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Con artists and CDs buyers

By Sheyna Steiner · Bankrate.com
Wednesday, September 7, 2011
Posted: 12 am ET

While most people would give complicated, arcane investments a wide berth, hardly anyone looks askance at the humble certificate of deposit -- which makes them tempting bait for scammers.

A recent local news story here in south Florida spoke with a victim of a notorious CD scammer, R. Allen Stanford. Stanford stole billions from investors in the U.S. and in the Caribbean.

Anthony Teti was one of those investors, according to the TCPalm.com story, "Investment scammers find easy picking in desperate Floridians."

…Teti and more than 2,400 other Florida victims lost money to an alleged Ponzi scheme managed by Houston financier R. Allen Stanford, a well-established businessman. Clients from 113 countries invested more than $7 billion.

"When we found out it was a Ponzi scheme, it was totally out of the blue," said Teti, 48, a former New York police lieutenant who has started several businesses in Jupiter. "It was just fictitious the whole time. The day we wrote our check to them, it was gone. I was in shock, as you can imagine. I lost a million bucks!"

With interest rates likely to stay extremely low for a while, savers may find themselves on the receiving end of a scam investment pitch as they look for higher yields.

But there are ways for investors to protect themselves. The Financial Industry Regulatory Authority, or FINRA, offers these tactics for shutting down scammers.

  1. End the conversation: Practice saying "No." Simply tell a caller, "I am sorry, I am not interested. Thank you for calling. Goodbye." Or tell anyone who pressures you, "I never make investing decisions without first speaking with my ___. I will call you if I am still interested. Goodbye." Fill in the blank with whomever you choose — a spouse, child, financial adviser, attorney, or accountant. Knowing your exit strategy in advance makes it easier to leave the conversation, even if the pressure starts rising.
  2. Turn the tables and ask questions: A legitimate investment salesperson must be properly licensed, and his or her firm must be registered with FINRA, the Securities and Exchange Commission, or a state securities regulator — depending on the type of business the firm conducts. In addition, with very few exceptions, companies must register their securities with the SEC before they can sell shares to the public.So, before you give out information about yourself, ask a few questions first:To check out the seller, ask: Are you and your firm registered with FINRA? SEC? A state securities regulator? If so, which one(s)?

Have you ever been approached about an iffy investment?

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