Skip to main content


Representing Individual, High Net Worth & Institutional Investors

Offices in Indiana and New York City


Home > Blog > Category Archives: Stealing Investment Money

Category Archives: Stealing Investment Money

Potential Signs of Investment Fraud

After years of building an investment portfolio, you’re presented with what appears to be a home-run financial opportunity. Before jumping in headfirst and betting your lifesavings, think twice.

Investment fraud is big business in an economic downturn, and can lure novice and sophisticated investors alike. In many cases, the victims are elderly.

All investments contain certain risks. Anyone who promises high returns with little or no risk is more than likely trying to scam you out of your money.

A recent article by Financial Highway offers several tips for spotting potential financial fraud schemes:

Pressure to invest immediately: Whenever someone is pressured to immediately turn over money regarding a potential investment “opportunity,” consider it a red flag. In any investment, it’s wise to research the company or investment advisor behind the investment pitch. Is the company legitimate? Are there arbitration filings or disciplinary actions against the broker? Is the person or company a member of the Financial Industry Regulatory Authority (FINRA)? To investigate the background of an investment firm or broker, check FINRA’s Broker Check Web site.

Lack of quality information about the investment:  When discussing investments, ask yourself if your questions are being answered thoroughly. Is the person offering comprehensive information about the financial product in question? Is he or she willing to provide physical documentation, such as a prospectus and other financial documents? If the answer is no, it could be a sign of a scam.

Flashy presentations that don’t hold up: According to the Financial Highway article, most fraudsters produce Web sites and marketing materials that on the surface appear professional but on closer inspection don’t add up. For instance, there may be a number of spelling and grammar mistakes or the description of the investment itself simply doesn’t make any sense.

Use Commonsense (And Caution) When It Comes to ‘Guaranteed’ Investment Opportunities

R. Allen Stanford’s conviction for running a $7 billion Ponzi scheme is yet another reminder that investors need to keep their guard up when presented with investment opportunities that sound too good to be true.

Stanford was accused of defrauding some 30,000 investors from 113 countries over the course of 20 years with bogus certificates of deposit sold by his bank inAntigua. According to prosecutors, investors thought their funds were being invested into safe and conservative assets when in actuality their money was used to fund risky businesses, as well as Stanford’s lavish lifestyle.

Financial frauds like Stanford’s are far from a rarity. Fraud complaints to the Federal Trade Commission (FTC) have quadrupled during the past decade and are up 35% in the past three years alone, according to The Rise of Financial Fraud, from the Center for Retirement Research atBoston College. It’s likely, however, that financial fraud is much more pervasive in that it often goes unreported to authorities.

The elderly are particularly vulnerable to financial fraud. Many individuals who become victims suffer from dementia or are desperate to find ways to recoup the financial losses they suffered during the 2008 market downturn.

The Boston College report includes a list of red flags regarding potential financial fraud schemes, including investments that sound too good to be true, financial products that supposedly guarantee high rates of return but little risk, and proposals that include the “free-lunch” seminar.

A Feb. 29 article by CBS Money Watch reminds investors that when presented with a financial opportunity or proposal to be aware of the rates of return that are available with different types of investments. As of March 2, the Board of Governors of the Federal Reserve System shows these rates of return as the following:

– 0.52% for six-month CDs;
– Under 1% for Treasuries with durations of five years or less;
– Returns of 1.97% for 10-year Treasuries and 2.74% for 20-year Treasuries;
– 3.82% and 5.08% returns for corporate bonds, depending on the bond’s duration and quality; and
– Returns of 3.72% for state and local municipal bonds.

For Richer or Poorer: What Happens When Spouses “Steal” From Each Other’s Brokerage Account?

An arbitration panel of the Financial Industry Regulatory Authority (FINRA) recently awarded $2.5 million in compensatory damages to an investor for his claim against Merrill Lynch. The investor was represented by Maddox Hargett & Caruso P.C.

The case itself involved one spouse stealing money from another spouse through a brokerage account. In this instance, the brokerage in question happened to be Merrill Lynch.

The issue, however, is not unusual, and gives a whole new meaning to the marriage vow lines of for “richer and poorer.” Every year, investors lose millions of dollars from stockbroker misconduct, investment firm negligence and securities fraud. In the past year, these kinds of cases have skyrocketed, with more investors filing claims for investment negligence, stockbroker incompetence and IRA theft.

If a spouse “steals” money from his or her spouse’s brokerage account, the brokerage can, in fact, be held liable and cited for investment broker negligence, as well as for other types of misconduct or fraud.

Investment broker negligence occurs when the conduct of broker falls below a standard that’s been established to protect investors against unreasonable risk of harm. The cause of action for stockbroker negligence is based upon duties owed by a broker to his or her clients and the breach of that duty. This includes the duty to exercise due diligence and care in connection with a client’s account.

Ultimately, stockbroker negligence can result in severe financial losses for an investor.

Victims of stockbroker negligence can include anyone: Individual investors, retirees, small businesses, corporations, pension funds, and institutional investors. For a free initial consultation regarding your securities claim, contact Mark Maddox at 800-505-5515. Or, fill out the contact form on this Web site to obtain candid legal advice.

Top of Page