Unsavvy Investors Aren’t the only Victims of Fraud

The investment world can be a scary place, especially for inexperienced investors. Meanwhile, many savvy investors fall into the dangerous trap of believing they are safe. However, the fact is that with volatile markets comes an increased opportunity for criminals to take advantage of even the savviest of investors.

One couple — we’ll call them Lloyd and Debra — maintains a diverse portfolio, researches each investment and communicates weekly with their broker. Even so, they were taken for $80,000 in what is now the Shire International Real Estate Investment case. In this case, Shire allegedly moved investors’ money from project to project and pitched properties despite the fact that the company did not have the title to said properties.

Mark Dickey of the Alberta Securities Commission, says that brokers claiming large returns with no risk are the first red flag. According to Dickey, times of market volatility are especially dangerous because criminals “tailor their approach to whatever that fear is at that time. They offer stability, guaranteed returns, ‘it’s safe, come with us.’ In essence, they sell back your dreams to you.”

This was the case for Odell Ramcharan, a realtor and investor who invested with Nicholas David Reeves in Disenco Energy, after doing research and checking with the British Columbia Securities Commissions. Even with Ramcharan’s research and precautions, he was the victim of fraud, losing an undisclosed amount of money, when Reeves kept his victim’s money for himself instead of investing it. Reeves had taken advantage of the 2009 plummet in oil prices to market an investment in Disenco Energy to a savvy investor.

Investors should also beware the “mob mentality” in which no one does the right thing because they think someone else will. Odell Ramcharan fell into just this kind of trap. Ramcharan said, “I got caught by not asking the right questions. There were about 28 people investing, and we all thought the other had done the due diligence.”

Sadly, many experienced investors who fall victim to broker fraud fail to report it out of shame. There is absolutely no shame in being victim to a crime and an investment attorney at the Law Office of Christopher J. Gray is here to help recover losses.