362.6 H849x universityof ILLINOIS LIBRARY AT UftBANA-CHAMPAIGN B06KSTAOKS 362.6 H849x to IDENTIFY and REPORT Investment FRAUD Information forAdult Protective Services Professionals UNIVERSITY OF ILLINOIS LIBRARY AT URBANA- CHAMPAIGN BOOKSTACKS utaerjinancialabuse is the “crime ofthe 21st century.” Together we can stopf ILLINOIS DEPOSITORY andhelp seniors MAY 1 3 2011 UNIVERSITY OF ILLINOIS ATURBANA-CHAMPAIGN JessmIhite SECRETARY OF STATE Illinois Securities Department www.avoidthescam.net 800-628-7937 Elder abuse can take manyforms. One ofthe most devastating and costly forms of elder fi- — nancial abuse in- — vestment fraud is often perpetrated by trusted financial advis- ers or even family and friends. Senior con-' sumers are increasinglytargeted by con artists using investment-related pitches, often in what the senior believes is a safe setting like a church, social club, or part of a so-called “free lunch” seminar. Adult Protective Services Professionals may have the objectivity needed to question whether a “fantastic” opportunity may, in fact, be fraud. Please call the Illinois Secretaryof State Secu- rities Department at 800-628-7937 if you be- lieve a senior in your care may be the victim of financial abuse or exploitation through an in- vestment scam. The Securities Department helps seniors avoid becoming victims by inves- tigating possible violations of securities laws, providing disciplinaryand registration status on financial advisers, enforcing laws and stan- dards of professional conduct, and offering in- vestor education programs. Help seniors spot and stopfinancial abuse and exploitation by knowing what to look for and who to call for assistance. Jesse White Secretary of State STEP Put the 1 : problem into focus 75 percentofthe nation’s consumerwealth is held by people age 50 and over. Financial losses suffered by seniors are higher with investment fraud scams than with other forms of financial abuse. Many common investment scams can be quickly discovered and avoided by check- ing with securities regulators before send- ing money. Only an estimated one out of three in- vestors using a financial adviser has ever checked the background ofthat person with regulators. Investment fraud complaints from the eld- erly account for nearly one half of all fraud complaints received by state securities reg- ulators. As with otherforms of elder abuse, officials estimate that only a small percentage of cases of financial abuse and exploitation is reported. The decline in mental faculties for some seniors makes them more vulnerable to fraud and may make cases harder to pros- ecute. Seniors are less likely to report fraud be- cause they are embarrassed or fear being seen as unfitto manage theirown finances. Seniors who are abused or mistreated are three times more likely to die earlier than seniors who are not. STEP Recognize 2: the red flags Red flags of potential investment fraud: • Mail piled up; unpaid bills • Excitement about winning sweepstakes/ lottery • New companion, adviser or power of attor- ney making financial decisions • Fearful, distressed or depressed • Senior received information or was asked to invest in unregistered or startup compa- nies • Senior was asked to sign blank paperwork on an investment, or gave an adviser dis- cretionary authority over their account • Senior has unopened investment account statements, missing accountstatements, or missing documentation for an investment (salesperson claimed to get paperwork to the senior later) • Senior is missing checks from the checking account, or made checks for the purchase of an investment directly to the adviser or salesperson • Senior complains that he or she is unable to get in touch with the adviser or broker and has difficulty remembering theterms of the investment • Senior has lost money in other scams COMMON INVESTMENT SCAM SCENARIOS UNSUITABLE INVESTMENTS - What might be suitable for one investor might not be right for another. Securities professionals must not recommend investmentsthat are inappropriate for a customer’s age, risk tolerance and need for access to the money. PONZI SCHEMES — As the number of initial investors grows and the supplyof potential new investors dwindles, the Ponzi bubble bursts, with the vast majority of investors losing all or most of their money. AFFINITY FRAUD - In affinity fraud, the sen- ior makes an investment because of a recom- mendation by a “trusted” friend based on similar backgrounds. UNREGISTERED INVESTMENTS - The sen- ior is sold a stake in a new company or enter- prise and is told that the investment “does not need to be registered” with the state or federal government. UNLICENSED SALESPEOPLE - Those who sell securities or provide investment advice must be appropriately licensed. If not, chances are they aren’t qualified to offer investments or advice. - FREE LUNCH/DINNER SEMINARS Regu- lators find the majority of these seminars are actually sales pitches. - SENIOR DESIGNATIONS Individuals may call themselves “senior specialists” to create a false level of comfort among seniors and then get them to invest. AVOID ANY SALES PITCH ACCOMPANIED BY PRESSURE OR COERCION STEP 3: Report it! It’s free, confidential and easy. Call your securities regulator to: 1. Check the licensure and disciplinary back- ground of any firm or individual offering in- vestments for sale. 2. Check to see whether the investment itself is properly registered or exempt from reg- istration. 3. Make a complaint concerning an invest- ment adviser or broker and/or report sus- pected fraud. 4. Learn more aboutcurrent investmentscams that have been reported in Illinois. 5. Receive investoreducation resources about wise and safe investing techniques. Your state securities regulator can help. Contact us today: Jesse®White SECRETARY OF STATE Illinois Securities Department www.avoidthescam.net 800-628-7937 NationalAdultProtective ServicesAssociation www.apsnetwork.org www.nasaa.org Find regulators for other states and provinces through the North American SecuritiesAdministrators Association at www.nasaa.org/QuickLinks/ ContactYourRegulator.cfm. OPrintedonrecycledpaper. PrintedbyauthorityoftheStateofIllinois-5M-SEC344 UNIVERSITYOFILLINOIS-URBANA 3 0112 109212578