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Speakers: Get smart on investment fraud

"Earn 30 percent on your investment." "Double your money in six months." These statements were among the warning signs of investment fraud outlined Tuesday by speakers from the North Dakota Securities Department. The Securities Department and its...

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North Dakota Securities Department Investor Education Coordinator Sheri Haugen-Hoffart speaks at the Lunch and Learn event Tuesday at the West River Community Center

"Earn 30 percent on your investment." "Double your money in six months."

 

These statements were among the warning signs of investment fraud outlined Tuesday by speakers from the North Dakota Securities Department.

 

The Securities Department and its partner, AARP, hosted a Lunch and Learn presentation at the West River Community Center. Sheri Haugen-Hoffart, investor education coordinator, and Kelly Mathias, supervisor of investigations and examinations, spoke on the topic, "Get Smart on Investment Fraud."

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Haugen-Hoffart asked the audience who was most likely to be scammed. The consensus was a woman age 65 and older with less than high school education. In reality, she said the person most likely to be victimized nationally is male, age 55 to 64, married, earning $50,000, college educated and above average in financial knowledge.

 

Haugen-Hoffart outlined several tactics used on victims by con artists:

 

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Moving out of the logical state to an emotional state . "They prey on your trust to get your investment," she said.

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Promise of a high profit in a short amount of time. "It’s never going to happen," Haugen-Hoffart cautioned.

 

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Source credibility. "Credibility can be faked - they are playing a role," she said. "They use false titles and credentials. They use strong financial language."

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Social consensus . The con artist will instill the thought, "Everybody is doing it, so it must be good."

 

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Affinity fraud. "They will prey on religious groups, ethnic communities, professional groups or the elderly," Haugen-Hoffart said. "They will make themselves part of a group, attend church or join a service club. The key is for them to gain the trust of a group. We’re trusting people, right?"

 

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Reciprocity : The conventional wisdom is "We must not take without giving back," she said. "We think we better invest, because they are willing to share information."

 

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Scarcity. "The con artist’s last trick is this is ‘your last chance,’ or ‘you must act now,’" she said.

"Prevention is the key to becoming a good investor," Haugen-Hoffart said. "Con artists do all the talking, right? Build your arsenal and ask questions. Don’t be afraid. Ask what services they offer.What are their licenses, registrations and experience? You interview them."

 

Kelly Mathias continued the discussion by describing a security.

 

"A security is an arrangement where a person invests money or the equivalent, to a common enterprise with the expectation of profits based on efforts of others - normally stocks, bonds and promissory contracts," he said.

 

An investor should ask for the securities salesperson’s CRDP (Central Registration Depository Number) that is filed with the North Dakota Securities Department.

 

"Every registered broker or agent must have one," he said.

 

Potential investors were encouraged to visit the website www.ndgov/securities to start a background check on the securities salesperson. The website will take you to the FINRA (Financial Industry Regulatory Authority) website that oversees brokers and agents around the U.S.

 

Mathias also encouraged investors to call the North Dakota Securities Department toll-free at 800-297-5124 to ask for a background check.

 

 

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North Dakota Securities Department Supervisor of Investigations and Examinations Kelly Mathias speaks at the Lunch and Learn event Tuesday at the West River Commuity Center.

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