This week’s CBTV show is entitled, “Is Your Financial Advisor a Trick or Treat? The Truth About Some of the Bad Apples Out There!”
The U.S. Department of Justice recently released the United States Attorneys’ Annual Statistical Report for Fiscal Year 2010, which revealed an 8% increase in the number of “white collar” financial fraud cases. It was also reported that “white collar” fraud made up a greater percentage of overall criminal cases in 2010 at 9.4%. The good news, is that of all the cases prosecuted in 2010 by the U.S. Attorneys’ office, the conviction rate was an astounding 91%! More than 1,500 defendants were convicted of a financial crime during fiscal year 2010, for crimes ranging from Ponzi schemes, to mortgage fraud, securities fraud, and quite a few others.
“White collar” crimes are defined as “non-violent” crimes, committed by an individual or group, for financial gain. Typically, white collar criminals pose as professionals and have knowledge of financial policies and investments. In an effort to prosecute these criminals, the federal government has enlisted the Offices of the U.S. Attorney General to serve as the nation’s principal litigator and “chief federal law enforcement officer.” They prosecute the federal financial fraud cases that are reported to the Securities and Exchange Commission or those investigated by the FBI. In their Fiscal Year 2010 Annual Report, they revealed that white collar criminal cases involving lending and investment frauds were on the rise in 2010. Fortunately, they closed nearly 6,000 cases throughout the year, with nearly 8,000 defendants convicted, and almost two-thirds of them being sentenced to prison.
The Federal Trade Commission (FTC), who is responsible for protecting consumers from fraud, deception and unfair business practices, recently released its annual list of top consumer complaints for 2010. “Imposter scams” made the top 10 list for the first time. These scams take place when imposters pose as friends, family members, respected companies or government agencies, and convince consumers to send them money. The FTC received over 1 million consumer complaints in 2010, and 4% of those were imposter scams. One particular imposter scam is taking advantage of senior citizens, and is known as the “grandparent scam,” with scammers posing as grandchildren in dire need of financial help. Another type involves homeowners struggling to avoid foreclosure, with scammers offering to secure a mortgage loan modification for a fee. “Texting” scams have also become quite popular, with the victim receiving a text message on their cell phone, which says that one of their bank accounts is frozen, and they need to call a number and reveal their account information.
White collar crimes are a real concern for everybody today, particularly those older Americans who are struggling financially. The federal government has tried to put an effective consumer protection system in place to fight financial fraud, using organizations such as the SEC, the FBI, the FTC, and the U.S. Attorney Generals Office. But they can only do so much, and they really can’t help victims who don’t file a complaint. The FTC conducted a random telephone survey a few years ago and found that only 8.2% of victims actually reported these crimes. That means more than 90% of all victims are not taking any action! So the real key here, is to be vigilant whenever you’re approached with any investment opportunities that seem “too good to be true,” and question everything. The fact of the matter is, there are a lot of bad apples out there, so be sure you investigate them thoroughly, before you take a big bite out of any one of them!
To help you in selecting the very best financial advisor you can find, be sure to log on to our website and download our FREE report, “10 Questions to Ask Your Financial Advisor – Before You Invest a Dime With Them!” - a free report that gives you the information and tools you need, to select the best financial advisor you can to help build a financially secure future.
I would like to hear from you on this important topic. Have you ever been a victim of a financial scam or fraud? Did you recover all or part of your investment? Did you report it? Let me know.
-Matt
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