The Savage Law Firm, PA Tampa, Florida

Will it ever end?  I think not as long as there is greed!  The SEC warned of this we bsite that claims (falsely) to have recovered Madoff money in Malaysia.  Madoff victims are asked to give information to ‘verify’ they are on the Madoff refund list which is just another way fraudsters set up a new con.

The web site in question tries to mimic the Securities Investor Protection Corporation’s (SIPC) website to lure in potential victim.  The web site claims affiliation with the International Monetary Fund, World Bank and others in its bid for authenticity.

There is really no way to prevent con artists from trying to run frauds but with a little healthy skepticism many potential victims might avoid these ‘too good to be true’ scams.

Here’s the SEC bulletin:  http://www.sec.gov/investor/alerts/sipcscamalert.htm

Ponzi schemes are bad enough but when based on affinity fraud and preys on elderly people’s religious beliefs in any manner it is just worse.  The SEC announced that they have charged a prominent Cuban-American couple in Miami with a $135 million ponzi scheme.  This is a large ponzi scheme whose size is almost comparable to to a Bernie Madoff-sized scam.

The SEC alleges that the couple, Gastin and Teresita Cantens are prominent in Miami’s close-knit Cuban-American community but started to “ruthlessly exploit vulnerable elderly investors who trusted them with their life savings.”  To be successful fraudsters the Cantens held themselves out as a “pious couple closely involved with educational and religious organizations” but, according to the SEC were really using defrauded investors’ money to support a lavish lifestyle.

All fraud is wrong but to me it is particularly egregious if the fraudsters take advantage of elderly people and those people’s religious and charitable beliefs.

The Securities and Exchange Commission today charged a San Diego-based broker-dealer with failing to reasonably supervise one of its registered representatives who engaged in unauthorized fraudulent trading in the accounts of two Florida municipalities.

This is an all-too common problem with brokerage firms.  While the large majority of brokerage firms mean well and supervise properly there remain a large number of brokerage firms who either cannot properly supervise their operation for various reasons or worse yet, there are firms who don’t really care about proper supervision.  This particular instance involved a common scenario where  the brokerage firm is in California, the broker is in Houston, and the client is another state.  It is difficult for firms to properly supervise their geographically dispersed registered representatives/brokers.  What happens is the classic ‘when the cat’s away the mice shall play’ scenario resulting in fraud such as the SEC charged in this case against the broker himself.

What to do?  Proper supervision can be done if the brokerage firms are held accountable but they resist because supervisory personnel are a cost instead of a profit center for the brokerage firms.  Thus many brokerage firms will opt for less supervisory personnel and factor into their cost of doing business the settlements and fines they have to pay for not having proper supervision.  One possible solution would be ensure that the SEC is actually focusing on this issue; it may be more expensive for the SEC but will protect many, many investors.

Here’s a link to the SEC’s press release: http://www.sec.gov/news/press/2010/2010-35.htm