Monthly Archives for October 2001

The Best Of…Invest Wisely With Hard-Earned Income

Published October 8, 2001, Pawtucket Times

             With the news of the latest Federal Reserve rate cuts, stocks soared with investors showing new optimism in the stock market.  The Dow Jones industrial average has spiraled up above 9,000 for the first time since the horrific terrorist attack more than three weeks ago.  With this latest rally on Wall Street, elderly investors might be more easily influenced by scam artists to invest their hard-earned income in buying stocks, bonds, and other securities.

             According to the state’s Securities Division of the Department of Business Regulation (DBR), charged with investigating financial scams, its staff has examined hundreds of complaints filed against stockbrokers and investment advisors.

           Some complaints can be resolved quickly, others are more complicated to tackle and take more time to resolve,states David Briden, DBR’s chief securities examiner.  For instance last April DBR entered a consent order against Alpha Telecom, Inc. and ATC, Inc.

             These two companies promoted the sale of pay telephone investments to Rhode Island residents.  State regulators noted that the  high risks of this investment were not fully disclosed to the 50 Rhode Islanders, some of them elderly, who had invested approximately $960,000.  Under the terms of the order the two companies paid a penalty of $50,000 to the state.  This represented the largest administrative penalty in a pay telephone case nationwide.

           Additionally, Alpha Telecom, Inc. and ATC, Inc. were ordered to offer a full refund to the Rhode Island investors.  DBR went to Superior Court to enforce the terms of the consent order.

          In August 2001 the U.S. Securities and Exchange Commission announced that the U.S. District Court of Oregon granted a temporary restraining order and froze the assets of the two companies.  Meanwhile, in that month these companies had filed for bankruptcy in the U.S. District Court for the Southern District of Florida.  At press time, the investors are still waiting for their money to be returned.

           So how can you protect yourself against financial scams?   Don’t get reeled in by a “cold call,” touting an investment that is guaranteed to make you lots of money, warns Briden.  Especially if you have never dealt with the caller, “simply tell them you are not interested and hang up,” he says.

           “Always get written information before making any investment decision,” Briden says.  Even meet with the broker at his or her office so you get to know them and to see the firm, he suggests.

           There’s a problem if the caller can’t produce written material. According to Briden, the old adage there is no free lunch really applies to making investments, too. Don’t be conned into making a quick investment decision when high pressure sales tactics are used, Briden says, adding that any investor should “Beware of any promise made that the investment will result in quick profits or extremely high returns.  Be concerned if your told ‘Act on it now or it will be too late,” he says.

           Meanwhile, a check can be a receipt of your investment. “Never invest cash,” Briden adds, stressing that a person should never send a check to someone at a firm you know nothing about.

            Become an educated investor when considering the investment of your money. “It is important that you understand the costs (commissions, fees and penalties) to the investment,” Briden says.  “Always find out the risk involved in your investment.  Never make an assumption that the investment is federally insured or guaranteed.”

              If you suspect that you have been a victim of investment fraud, contact the State of Rhode island, Department of Business Regulation Securities Division, Suite 232, 233 Richmond Street, Providence, RI 02903, or call (401) 222-3048.

            Herb Weiss is a Pawtucket-based freelance writer who writes about aging, health care and medical issues.

Seniors Should Beware of Charity Scams

Published in the Pawtucket Times on October 1, 2001

Following on the heels of last month’s deadly terrorist attacks on the World trad towers and the Pentagon, AARP has issued a warning to seniors to watch out for scam artists seeking to make a fast buck on the horrific national tragedy.

The Washington, DC-based senior watchdog group urges older persons to be very cautious when responding to charitable solicitations. “In this time, we need to be alert to stop those who would divert charitable donations away from those who have been victimized by the tragedy in New York and Washington, DC., states Kathleen S. Connell, AARP’s Rhode Island Executive Director.

Charities have historically targeted seniors, Connell says, making seniors especially vulnerable to scam artists.  AARP research shows that, even in ordinary times, Americans age 65 and older receive more telephone and mail solicitations for charitable donations than any other age group. “Older Americans may become particularly receptive to appeals that benefit police and firefighters who were victims of the recent terrorist attacks,” Connell says.

According to AARP experts, charity scams may take various forms, but certain elements can be warning sign. Red flags indicating the signs of a scam include: the use of a similar sounding name that suggests a well-know charity; a request for your credit card number or cash; an offer to send someone to pick up your contribution; and failure of the solicitor to explain the charity’s administrative costs and programs.

Connell recommends that donations be given to recognized organizations such as the Red Fross or Salvation Army or any charitable groups that the giver is familiar with.

Are scam artists targeting Rhode Island seniors using the backdrop of a national tragedy for fraudulent charity appeals?  No, says Connell.  She is unaware of any scams in Rhode Island being directed specifically at seniors. “It appears that the public relations campaigns raising the visibility of telephone scams have been successful and seniors are being more than careful when making donations.

Jim Martin, spokesperson for the state Attorney General’s Office told All About Seniors, “There is no substantial evidence of any scam artists collecting money under the guise of a charity purporting to assist the victims of the Sept. 11th tragedy.”  If this occurred, he says, State Attorney General Sheldon Whitehouse would not hesitate to use any means at his disposal to stop it and hold those who do it accountable.”

State charity regulator David Briden, of the Department of Business Regulation, also is not aware of any charity scams sweeping through the Ocean State targeting seniors.

Briden states that hundreds of charities raising money across the nation, soliciting funds for the victims of the terrorist attacks, his staff is attempting to monitor their efforts.

Briden urges seniors to take precautions when making a donation to charitable causes.  Write a check instead of using cash, making out the check to the organization. “Never give out your credit card number, Social Security number or any other personal information over the phone,” he says.

Weeks after the terrorist attack, contributions are pouring into the American Red Cross of Rhode Island. Individual and group contributions, from the Boy Scouts, neighborhood children who banded together to raise funds, to donate received from a growing number of major corporations, like Textron, Inc., and MetLife, have raised nearly $ 1 million for relief efforts, states Sara Bilossky, the group’s communication director.

Even with state regulators acknowledging little reporting of scam operations in Rhode Island, Bilossky is aware of a few callers who have contacted her agency attempting to determine if solicitation calls, they have received on behalf of the American Red Cross were really legitimate. But these calls quickly tapered off, she said.  Any donation to the American Red Cross can either be delivered directly to the nonprofit agency or mailed, she recommended, suggesting that donation checks to be made out directly to the Red Cross Disaster Relief Fund.”

Hundreds of millions of dollars have ben raised nationwide by charities for the victims of the terrorist attacks and their families. It is the donor’s responsibility to make sure that his or her hard-earned money gets into the right hands. If solicited, always ask about the group’s fund-raising goals, find out how the collected money will be spent and request a list of the board of directors.  Does the group have written materials? Give smartly and generously.

For questions concerning charities that have been registered by the State of Rhode Island or to file complaints, call the state’s Department of Business Regulation at 401 222-3948.