Perfect Investment or Ponzi Scheme?

investgate 150x150 Perfect Investment or Ponzi Scheme?Got money to invest? Who would you trust more: A Dallas oil-and-gas businessman or a Virginia minister and her husband? The best answer: “none of the above.” All three were convicted this year of running Ponzi scams. How to smell a rat?

Investigate before you invest. According to the Meyer Wilson law firm, Alan Todd May claimed to operate oil and gas leases in Texas, Oklahoma, Colorado and Arkansas. Drive to the locations. See if there is anything there. Or Google Earth the sites.

  • Mr. May got 20 years in prison for cheating investors out of $7 million in fake mineral interests from Prosper Oil & Gas, Inc.

Does it sound too good to be true? Mr. May also told investors they’d get royalties of more than 25 percent. Contact the U.S. Securities and Exchange Commission or speak to other investors. What is a normal percentage of return?

Does one person seem to be doing everything? Does he or she claim the investment formula is “top secret” and nobody can look at it? Ronald Smith, the husband of minister Angela Smith, claimed that the secret to their success was a magical computer program.

  • The Smiths and their business partner Terrance Cunningham received a total of 21 years of jail time (Ronald got the most) for defrauding clients in foreign exchange markets. They made $1.4 million.

Is this investment “eerily consistent or above the returns on similar investments?” According to the San Francisco Chronicle, (quoted in bold), Bernie Madoff’s fictitious stock allegedly paid 10 to 12 percent a year, every year, even during bad markets.

Run “scam artist” checks on the Internet using search engines. Ronald Smith is said to be a political conspiracy theorist who claims U.S. laws don’t apply to him because he personally did not sign the Constitution. Alan Todd May was previously jailed before his latest offenses. And Todd Surgeon, who bilked Oregonians out of $215,000 by selling them non-existent business franchises, did so after piling up racketeering and fraud charges in Nevada. (This time, he got six years.)

Look for independent verification of the claims an adviser is making. Are the financials audited by a reputable firm?

As the judge in the Smith case reportedly said, “People want to believe that they’re being told the truth and are optimistic about their future. And these are the people who are willing to prey on their fellow man’s good nature.”

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About Holly Doering

Holly Doering has worked for the Better Business Bureau Serving Eastern Washington, North Idaho, and Montana for half a decade. Her areas of expertise include the CORE Values Program (Character, Optimism, Respect, Ethics) for Teens and Charity Review as well as writing and editing. Prior to that, she has written for two newspapers, a local magazine, and taught English at the community college. She is the proud author of a short story in ZYZZYVA literary magazine and has had good luck publishing lots of poetry. Each year she rolls up her sleeves and wades into the autumn Nanowrimo writing madness and has several unfinished novels to her credit.