Tag Archives: fraud

How to spot an investment scam and run

Investment scams


No one likes to be a victim of a scam and lose their investment. There is no perfect 100% guaranteed investment, and in good and bad times, any investment can fail for many legal business reasons. Here are a few examples to spot an enticing investment opportunity that are actually scam and require extreme caution.

  • Guaranteed high return on investment – If you are ever offered an investment that promised ‘guaranteed’ , ‘sure thing’, or ‘zero risk’, run away from the offer. Don’t walk, RUN. If someone offer you an investment opportunity that is a sure thing, then ask yourself why the promoter of the investment is not on the top 10 money earners of the world.
  • A fellow Baptist is offering you risk free investment – Or a fellow Lithuanian, African American, Mason, Orthodox Jew, Muslim, Christian, Rotarian or whatever. Take heed of any person who tries to abuse and leverage a common shared characteristic with you such as race, religion or other social membership. This type of investment offer should be scrutinized and looked at as affinity fraud and preying your common characteristic and the hope that this will make you let down your guard.
  • Avoid any stock that went public in a reverse merger – Even though a reverse merger is perfectly legal whereby a private company goes public y merging with a dormant public company. The problem with this type of investment is that many of the legal protection mechanisms offered in a traditional public offering are circumvented such as the underwriting of the public offering.
  • Claims of revolutionary breakthrough technology – Revolutionary game-changing inventions and technology that will change the world does come along from time to time. However, this type of invention or revolutionary technology is not going to come from some unknown small start-up or company with no known leader or individuals in the company. Always double-check to see if this ‘new’ technology is just licensed from another company and still unproven.
  • No financial statements or numbers to review – There are countless incidents of companies that don’t file extensive financial statements on a regular basis with regulators. May of these type of companies are listed on unknown and sketchy exchanges.
  • The investment methodology is unexplained or just makes no sense – If the person or company is offering you an investment but cannot explain in detail how the company is going to generate its return, never accept the lack of these details as sound honest business practice. We have all heard of Bernard Madoff’s ponzu scheme.
  • Do your due diligence when it come to the auditor – Never assume that the audited business statements are honest and sound. Even though a large, well-known auditor can reduce the risk and avoid the chances of fraud, it is no guarantee that the investment will work out.
  • Last chance, act now or else! – Be wary of any investment that requires you hand of money immediately and places pressure on you to invest. This type of investment is a common tactic by fraudsters to prevent you from doing your due diligence and research about the investment and company. If you are looking for a long-term investment, then why should you be rushed into handing over your cash.
  • Your investment cash is going abroad – Even though international investments in many instances make perfect sense, however handing over your cash that is going to land up at some unknown foreign address or bank is extremely risky.
  • Double check the source of any favorable company information – The internet and ability to make use of the numerous search engines has made it easier than ever to be able to research an investment opportunity. However, take note if all the reports you read are favorable and the source behind this information is the promoters of the business or being paid by the promoters to release positive report for a kick back.

In the end of the day there is no risk free investment and if it sounds too good to be true, then it is to true. The best advise to you when it comes to any investment is to use your common sense.


SA government cautions general public of 419 scams

The Minister of Finance along with the Financial Intelligence Centre (FIC) have released an alert to South Africans pertaining to fraudulent letters and emails which profess to be originating from the Minister and various other senior public officials.

The letters appear to be real and have fake logos of the FIC and other state institutions in the the letterheads.

The FIC has for a long time been aware of these 419 scams and has for a long time issued a warning on its website (www.fic.gov.za) cautioning the public about these fraudulent schemes that allege to have the authority of the FIC, the Minister of Finance along with other public officials.

The FIC would like to remind the public that they do request any payments for its services, nor do they pay out funds to anyone.

The sources of these scam letters and exactly how individuals are targeted was constantly changing and evolving.

The treasury is asking all members of the public who receive these letters and scams claiming to be from the FIC (or any other government department) that makes reference to payments to be made or to be received, not respond to them. Rather report these scams to the nearest police station.

The Financial Intelligence Centre (FIC) reports directly to the Ministry of Finance and is mandated to guarantee the stability and integrity of the country’s financial system. In addition they manage South Africa’s framework to fight money laundering as well as the financing of terrorism; and it also supplies the financial intelligence that is increasingly coming to the fore in the investigation of priority crimes.

Guidelines to identify a scam:

* The e-mail requestor asks for bank account information, credit card numbers, driver’s licence number, passport number, information about members of your family, and other personal information.
* The e-mail advises that you have won a prize – even though you are not aware of having entered any competition run by the prize promoters.
* The e-mail may be personally addressed to you but it has been posted using bulk mail sending facilities to many others locally and internationally.
* Check the wording of the letter; you may notice spelling errors and exaggerations, which should alert you to the offer being too good to be true.
* Logos of the organisations mentioned in the letter (such as the prize-givers) may not seem correct or professionally drafted.
* The names of persons used as senders of the e-mails are common.

Source: SAnews.gov.za