I want to continue discussing the topic of “How To Protect Yourself From Financial Fraudsters” and today I will share two additional thoughts.
The first is when someone starts Name dropping: I have never, in all my years in the money management business, discussed who I work with or even who I speak to. While there is no HIPAA policy in the investment industry, keeping my conversations and relationships private has always seemed like the right approach. Money is a private matter and not the business of the rest of the community. Over the years, potential clients have expressed interest in working with me on the stipulation that I send them a list of clients as a reference. I never do this, even if it means losing business.
However, the first thing a charlatan in the investment industry will do is name drop all the people they do business with, have done business with, or may do business with. This strategy works in convincing people to part with their money since other big shots have participated in a particular investment. This may be the biggest red flag of them all. Trying to convince you to do business because of what other people are doing is a good way to distract you from the merits (or lack thereof) of the actual investment. Steer clear of name droppers!
The most interesting thing about many of the fraudsters is that they appear to be normal. Their family consists of many upstanding members of society and they may be a pillar of the community. The lesson here is clear. A fraudster may come from a well-respected family and appear decent and respectable on the outside. Oftentimes, that’s how these charlatans gain the trust of potential investors. This type of deceptiveness, cunning, and impressive progeny are a good warning to all investors that outward appearance should not be the whole story when evaluating an investment opportunity.