Editorial - Don't fall prey to investment scammersThey’re out there – seemingly friendly, encouraging and helpful – wanting to help you invest your money for tantalizing returns. But in some instances, they’re not your friend at all. They’re just out to rip you off. Last week, the Minnesota Department of Commerce continued its efforts to crack down on scams that defraud senior citizens.
They’re out there – seemingly friendly, encouraging and helpful – wanting to help you invest your money for tantalizing returns.
But in some instances, they’re not your friend at all. They’re just out to rip you off.
Last week, the Minnesota Department of Commerce continued its efforts to crack down on scams that defraud senior citizens.
Commerce Commissioner Mike Rothman issued a statement of charges alleging that James Ronald Redden of JRR Enterprises, LLC befriended and then took advantage of several vulnerable senior citizens, encouraging them to invest more than $71,500 in fictional annuities. Among Redden’s alleged victims were an 85-year-old retired St. Paul police officer who was scammed out of $50,000, and an 88-year-old man who was duped into purchasing $21,500 in unsuitable annuities products.
“Senior citizens are among the most vulnerable to scams, fraud, and financial abuse,” said Commissioner Rothman. “That’s why the Commerce Department is redoubling our efforts to crack down on scam artists who take advantage of elderly consumers. Being defrauded out of tens of thousands of dollars late in life can be devastating – and it happens to thousands of seniors every year.”
The majority of those selling investment projects are knowledgeable, reputable and can help seniors plan a better financial future. But you have to be careful about what you’re getting into and who you are dealing with.
Acording to the 2010 Investor Protection Trust (IPT) Elder Fraud Survey, more than 7 million older Americans – one out of every five citizens older than 65 – have already been victimized by a financial swindle. According to the IPT, con artists scam senior citizens out of $2.5 billion every year. Last week’s announcement by the commerce department reveals that the problem is often closer to home than most consumers realize.
One of Redden’s alleged victims was 85-year-old retired St. Paul police officer Lloyd Abraham. In October 2009, Abraham was allegedly persuaded to give Redden a $10,000 loan. After selling his mobile home and moving into an assisted living facility, Abraham then invested all $40,000 from the proceeds of that sale in JRR Enterprises, LLC. Abraham’s family members and other neutral third parties were not consulted in the negotiation of these transactions.
Prior to Abraham’s death in 2010, family members became aware of the $50,000 in payments to Redden and began to seek repayment. Redden allegedly indicated that the $40,000 investment provided a 50 percent surrender fee if the investment was canceled prior to the four-year term, at which time the victim would have been 90 years old. Department investigators have uncovered that the promissory note was purchased 10 days after the check had been cashed and included other inconsistencies.
The commerce department said that typical of professional scammers, Redden allegedly built his scams on trust – building friendships with his victims before encouraging them to make unwise, unsuitable investments.
“Establishing phony friendships with impressionable seniors is exactly how many unscrupulous fraudsters get their foot in the door,” said Rothman. “I strongly encourage all seniors and their trusted family members to be wary of fraudsters and vigilant in protecting their financial assets.”
If you’re concerned that you may be a victim of a scam or if an investment sounds too good to be true, the commerce department encourages all consumers to ask the following questions:
• Were you promised a high return on a low-risk investment?
• Did you have enough time to make a decision?
• Were you given confidential or “inside” information?
• Can you verify the investment with a credible source?
• Is the person who contacted you registered?
The Commerce Department’s Consumer Help Line can be reached by phone at (651) 296-2488 or (800) 657-3602. Questions or consumer complaints can also be sent by e-mail to email@example.com or by mail to Minnesota Department of Commerce, 85 7th Place East, Suite 500, St. Paul MN 55101.