Spitzer Issues Warning To Investors:
Attorney General Spitzer issued a warning to investors across New York today, saying that his office is seeing an increase in the number of cases where smaller investors are being targeted by people they know.
"We're seeing investment fraud move from Wall Street to Main Street," said Spitzer. "Often those behind these scams are people who are known by their victims- insurance salesmen, investment advisors, or neighbors.
"Their pitch is almost always the same- offers of 'no-risk, guaranteed' investments at high rates of return. Unfortunately, the only thing guaranteed is that investors will lose money they had set aside for retirement nest eggs, college education funds, or to leave to children and grandchildren."
Over the past two years, Spitzer's office has prosecuted a number of such cases where, each time, investors have lost a total of one million dollars or more. The scams have taken place all across the state, from Buffalo to Albany to Long Island:
- In the Buffalo area, two insurance agents bilked 45 people, many of them elderly, out of $5 million, by selling joint venture agreements with a 'guaranteed' 10% or 11% rate of return, in one of the largest investment scams in Western New York history;
- In Westchester County, Luigi Alexander took more than $4 million from victims selling promissory notes with a 'guaranteed' 16.8% rate of return, claiming he was the heir to a billion dollar trust fund;
- On Long Island, members of a boiler room operation selling 'rare' gold coins that were 'guaranteed' to go up in value, are charged with defrauding over 1,000 investors from across the country out of at least $25 million.
Spitzer noted that through the use of his office's criminal, civil, and regulatory jurisdiction, he's not only been able to seek jail time for those behind the scams, but has also obtained restitution for victims from the companies and employers of those who committed the crimes.
"People should be extremely careful before investing money with anyone, even if it's someone they know," said Spitzer. "Other than U.S. government bonds, there is no such thing as a 'risk-free' or 'guaranteed' investment, and anyone attempting to portray securities that way should be reported."
Spitzer issued these tips to potential investors:
- Check with the Attorney General's office, the Securities and Exchange Commission (SEC) or the National Association of Security Dealers (NASD) to see whether those selling a security, as well as the security itself, are registered;
- If anyone claims to be selling an investment on behalf of a bank or insurance company, call the company and ask the manager to confirm the claimed affiliation;
- Be extremely careful before sending money to someone attempting to sell a security over the phone.
The Attorney General's Securities Prosecution Unit is overseen by Bureau Chiefs Eric Dinallo and Janet Cohn.