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Recovering Losses Caused By Investment Misconduct

Avoiding Scams During the Holidays: Part One of a Six-Part Meyer Wilson Blog Series

The Wolf is Always at the Door—Especially at Christmas

The holiday season is approaching, and with the excitement of giving comes an increased risk of being taken—as a victim of an investment scam. Scammers are constantly honing their skills and tactics and use them with abandon during the holiday season.

Ironically, scheduled for release this Christmas, December 25, 2013, is the movie, "The Wolf of Wall Street". It stars Leonardo DiCaprio as Jordan Belfort, the New York stock swindler convicted of securities fraud crimes in 2004. He served 22 months in federal prison for stealing from investors and was ordered to pay restitution of $110 million dollars.

How did he do it? Belfort was a master of the art of persuasion. He started a brokerage firm and hired salespeople to convince potential investors to buy the firm's penny stocks. His main tool was a script he created for his salespeople to use in cold calls. The callers dialed a number from a phone bank, recited Belfort's finely-crafted script, and sold millions of penny stocks to investors who never saw a dime in return. Jordan and his company made millions scamming people who were 1) attracted by the low-risk the "penny stock" idea projected, and 2) hoodwinked by Jordan's persuasive tactics.

Most scam artists are masters of persuasion. Persuasive tactics can fool anyone from the least sophisticated investor to the most sophisticated. In the work we do at Meyer Wilson, we've seen many such tactics used on individuals who've fallen prey to Ponzi schemes and other investment scams.

Beware this holiday season of the following persuasive statements scammers use in phone calls, in-person solicitations, emails, and mobile messages:

  • "We Have a Hot Tip for You." There's no such thing as a "hot tip," or an "exclusive deal" that's only being offered to a select group that happens to include you. Never, ever, hand over your hard-earned money in response to a "hot tip."
  • "I Made This Same Investment." [For me; my mom; my grandma.] This sounds persuasive (which is why cheaters say it) but there is no way to verify it and it is most always false.
  • "We Talked Last November." Ignore this. This tactic is often used to confuse elderly investors who might be dealing with memory issues.
  • "Simple Bank Savings Earn So Little Interest." If you have bank savings or CDs, you probably have it there because you are adverse to risk, which is a good thing. Don't take it out to hand over to a stranger for a promised better return. That's what Belfort did with the penny stocks.
  • "We Can Buy Low and Sell High." If it was that easy everyone would be doing it. Nobody has the magic answers. Brokers can face steep penalties for making any guarantees whatsoever about stock market performance. Do not believe any statements about guaranteed returns of any kind.

Also avoid giving any personal or investment information to someone who 1) uses your first name as if they know you; 2) uses a brokerage firm name you've never heard of; 3) asks you how much you can start investing with; or 4) tells you the salespeople only earn a minimum commission.

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