Prevention efforts planned as con artists target retirees
Seniors with retirement savings and invested assets are prime targets for con artists and phony schemes, which are increasing nationwide, AARP Hawaii and state officials warn.
The first wave of 78 million baby boomers nationally have $8.5 trillion in investment assets for retirement, according to Hawaii Securities Commissioner Tung Chan.
AARP Tips for Investors
» Do research before investing.
» Be skeptical of investment offers from unknown people or companies.
» Ask for written information about the investment business or product.
» Confirm information, and do not rely on testimonials that might be phony.
» Avoid making a quick decision.
» Check credentials of any insurance or investment broker with the state insurance or securities commissioners.
» Be wary of offers using words like "guarantee," "high return" or "limited offer."
» "If in doubt, keep your money in your pocket."
To report suspected investment fraud, call the Office of Securities Commissioner's toll-free line, (877) HI-SCAMS (877-447-2267).
To check whether a broker-dealer or financial adviser is registered in Hawaii, call 586-2722; provide the firm's name and the individual's first and last name and middle initial if available. Or check the national Web site www.nasdbrokercheck.com.
For more information, call the Securities Commission at 587-7400 or visit www.hawaii.gov/dcca/areas/sec or AARP Hawaii's Web site aarp.org investmentfraud.
Con artists know they are coming into this money from 401(k) accounts, pensions and Social Security, and they "want to take their nest egg and use it for themselves," she said.
Isle seniors are concerned, with 81 percent of AARP Hawaii members surveyed asking for tougher regulations to protect residents from investment fraud and unscrupulous marketing.
A bill is pending in the Legislature to raise the current $100,000 penalty for a securities law violation by $50,000 if the victim is 62 or older.
"This is an extra tool we have to go after people who rip seniors off," Chan said. "There can be a number of violations, and at $150,000 per violation, it could really add up."
Concerned about increasing investment fraud nationally, Chan's office joined AARP Hawaii in asking Alan Newman Research to do a study here last December. Researchers interviewed 700 AARP members across the state.
Among findings released today:
» About 67 percent said they invest in stocks, bonds or mutual funds; 51 percent invest mostly for retirement.
» About 82 percent expressed fear of losing money, while 74 percent listed concerns about identity theft.
» About 46 percent seek advice from a broker or financial adviser, and 71 percent have not checked their financial adviser's background.
The Securities Commission Office and AARP Hawaii are launching a consumer education program with a series of print, radio and TV ads, said Harry Mattson, AARP Hawaii associate state director for advocacy.
He said the message is, "Be a wise investor. Do your own research. Ask questions of people and don't give out personal information. Don't jump right away into an investment. That's a huge, huge red sign if you have to do it today. Call the state Securities Commission if you have a problem."
According to AARP, isle consumers reported a loss of more than $11 million from fraud last year, ranking Hawaii seventh among states for the number of fraud complaints by population.
Chan said her office has about 140 to 200 enforcement cases open at any given time for violations of securities laws and that seniors are victims in about 20 percent of them.
She believes there are many more cases. "You tend to get underreporting a lot with seniors. They don't want family members to know because of issues of shame and embarrassment.
"We hope people will report so we can help them out," she said, adding that her office has investigators and attorneys "and can keep things pretty confidential until action is taken."
Chan gave the case of a 76-year-old woman who had $281,000 to buy a condominium being built, and invested it in a viatical contract -- a life insurance policy of a terminally ill person sold at less than face value. She was assured the investment would be delivered to her on a specific date, but it was not.
The woman did not want to be identified because she did not want her children to know what she had done, Chan said. "But we ended up being able to get her money back, and she was able to live in her own condo." The company was fined and no longer does business here.
Joviane Randall of Makaha first called the Better Business Bureau when she received a card saying her annuity was being canceled and that she should call a company called Annuity Service Center.
She called, and they set up an appointment for someone to come to her house, she said, but when she started asking questions, they canceled the appointment. "I knew something was wrong."
She learned from BBB that seven states have cease-and-desist orders against that company and a parent company. She called AARP and was referred to Chan's office in the Department of Commerce and Consumer Affairs.
Chan said her office had received a similar complaint from another resident and is investigating.
She urges residents not to give personal information to anyone unknown and to make sure their investment advisers are registered with her office.
The industry is supportive because it wants investors to feel confident, she said. "They want a healthy market."
Her office is concerned about two major scams, she said: pyramid schemes, which are illegal and are not safe investments, and sales of a legal investment without revealing all the information.
"For example, your money may be locked up for 20 years, so if you have a medical problem, you can't get it out."