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Fight Financial Fraud With Tricks of Your Own
Old 05-10-2012, 04:24 AM   #1
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Fight Financial Fraud With Tricks of Your Own

"Financial fraud of retirees is on the rise, but it is preventable if you simply ask a few pointed questions or hire an outside financial adviser to perform due diligence."

http://www.nytimes.com/2012/05/10/bu...irementspecial
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Old 05-10-2012, 09:06 AM   #2
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Financial advisers are some of the worst perpetrators of financial fraud. Some of it is even legal. My in-laws were repeatedly solicited by fraudsters and they fell for some of them. My FIL also bought some variable annuities that were totally absurd for his financial situation and age.
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Old 05-10-2012, 09:36 AM   #3
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Quote:
Originally Posted by Obgyn65 from link
"Financial fraud of retirees is on the rise, but it is preventable if you simply ask a few pointed questions or hire an outside financial adviser to perform due diligence."
'An increase in financial fraud of retirees' doesn't surprise anyone, but you'd think those most susceptible to financial fraud would also have a high probability of picking a bad financial advisor (since bad ones outnumber the good) - a real Catch-22. As with most important things in life, educating yourself is probably first and foremost (preaching to the choir here) - and you're not likely to learn by watching CNBC or reading Money Magazine et al.
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Seeking financial advice is bad for your wealth. New research by top academics concludes that the advisor industry mostly reinforces bad behavior, rather than fixing it, even when clients start with a well-diversified, low-fee portfolio. High fees and commissions incentivize advisors to promote performance chasing and costly actively-managed products.

They also found that advisor self‐interest plays an important role in generating recommendations that are not in the best interest of the clients. They are unwilling to lean against these biases even when they know they exist because not doing so helps them further their own economic interest, e.g. maximize fees and commissions.

In addition, in some cases the advice even pushes clients away from low-cost funds they may already own and toward funds and products that have higher fees, even though little is changed in portfolio diversification. This reduces the expected return on a portfolio by increasing cost.
Why are low-fee strategies stifled? Low-fee advisors have meager marketing budgets to promote rational investing. In contrast, Wall Street and the actively-managed mutual fund industry sink billions into advertising annually in order to capture the imagination of individual investors. It’s like David and Goliath, only Goliath never dies. Low-fee advisors survive and carry-on because we know that word of mouth is the most powerful marketing tool available.

I hope the mass media can find an incentive to report these facts. Sadly, that may prove difficult because their incentive is to collect advertising dollars, and that means highlighting poor advice more often than not. I’m usually not a pessimist, but in this case, I’ll make an exception.
Financial Advisors Encourage Bad Behavior - Forbes
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Old 05-10-2012, 11:21 AM   #4
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Any time someone is on commission their job is to figure out ways to take your money.
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Old 05-10-2012, 12:46 PM   #5
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I used to have fun exchanging e-mails with a very nice Nigerian Prince. Yep, I knew royalty! Poor guy had a lot of money but didn't know how to get it without sending me a little first...

Over the span of a couple dozen e-mail exchanges I got the point across that I had way too much money already, and didn't need any more - but of course I wanted to help him just to be a nice guy.

Thing is, I could never seem to find my bank account numbers when he needed them. A few times I tried to guess what they were... but he always got back to me and told me they didn't work. I think he thought my bank was blocking his access... why would they do that?

Then there was the one time that I felt obliged to meet the Prince in the outskirts of London at a hotel... I was going to bring a few thousand dollars cash to help him stay afloat until his funds arrived, but I forgot to board the plane. In fact, I even forgot to buy the tickets, silly me. He wasn't very happy after that, and stopped talking to me.

.. I felt like I wasted a lot of his time. Those internet cafe's aren't cheap over there. Oh well, at least I got some enjoyment out of our correspondence
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Old 05-10-2012, 01:41 PM   #6
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Then there was the one time that I felt obliged to meet the Prince in the outskirts of London at a hotel... I was going to bring a few thousand dollars cash to help him stay afloat until his funds arrived, but I forgot to board the plane. In fact, I even forgot to buy the tickets, silly me. He wasn't very happy after that, and stopped talking to me.

.. I felt like I wasted a lot of his time.
As pleasing as it is to vicariously "stick it" to those scammers through your story, I feel compelled to point out to anyone else reading that such antics (assuming they actually happened and are not mere literary license) are EXTREMELY dangerous. The folks on the other end of those emails are desperate, degenerate sociopaths who view you as undeserving of the fortunate circumstances you were born into. Numerous people have literally been killed for yanking their chains. They may be in poor countries, but they have the means (ill-gotten gains from other more gullible victims) to travel and hire all sorts of unsavory people to do their dirty work.

Do you really want a murderous Somali warlord fixated on "getting back" at you for wasting his time and making him look like a fool? The safest thing to do is simply delete the emails.

Now, telemarketers on the other hand, are a different story. Feel free to unload on them. They're harmless.
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Old 05-10-2012, 02:22 PM   #7
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Do you really want a murderous Somali warlord fixated on "getting back" at you for wasting his time and making him look like a fool?
sounds like an adventure... if he could ever find me in the sea of 7,039,915,362 other people on this planet. I suppose he could start by narrowing it down to the 250,000,000 people with Yahoo e-mail addresses... if he could break into their server rooms and monkey his way through the bits of data to correspond to a master e-mail list.

Guess I better find a slingshot...
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Old 05-10-2012, 03:02 PM   #8
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Another successful humorectomy! Sorry, couldn't resist...
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Old 05-10-2012, 05:26 PM   #9
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This thread reminded me of an episode of American Greed I watched last night. Over 4000 investors in NY were bilked out of all their money on a ponzi scheme about the time Madoff was exposed thus it didn't get much airplay. Agape World was the company that was using funds to loan "bridge loans" in real estate. They were promised 14% returns quarterly. I just cant believe how unsophisticated people can be. These were not old and senile people either. Many had their small 6 figure nest eggs wiped out and have nothing now. Why do people think they can get this kind of return on money? They save religiously their whole life to only be bilked by a local smooth talking swindler. I may miss out on my fortune, but my money will only go to invest Vanguard, Fidelity, Treasury Direct, or the local bank. Never to an individual or new company promising fantastic returns.
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Old 05-10-2012, 10:34 PM   #10
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This thread reminded me of an episode of American Greed I watched last night. Over 4000 investors in NY were bilked out of all their money on a ponzi scheme about the time Madoff was exposed thus it didn't get much airplay. Agape World was the company that was using funds to loan "bridge loans" in real estate. They were promised 14% returns quarterly. I just cant believe how unsophisticated people can be. These were not old and senile people either. Many had their small 6 figure nest eggs wiped out and have nothing now. Why do people think they can get this kind of return on money? They save religiously their whole life to only be bilked by a local smooth talking swindler. I may miss out on my fortune, but my money will only go to invest Vanguard, Fidelity, Treasury Direct, or the local bank. Never to an individual or new company promising fantastic returns.
I saw this episode a few days ago on CNBC, too, and wondered the very same thing you did. Because Agape World was located here on Long Island (where I live), it was also a big local story. A few weeks ago, several of Agape World's underlings were charged for their role in the ponzi scheme. Disgraced CEO Nick Cosmo is already serving 25 years in jail.

Nicholas Cosmo - Wikipedia, the free encyclopedia
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Old 05-10-2012, 10:35 PM   #11
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Numerous people have literally been killed for yanking their chains.
Got any background or facts to back that up? I've only heard about a Nigerian scammer being killed by the scammee (once). Never the other way around.
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Old 05-10-2012, 11:17 PM   #12
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Got any background or facts to back that up? I've only heard about a Nigerian scammer being killed by the scammee (once). Never the other way around.
There's a bit of information here on wikipedia: Advance-fee fraud - Wikipedia, the free encyclopedia While there have been instances of murder, suicide and kidnapping they would appear to be largely limited to people who either fell for the fraud and were trying to get their money back or who were silly enough to travel to meet the criminals.

That said, I won't be baiting them - it's a needless risk and there are easier ways to get a few laughs.
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Old 05-11-2012, 07:35 AM   #13
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That said, I won't be baiting them - it's a needless risk and there are easier ways to get a few laughs.
No need to bait them yourself... there are websites dedicated to "ScamBaiting" out there... some of the lengths both the "baiters" and "scammers" go are pretty funny.
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Old 05-11-2012, 07:39 AM   #14
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Got any background or facts to back that up? I've only heard about a Nigerian scammer being killed by the scammee (once). Never the other way around.
It's on the internet.
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Old 05-11-2012, 09:03 AM   #15
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It's on the internet.
Then it must be true.
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Old 05-11-2012, 12:56 PM   #16
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This thread reminded me of an episode of American Greed I watched last night. Over 4000 investors in NY were bilked out of all their money on a ponzi scheme about the time Madoff was exposed thus it didn't get much airplay. Agape World was the company that was using funds to loan "bridge loans" in real estate. They were promised 14% returns quarterly. I just cant believe how unsophisticated people can be. These were not old and senile people either. Many had their small 6 figure nest eggs wiped out and have nothing now. Why do people think they can get this kind of return on money? They save religiously their whole life to only be bilked by a local smooth talking swindler. I may miss out on my fortune, but my money will only go to invest Vanguard, Fidelity, Treasury Direct, or the local bank. Never to an individual or new company promising fantastic returns.

I saw that same episode... crazy to think people could fall for something like that. 14% every 3 months = 69% a year....

if I just threw $1,000 into that scheme out of college and left it alone... I'd have $23.9 trillion by the time I was 70.
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Old 05-11-2012, 01:02 PM   #17
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Now, telemarketers on the other hand, are a different story. Feel free to unload on them. They're harmless.




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No need to bait them yourself... there are websites dedicated to "ScamBaiting" out there... some of the lengths both the "baiters" and "scammers" go are pretty funny.
I think I found my new hero...

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Old 05-11-2012, 01:19 PM   #18
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Originally Posted by EvrClrx311

I saw that same episode... crazy to think people could fall for something like that. 14% every 3 months = 69% a year....

if I just threw $1,000 into that scheme out of college and left it alone... I'd have $23.9 trillion by the time I was 70.
That is some serious compounding of interest, too bad it wasn't that easy isn't it. Some of those victims still didn't get it. One of them lost his life savings of $250,000 that was going to be used for his retirement home in Florida. He said that idea is now on hold because of the loss. On hold? The guy looked like he was in his late 50's, it isn't on hold, the dream is over. If people could remember just one saying "if it sounds too good to be true... Then it is.." they might prevent these financial wipeouts from occurring. I know Albert Einstein commented that compounding of interest is the 8th wonder of the world, but even he wasn't implying 69% a year is an achievable goal!
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Old 05-11-2012, 02:11 PM   #19
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Remember Chris Hansen in those two Dateline series, "To Catch an ID Thief" and "To Catch a Con Man" where he and a Dateline NBC crew do some creative things to waste the time of these crooks and beat them at their own games? They rerun on MSNBC once in a while. Fun stuff to watch.
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Old 05-11-2012, 02:41 PM   #20
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There is a Cosmo/Agape thread on Fatwallet. People tried to explain compound interest to the "potential" investors but it didn't work. And some of the scamsters showed up to tout the company as Legit. And they were listed in Entrepreneur magazine as the number 73 growing business in the US. It was all amusing. But people want to get rich quick.

The original thread here
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