Today the FBI released details about an investment scam in which a member of the clergy used an elaborate Ponzi scheme to bilk his friends and followers out of more than $52 million. According to the FBI, Martin Sigillito, an attorney and an American Anglican bishop, convinced more than 200 people to invest in “flipping” British real estate, and he offered interest rates as high as 48% (which should have been a clue to his investors, right?).
It’s a sad story about abuse of trust, but it’s also a lesson for all of us about listening to our gut when something sounds too good to be true.
BBB recently launched BBB Smart Investing, with generous support from the FINRA Investor Education Foundation. Stay tuned for more information on educational programs in your area. In the mean time, here are some tips on how to avoid investment fraud:
- Never believe anyone who says there is no risk; there are always risks in any investment.
- Be wary of claims of extravagant earnings potential.
- Get all of the details in writing.
- Avoid offshore investments. They tend to be very risky at best, and difficult to investigate or prosecute if there is a problem.
- Before investing, check out brokers and dealers with FINRA’s BrokerCheck and your state or provincial securities regulator.
- Also check out www.bbb.org to see if your broker or dealer has a history of complaints from customers.
- Diversify your investments. Never put all your eggs in one basket when it comes to investing.
Want to know if you are at risk for being swindled by an investment scam? Check out FINRA’s Risk Meter. I just took the quiz and got a 65%, which put me in the Medium range…not exactly a risky investor, but still worth my considering a more educated approach. At least I know not to invest in foreign real estate!