Consistency. Like Bernie Madoff’s billon-dollar
Ponzi scheme, many fraudulent investments show consistent returns – or promise
consistent returns – quarter after quarter, year after year, even
when the market itself is in decline. Investments fluctuate, as does the
market itself. That’s the nature of investing. Watch out for anyone
who promises you otherwise, or whose statements show otherwise; they are
very likely running an investment scam.
Excessive Complexity. Some investments are inherently more complex than others, but if a representative,
advisor, or broker is unable to clearly explain a product in which she
wants you to invest – recognize the lack of clarity as a warning
sign that the product may be either too risky or
unsuitable for you.
Secrecy. If an advisor, broker, or sales rep tells you that a product’s investment
strategy is “confidential” or refuses to answer your questions,
you should consider the lack of disclosure a red flag. A legitimate investment
opportunity will include full disclosure of the product’s underlying
assets, the investment strategy, the expected rate of return, and the
risks involved. If you aren’t given this information, it is very
probable that either the product is a scam or the person pushing it is
a con artist.
Unverifiable Claims. If someone insists that he has assets or connections he can’t –
or won’t – back up, you should think twice before you invest
in whatever he’s selling. “International connections,”
pending “inheritances,” and the ability to raise “venture
capital” are all claims previous scam artists have made to rope
unsuspecting investors into an investment fraud.