Protecting Against Securities/Investment Fraud
Author: Mary Ellen Schnur
Protecting Against Securities/Investment Fraud
Mary Ellen Schnur
Kaitlyn Wenzel, Outreach Coordinator for the Commissioner of Securities and Insurance, presented the “Fighting Fraud in the 406” program on January 12 at a program sponsored by Broadwater Farm Bureau.
The CSI’s job is to investigate complaints and prosecute fraud. $11.4 million was lost in investment scams in Montana in the year 2024. The dollar loss amounts from these scams have increased markedly over the past five years. The greatest amount of financial fraud occurs in people over age 70. This is partly because this demographic has accumulated savings and property over a lifetime. Scammers also rely on the fact that most people of this generation are not so tech-savvy. These people are very clever and play on emotions and fear to gain your cooperation. There are a variety of types of schemes.
Typically, a person can identify the “four P’s” as red flags to stay away from a transaction or investment.
* 1-Pretend to be someone you trust
* 2-Problem to be solved/Prize to be gained (pay to resolve an issue or obtain winnings)
* 3-Pressure you to act immediately
* 4-Pay in an unusual way (Gift cards, cryptocurrency)
“Pig butchering” scams rely on building the victim’s trust over time, before snatching the money.
“Romance” scams defrauded Montanans of $2.4 million in 2024. Striking up a romantic relationship online or by phone can lead to “loaning” or giving money or personal financial information to a fraudster who can then impoverish the victim. Some individuals in Montana have lost their entire retirement savings to romance scams.
Ponzi schemes entice investors to buy into a company that either doesn’t exist or doesn’t have a legitimate means of earnings. These types of schemes have gone on for many years, enticing people to invest in such things as household cleaning supply businesses which produce little revenue for the investor, but big bucks for the fraudster.
Ms. Wenzel recommends that everyone watch the cryptocurrency fraud video presented by CNN. It is archived, so can be seen via computer.
To check out valid investments, call the CSI office at 406-444-3815, or go to csimt.gov/ securities, or go to AdviserInfo.sec.gov, a federal government website, or BrokerCheck.finra.org.
The CSI FAST team (Financial Abuse Specialist Team) responds to complaints within 72 hours. Montana is one of six states that has a Restitution Assistance Fund for victims of securities fraud. The money in this fund is not tax money; it is a portion of money set aside from fees charged for licensing of insurance and securities businesses.
When dealing with someone offering an investment opportunity, remember the four P’s listed above. If any of these red flags appear, stop the conversation and do your homework before proceeding.
