SEC Warns of Ponzi Schemes Targeting Senior Investors

On April 9, the Securities and Exchange Commission (SEC) issued an Investor Alert highlighting the risks of Ponzi schemes targeting senior investors. As explained by the SEC, “In a Ponzi scheme, fraudsters use money they collect from new investors to pay existing investors. What appears to be a return on your investment is actually money from another investor who has been swindled.” If you are in the later years of saving for retirement, if you are thinking about investing as a senior, or if you have an aging loved one who needs help making smart investment decisions, it is important to be aware of the risk of Ponzi schemes and other investment scams that are designed to take advantage of the elderly.

Recent Examples of Ponzi Schemes Targeting Seniors

The Investor Alert summarizes two ongoing enforcement actions in which the SEC is pursuing legal remedies against companies allegedly involved in two separate Ponzi schemes targeting seniors:

• In the first case, the SEC is alleging that Lifepay Group, LLC stole roughly $1.3 million from senior investors by perpetrating a Ponzi scheme involving a purported real estate investment opportunity. According to the SEC, instead of investing these seniors’ money as promised (much of which came out of the victims’ retirement savings), Lifepay Group, LLC used later investors’ funds to pay supposed “high returns” to earlier investors.
• In the second case, the SEC has alleged that a group of unregistered investment companies operating under the name Woodbridge solicited $1.2 billion from senior investors through television and radio ads, cold calls, seminars, and other means. According to the SEC, “although the defendants claimed that investors would get paid revenue from high-interest loans to third parties, the defendants, in reality, used money from new investors to pay returns owed to existing investors.”

Warning Signs of Ponzi Schemes and Other Investment Fraud Scams

Sadly, investment scams targeting seniors and their hard-earned retirement savings are all too common. If you are thinking about investing, or if you are concerned that you or a loved one may have lost money in a Ponzi scheme, it is important to be aware of the warning signs of investment fraud. These include:

• Guarantees of high returns, often coupled with promises of little or no risk of loss of principal.
• Unregistered investment brokers.
• Investment “returns” that are systematic and uniform rather than reflecting the inherently inconsistent nature of the investment market.
• Aggressive and unsolicited sales pitches, often involving high-pressure tactics such as claims that you have to “act now” in order to take advantage of an opportunity.
• In-person presentations or seminars marketed specifically to senior investors with little experience managing their own investments.

Read about more examples of investment fraud scams targeting senior investors.

Speak with an Investment Fraud Attorney at Zamansky, LLC

Zamansky, LLC is a national investment fraud law firm that represents individual investors in cases against their brokers and advisors. If you or a senior family member has lost money in an investment that you believe may have been a scam, we encourage you to call (646) 663-5628 or contact us online for a free and confidential consultation.