Investment Scams

What are some common investment scams?

The most common Investment Scams, well the most common seems to be, because I get four or five e-mails from them every day, is someone who is in some particular bind in Nigeria or whatever country and if you just wire them $5000 your fortune will be unlocked and they will get your share. Right now if you go to Craig's List, there are a lot of scams going around you know, we are going to buy a product from you, but first you have to cash this check for them and there are people selling you, products extensive tapes on how to be rich by tax selling liens and real estates. And chances are you could get the same knowledge going to your public library for free. So there are 1 million scams out there. Stock swindlers have been around there forever they call you try to get your bucket chops out there. An investment scam that they are pitching. They are all out there. Everyone wants to take your money and people will not return it to you. So be very careful.

Why do people still fall for investment scams?

Greed, unfortunately, is in all of our nature and even the smartest investors, at one point in their lives, get caught up in something stupid. Having that experience level and to sit back and think through what you're doing is very hard. There's often - you're at a cocktail party and people are talking about how they got rich in Internet stocks, they got rich in real estate - you want your piece. It's very difficult sometimes to sit back when all the crowd is roaring in one direction and to say "wait a second, is this really where I want to put my money, do I know the business, do I know the investment?" And chances are, more often than not, that you're better not making a deal than doing a deal.

What do I do if I find myself stuck in an investment scam?

There are a lot of opportunities for you if you find yourself stuck in an investment scam. You can try the Securities and Exchange Commission in Washington, the local office of the Security and Exchange Commissions in a lot of big cities. You can file complaints with the National Association of Securities Dealers, which also supervises brokerage firms. There's also state entities that are responsible for licensing brokerage firms, and monitoring people who sell investments. And the best thing is to contact all of them, even your local Better Business Bureau, and, ultimately you may end up needing to hire a lawyer if the money involved is significant enough. But, there are lots of avenues available to you. It's not easy but you can pursue people in court to get your money back

Are all investment scams illegal?

I would say more people lose money in perfectly legal investments than in all of the scams combined. You know, people chase whatsever hot, hot money in real estate, commodities, stocks and that's how they get burned. Pefectly reputable firms selling people the wrong product at the wrong time. There is a lot of scamming going on and you have to do your research and figure out who's selling it, why. Does this fundamentally make it a good investment, you know? Does it make sense? Can you understand why this is going to be worth more money in the long term or are you approaching this just because you got a salesperson and you're feeling like you could make a quick buck?

How easily could I make millions in a money scam?

You can't make millions in a money scam unless you are a great practitioner of the greater fool theory, which means that you found a bigger fool than yourself to unload your investment on. I've gotten calls about these pyramid schemes. If somebody calls me up that I maybe knew from high school and they say, you know, "Chris if you send this guy a thousand dollars he'll send you a check for ten thousand." And it's amazing that people actually will do this because they think they're smarter than everybody else. But at the end of the day you may be smarter and you'll be a lot smarter and richer if you don't send your money into schemes that just fundamentally don't make sense.