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Even the savvy can get burned in scams
5:00AM Sunday November 04, 2007
The Securities Commission is warning people about common investment scams. It warns that an "investment offer" is likely to be a scam if you are:
* Promised very high returns with little risk. These promises are too good to be true.
* Given little information in writing. Investments must have documents that explain the investment.
* Told the offer is know only to a select few, or is a "once in a lifetime" opportunity. These ploys encourage you to pay money.
* Not told who is behind the offer or given a physical address. Legitimate investments must give contact names and full addresses.
* Promised access to "prime banks" or "secret" overseas agencies that supposedly offer very high returns. These agencies don't exist.
* Asked to keep the offer secret. This is to stop the authorities hearing about it.
If you are offered such investments, the commission advises asking questions:
* What sort of investment is this? "You'd be surprised how many people don't understand what they are investing in," says the Securities Commission.
* What are my risks? Be suspicious if you're told the investment is risk-free.
* How do I cash in my investment?
* Who will my money be paid to?
* What is the name and address of the entity you want me to invest in? The names of people offering legitimate investments are always available.
* Who do I contact for more information or if something goes wrong?
* Is the money going overseas and, if so, what is the name and address of the New Zealand agent? Get a physical address.
* Seek independent advice from a lawyer, accountant, or financial adviser who has no connection with the investment offer.
Even the brightest and the best can be taken in by scams. In 2000, former investment manager of Citibank in New Zealand, Graeme Rutherfurd was jailed on a variety of charges relating to $7 million he'd got from friends and business associates and invested it in a Nigerian bank scam he was convinced was actually the real deal.
The Nigerians swindled Rutherfurd - who had Reserve Bank Governor Don Brash speak at his leaving do - out of millions. Do you think you can do better?
* Fraudster Donald Rea's International Investment Unit Trust scammed $29 million from NZ investors. He died before his trial was over. Serious Fraud Office prosecutor Anita Killeen says Rea's tactics had similarities to affinity frauds which target religious and cultural groups.
* In 2004, scamsters led by American preacher Donald Eugene Allen and Paul Eugene Palmer fleeced New Zealanders out of nearly $5 million. A central theme was that wealthy people had access to lucrative investment opportunities from which ordinary investors were excluded by a Government and finance industry conspiracy.
* Between September 2000 and September 2002, 120 investors lost $14.6 million in schemes run by Bill and Lee Papple and Tina West. They had offered returns as high as 10 per cent a month. Victims included members of the Mormon Church.
* In 1999, more than $8 million was lost by investors in schemes run by IMI Pacific Group and Walakahai Pacific Corporation. Directors Willard Karaitiana Amaru and John Edward Baylis targeted Maori groups.
5:00AM Sunday November 04, 2007
The Securities Commission is warning people about common investment scams. It warns that an "investment offer" is likely to be a scam if you are:
* Promised very high returns with little risk. These promises are too good to be true.
* Given little information in writing. Investments must have documents that explain the investment.
* Told the offer is know only to a select few, or is a "once in a lifetime" opportunity. These ploys encourage you to pay money.
* Not told who is behind the offer or given a physical address. Legitimate investments must give contact names and full addresses.
* Promised access to "prime banks" or "secret" overseas agencies that supposedly offer very high returns. These agencies don't exist.
* Asked to keep the offer secret. This is to stop the authorities hearing about it.
If you are offered such investments, the commission advises asking questions:
* What sort of investment is this? "You'd be surprised how many people don't understand what they are investing in," says the Securities Commission.
* What are my risks? Be suspicious if you're told the investment is risk-free.
* How do I cash in my investment?
* Who will my money be paid to?
* What is the name and address of the entity you want me to invest in? The names of people offering legitimate investments are always available.
* Who do I contact for more information or if something goes wrong?
* Is the money going overseas and, if so, what is the name and address of the New Zealand agent? Get a physical address.
* Seek independent advice from a lawyer, accountant, or financial adviser who has no connection with the investment offer.
Even the brightest and the best can be taken in by scams. In 2000, former investment manager of Citibank in New Zealand, Graeme Rutherfurd was jailed on a variety of charges relating to $7 million he'd got from friends and business associates and invested it in a Nigerian bank scam he was convinced was actually the real deal.
The Nigerians swindled Rutherfurd - who had Reserve Bank Governor Don Brash speak at his leaving do - out of millions. Do you think you can do better?
* Fraudster Donald Rea's International Investment Unit Trust scammed $29 million from NZ investors. He died before his trial was over. Serious Fraud Office prosecutor Anita Killeen says Rea's tactics had similarities to affinity frauds which target religious and cultural groups.
* In 2004, scamsters led by American preacher Donald Eugene Allen and Paul Eugene Palmer fleeced New Zealanders out of nearly $5 million. A central theme was that wealthy people had access to lucrative investment opportunities from which ordinary investors were excluded by a Government and finance industry conspiracy.
* Between September 2000 and September 2002, 120 investors lost $14.6 million in schemes run by Bill and Lee Papple and Tina West. They had offered returns as high as 10 per cent a month. Victims included members of the Mormon Church.
* In 1999, more than $8 million was lost by investors in schemes run by IMI Pacific Group and Walakahai Pacific Corporation. Directors Willard Karaitiana Amaru and John Edward Baylis targeted Maori groups.
