Con Men, Scam Artists and Crooks, Oh My!


When Money Speaks, the Truth Keeps Silent.  Russian Proverb

Judging from the number of well publicized investment swindles in recent history, it seems safe to conclude that one cannot be too careful when selecting investments or the financial advisor who will recommend them.  Despite the labyrinth of Federal and state laws designed to protect investors from illegal and unethical investment schemes, these laws have not been as successful in protecting investors from themselves.  It seems that some of the victims of these crimes may have done more due diligence when purchasing a car than when investing substantial sums of money or choosing an advisor.  From high flying hedge fund companies of the early 2000’s like Bayou and Refco, to the more recent Bernard Madoff Ponzi scandal which would make Charles Ponzi proud,  smart and successful people have been lured to financial loss and ruin on the promise of quick riches gained with little risk…the proverbial “sure thing”.

Honest financial professionals can only shake their heads in wonder at the web of lies, deceit and psychological factors that enable these frauds to succeed.   Trustworthy advisors are subjected to intense regulation and licensing requirements and live by a code of ethics that place the interests of their clients ahead of their own.  Building wealth takes hard work, expertise, discipline and patience.  Those seeking outsized returns delivered overnight will be better served at the casino.

Taking a Lesson from the Pro’s Playbook

The professional sports industry has taken important steps to insulate young, talented, high income athletes from the host of unscrupulous “investment advisors” who are eager to separate them from their new found wealth. The National Football League Players Association (NFLPA) has adopted a screening and registration process for advisors and only those that meet the very rigorous requirements are certified to the players, many of whom lack the financial experience and maturity to make prudent decisions. The application which advisors must complete is quite thorough and would be of value as a guide to anyone searching for an honest and ethical advisor.  It asks questions such as:

  • Have you ever been denied an occupational or professional license?
  • Has a final civil judgment been rendered against you for fraud, misrepresentation or theft?
  • Have you filed for bankruptcy in the past seven years?
  • Has your right to engage in “any profession” ever been restricted, suspended, withdrawn or terminated?

It further requests:

  • The details of any charges or pending complaints you face regarding your conduct as a member of “any profession.”
  • The names of three people known for five years – excluding relatives- who can attest to your character, financial experience and expertise.
  • Any commission, finder’s fee, or “other thing of value” that you receive for convincing a player to make or not make an investment.

The list goes on, but you get the idea.  The process greatly improves the odds that the players who work with an NFLPA registered advisor will not become another statistic in the record book of rip offs.  How many financial disasters might be averted by applying the same standards as the NFLPA when choosing a financial or investment advisor?  Of course, nothing is foolproof.  Con men are good at what they do for a reason.  Yet, surfacing a few red flags might be enough to give pause to consider other alternatives.

None of the victims of these fraudulent activities ever thought it could happen to them.  Anyone can fall into a carefully concealed trap.  It has happened in our own back yard more than a few times and it will happen again.  Don’t let it happen to you.

Legacy Trust is a Michigan chartered bank specializing in fiduciary and wealth management services.  The word “trust” is in our name for a reason.

“If it sounds too good to be true, then you’re dealing with an amateur con artist.” – Dennis Marlock