High Return or Risk Free Investments

While elder fraud, breach of fiduciary duty and other types of financial abuse can take on many forms, there are a number of investments which increasingly have been used in illegitimate schemes to defraud older investors. Elder or retired investors should exercise appropriate scrutiny before investing in these types of products.

In this type of scheme a fraudster often will tout unrealistic returns can be realized from “low-risk investment opportunities.” But no investment is risk-free. And sometimes the investment products touted do not even exist — they’re merely scams. Investors should be wary of opportunities that promise spectacular profits or “guaranteed” returns. As the adage goes, if the deal sounds too good to be true, then it probably is. For example, the SEC found fraudsters that induced at least 803 elderly investors nationwide to invest in notes in PCM and the PCM Fund (“PCM notes”) that purportedly paid a “guaranteed” return of 5.5 percent to 8 percent per year. The fraudsters claimed that investor funds would be used to make secured loans to businesses. They also represented that independent IRA administrators conducted “due diligence” on the PCM notes, and that investors would be repaid their principal at maturity, or that investors could redeem all or part of their investment before maturity, subject to a penalty. All of these representations were false. The loans were not secured. Further, the PCM notes were not liquid because the fraudsters failed to promptly return investor funds. Some investors had to threaten to file, or actually file, lawsuits against the defendants to get back their money. Nor was it true that IRA administrators conducted due diligence. [See SEC v. D.W. Heath & Associates, Inc., et al., No. CV 04-02949JFW (Ex) (C.D. Cal.)]

With extensive courtroom, arbitration and mediation experience and an in-depth understanding of financial 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.