How to avoid being a Ponzi victim?

The Madoff scandal is two years old today, and yet the Ponzi world continues. More victims, more lost savings. There will always be scamsters, of course, but there also are lots of ways to avoid getting scammed. The most obvious step: Do a Google search. You'd be amazed how much information concerning a possible Ponzi artist is available by just going online. It's also amazing how many people don't bother. But what if you can't find anything definitive? From the NYT:

Randy Shain, an executive vice president at First Advantage Investigative Services, had several suggestions. First, he said, an investor should ask the manager of the fund what institutions have invested with him. If the manager has been in the business for decades yet has not secured any institutional investments, that should be a warning sign, he said. Second, people should consider the manager's pedigree and ask where he learned how to manage money. "I don't want to hear, 'I've been trading my own account for 10 years,' " he said. Related to that is knowing who the manager's bosses were at those places.

Unfortunately, victims are often led into a swindle by friends and relatives.

[Thomas R. Ajamie, managing partner at Ajamie L.L.P., a Houston law firm that specializes in fraud litigation], said one of the most egregious recent examples of this involved Imperia Invest IBC, whose assets were frozen by the Securities and Exchange Commission in October. According to the S.E.C., Imperia defrauded some 14,000 investors out of $7 million. About $4 million was collected primarily from the deaf. "They found some deaf people who would ingratiate themselves into the deaf community," Mr. Ajamie said. "It was really vicious, but it was very consistent."

More by Mark Lacter:
American-US Air settlement with DOJ includes small tweak at LAX
Socal housing market going nowhere fast
Amazon keeps pushing for faster L.A. delivery
Another rugged quarter for Tribune Co. papers
How does Stanford compete with the big boys?
Those awful infographics that promise to explain and only distort
Best to low-ball today's employment report
Further fallout from airport shootings
Crazy opening for Twitter*
Should Twitter be valued at $18 billion?
Recent stories:
Letter from Down Under: Welcome to the Homogenocene
One last Florida photo
Signs of Saturday: No refund
'I Am Woman,' hear them roar
Bobcat crossing

New at LA Observed
On the Media Page
Go to Media

On the Politics Page
Go to Politics
Arts and culture

Sign up for daily email from LA Observed

Enter your email address:

Delivered by FeedBurner

Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
Mark Lacter, business writer and editor was 59
The multi-talented Mark Lacter
LA Observed on Twitter and Facebook