Bala Cynwyd investment scam hits close to home

Posted on Posted in Financial Planning, Investment, Leadership, News and Politics, Scam, Wealth Management

Hardly a week goes by that I don’t read about some homeowner being defrauded by an unscrupulous building contractor or an elderly person being lured into an investment scam. I’ve written and talked about dozens of such schemes over the past three decades. Yet year after year the stories keep coming.

The latest incident occurs in my hometown of Bala Cynwyd, Pennsylvania where a disbarred stockbroker posing as a financial planner or investment adviser allegedly took hundreds of thousands from unwitting clients. The headline in Patch said “Lower Merion Stockbroker Scammed Elderly Out Of $400K To Open Philly Bar“. The indictment from the US Attorney’s office makes it clear to me that this was just a routine scam that could have been easily detected by any auditor conducting even cursory review procedures. The victims apparently included at least one disabled person who was the beneficiary of a special needs trust.

These stories just make me want to scream: “PEOPLE: IT IS NOT FREAKIN’ DIFFICULT TO AVOID MOST SCAMS. JUST FOLLOW THE FEW VERY SIMPLE AND EASY TO UNDERSTAND RULES ABOUT HANDLING MONEY LAID OUT BY YOUR CPA“. It is almost impossible to be victimized if you adhere to the most basic professional cash management techniques, maintain professional custody  and due diligence procedures.

I’ve been talking and writing about these types of scams since the middle 1980s. I’ve taken a number of fraud avoidance courses as part of required continuing professional education for accountants and investment advisers. Even within the past year I’ve helped people close to me detect and avoid schemes like this. I even had to report illegal activity to state regulators. Yet even with this ‘inside track’ and professional training on fraud avoidance, I’m still just at a loss to explain why so many are lured by the sales sizzle but fail to counter with a healthy dose of conservatism. Lacking that, why don’t people seek professional unbiased advice from advisers like me? Why do they rely solely on the people who are directly handling the transaction? It just confounds me.

Maybe Adlai E. Stevenson was right when he said “There was a time when a fool and his money were soon parted, but now it happens to everybody”. Perhaps my call for common sense in a senseless world is really nothing more than a foolish yell into the wind.

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