FRAUD - 10 WARNING SIGNS ABOUT YOUR 401K

The U.S. Labor Department publishes

10 signs that your 401(k) retirement account may be subject to fraud:

1) Your quarterly 401(k) statement is consistently late or comes at irregular intervals.

2) Your account balance appears to be inaccurate.

3) Your employer failed to transmit your contribution to the plan on a timely basis.

4) A significant drop in account balance appears that cannot be explained by normal market ups and downs.

5) Your 401(k) statement shows that your contribution from your paycheck was not made.

6) Investments listed on your statement are not what you authorized.

7) Former employees are having trouble getting their benefits paid on time or in the correct amounts.

8) Unusual transactions show up.

9) Frequent and unexplained changes take place in investment managers or consultants.

10) Your employer has recently experienced severe financial difficulty.

This was excerpted from a a larger article by Jim Gallagher in St. Louis today - recommended reading if you or your clients have a closely managed retirement account of any kind.

http://www.stltoday.com/business/columns/jim-gallagher/article_f1ae39ae-58ef-5729-ab06-9d41edf6a850.html

Warning For Employers: Service Helps Job Applicants Lie to You

Warning For Employers: Service Helps Job Applicants Lie to You

Please read this important warning about a troubling web site brought to my attention by my friend and employment law expert Rachel Weiss. Many of my clients have employees that are in sensitive positions, and whose actions can potentially place those I serve in jeopardy - this service creates huge liability. I'd love to see the owners of the company below SUED when one of their "clients" kills or injures someone or creates some other harm, theft or loss because they got a job based on the false history and credentials they created. This is especially terrifying for medical businesses.

Thanks, Ike

If any of you are involved in any way with your company’s hiring process, you need to be aware of a service called Career Excuse.

Career Excuse essentially provides job applicants with a completely or partially fabricated work history, complete with fake company names and fake references with phone numbers.

Real people will answer your phone calls and confirm whatever the applicant states in his or her resume. Career Excuse has become so popular that they’re not taking new “subscribers” at this time. (Of course, individuals currently filling out applications and submitting resumes may already be signed up).

Visit their website – CareerExcuse.com – for more information. In particular, read the “What If I Get Caught?” page, which assures its clients that lying on a resume is not a crime.

Please do not hesitate to contact me with any questions about this or any other employment or litigation issue. Rachel R. Weiss (602) 256-4448 rweiss@gblaw.com

SCAM - “Brokers” and ‘Up Front Fees’ for Venture Capital

This is a guest column by Greg George, a professional due diligence expert that I use as a resource. There are a huge number of people looking for financing due to the current lending climate and the bad guys know it. Here's what one expert has to say.

Yours, Ike


Risk and Threat Management – Presented by Greg George

Posted in Awareness by gtiadvisors on January 7, 2010

I’ve been monitoring what appears to be the longest discussion string in LinkedIn history (up to 223 comments now) going on at the Private Equity and Venture Capital Group.

The discussion question is: What do you think about ‘up front’ fees..? (for funding a deal)

There has been very good information posted, there has been very bad information posted, smart ass comments and bullying here and there (yes, very professional), those postulating their own ‘expertise’ – “…this is how good I am, I’ve done these $20mm+ deals, and…” etc etc (never tout yourself as an expert, it diminishes your credibility – If you’re worth the recognition, others will do that for you), and I’ve even seen a few spamming in trying to sell their services/deals – astonishing…

A few thoughts on ‘brokers’ and other middle men/women requiring fees ‘up front’ – usually under the guise of due diligence work that needs to be done, we have to better position your business plan and pro-forma’s, along with all the assurances and window dressings of how they will get your deal funded – these are great sales people, and most are frauds.

You’ll never get to a closing, they will stall and stall and stall… for months – and you may never see the ‘up front’ fees you gave them again. If you think an alternative financing or equity funding program might be the right deal for you, at minimum, at least find out:

•Who these people really are
•Talk to several past success deal client references they ’should’ provide
•Who do they represent as potential investors on your behalf
•What are the sources of funds (don’t get sucked in to a money laundering or tax evasion racket)
See if the person and firm are even licensed in the U.S: do a FINRA broker check.

FSA (UK) – also provides alert lists of EU and other international players in the finance and equity funding game not registered or vetted.

Another growing dimension of these economic times, new groups and angel investors charging ‘up front’ fees just to hear your pitch – a good example of what’s going on with these guys see: VentureHype (a great resource for many VC, Angel, start-up and investing topics) – the article also links to a well done ‘rant’ by Jason Calacanis on these practices.

Bottom line 1: If you do not have the expertise and require consulting help to get your business plan, pro-forma’s, your perfect 7-slide ppt for your pitch, and everything else up to speed (and rehearsed many times) to be received as an attractive, fund-able opportunity – set a budget, hire a competent firm or person and pay them to help you accomplish this.

Consulting services to get this right the first time, has nothing to do with capital raise.

Bottom line 2: Assume any “up front ‘broker’ fees” to arrange funding are frauds. Period (I’ve been dealing with these kind of people for a long time).

$4mm in up front fee frauds have come across my desk the past many months, especially since the real financial crash began to fall in September, 2008. In some cases we have been able to get the “up front fees” back on behalf of clients, even those fee’s that were wired offshore before the ink on the check was dry. We continue to work on others (leveraging RICO is a wonderful thing).

I have participated as an advisor to investors and as a decision panel member riding shotgun over the due diligence drill on companies seeking funding… during the past 12 months, the several organizations, equity firms, angels, family offices and high net worth individuals I’ve worked with have funded more than $30mm in start-ups, acquisitions and expansions – not one dime of any ‘up front fee’ was involved.

_________________________________________________

Greg George is Managing Partner of GTI Advisors; Threat Management Practice Group. A senior advisor to executives, business owners, private equity investors, M&A teams and transaction lawyers, Greg provides guidance on matters of enhanced due diligence research, threat analysis, security issues, actionable intelligence, fraud avoidance, and corporate espionage realities. For further information please visit http://gti-advisors.com or contact Greg directly: greg@gti-advisors.com

STATES RELEASE LISTS OF TOP INVESTMENT SCAMS

I am seeing a massive increase in investment fraud, theft, and embezzlement among our affluent business owner clients right now. This exposure is coming from both outside sources AND partners, executives and employees of all types.

I continually post issues and warnings here, in my private email update newsletters to clients and advisors and on Twitter to try to help, but the scams evolve so fast and multiply so quickly that it's impossible to keep up with this human "virus", even with the help and tips supplied by other top pros like my friend Greg George at
GTI-ADVISORS.COM, a leading professional due diligence firm.

The list below is currently being circulated by state and local govt. nationwide and includes many of the issues that I have commented on previously including here in my previous post on Affinity Fraud taking advantage of personal, religious and cultural connections: http://tinyurl.com/kjdwxm

Please take a moment to protect yourself or your clients by taking a look at this report, it applies to EVERY city and state in the country.

LIST OF TOP TEN INVESTOR FRAUD SCHEMES:

http://www.cc.state.az.us/Divisions/Administration/news/090821Top%20Ten%20Investment%20Schemes.pdf

ID THEFT ALERT - SCAMMERS POSING AS JURY DUTY OFFICERS

JURY DUTY SCAM !
This has been verified by the FBI (their link is also included below). It is spreading fast so be prepared should you get this call. Most of us take those summons for jury duty seriously, but enough people skip out on their civic duty, that a new and ominous kind of fraud has surfaced.

HOW IT WORKS:
The caller claims to be a jury coordinator calling about jury duty you missed. . If you protest that you never received a summons for jury duty, the scammer asks you for your Social Security number and date of birth so he or she can verify the information and cancel the arrest warrant. Give out any of this information and bingo;your identity was just stolen.

The fraud has been reported so far in 11 states, includingOklahoma , Illinois , and Colorado . This (swindle) is particularly insidious because they use intimidation over the phone to try to bully people into giving information by pretending they are with the court system. The FBI and the federal court system have issued nationwide alerts on their web sites, warning consumers about the fraud.

Here's the FBI's own story:

http://www.fbi.gov/page2/june06/jury_scams060206.htm

New FRAUD Schemes Prey on Personal, Religious and Cultural Connections to Build Investor Confidence

Ike Devji, J.D.
© 2009

Something quick, down and dirty I want all our clients and partners to be aware of, as you folks are the ideal candidates for the bad guys – you are among the most successful people in the U.S.

http://www.fa-mag.com/fa-news/4036-sec-advisor-scheme-targets-chinese-americans.html

UPDATE 8/7/09 - Former Rabbi Charged in $35M Tax Fraud Scheme http://tinyurl.com/muesxf

As markets continue to fluctuate and rattle investor confidence a new series of alternative investment fraud schemes are emerging and being exposed faster than I can post all the details.

In times of crisis many people feel comfort doing business with a personal or social contact or a member of their own religious or ethnic community. Unfortunately that comfort level is replacing normal standards of due diligence and often intentionally sidesteps the professional advisor relationships that an investor may have in place, often with tragic results.
Many of these schemes are dressed under broad terms such as private offerings, hedge funds or are related to purchasing intangibles, like deeds of trust.

Common excuses for exclusion of the investor’s advisors include:
- They won’t know how this works;
- Your friends are all in the deal and they all had their people check it out;
- They will say no because we will compete with them;
- This is a special private deal for friends and family only;
- We have an NDA (non-disclosure agreement) you will need to sign and keep this offering confidential;
- We need you to make a decision and fund immediately because we have other investors waiting for this opportunity;
- We have our team and they have checked this out with our own high dollar lawyers;
- We have the “support” of such and such big bank and you they checked us out

Any one or even a few of these may be actually true and valid on any deal, but I have never seen a legitimate opportunity where the promoter used all the tricks on this list. If they have a deal that is worth being part of they will allow you to ask questions and do your homework.

Will your CPA or other advisor have an issue with signing the NDA if he is reviewing an offering on your behalf? I doubt it.
Invest, make money – take calculated risks and allow your team to help guide you! As always – walk with awareness and call us for help if you need it.