Scams & Schemes Archives - Page 4 of 4 - NorthStar Capital Advisors

“Cockroaching” — 5,000 Stockbrokers from Expelled Firms Still Selling Securities

More than 5,000 stockbrokers who were still licensed to sell securities earlier this year after working for one or more firms that regulators expelled between 2005 and 2012, according to The Wall Street Journal.

The pattern of brokers moving from one problem firm to another, according to a former broker, is sometimes called “cockroaching.”

The Journal’s analysis reveals some of the nationwide migratory patterns of brokers associated with firms having troubled regulatory records. These brokers often remain in the industry after working at firms expelled by regulators, in some cases after the brokers accrued numerous arbitration claims or declared multiple bankruptcies.

58% of brokers from at least two expelled firms have at least one black mark on their records. This is much higher than the 13% average for all brokers.

Always check the background of any financial professional before doing business with him or her. It takes only a few minutes and can save you a lot of trouble.

Research brokers or brokerage firms here:
http://brokercheck.finra.org/Search/Search.aspx

Research investment advisors here:
http://www.adviserinfo.sec.gov/IAPD/Content/Search/iapd_Search.aspx

CNBC Core Viewership Drops to 20-Year Low — Why that’s a good thing!

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According to the latest Nielsen data, CNBC’s prime viewership (age 25-54 demographic) just tumbled to a fresh 20 year low of just 37,000, the lowest since March 1993. CNBC’s Fast Money (fell 32% vs previous year), Mad Money (fell 42% year-over-year) and Kudlow (fell 52% year-over-year) all had all time low ratings in the “all viewers” category in August 2013.

So why is this a good thing?

This is good news for individual investors and their advocates because it means less people are being negatively influenced by CNBC’s misinformation.

CNBC’s goal is not to make you money, but to sell advertising.They want you to live in fear and react to every little hiccup in the market so that you’re glued to their network in order to receive investment advice from their guests and anchors. But if you make just one move to improve your portfolio’s performance this year, it should be turning off CNBC. In fact, you should tune out most of the financial media.

If you’re invested for the long haul, it really doesn’t matter…

If inflation is up two-tenths of a percentage point this year,
Or if the Consumer Confidence Index dips 3%,
Or if the Bull Bear Sentiment Indicator switches from bullish to bearish.

Your portfolio should be positioned to withstand good times and bad. You shouldn’t be jumping in and out of the market or sectors based on news, politics, the economy, or any other event.

Whose side is your financial adviser on, anyway?

This is not a fiduciary.

Does your financial adviser have a legal duty to give advice that’s in your best interests? The chances are that you think the answer to this question is “yes.”

Chances are, you’re wrong.

Not everyone who gives you financial advice has a duty to actually help you. The technical term for the true helpers is ‘fiduciaries.’ That means it’s their legal duty to always put their client’s best interests ahead of their own.

There are some financial helpers who are fiduciaries. That includes certified financial planners and Registered Investment Advisors – usually known as RIAs. Their job description includes warning you away from any financial cliffs. Unfortunately, these people are a small part of the financial advice world – they make up less than 20% of the universe.

NorthStar Capital Advisors is a Registered Investment Advisor and has a fiduciary responsibility to its clients.

Fox Analyst Charles Payne Was Paid To Push Now Worthless Stocks

Yet another reason to avoid the talking heads in the financial media!

According to the investigative reporting of Eric Hananoki at Media Matters:

Charles Payne, a contributor and frequent guest host for Fox News and Fox Business, was compensated to promote the stocks of at least three companies since joining Fox. The practice of compensated stock endorsements is currently prohibited by Fox rules, and resulted in the recent contract termination of contributor Tobin Smith.

According to a Media Matters review, Payne was paid $40,000 to promote The Brainy Brands Company, “$25,000 by a third party” to promote NXT Nutritionals Holdings, and an undisclosed amount for a “consulting arrangement” to promote Generex Biotechnology Corporate.

Payne’s sponsored stock pitches shared a common theme: using his cable news and Fox credentials to assure skeptical investors that his advice was trustworthy. A direct marketing company which worked with Payne stated it brandished Payne’s Fox News connections “to build credibility” with his potential customers. The stock pitches were also used as a vehicle to entice readers to join Payne’s subscription newsletter.

Payne and his company, Wall Street Strategies, have a problematic history related to the disclosure of paid stock endorsements. In 1999, the Securities and Exchange Commission (SEC) announced that while not “admitting or denying” wrongdoings, Payne “agreed to pay a civil penalty of $25,000.”

Source: Media Matters

Not Googling a New Investment Advisor, Seriously?

It’s hard to believe, but there are people who sign on with a new financial advisor without bothering to do even the bare minimum due diligence. Consider the sad story of fraudster Janamjot Singh Sodhi who ran a Ponzi scheme promising high rates of return in a relatively short period of time.

Sodhi solicited and received funds from investors starting in 2005 and through the fall of 2011 despite the fact that

The New York Stock Exchange permanently debarred him in January 2006, and
The California Department of Corporation ordered Sodhi to cease and desist from dispensing investment advice in California.

Potential investors and soon-to-be victims could have easily learned about these serious redflags had they bothered to simply google “Janamjot Singh Sodhi”. Sodhi did not use an alias so the information and fraud was in plain sight.

“Forget about hiring an attorney or paying for a background check. If you just typed his name into Google you could find out that before he solicited you he was barred by the NYSE and threatened by the state of California. … People spend more time buying a used car for $2,000 than giving $10,000 or $1 million to someone they never met or checked out to invest.” This from Bill Singer, a lawyer who specializes in investor fraud.

Sodhi will spend the next four years and nine months in jail and required to pay back the $2.4 million he stole from investors.

Source: CNBC

Rich Dad, Poor Dad, Bankrupt Dad?

You’ve probably heard of Robert Kiyosaki through his best-selling book series, Rich Dad, Poor Dad. Kiyosaki holds himself out as a self-made wealth guru who is happy to share the secret money-making strategies of the wealthy.

The tactics that he has advocated range from silly to illegal and include things like insider trading, buying multiple real estate properties for no money down, and buying stocks on margin via unfunded brokerage accounts.

Now add bankruptcy to Kiyosaki’s highly questionable list of strategies. One of Kiyosaki’s businesses, Rich Global LLC, filed for bankruptcy protection in August after it was ordered to pay a $24 million settlement. Kiyosaki will not be putting any of his personal fortune toward the settlement.

There is no evidence that Rich Dad, the man who allegedly imparted all these money-making secrets to Kiyosaki, ever existed. Nor is there any evidence that Kiyosaki amassed any significant wealth before the publication of Rich Dad, Poor Dad in 1997. Nonetheless, Kiyosaki is now reportedly worth $80 million!

In all likelihood, Kiyosaki did not get wealthy using the schemes he pushes in his books, but through proceeds of his book sales and personal appearances. He got wealthy selling the dream and illusion of get-rich-quick schemes.

source: Forbes

NBC’s Chris Hansen Investigates Annuity Sales to Seniors

NBC’s Chris Hansen conducted an undercover investigation focused on the predatory sales tactics used in the sale of equity-indexed annuities to senior citizens.

Watch the video below or read the transcript to,

go behind the scenes to uncover the sales tactics insurance agents use
inside free-dinner seminars to catch the questionable pitches
inside training sessions to reveal insurance agents being taught to scare seniors and puff their credential with deceptive books, magazines and radio shows

Prominent in the program is Annuity University which trains insurance agents. Annuity University has been sued for running a dishonest scheme to deceive, coerce, and frighten the elderly. Read more about Annuity University in this Wall Street Journal article.

Minnesota Attorney General Lori Swanson, who reviewed NBC’s footage, and who has filed several suits alleging fraud in the sale of annuities to seniors, tells Hansen: “…what is tragic about it is when those agents go into the seniors’ homes, it is literally the wolf among the lambs.”

“Treat’em like blind 12-year olds”
Commentary: Annuities are a suckers bet

Hall of Fame Coach Jim Donnan Charged With Ponzi Scheme

The SEC hit college football Hall of Fame coach Jim Donnan with fraud charges on Thursday, August 16, 2012. The former University of George football coach is accused of helping run an $80 million Ponzi scheme that victimized other coaches and former players.

Working with business partner Gregory Crabtree, Donnan convinced 100 investors that their investment company was a wholesale liquidation business that would earn 50% to 380% returns by purchasing “leftover” merchandise from retailers and selling them to discount retailers. In reality, they spent only $12 million of the investors’ capital and used the remainder of the $80 million to pay fake returns to early investors.

According to William Hicks, associate director of the SEC, “Donnan and Crabtree convinced investors to pour millions of dollars into a purportedly unique and profitable business with huge potential and little risk. But they were merely pulling an old page out of the Ponzi scheme playbook, and the clock eventually ran out.”

Donnan used his celebrity status to solicit victims. He allegedly told a pro football player, “Your Daddy is going to take care of you” … “if you weren’t my son, I wouldn’t be doing this for you.” This player subsequently invested $800,000.

This is a classic affinity scam where the alleged scammer victimizes friends and acquaintances in his professional network. Promising very high returns with nearly no risk is a big red flag.

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