How to spot the red flags of investment seminar scams

SAN DIEGO COUNTY – Falling victim to a fraudulent investment scheme could mean losing anywhere from a few hundred dollars to one’s life savings. While most people might not see any harm in sitting through a slick investment seminar featuring promises of big returns, the San Diego Better Business Bureau (BBB) recommends researching the investment company first rather than run the risk of falling for a financial scam drawn in by a free lunch or dinner.

In one recent case, the Securities and Exchange Commission shut down a Ponzi scheme which stole $20 million from retirees in California and Illinois. The scammers invited senior citizens to estate planning seminars and later coaxed their victims into buying promissory notes for purported Turkish investments.

According to Sheryl Bilbrey, San Diego BBB president/CEO, “Unscrupulous seminars often use the promise of a free lunch to lure in leisurely senior citizens who have time plus exploitable retirement accounts and real estate.” When listening to an investment pitch, the BBB advises to look for the following red flags:

• Requires a large up-front investment. Untrustworthy schemers might try to convince investors to pay a lot of money upfront so they can get out of town with a large haul, rather than waiting for the funds to trickle in.

• Promises high returns for low risk. The reality is that every investment comes with a level of risk and, typically, the amount of risk increases in line with the potential return on the investment. So, if the seminar is trying to sell an investment scheme that claims a high return with little or no risk, then beware, even if it comes with the promise of a money-back guarantee.

• Employs high pressure sales tactics. Seminar leaders often use high pressure sales tactics to get people to sign up without thinking it through, or they might claim that there are only a few spots left or that you need to get in on the ground floor today to see the largest earnings. However, any reputable investment company will let you take your time and do your research and will not pressure you into signing a check.

• Relies on off-shore investments. Many hucksters will try to give their scheme an air of sophistication by relying on overseas investments such as foreign currency, property, stocks and bonds, or they also might claim, incorrectly, that you can avoid taxes by investing overseas.

• Sounds too good to be true. At the end of the day, if the offer sounds too good to be true, it probably is. So, listen to your instincts because the potential payoff is rarely worth the risk.

For more consumer protection information, visit the Better Business Bureau’s website at

http://www.bbb.org, or phone the BBB’s free 24‑hour Consumer Helpline at (858) 496‑2131.