Show #400 Airing Sunday 8/26/07
Wouldn't you love an investment that will pay you 8-10% or more each year, safe and guaranteed! Of course you would. And every year lots of seniors grab at these kinds of offers, only to find themselves at the wrong end of a senior scam. Here to warn us about the top investment scams aimed at trusting older folks is my very trustworthy law partner, Jennifer Peck.
First is: Charitable Gift Annuities
Answer:Here's what happens: An employee at a charitable organization offers you a huge monthly payment for life in exchange for a donation. You give the charity money, they invest it and give you a fantastic return. In fact, charitable gift annuities can be a worthwhile investment. Unfortunately, in this scam, the charity doesn't really exist, and your money disappears along with the supposed employee.
Question: How can we protect ourselves, especially since a charitable annuity is usually a legitimate investment vehicle?
Answer:Contact the charity, make sure the employee who you're talking to really works there. And contact the Better Business Bureau and Ohio Attorney General's office to make sure the charity is legitimate. You can check the BBB's list of charities at www.give.org/reports/index.asp
Next is: Guaranteed Investments.
Answer:There are variations on this scam, but generally it goes something like this: You are offered the chance to invest in notes that pay a high guaranteed return, maybe 6% to 10%. You're told that your funds will be used to make secured loans to businesses, and that you'll be repaid your entire investment at maturity. Unfortunately, this is all a hoax, and your money is lost to some scam artist's account.
Question: What should we do to protect ourselves:
Answer:Be wary of any investment that offers huge profits or guarantees. Any company selling securities, like notes, in the U.S. must register with the SEC; before you invest, check to see if it's registered at www.sec.gov. And check with the Ohio securities department too at securities.state.oh.us.
One more: High Paying CD's
Answer:You've talked with financial experts on the show about high paying CDs. Usually we buy CDs from banks. But now there are brokerage firms, called deposit brokers, who negotiate higher than normal CD interest rates from banks in exchange for bringing huge amounts of deposits to the banks. Then these brokers offer the higher interest CDs to customers, passing along the higher interest rates.
These are legitimate investments!
But con artists have gotten into the act. They sell high interest CDs to seniors. But the CDs don't really exist and the banks they're from don't really exist.
You might be told the CD is from CITICORP Bank - a name that sounds legitimate. And you may be given false documents and bank statements to make you think the investment is real.
To protect yourself, and to sort out real vs. fake CD sales, contact the bank directly that's supposedly issuing the CD. Get a phone number for the bank, yourself, not from the salesman. And make sure the bank is federally insured by checking the FDIC web site at www.fdic.gov.
Scams are like weeds - they never seem to go away. Always be on alert. Someone's out there trying to steal you hard earned money. For more information, give Jennifer a call.
