In a previous article, Richard Cayne of Asia Wealth Group and Meyer International of Bangkok, Thailand reviewed warning signs of investment scams. In this article, Richard would like to describe some common investment scam set-ups for you to look out for.
“These fraudsters make it difficult for legitimate professionals like me and my colleagues,” Richard explains. “I want people to know what pitfalls there are and how to avoid getting cheated. And if you aren’t sure, then definitely ask a financial expert you trust!”
Cold calls / boiler rooms
Although not the same thing, you should be aware of both. Unsolicited calls from someone claiming to have the investment opportunity of a lifetime could very likely be calling from a boiler room. You may have heard the term describing a fly-by-night type of scam. But boiler rooms can be sophisticated, dressed up to look like a legitimate business. They need to add credibility since they are cold calling you. Impressive websites, glossy brochures – it’s all just window dressing that can disappear, along with your money, in the blink of an eye.
Precious metals and coins investments
Make easy money with silver or gold? That seems like a no-brainer. Except when the offer is coming from a dealer or trader that you are unfamiliar with. Or from someone that seems to be hyping a particular type of precious metals in a particular form. “Bigger profits with XY coins and bullion!!” Precious metals are a valid asset class, but you need to make sure that that’s what you’ll be delivered. You could receive plated coins, or worse, nothing at all as the scammer makes off with the lion’s share, if not all, of your money.
Fraudulent offshore investment schemes
Now, offshore investing is a legitimate investment option. But scammers will rely on the fact that you may not be that familiar with their structures and benefits. If their main selling point is how you will be avoiding taxes and how most of your profits will come from this tax avoidance, you should investigate further. And definitely get a second opinion from a trusted financial consultant like Richard Cayne!
Free stock tips
Also called pump-and-dump scams, this is a variation of cold calling / boiler room shenanigans. Rather than making off with your money outright, they claim they are offering amazing deals or incredible insights on certain stocks. They may not even demand that you buy through them, but that these are legitimate tips that they want to share with you so you can get rich too. This is not the case. Most likely, they already own quite a bit of these “under-valued” stocks. By getting you and others to buy, the stock price increases dramatically. Then when the scammer sells their considerable holdings, the price drops, and you may end up holding worthless paper.