Officials warn seniors they are high risk for fraudulent investment opportunities
The Wards invested approximately $86,000 from December 2009 through March 2010. In offering and selling a security to the Wards, Udy failed to disclose he was not licensed in the securities industry. To date, the Wards have not received a return on their investment or their principal back.
“Sometimes, don’t trust somebody even if you know them,” Vance Ward said.
“If it sounds too good to be true, then it probably is,” he added.
Udy has appealed his concurrent sentences of one to fifteen years in prison for securities fraud, and zero to five years in prison for false statements in a securities document. He remains in prison.
“Fraudsters are constantly looking for their next act and this list of investor threats gives investors a heads up on how internet investing and other tactics may be used to prey upon their hard earned savings,” said Keith Woodwell, Division of Securities director.
As the economy struggles, consumers may be more inclined to look for ways to get higher returns on their investments — including considering high-risk, high-reward investments. State officials warn potential investors to beware of “too good to be true” investment opportunities.
“As technology advances and the stock markets rise and fall, senior investors remain prime targets for investment fraud,” said Francine Giani, Commerce executive director. “Make sure your money is safe and sound by reviewing any investment offer and a professional’s license with our Division of Securities.”
Top 10 Investor Threats: Products and Practices
1) “Crowdfunding” and internet investment offers — Investors should note that when the new “crowdfunding” rules take effect next year, they will not make these investments less risky. Small startups are among the riskiest of investment categories under the best of situations.
2) Gold and precious metals — The promise of continued increases in value pitched by high-profile celebrities on television, radio or the Internet too often lure unsuspecting investors into any number of gold or precious metal scams.
3) Real estate investment schemes — While legitimate real estate investments can play a role in a diversified portfolio, investors should be aware that bogus schemes related to buying, renovating, flipping or pooling distressed properties are also very popular with con artists.
4) Risky oil and gas drilling programs — Investments in oil and gas drilling programs typically involve a high degree of risk and are suitable only for those who can bear risking their entire principal investment.
5) Promissory notes — Sales of promissory notes are often the favored investment vehicle for Ponzi schemes. As with all investment opportunities, investors are encouraged to make sure the security is registered with the Utah Division of Securities.
6) Scam artists using Self-Directed IRAs to mask fraud — Self-directed IRAs are now a common vehicle for fraud where promoters push a Ponzi scheme or other investment.
7) Unlicensed salesmen promoting liquidation recommendations — Senior citizens are often enticed to shift their investments from traditional securities to annuities with the promise of guaranteed income and an easy way to transfer the value of the annuity to beneficiaries upon death. Consumers should note that most insurance agents are not licensed securities professionals and do not have the training to determine the suitability of liquidating securities products.
8) Regulation D Rule 506 private offerings — Fraudulent private placement offerings are one of the most common investment schemes seen in Utah due to a federal exemption which allows these investments without oversight from a state agency.
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