It might seem that the Great Recession, which hit Michigan harder than almost any other state, would have put at least a dent in the business of unscrupulous investment advisers.
That's what Anita Salustro, a consultant on consumer fraud issues for AARP Michigan, figured. She was wrong.
"Investment fraud is alive and well. That's been kind of a shocker," she said.
Of particular concern to AARP and state securities regulators are "free lunch" investment seminars. After lunch, attendees are often subjected to high-pressure sales tactics to invest immediately before they can check out the legitimacy of the offer. In the worst cases, scam investments can wipe out life savings.
AARP Michigan and the Michigan Office of Financial and Insurance Regulation (OFIR) have teamed to offer five investment fraud and identity theft seminars to warn older people of the dangers they could face at free lunch seminars. The first "Fraud Fighter College" will be from 10 a.m. to 2 p.m. March 18 at the Dominican Center in Grand Rapids. Dates for the other seminars will be posted on the AARP Michigan website.
Scammers often press potential investors to divulge personal financial information by saying they need it to sign up investors for the investment products, said Jacqueline Morrison, senior manager of state operations for AARP Michigan. People who provide that information are then vulnerable to identity theft.
State regulators say today's investors need to be particularly wary of gold investment schemes because of the recent run-up in the price of precious metals.
"The soaring price of gold has sparked a modern-day gold rush among investors, but it's still the Wild West out there," OFIR Commissioner Ken Ross said.
Whether it's gold or any other sort of investment proposal, potential investors can call OFIR at 1-877-999-6442 toll-free to find out whether a person selling an investment is licensed to do so and whether he or she has been cited for any securities violations.
Topics include Medicare, insurance
AARP officials say they've noticed free lunch seminars expanding into other areas such as Medicare and health insurance.
"Some of these are not educational, so people should be on alert," Morrison said.
"They're often designed to get people to disclose personal information, such as Social Security numbers and bank account information, and to pressure people into scheduling home visits. They really use high-pressure tactics," she said.
Morrison said men 55 and older are often targeted.
"Many of them are well-educated men who have lost some of their investment resources because of the economy and are willing to take a lot of risk" to recover their losses, she said.
OFIR says at least 400 Michigan investors have lost more than $50 million through fraudulent investment schemes, which often involved free lunch seminars.
The agency has cracked down on several free lunch investment scams in recent years.
In 2009, it ordered John Missitti of Flint and a company he was associated with, GetMoni.com, to stop selling unregistered investment products. The agency said Missitti sold fraudulent promissory notes related to silver mines and other investments through free lunch seminars. And in October 2010, OFIR issued cease-and-desist orders to 41 insurance agents in western Michigan who were offering investment products they were not licensed to sell.
'Free lunch' seminar monitors
AARP Michigan has trained about a dozen monitors who attend free lunch seminars and report information about the seminars to state AARP offices and, ultimately, state financial industry regulators.
One of those monitors, Ray Denison, 87, a retired lobbyist from Port Sanilac on Lake Huron, said he attended a free lunch seminar in December and was repeatedly pressed by a financial planner for personal information. "He was so intense, the only way I could escape was to tell him I wasn't feeling well," Denison said.
AARP advises potential investors to be suspicious of investments that offer high returns and low risk, and one-time-only deals.
And they should be wary of brokers, sales agents and financial planners who refuse to answer questions clearly, ask for bank account numbers or ask that checks be made out to personal bank accounts.
For more information on investment scams, check out these resources. Download the state Attorney General's consumer protection guide for older people. The North American Securities Administrators Association reports the latest news and alerts on senior investment fraud.
Rick Haglund is a freelance writer in Birmingham, Mich.
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