Home » News

You probably won’t get your money back, so look out for fraudsters, officials say

First Published      Last Updated Jul 19 2017 11:11 pm

Red flags » Regulators and law officers team up to educate Utahns about scams.

If your cash has become OPM, then it's already MIA and almost certain to stay that way.

Scammers rely on it — other people's money — and when you turn it over to them, it's likely missing in action and never to be seen again.

That was one of the messages Wednesday night as state and federal agencies attempted to give Utahns tools and a skeptical approach to investing that could help them avoid being scammed.

Utah is prime hunting ground for those looking to fleece others — it's in the top three states per capita for fraud, according to FBI statistics.

The newly formed Financial Fraud Institute — a coalition of regulatory and law enforcement agencies — held its first seminar at the University of Utah law school Wednesday to spread the word on how to avoid being fleeced.

"How much do victims get back of the money that's taken from them?" asked Utah Attorney General Sean Reyes, the keynote speaker at the first of two such gatherings. "Sadly, almost nothing, almost never."

Reyes said financial fraud costs Utah millions of dollars.

"Hundreds of millions of dollars are sidelined and don't even come into the state for investment because of a reputation or because of a prevalence of fraud that we have," he said. 

Federal prosecutor Stewart Walz, a veteran of handling white-collar crime in the state, told participants that law enforcers can go after scammers after money has been lost, but they can't, for the most part, prevent fraud.

"Only the investor that doesn't give money to the crook can actually prevent fraud," Walz said to a crowd of about 120 people.

Meredith Regine of the Commodities Futures Trading Commission provided a profile of who are the likeliest victims of investment fraud. They are married males between 50 and 65 years of age who research investment opportunities. 

"There's also certain things about you that make you more prone to falling for a scheme," she said. "One of those is belonging to a religious or professional group."

Indeed, Utah suffers from a high rate of affinity fraud, characterized by a bond of trust between fraudster and victim, a phenomenon prevalent in the state's predominant Mormon population.

Keith Woodwell, director of the Utah Division of Securities, said common fraud traps in Utah include Ponzi schemes tied to real estate deals; those pushing supertrading programs for stocks or foreign currency; advance-fee schemes, like the woman who claimed that she had $50 billion tied up in Lativa and only needed money to pay fees to get it released and pay huge returns for investor moneys; and new technology startups offering the opportunity to get in on the ground floor.

"So if they're doing cold fusion in the basement or they have a special machine where you pour in sand and gold comes out the other end, that's not true," Woodwell said.

"Red flags" was the phrase of the day, and those warning signs include:

• The tried and true; if it sounds too good to be true, it is.

• The higher the promised return, the greater the risk; there's no such thing as no risk when investing.

» Next page... Single page



Anti-fraud resources

U.S. Securities and Exchange Commission » sec.gov, 800-732-0330

Commodities Future Trading Commission » cftc.gov, 866-366-2382

Financial Regulatory Authority » finra.org, 301-590-6500

Utah Division of Securities » securities.utah.gov, 800-721-7233