Here's a perfect example of how people are getting victimized by stock brokers. I received a cold caller from an unnamed securities firm seeking to sell me bonds from Mohegan Sun Gaming Corporation yielding 8%. The bonds are rated Caa3. According to Moodys, Caa1, Caa2, Caa3 means bonds of poor standing.
When I called this "hustler" on it he explained that the casino business is speculative.
The fact that this "hustler" came from a legitimate firm is irrelevant. He knew nothing about me and did not qualify me in any way. While he certainly is not going to get my business. I am afraid for others, because I suspect that such investment advice is being dispensed to those who do not know how to tell good from bad in this area. The business practice simply highlights the EXTREME RISK and vulnerability of those investors who are unsophisticated.
We've all read about Madoff and to a lesser extent Rothstein, Stanford, "Dirty Barry" and the dirtbag from Buffalo who admitted to ripping off Catholic priests, but here are a few more examples of New York, New Jersey, Connecticut area alleged Ponzi ripoffs.
June 2010, Antoinette Hodgson, of Montclair New Jersey was charged with running a $45 million Ponzi scheme in which she promised high returns from real estate, but used the money to gamble at casinos and repay some of the investors.
August 2010, Another affinity group heist. By using “lies, threats, deliberate misrepresentations and even counterfeit checks,” Eliyahu Weinstein, 35 and Vladimir Siforov “exploited the close community ties of the Orthodox Jewish community for one goal: to steal money through an elaborate real estate and Ponzi scheme,” Michael B. Ward, special agent in charge of the Federal Bureau of Investigation’s office in Newark said in a statement on Aug. 12.
New victims come forward daily, and the fraud caused “at least a $200 million loss,” Assistant U.S. Attorney Zach Intrater said today at the bail hearing. “The vast bulk of this money is missing, and the number keeps climbing.”
See United States of America v. Weinstein, 10-mj- 7115, U.S. District Court, District of New Jersey (Newark).
In September 2010, a New Jersey-based investment advisor was charged by the Securities and Exchange Commission with stealing $11 million from clients through a Ponzi scheme she ran over the preceding 13 years.The SEC charged that Sandra Venetis of Systematic Financial Associates Inc. in Branchburg, N.J.—one of the state’s upper-income suburbs—preyed on clients who were retired or unsophisticated about investments. "Venetis abused her position of trust to target older investors who were the most vulnerable to her egregious lies and misrepresentations," said Bruce Karpati, co-chief of the SEC's Asset Management Unit. Venetis, orchestrated the scheme through the sale of phony promissory notes, which she told clients were tax-free, FDIC-insured and would earn annual interest of 6% to 11% per year, according to the SEC.
January 2011 "Carr Sharks" According to Marc Minor, chief of the New Jersey state Bureau of Securities, Carr Miller Capital, LLC, with offices in Short Hills and Marlton, would sell nine-month promissory notes that guaranteed returns of up to 15 percent. Investors, who would receive fabricated account statements, were told they could renew the notes after nine months, or be paid at the end of the term.
There were no promissory notes, officials said. Some of the money was used to pay off earlier investors as interest payments. The rest of it was put into real estate, travel, luxury vacations, concert tickets, a luxury box at the Prudential Center and cars. Money was also socked away into the Octo Waterfront Grille in Philadelphia, a film production company, various hedge funds and Indigo-Energy Inc., an oil and gas venture headed by Miller, authorities said.
Your best protection is to become more financially literate
Don't just chase yields!
Distressed Debt (Bonds) Are Not For Unsophisticated Investors!
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