I recently had the pleasure of speaking with Kathryn Bazoian-Phelps, the author of the book Ponzi Proof Your Investments. (www.ponzi-proof.com) This excellent book avoids legalese instead providing easy to understand information to help investors avoid becoming the next victim of a Ponzi or other type of fraudulent scheme. Specifically, the book shows potential investors how to distinguish a good investment from a fraudulent scheme; key questions to ask before investing funds; telltale signs of a fraudulent investment; and due diligence and investigation steps to take before you invest, and more.
Approximately 2 years ago, I was able to hear Ms. Bazoian-Phelps speak at an Association of Certified Fraud Examiner meeting in Los Angeles. During her talk she made the memorable statement that a high majority of Ponzi and fraud schemes could have been discovered early in the scheme and even prior to placement of the investment, with the proper application of due diligence and investigative procedures. Ponzi Proof Your Investments preaches from the rather unique perspective of prevention – and not on the often fruitless efforts of recovering losses after the scheme inevitably collapses.
My own experience as an attorney litigating against fraudsters and enforcing the resulting civil judgments confirms the importance of prevention. Although, my firm works hard to pursue every legal avenue to obtain a recovery for our clients – we are often retained too late, and only after the fraudsters have expended investors’ funds on their own selfish pursuits. To be sure, the chances of achieving a complete recovery of fraud losses on behalf of a client is rarely very promising. Sadly, sometimes the costs of litigating a fraud case against the scheme perpetrators only adds to the client’s losses.
The good news for investors is that excellent low-cost resources exist to help them detect, a fraudulent business or investment opportunity prior to making any investment. These resources include easily accessible websites (PBACheck.com), public records, court records, and regulatory agency records. In addition, there are online companies that specialize in providing comprehensive reports to businesses and investors to assist them in assessing potential opportunities
Ponzi Proof Your Investments is among the best of the available resources and is a must-have for even those considering themselves to be a sophisticated investor. I plan on using my own copy in advising my own clients on the importance of prevention and hopefully convince them to institute sound due diligence and investigation protocols as part of their internal processes.
Paul P. Young
Attorney at Law