Investors Beware: Fraudsters May Have Nine Lives
If you’re like most investors, when you hear that a broker or advisor has been barred or suspended from the securities industry, you believe the threat posed by that person has been removed. Sadly, this isn’t always the case.
Fraudster Frank Bluestein, for example, was sanctioned for defrauding investors during the credit crisis. According to the SEC, Bluestein was the single largest salesperson in Edward May’s $350 million Ponzi scheme. He allegedly raised around $74 million from more than 800 investors by making a variety of misrepresentations and omissions to potential investors.
“Bluestein convinced elderly investors to refinance their homes to invest in securities that he falsely claimed were safe,” said Merri Jo Gillette, Director of the SEC’s Chicago Regional Office. “His lies, false assurances, and unscrupulous tactics put many investors at risk of losing not only their life savings, but also their homes.”
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Though Bluestein has been suspended from the securities industry, he hasn’t exited the investment world. Instead, he is one of many barred or suspended financial professionals now holding themselves out as “investment coaches,” “wealth coaches,” and/or “investment teachers.”InvestmentNews reporter Bruce Kelly says Bluestein is connected to several online trading websites, and that he also appears in a YouTube video about trading futures.
Educated investors who come across Bluestein online may know to run him through BrokerCheck (which shows he has had well over 100 customer disputes levied against him). Less savvy investors, however, may see him only as an intelligent teacher – never guessing that he played a key role in the largest Ponzi scheme in Michigan history.
Bluestein’s reinvention of himself is nothing new. Many “barred brokers with disreputable histories often find it hard to give up the potential easy money of selling investment strategies or products,” stated Kelly.
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Investors who want to protect themselves against such fraudsters should be particularly vigilant about investigating anyone they consider doing business with. Understanding theins and outs of financial credentials and investment industry designations also helps. For more tips on choosing an advisor or broker, click here.
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