Each year, unsuspecting investors lose their life
savings in fraudulent financial schemes. Collectively, these losses amount
to hundreds of millions of dollars. Federal Equity Receivers know this
better than anyone as they unwind the entangled financial schemes and
administer assets for the benefit of the defrauded victims. Receivers face
significant legal hurdles in the administration of these cases and rarely
(if ever) return 100% to creditors and investors.
The best course of action is for investors to refrain
from investing in a fraudulent scheme in the first instance. So the key
questions becomes: How does an unsuspecting investor identify a potential
Ponzi scheme? A new book offers the answer: Ponzi-Proof Your
Investments: An Investor’s Guide to Avoiding Ponzi Schemes and Other
Fraudulent Scams ( www.ponzi-proof.com ),
written by RN’s editor, Kathy Bazoian Phelps, places the focus on
the front end of fraud, encouraging investors to conduct due diligence and
to avoid Ponzi schemes and fraudulent scams before they hand over their
life savings.
Ponzi-Proof Your Investments tells
investors in plain language how to best increase their odds of avoiding
that fate. When asked why she wrote the book, Kathy answered:
In the course of representing trustees and
receivers in these types of fraud cases, it became clear to me that the
best line of defense for everyone – investors, financial institutions,
auditors, lawyers and brokers –is to avoid getting involved in a Ponzi
scheme in the first place. The available literature is generally overly
simplistic, stating little more than, “If it’s too good to be true, it
probably is.” For the unsophisticated investor who relies on friends,
family and trust to make an investment, this advice is meaningless.
Ponzi-Proof Your Investments empowers the individual to take a close
look at the investment itself, and not just rely on word-of-mouth. Had
Bernie Madoff’s victims asked the questions and conducted the
investigations recommended in Ponzi-Proof Your Investments, billions of
dollars could have been saved. The book arms investors with the ability
and confidence to spot the red flags of fraud, ask the hard questions,
demand solid answers, and conduct targeted due diligence.
Kathy Phelps is also the co-author (with
Bankruptcy Judge Steven Rhodes) of The Ponzi Book: A Legal Resource for
Unraveling Ponzi Schemes, the definitive legal treatise on Ponzi
scheme law. Ponzi-Proof Your Investments benefits from her vast
knowledge of the law relating to Ponzi schemes and provides real life
examples of what has gone wrong for others in the past.
*Robert P. Mosier is a Southern California receiver and trustee
and principal of Mosier & Company, Inc., a firm that has specialized in
managing and turning around troubled companies for more than 25 years.
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