Securities Cops Issue Warnings about Current Investment Scams


The association of state securities regulators known as NASAA has released its top 10 investment traps. NASAA finds that scam artists are peddling various get-rich-quick schemes to take advantage of the economic uncertainty. According to NASAA, investments that investors should be particularly wary of include distressed real estate schemes, energy investments, gold and precious metal investments, promissory notes, and securitized life settlement contracts. Tactics used to peddle such investments often involve affinity fraud, bogus or exaggerated credentials, mirror trading, private placements, and securities and investment advice offered by unlicensed agents.

Many of the schemes are outright frauds like ponzi schemes. For example, one case involved a mail and wire fraud scheme that solicited $2.3 million from multiple investors to invest in a purported project to purchase and refurbish distressed properties and sell them for a profit. Investors were issued corporate promissory notes promising returns of up to 12 percent. The money was used for personal gain and to make Ponzi-type distributions to other investors.

Similarly, booming gold prices are a hook for many fraudulent schemes. In one case more than 1,400 investors lost $29.5 million after investing in an outfit called Gold Bullion Exchange. Investors were lured with claims that they would only put down a tiny fraction of the purchase prices to gain outsized “leveraged” profits. The whole thing was a fraud. No gold bullion was purchased, investors could not sell their supposed “investments,” and the seller took commissions and fees off the top of up to 18 percent.

Life settlement contracts are investments in the death benefits of insurance policies that insure the lives of unrelated third parties. In that arena, two executives of National Life Settlements LLC of Houston were recently indicted for fraud in the sale of $30 million in unregistered promissory notes secured by life settlement contracts. One of the “executives” had a long history of investment fraud and was a three-time convicted felon! Investors were promised safe annual returns as high as 10 percent. It turned out to be a Ponzi scheme. The investors were retired teachers and state employees who invested through various insurance agents and securities brokers.
Other recent private placement scams include sales of Medical Capital and Provident Royalties promissory notes were sold by various broker dealers, many of whom are out of business as a result of investor arbitrations and regulatory actions filed against them after the notes proved to be fraudulent. The brokers, which touted their supposed “due diligence” investigations into the investment offerings, ignored red flags of fraud by the principals of those companies.

Atlanta attorney J. Boyd Page observed: “The current financial situation presents ideal conditions for crooks and schemers in the financial industry. Investors need to avoid anyone who claims that any investment can produce higher than average return with little or no risk. Extravagant claims and promises are the badges of fraud.”

NASAA’s alert can be viewed at

Page Perry is an Atlanta-based law firm with over 125 years collective experience representing investors in securities-related litigation and arbitration. While past results are not indicative of future success, Page Perry’s attorneys have recovered over $1,000,000 for clients on more than 45 occasions. For further information, please contact us.