Professional Negligence - Russell L. Forkey

Accounting Malpractice and Negligence – Boca Raton, West Palm Beach and Fort Lauderdale, Florida Litigation Attorney

Russell L. Forkey — Fri, 12 Sep 2014 15:19:10 GMT

Accounting Malpractice and Negligence – Boca Raton, West Palm Beach and Fort Lauderdale, Florida Commercial Litigation and Elder Financial Abuse Attorney:

SEC Charges Bank Holding Company in Delaware with Improper Accounting and Disclosure of Past Due Loans

The Securities and Exchange Commission recently announced accounting and disclosure fraud charges against a Delaware-based bank holding company for failing to report the true volume of its loans at least 90 days past due as they substantially increased in number during the financial crisis.

An SEC investigation found that as the real estate market declined in 2009 and 2010 and its construction loans began to mature without repayment or completion of the underlying project, Wilmington Trust Company did not renew, extend, or take other appropriate action for 90 days or more on a material amount of its matured loans. Instead of fully and accurately disclosing the amount of these accruing loans as required by accounting guidance, Wilmington Trust improperly excluded the matured loans from its public financial reporting.

Wilmington Trust, which was acquired by M&T Bank in May 2011, has agreed to pay $18.5 million in disgorgement and prejudgment interest to settle the SEC’s charges.

According to the SEC’s order instituting a settled administrative proceeding, Wilmington Trust omitted from its disclosures in the third and fourth quarters of 2009 approximately $338.9 million and $330.2 million, respectively, in matured loans 90 days or more past due. Instead, it disclosed just $38.7 million in such loans for the third quarter and only $30.6 million in its annual report following the fourth quarter. Wilmington Trust also materially misreported this category of loans in the first and second quarters of 2010. Furthermore, Wilmington Trust failed to accurately disclose during the second half of 2009 the amount of non-accruing loans in its portfolio, and materially understated its loan loss provision and allowance for loan losses during this same period.

Wilmington Trust consented to the entry of the order finding that it violated Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933 as well as the reporting, books and records, and internal controls provisions of the federal securities laws. In addition to the monetary sanctions, Wilmington Trust agreed to cease and desist from committing or causing any violations and any future violations of these provisions.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation,, accounting negligence and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Fort Lauderdale Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

South Florida – Certified Public Accountant Independence and Negligence Litigation and Arbitration Attorney

Russell L. Forkey — Tue, 15 Jul 2014 12:24:16 GMT

Boca Raton, Deerfield Beach, Delary Beach, Boynton Beach, Lantana, Lake Worth and West Palm Beach Certified Public Accountant and Public Accountant Independence and Negligence Litigation and Arbitration Attorney: SEC Charges Ernst & Young With Violating Auditor Independence Rules in Lobbying Activities

The Securities and Exchange Commission recently charged Ernst & Young LLP with violations of auditor independence rules that require firms to maintain their objectivity and impartiality with clients.

Ernst & Young agreed to pay more than $4 million to settle the charges.

The SEC’s order instituting a settled administrative proceeding finds that an Ernst & Young subsidiary lobbied congressional staff on behalf of two audit clients. Such lobbying activities were impermissible under the SEC’s auditor independence rules because they put the firm in the position of being an advocate for those audit clients. Despite providing the prohibited legislative advisory services on behalf of the clients, Ernst & Young repeatedly represented that it was “independent” in audit reports issued on the clients’ financial statements.

According to the SEC’s order, Ernst & Young’s subsidiary Washington Council EY (WCEY) impaired the firm’s independence in several lobbying actions:

WCEY sent letters signed by a senior executive of an Ernst & Young audit client to congressional staff, urging passage of certain legislation.
WCEY asked congressional staff to insert language into a bill that was favorable to the business interests of an Ernst & Young audit client.
WCEY met with congressional staff in order to defeat legislation detrimental to the business interests of an Ernst & Young audit client.
WCEY asked third parties to approach a U.S. senator in order to seek support for a legislative amendment sought by an Ernst & Young audit client.
WCEY marked up a draft of a bill by inserting an Ernst & Young audit client’s language and sending it to congressional staff.

According to the SEC’s order, Ernst & Young had issued a written independence policy intended to provide guidance on the provision of legislative advisory services to audit clients. However, Ernst & Young did not provide WCEY with formal, in-person training specifically tailored to the policy.

The SEC’s order finds that Ernst & Young committed violations of Rule 2-02(b)(1) of Regulation S-X; caused violations of Section 13(a) of the Securities Exchange Act of 1934 and Rule 13a-1; and engaged in improper professional conduct pursuant to Exchange Act Section 4C(a)(2) and Rule 102(e)(1)(ii) of the Commission’s Rules of Practice. The SEC’s order requires Ernst & Young to cease and desist from violating the auditor independence rules and from causing violations of the corporate periodic reporting provisions of the federal securities laws. The SEC also censured Ernst & Young and ordered payment of $4.07 million in monetary sanctions, including disgorgement of $1.24 million, prejudgment interest of $351,925.98, and a penalty of $2.48 million. The SEC took into consideration the remedial acts undertaken by Ernst & Young and its cooperation with SEC staff during the investigation. For example, Ernst & Young voluntarily issued new guidance in June 2012 restricting such legislative advisory services. The firm issued similar final guidance in May 2013.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

Accountant’s Liability to Third Parties – Broward and Palm Beach Florida Accounting Negligence Litigation and Arbitration Attorney

Russell L. Forkey — Sat, 07 Dec 2013 21:40:52 GMT

Accountant’s Liability to Third Parties – Florida Accounting Negligence Litigation and Arbitration Attorney – Russell L. Forkey, Esq.

WHEN AN ACCOUNTANT FAILS TO EXERCISE REASONABLE AND ORDINARY CARE IN PREPARING THE FINANCIAL STATEMENTS OF HIS CLIENT AND WHERE THAT ACCOUNTANT PERSONALLY DELIVERS AND PRESENTS THE STATEMENTS TO A THIRD PARTY TO INDUCE THAT THIRD PARTY TO LOAN TO OR INVEST IN THE CLIENT, KNOWING THAT THE STATEMENTS WILL BE RELIED UPON BY THE THIRD PARTY IN LOANING TO OR INVESTING IN THE CLIENT, IS THE ACCOUNTANT LIABLE TO THE THIRD PARTY IN NEGLIGENCE FOR THE DAMAGES THE THIRD PARTY SUFFERS AS A RESULT OF THE ACCOUNTANT’S FAILURE TO USE REASONABLE AND ORDINARY CARE IN PREPARING THE FINANCIAL STATEMENTS, DESPITE A LACK OF PRIVITY BETWEEN THE ACCOUNTANT AND THE THIRD PARTY?

The Florida Supreme Court answered this question in the affirmative in the case of First Florida Bank, N.A. v. Max Mitchell & Co., 558 So. 2d 9 (Fla. 1990). In this matter, the court provided two examples to illustrate this circumstance.

(1): The court held that the Restatement (Second) of Tort § 552 governing information negligently supplied for the guidance of others has been adopted to apply to accountants so that when an accountant fails to exercise reasonable and ordinary care in preparing financial statements of the client and accountant personally delivers and presents statements to third party to induce that third party to loan or invest in client, knowing that statements will be relied upon by third party in loaning to or investing in client, accountant is liable to third party in negligence for damages third party suffers as a result of accountant’s failure to use reasonable and ordinary care in preparing financial statements, despite lack of privity (direct relationship) between accountant and third party.

(2): Accountant, who prepared audits without knowing they would be used to induce reliance of bank to approve line of credit for client, but who actually negotiated loan on behalf of client and personally delivered financial statements to bank with knowledge that it would rely upon them in considering to make loan, was liable to bank in negligence for damages bank suffered as a result of accountant’s failure to use reasonable and ordinary care in preparing financial statements, despite lack of privity.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of accounting, negligence and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

Corporation Annual Report (10-K) – Florida Business Practice and Corporate Litigation Attorney

Russell L. Forkey — Sat, 05 Oct 2013 23:16:20 GMT

Corporate Annual Report (10-K) – Florida Business Practice and Corporate Litigation and Arbitration Attorney:

An “Annual Report” is a record of a corporation’s annual financial condition that is required to be distributed to shareholders under Securities and Exchange Commissions rules and regulations. Included in the report is a description of the company’s operations as well as its certified balance sheet and income statement. The full version of the annual report is called the 10-K. It is available from the company or or on-line at the Edgar Website of the SEC. Other reports issued by a reporting company include forms 10-Q (quarterly reports) and 8-K (material disclosures).

As an investor, these reports provide invaluable information when considering to purchase, hold or sell a security. However, please keep in mind that this information is being provided for educational purposes only. It is not designed to be complete in all material respects. Thus, it should not be relied upon as legal or investment advice. If the reader has any questions concerning this post, you should contact a qualified professional.

Contact Us:

With extensive courtroom, arbitration and mediation experience and an in-depth understanding of securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

Frank Dappah and Yatalie Capital Management – Florida Excessive Investment Advisory Fee Litigation and FINRA Arbitration Attorney

Russell L. Forkey — Sat, 28 Sep 2013 11:40:24 GMT

Securities and Exchange Commission v. Frank Dappah and Yatalie Capital Management, et al., Civil Action No. 3:13-cv-00546 (W.D.N.C.)

SEC Charges Charlotte Investment Advisors with Excessive Fee Scheme

Recently, the Securities and Exchange Commission filed an action in federal court in the Western District of North Carolina, charging Frank Dappah of Charlotte, NC, and his firm, Yatalie Capital Management (a/k/a Yatalie Capital Management Co, Creato Funds L.P., a/k/a Yatalie Capital, Inc., a/k/a Creato Funds, L.P., a/k/a Yatalie Capital Management Co.), a sole proprietorship, with violations of the federal securities laws for charging grossly excessive fees to their advisory clients without authorization or notice and other violations. The Commission’s complaint seeks permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, civil penalties, and an asset freeze against the defendants.

The Commission’s complaint alleges that Dappah and his firm took from the clients fees far in excess of what they were entitled to under the client advisory agreements. The complaint alleges that between March 2012 and July 2013, Dappah took advisory fees of nearly $75,000 on assets under management averaging around $205,000. One client, according to the complaint, lost $9,200 in unauthorized fees to Dappah in less than a year on investments of around $23,000.

The complaint also alleges that the defendants improperly registered Yatalie Capital Management with the Commission as an investment adviser, that they made multiple materially false statements in Yatalie Capital Management’s Forms ADV, on the firm’s website and elsewhere, and that the defendants failed to maintain client advisory agreements.

The complaint alleges that Dappah and Yatalie Capital Management violated the antifraud provisions of the federal securities laws, Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder. It further alleges that while acting as investment advisors, the defendants violated Sections 206(1) and Section 206(2) of the Investment Advisers Act of 1940 (“Advisers Act”), the antifraud provisions of the Advisers Act, and Sections 203A, 204, and 207 the Advisers Act and Rules 204-2 and 206(4)-1 thereunder.

The defendants have entered into a consent with the Commission agreeing to the entry by the Court of the relief requested in the complaint.

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Financial Abuse of Older Adults – Florida Elder Abuse and Financial Loss FINRA Arbitration and Litigation Attorney

Russell L. Forkey — Fri, 27 Sep 2013 11:28:33 GMT

Florida Elder Abuse and Financial Loss FINRA Arbitration and Litigation Attorney:

Federal Regulators Issue Guidance on Reporting Financial Abuse of Older Adults

Seven federal regulatory agencies recently issued guidance to clarify that the privacy provisions of the Gramm-Leach-Bliley Act generally permit financial institutions to report suspected elder financial abuse to appropriate authorities.

The Gramm-Leach-Bliley Act generally requires that a financial institution notify consumers and give them an opportunity to opt out before providing nonpublic personal information to a third party. Today’s guidance clarifies that it is generally acceptable under the law for financial institutions to report suspected elder financial abuse to appropriate local, state or federal agencies.

Older adults can be attractive targets for financial exploitation and may be taken advantage of by scam artists, financial advisors, family members, caregivers, or home repair contractors. Recent studies suggest that financial exploitation is the most common form of elder abuse and that only a small fraction of incidents is reported. Older adults often are targeted because they have retirement savings, accumulated home equity, or other assets. They also are more likely to experience cognitive decline, which can impair their capacity to recognize financial exploitation and scams.

Employees of financial institutions may be able to spot irregular transactions, account activity, or behavior that signals financial abuse. They can play a key role in preventing and detecting elder financial exploitation by reporting suspicious activities to the proper authorities.

The interagency guidance was issued by the Board of Governors of the Federal Reserve System, Consumer Financial Protection Bureau, Federal Deposit Insurance Corporation, Federal Trade Commission, National Credit Union Administration, Office of the Comptroller of the Currency, and the Securities and Exchange Commission. The Commodity Futures Trading Commission issued the document as staff guidance.

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Cash Basis of Accounting, Accrual Method of Accounting and Modified Cash Basis of Accounting – Florida Breach of Contract, Breach of Fiduciary Duty, Fraud and Accounting Negligence Litigation Attorney

Russell L. Forkey — Thu, 15 Aug 2013 09:45:31 GMT

Cash Basis of Accounting, Accrual Method of Accounting and Modified Cash Basis: South Florida Accounting Negligence and Breach of Contract Commerical Litigation Attorney, Russell L. Forkey, Esq.

The Cash Basis accounting method recognizes revenues when cash is received and recognizes expenses when cash is paid out. In contrast, the Accrual Method of accounting recognizes revenues when goods or services are sold and recognizes expenses when obligations are incurred. A third method, called Modified Cash Basis uses accrual accounting for long-term assets and is the basis usually referred to when the term cash basis is used.

Please keep in mind that the above information is being provided for educational purposes only. It is not designed to be complete in all material respects. Thus, it should not be relied upon as legal or investment advice. If the reader has any questions concerning the contents of this post, you should contact a qualified professional.

Contact Us:

With extensive courtroom, arbitration and mediation experience and an in-depth understanding of accounting, business and securities laws, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

Sales Practice Violations – Discretionary Trading Without Authorization, Unauthorized Trading, Unsuitable and Excessive Trading and Churning – South Florida FINRA Arbitration and Litigation Attorney

Russell L. Forkey — Wed, 03 Jul 2013 18:09:04 GMT

Securities and Exchange Commission Sustains FINRA Disciplinary Action against Registered Representative and Supervisor

The Securities and Exchange Commission has sustained disciplinary action by the Financial Industry Regulatory Authority (“FINRA”) against William J. Murphy and Carl M. Birkelbach, formerly associated with member firm Birkelbach Investment Securities, Inc. In its opinion, the Commission sustained FINRA’s finding of sales practice violations by Murphy, which included discretionary trading without authorization, unauthorized trading, unsuitable and excessive trading, churning, and the creation and distribution of misleading communications. In one customer account at issue, Murphy engaged in excessive options trading that generated over one million dollars in commissions in the span of approximately three-and-half years. The Commission also sustained FINRA’s findings of supervisory violations by Birkelbach for ignoring obvious and repeated red flags with regard to Murphy’s handling of customer accounts. Finally, the Commission has sustained FINRA’s imposition of sanctions: a bar in all capacities and the disgorgement of $585,174.67 for Murphy and bar in all capacities for Birkelbach.

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Accounting Fraud and Accounting Negligence (Generally Accepted Accounting Principles) Florida Litigation and Arbitration Attorney

Russell L. Forkey — Sun, 30 Jun 2013 12:51:12 GMT

Florida Accounting Fraud and Accounting Negligence Litigation Attorney:

Court Enters Final Judgments against JBI, Inc. and Former Officer in Accounting Fraud Case

The Securities and Exchange Commission announced that a Massachusetts federal court entered final judgments by consent on June 26, 2013 and March 20, 2013, respectively, against John W. Bordynuik (“Bordynuik”) and JBI, Inc. (“JBI”), two defendants in a fraud action filed by the Commission in 2012. The Commission alleged in its complaint that JBI, its then CEO, John Bordynuik, and its former CFO, Ronald Baldwin, Jr. (“Baldwin”), engaged in a scheme to commit securities and accounting fraud in 2009. In the consent judgments, the Court ordered JBI to pay $150,000 and Bordynuik to pay $110,000 in civil monetary penalties.

The Commission filed its action on January 4, 2012, alleging that during two reporting periods in 2009 and in contravention of Generally Accepted Accounting Principles (“GAAP”), JBI stated materially false and inaccurate financial information on its financial statements. The Complaint alleged that the defendants misrepresented and overstated the actual value of certain assets, known as media credits, by almost 1,000%, in an effort to bolster its balance sheet. JBI then used the overvalued financial statements in two private capital raising efforts (Private Investment in Public Equity or PIPES) that raised over $8.4 million from unwitting investors in these PIPES just before the company issued a public statement indicating its financial statements could no longer be relied upon, in part, due to the erroneous valuation of the media credits and other assets on the balance sheet. According to the complaint, Bordynuik was aware of, or was reckless in not being aware of, GAAP concerns surrounding the reported value of the media credits in advance of the company’s periodic reports that included the financial statements filed with the Commission, yet falsely certified that the company’s financial statements for those reporting periods were filed in conformity with GAAP.

Without admitting or denying the allegations in the Commission’s complaint, JBI and Bordynuik consented to final judgments entered by the Court. The final judgment against JBI permanently enjoined the company from violating Section 17(a) of the Securities Act of 1933 (“Securities Act”) and Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B) and 13(b)(5) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rules 10b-5, 12b-20, 13a-1, 13a-11, and 13a-13 thereunder, and ordered JBI to pay a civil monetary penalty of $150,000. The final judgment against Bordynuik permanently enjoined him from violating Section 17(a) of the Securities Act and Sections 10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5, 13a-14, 13b2-1 and 13b2-2 thereunder, and from aiding and abetting violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-11, and ordered him to pay a civil penalty of $110,000. Bordynuik also was barred for five years (from March 18, 2013) from acting as an officer or director of a public company. The case against the remaining defendant (Baldwin) remains pending. [SEC v. JBI, Inc., John Bordynuik and Ronald Baldwin, Jr., C.A. No. 1:12-cv-10012 (USDC, MA)]

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Professional Negligence (Malpractice) Claims Against Accountants (CPA), Engineers, Surveyors, Architects and Others – Florida State and Federal Court Litigation and AAA Arbitration Attorney

Russell L. Forkey — Wed, 29 May 2013 00:17:08 GMT

Professional Negligence Claims Against Accountants, Engineers, Surveyors, Architects and Others – Florida State and Federal Litigation and AAA Arbitration Attorney:

In Florida, professional negligence claims require four elements: (1) existence of a legal duty, (2) breach of the duty, (3) proximate causation, and (4) actual loss. Generally, this duty of care only exists between parties who are in privity of contract with one another. The contractual relationship of the accountant, engineers and others and their clients gives rise to tort liability for professional negligence.

In limited circumstances, however, a professional can be liable to non-contractual third parties for economic damages arising from professional negligence. The Florida Supreme Court adopted Restatement (Second) of Torts § 552 to determine an accountant’s liability for negligent misrepresentation. It provides in pertinent part:

§ 552. Information Negligently Supplied for the Guidance of Others
(1) One who, in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance on the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information.

(2) Except as stated in Subsection (3), the liability stated in Subsection (1) is limited to loss suffered (a) by the person or one of a limited group of persons for whose benefit and guidance he intends to supply the information or knows that the recipient intends to supply it; and

(b) through reliance upon it in a transaction that he intends the information to influence or knows that the recipient so intends or in a substantially similar transaction.

Please keep in mind that the information provided in this post is for educational purposes only. It is not designed to be complete in all material respects. Thus it should not be relied upon as legal advice. If you have any questions relative to the information provided herein, you should contact a qualified professional.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of of issues relating to professional negligence, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida. Contact us to arrange your free initial consultation.

Elder and Senior Financial Abuse Attorney – Common Sense Tip for Seniors to Help Protect Your Nest egg

Russell L. Forkey — Tue, 28 Dec 2010 23:00:00 GMT

South Florida Elder and Senior Financial Abuse and Breach of Fiduciary Duty Litigation FINRA Arbitration and Litigation Attorney:

The North American Securities Administrators Association, Inc. (NASAA) has issued a post that sets forth 10 general tips to help you protect your nest egg. I have modified this list somewhat based upon issues that I have help seniors deal with over the years.

First the bad news: As an older investor you are a top target for con artists. The files of state securities agencies are filled with tragic examples of senior investors who have been cheated out of savings, windfall insurance payments, and even the equity in their own homes. If the con artist is not associated with a major brokerage firm or other substantial company, it may be difficult to recover your losses. If you are a victim of a con artist, the faster you take action, the higher the probability that you will revocer some or all of your money.

Now the good news: You can avoid becoming a victim by following 10 self-defense tips developed for seniors by NASAA, which I have modified somewhat.

1. Don’t be a courtesy victim. Con artists will not hesitate to exploit your good manners. Save your good manners for friends and family members, not strangers looking for a quick buck!

2. Check out strangers touting strange deals. Trusting strangers is a mistake anyone can make when it comes to their personal finances. Say “no” to any investment professional who presses you to make an immediate decision, giving you no opportunity to check out the salesperson, firm and the investment opportunity itself. Extensive background information on investment salespeople and firms is available from the Central Registration Depository (CRD) files available from the Financial Industry Regulatory Authority and your state or provincial securities agency.

3. Always stay in charge of your money. Beware of anyone who suggests investing your money into something you don’t understand or who urges that you leave everything in his or her hands. Sometimes this is unavoidable because of the mental condition of the senior or other person. Therefore, family members should try and spread the responsibility through more than one family member so that one can oversee the other. While it does not happen frequently, I recall a tragic story that was told to me by a husband and wife who came to see me to complain about their son, who was there stock broker. The son had churned their account and had lost most of his parents financial nest egg. When I asked the parents if they had confronted their son about what he had done, they indicated that they had and his response was “sue” me.

4. Don’t judge a book by its cover. Successful con artists sound and look extremely professional and have the ability to make even the flimsiest investment deal sound as safe and sound as putting money in the bank. The sound of a voice, particularly on the phone, has no bearing on the soundness of an investment opportunity.

5. Watch out for salespeople who prey on your fears. Con artists know that you worry about either outliving your savings or seeing all of your financial resources vanish overnight as the result of a catastrophic event, such as a costly hospitalization. Fear can cloud your good judgment. An investment that is right for you will make sense because you understand it and feel comfortable with the risk involved.

6. Don’t make a tragedy worse with rash financial decisions. The death or hospitalization of a spouse has many sad consequences – financial fraud shouldn’t be one of them. Ask a con artist to describe his ideal victim and you are likely to hear the following two words: “elderly widow.” If you find yourself suddenly in charge of your own finances, get the facts before you make any decisions. Local libraries and universities may offer classes and information on investing. Talk to friends, family, trade organizations, and state or provincial securities regulators for advice on locating a financial professional and checking their background. An insurance settlement may help with expenses but it also makes you an ideal target for fraud. Arm yourself with information and your confidence will send con men running.

7. Monitor your investments and ask tough questions. Don’t compound the mistake of trusting an unscrupulous investment professional or outright con artist by failing to keep an eye on the progress of your investment. Insist on regular written reports. Look for signs of excessive or unauthorized trading of your funds. Don’t let a false sense of friendship or trust keep you from demanding a routine statement of your accounts.

8. Look for trouble retrieving your principal or cashing out profits. If a stockbroker, financial planner or other individual with whom you have invested stalls you when you want to pull out your principal or profits, you have uncovered someone who wants to cheat you. Some kinds of investments have certain periods when you cannot withdraw your funds, but you must be made aware of these kinds of restrictions before you invest.

9. Don’t let embarrassment or fear keep you from reporting investment fraud or abuse. Con artists know that you might hesitate to report that you have been victimized in financial schemes out of embarrassment or fear. Con artists prey on your sensitivities and, in fact, count on these fears preventing or delaying the point at which authorities are notified of a scam. Every day that you delay reporting fraud or abuse is one more day that the con artist is spending your money and finding new victims.

10. Beware of “reload” scams. If you are already the victim of an investment scam, don’t compound the damage by letting con artists “reload” and take a “second bite” of your assets. Con artists know you have a finite amount of money. Faced with a loss of funds, some seniors who have been victimized once will go along with another scheme in which the con artists promise to make good on the original funds lost … and possibly even generate new returns beyond those originally promised. Though the desire to make up lost financial ground is understandable, all too often the result is that you lose whatever savings you had left in the wake of the initial scam.

Contact Us

With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.