High Risk Investment Scams

While elder fraud, breach of fiduciary duty and other types of financial abuse and exploitation 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.

Some unscrupulous investment advisors make unsuitable recommendations to purchase investment products that don’t meet the investing objectives and means of an investor. Unsuitable recommendations might occur when a broker sells speculative investments such as options and futures, penny stocks, etc to a 95-year-old widow living on a fixed income with a low risk tolerance. Investors should be careful to review the risk profile of each investment recommendation and should seek the advice of an objective third party when in doubt. In one such example, the SEC found fraudsters that induced their clients to invest in the high-risk securities despite being aware that the securities carried a high risk of loss and were not suitable for elderly, unsophisticated investors seeking secure investments for retirement. In order to persuade their clients to invest large amounts of their savings and retirement funds in the high-risk securities, the fraudsters falsely misrepresented that the investments had little or no risk and were as safe as bank deposits. The fraudsters falsified documents to make it appear that their customers had the net worth and risk tolerance to qualify for the speculative investments. [See SEC v. William Edward Sears and Patricia Jean Sears Million, Case No. CV-05-1473 CO (D. Ore.)]

In addition to licensed investment advisors making unsuitable and/or fraudulent recommendations to their clients, investors, especially the elderly, are also exposed to unlicensed telemarketing solicitations and unscrupulous thieves that will do or say anything to steal their money. If you believe that you, a family member or vulnerable adult have been scammed by such a fraudster, please contact us for your initial free consultation.