Help friends, kin avoid scammers
The Christmas season is a time for family, friends, faith and finances.
I say finances because families don’t talk about them nearly as much as they should, and faith does not pay the bills. In past years, I’ve urged older family members to discuss their retirement plans with their adult children or explain the world of banking and investing to young adults.
This year, though, younger folks should take a moment to warn older friends and family about the staggering number of scams circulating on talk radio,
at work, in the country club and even at church. With safe havens like Treasury bonds paying little, too many elderly investors get ripped off in their search for a decent return.
Some of the most astonishing emails I receive are news releases from the Texas State Securities Board, the agency responsible for protecting the state’s investors. While the U.S. Securities and Exchange Commission enforces federal law, the board enforces the state Securities Act.
Former Texas Securities Commissioner John Morgan once told me his team gets its best leads listening to early morning talk radio. Many of the ads feature unregistered brokers offering deals too good to be true.
If it’s on the radio, it must be true, right? If a friend recommends a broker, they must be above board! Nope. The board’s investigators stay plenty busy, and too many Texans lose their money to fraudsters. Let’s look at some recent examples.
Wilson Alejandro Montoya founded All in One Inv & Repairs LLC, a Colleyville investment firm where he sold shares in his business. He is alleged to have promised 25 customers he could generate monthly returns of 10 percent to 15 percent on real estate and other investments, a grand jury indictment issued in Dallas County states.
Instead, he used the more than $300,000 he collected to pay his family’s expenses and pay off those who had invested early in the scheme, the indictment alleges. Instead of operating a local real estate investment firm, Montoya ran a classic Ponzi scheme, investigators allege.
Many Texans would jump at the chance to invest in an oil well, hoping for a gusher. But many of the limited partnerships offered after dinner in a highway hotel conference center only benefit the promoters.
The securities board collected a $200,000 fine from Woodland Resources LLC and forced the oil and gas company to pay 27 investors back $1.5 million this year. The company also agreed to get rid of Fort Worth oilman Michael E. Patman, who was not what he seemed.
Patman claimed to be a successful wildcatter and offered investors a share of two Oklahoma wells that he promised would produce 70 percent annualized returns. But according to the securities board, Patman had put his two previous companies into bankruptcy, and he still owed millions to previous investors who successfully sued him for fraud.
The internet is the gateway to countless scams. Last month, the board entered a cease-and-desist order against Cryptobase, also known as Crypt-Base, and the man behind it, Aaron Maxwell. He was promoting foreign exchange investments on the popular Reddit site.
Maxwell tells users the deals are guaranteed, and investors will receive 300 percent to 500 percent returns weekly, according to the order. Maxwell operates his business from Bournemouth, England, so he is free to ignore the order.
Cryptocurrency investments with guaranteed returns seem to be a popular scam these days. They almost certainly will escalate now that Bitcoin is reaching record-high valuations. But as I’ve said many times, if you can’t explain how cryptocurrency works, you have no business investing in it.
Of course, time-honored cons continue, and people keep following for them. Fraudulent insurance products, stock sales with outrageous commissions and predatory lending scams remain rampant. This year saw a fine wine swindle and illegal offers to profit from COVID-19.
Most of these con artists target the elderly because they tend to have cash savings and they are worried about their money lasting until the end of their lives. Many elderly investors also don’t understand the latest investments, including cryptocurrencies, and fall victim to persuasive con artists.
This holiday season, take a moment to talk to the people you love about their finances and where they are putting their money. Ask if anyone has approached them about making any new investments outside of the standard retirement accounts.
If they have, five minutes on the internet probably will clear things up. The State Securities Board’s website, ssb.texas .gov, is a valuable resource. Make your loved ones promise to speak to you before they give their money to a new friend for a surefire investment.