Gary Opper

Gary Opper

I am the Managing Member of Levie-Opper, LLC, a forensic accounting practice. We focus our practice entirely on forensic accounting and fraud auditing.

With more and more scams occurring in our economy, it is wise to be aware of how to stay clear of their snares. Knowing how to detect and avoid Ponzi Schemes will help you to avoid fraudsters’ clutches. As a forensic accountant, I want to highlight ways to detect and avoid falling into the traps of Ponzi Schemes. By following the tips below, you will have a greater chance at sidestepping the Ponzi pitfalls.

What is the easiest way to avoid falling prey to a Ponzi Scheme?

An easy way to detect a Ponzi Scheme is taking notice when an investment opportunity sounds too good to be true. A fraudster will make lofty promises for a guaranteed return; however, with any legitimate business investment there is risk involved. Therefore, it would be impossible to be assured of receiving a specific profit and/or rate of return. Affluent businessman Donald Trump has stated, “Some of my best investments were ones I didn’t make.” Follow “The Donald’s” lead and skip investing in an offer that seems too good to be true.

Am I allowed to ask the investor for the proposal in writing?

Feel free to ask the promoter for a detailed clarification of the investment in writing. As an investor, of course you have the right to receive information on the venture since you will be placing a substantial amount of money in it. Inquire about receiving information on the company, the officers and their financial records. For the product being offered, ask the salesperson for documents regarding cost, fair market value and the existing and potential markets.

Should I go with my gut if something about the investment doesn’t sound right?

A product that appears to be unique or exotic is a cause for concern. It is not wise to invest your money on an investment that seems too risky or is unfamiliar. Investments that offer a rising return or that claim to provide remarkably steady returns, regardless of the current market conditions, should give pause. Due to the current state of the economy, even the most solid investments will note fluctuation from time to time. Furthermore, any funds you receive back should be given consideration, as they may be funds that originate with other investors.

How can I tell if an investor is reputable?

A pushy salesman could indicate a less than reputable individual. No trusted salesperson should ever try and push you to make a quick decision about making an investment. The words “act now” are a clear indicator of something with which you should not be involved. If the investment is truly without fraud, there would be no reason to pressure you into getting involved.

The company that manages your investment should not be custodian of your investments. With this arrangement, you will receive periodic statements from a source independent from the manager/promoter.

Is there a website or a phone number to call to see if an investor is legitimate?

To save yourself from falling into the clutches of a Ponzi Scheme, it is important to do your homework and review an investment with a comfortable level of skepticism. Request a copy of the promoter’s license in order to confirm you will be entrusting your hard earned funds to someone legitimate. Check their credentials to see if they have ever had their license suspended or revoked. Speak with your state, county or city securities regulator to confirm the answer. The number for your state securities regulator can be found in the government section of your local phone book or by speaking with the North American Securities Administrators Association at (202) 737-0900.  A legitimate salesperson will be registered with the Financial Industry Regulatory Authority (“FINRA”), The Securities and Exchange Commission (“SEC”) or a state securities regulator. To verify a broker’s license and registration, including whether or not they have ever had a complaint filed against them, contact BrokerCheck at (800) 289-9999. Investment advisors can be verified by the SEC’s Investment Advisor Public Disclosure website at . Additionally, to check on an insurance agent, you can speak with your state’s insurance department, which can be located through the National Association of Insurance Commissioners (“NAIC”) at http://www.NAIC.org. Individuals that are sellers should be investigated through your state securities regulator.

Is it better to invest in one product or diversify?

A diversified investment portfolio will keep you protected from completely emptying your pockets should you somehow invest funds in a Ponzi Scheme. No one enjoys losing money, but through proper diversification you suffer a much smaller blow. By spreading out your investments, it will be a softer pain to lose 5% of your funds than your life savings. No matter how good an investment may appear to be doing, the safest security measure is not to put all of your money in one place.

My investment has been steady and now it is time to reinvest. Are there any warning flags?

A product that offers an overly consistent return is a cause for concern.  Also, an investment with a rising return or that gives remarkably steady returns, regardless of the current market conditions, should be a cause for concern. Especially during these economic times, it is common for even the most solid investments to experience fluctuation from time to time. Be aware even if you receive funds back, they may be from other investors.

These tips will greatly improve your chances of detecting and avoiding Ponzi scheme pitfalls. Truly take the time to research the investment transaction opportunity being offered and the individuals promoting them. Make sure that your funds are in good hands and be wary of anything that sounds too good. Protect yourself and your pocket from poisonous Ponzi promoters.

Gary Opper, CPA is the Managing Member of Levie-Opper, LLC, Weston, Florida. He is a member of the American Institute of CPAs and the Florida Institute of CPAs. He has written over 500 published articles in over 20 magazines.  Mr. Opper has been the National Association of Mortgage Broker’s “Writer of the Year” and “Featured Writer of the Year.” He has spoken to many groups including the Florida Bar Association, the Florida Institute of CPAs, the Mortgage Bankers Association and Northern Trust Bank.  He has lectured at four colleges including University of Florida and Florida International University.  Opper has an Accounting degree from UF and a Master of Science in Taxation from FIU. Opper is Past President of the Florida Association of Mortgage Professionals – Miami Chapter and the FICPA – Gold Coast Chapter. Levie-Opper, LLC focuses on forensic accounting and fraud auditing. They handle state and federal cases including civil, commercial and criminal. Mr. Opper is available to speak to your group.  He may be reached at (954) 384-4557, fax: (954) 384-5483, or e‑mail: Gary@Levie-Opper.com.

© Gary Opper.  All Rights Reserved.

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