Looking for Ponzi schemes;MASS William Galvin launches ads as complaints grow
Looking for Ponzi schemes
William Galvin launches ads as complaints grow
By Jay Fitzgerald
Monday, February 2, 2009 - The hunt is on for the next “mini-Madoff” scammer and it’s not just regulators on the prowl.
Secretary of State William Galvin said his office is getting inundated with tips from citizens, who think they’ve either spotted or become the latest victim of a financial rip-off artist.
Some of the tips are coming from those who have seen recent television commercials aired by Galvin, whose office oversees the state’s securities industry and who’s been warning investors to report suspicious activities of brokers, financial planners and others overseeing money for others.
But Galvin said recent high-profile scandals - especially the granddaddy of all scams, Bernie Madoff’s alleged $50 billion Ponzi scheme that recently unraveled - have simply made investors more alert.
Because of Madoff, people have become much more skeptical, said Galvin. It’s raised questions in people’s minds, fairly or unfairly, about financial (experts and firms).
Galvin said he has no doubt there are other Madoff-like characters yet to be exposed, especially now that capital markets have dried up and many thieves don’t have much incoming cash from new investors, whose inflow of money is often used to hide bookkeeping discrepancies.
It’s hard to beat Madoff’s exploits both in size and scope.
Nonetheless, just recently Galvin’s office and the Securities and Exchange Commission charged a Quincy financial planner and radio talk-show host, Gregg Rennie, with allegedly scamming as much as $4 million from investors.
Among regulators, there’s some dispute whether Rennie was allegedly outright stealing money or running a quasi-Ponzi scheme - in which early investors are paid returns with funds coming in from new investors, creating the facade that a fund is actually making money.
Besides Madoff and Rennie, federal authorities are also plowing through the books of Long Island’s Nicholas Cosmo, yet another accused multimillion-dollar financial scammer. In Florida, hedge fund manager Arthur Nadel has been charged with securities and wire fraud, and the prosecution argues millions of dollars are unaccounted for.
All the scandals are making life miserable for legitimate financial experts who are just trying to make a living and are now facing heavy skepticism from investors.
“These types of (scandals) just make it that much harder for the rest of us,” said Barry Armstrong, a financial planner and radio host on WBIX-AM (1060