Self-described savvy person scammed (and thanks a lot Bank of America)

[progree]

Last edited Tue Jul 9, 2024, 07:52 PM - Edit history (1)

I read about tons of scams, as a reader of AARP Bulletin and Consumer Reports, and just in general online, but this somehow struck me as something other than a variation of the same kinds of scams we keep hearing about.
 
https://finance.yahoo.com/news/scammed-nearly-300-000-forced-212158398.html

I was scammed out of nearly $300,000 and was forced to abandon my retirement dreams, Business Insider, 7/9/24

I researched investment options online and eventually reached out to a friend. He connected me to a company he was investing in. I checked the company out online, and everything seemed above board. I spoke with a professional financial planner tied to the company.

Still, I was cautious. I opened an account with just $250. Then, I transferred $10,000. When that investment began to grow, I wanted to go all in. I withdrew $100 from the account to make sure it was legit. After that withdrawal was processed, I transferred all my money: $256,470.

After that, things started to get strange. The so-called investment company asked me to take out a line of credit. They encouraged me to invest in bitcoin and started charging me steep commissions.

... I got my own lawyer, who looked up the company's legal representation. He couldn't find any licensed lawyer with the name I'd been given. ...

... My lawyer realized that I had sent most of my funds to an account at Bank of America. As an immigrant, I trusted Bank of America intrinsically.

.... Even after my lawyer alerted them to what was happening, they cleared a check I'd written to the scammers. They ignored requests from my bank to look at the fraud, and after three requests, my bank gave up.

The thing is, I'm a smart guy. I ran a major business for 30 years. I am good at vetting people—or at least I thought. ((he's 70, not 85 or 95 --p))

Things in double parentheses ending in a -p are mine

Besides hiring the lawyer, he hired a private investigator...

He contacted his local police department but they said they had 600 cases like his and only 3 investigators.

"Older people, like myself, need help to protect themselves"

It's not always a matter of age, but the literature on cognitive decline after say 50 is scary, and I worry a lot about that even though I don't notice anything other than it is a struggle to memorize stuff, which I do as an exercise (a great falling asleep exercise). And maybe it takes longer to find the right word sometimes.

In a statement to Business Insider, Bank of America said: "We don't want any bank's clients to become victims of scams. We try to work with victims and their banks to return the funds when feasible, but unfortunately, this is not always possible. We encourage clients to do thorough due diligence to ensure that they are transferring funds to legitimate businesses."

Two edits made after 17 replies:

I added the full Bank of America statement to Business Insider - see just above

I changed the old title was "Savvy person scammed (and thanks a lot Bank of America)" to "Self-described savvy person (and thanks a lot Bank of America)"

It was question everything who pointed out what is unquestionably dumb -- putting all his eggs in one basket.

From the article:

I transferred all my money: $256,470.

[marybourg]

1. "eventually reached out to a friend"

[progree]

4. I value highly personal references from people I know well and trust, but it would take more than that

since one never knows. It very much depends on the nature of the "friend"ship too. E.g. looking for a contractor to do something that a neighbor and friend had done would weigh probably more with me as some crap on Angi, but I'd look at both anyway, and Google searches and FINRA and BrokerCheck and all that other stuff that is out there (as far as financial things).

[marybourg]

15. I would -- and did -- open an account at an established brokerage or

mutual fund company, like Vanguard, Fidelity or even JPMorgan Chase. You might pay high fees to some of them, but you wouldn’t lose your life savings.

[progree]

18. I've been screwed by well-known brokerages, AG Edwards at the time

and Smith Barney at the time. E.g. selling me gas and oil partnerships and real estate partnerships that are larded with fees and commisions. My parents similarly with other big name brokers. This was in the 1980's.

And a lousy bond investment that my broker (Smith Barney) sold me, and then 2 years later tried to talk me into selling because the firm's prospects were deteriorating (and then no doubt calling other clients about how good an investment it is at some really high yield to maturity).

Which is why I rely on my own judgement and don't give it to a brokerage or financial advisor who ends up thinking it is his or her money, when I decide to move some of it elsewhere or act against their recommendations.

[marybourg]

20. It's best if you can rely on your own judgment.

Many people aren’t willing to put in a little time learning, or don’t have the self-confidence to go it alone. So they need someone to lean on. One of the major brokerages may cost you something in fees as you learn, bu they’re not going to scam you out of your life savings. Unfortunately the “friend” from the neighborhood, club or church may do just that. Affinity Group scam, it’s called.

[progree]

21. Well, both of my partnerships were total losses except for some tax savings

One of the major brokerages may cost you something in fees as you learn, but they’re not going to scam you out of your life savings.

And as I've said before, I would not rely solely only on a friend's recommendation, it's data that I value (or not) depending on my trust of the individual. And I'm well aware that many people -- and they can be neighbors or fellow club or church members -- get paid something when somebody they refer signs up.

I have to tell you, I am perplexed. We have one frequent poster here who, from what I can tell, gave pretty much ALL their money to a financial advisor more than 12 years ago (and has posted many times about it over the years), who promptly recommended half of it in the most non-liquid investment around, and nobody, no, nobody, no, not a single person here in all these years, have warned about eggs in one basket or get rich quick schemes or anything like that. But JFC, I post something about someone who did similar I get all this "don't put your eggs all in one basket", stick with Vanguard, Fidelity, major brokerages only, etc. I'm just not getting it.

[marybourg]

25. Sorry. Maybe we're all talking at cross-purposes.

[Shermann]

2. Vanguard or Fidelity or Schwab

Pick one of the big three and ditch that company your friend told you about. Build wealth slowly and ditch the get-rich-quick schemes.

[progree]

7. The article didn't say anything about a quick-rich scheme or one full of big promises or anything like that

Build wealth slowly and ditch the get-rich-quick schemes.

We have some posters here who entrust all their money to a financial advisor... and we get our assed chewed out for having the effrontery of investing on our own.

. Vanguard or Fidelity or Schwab

Interesting, I have accounts with all three (I inherited two of them, and I'm thinking of consolidating down to two, but its not a high priority)

[Shermann]

11. I'm skeptical of this supposed vetting that was done

We have two sentences covering that aspect, then the author moves on to blaming the bank.

They got a hot tip from a friend and chased higher returns without appropriate prudence. No, the article doesn't say that, but I just sort of know.

[progree]

12. Could be, there are innumerable ways to twist and alter this story to fit ones preconceptions

and one way is as good as another, I guess.

There are some people who choose a financial advisor based on a trusted friends' recommendations, that aren't necessarily chasing a "get rich quick scheme".

They got a hot tip from a friend and chased higher returns without appropriate prudence. No, the article doesn't say that, but I just sort of know.

[Shermann]

13. Yes that's it, I've twisted the story to fit my preconceptions

[progree]

14. Exactly. And admitted it too nt

[FBaggins]

3. Doesn't pass the smell test

No fan of BofA here… but nothing in the story points a finger plausibly at them

You don’t write checks to an account at BankX… you write checks to an investment company. You don’t even know who they bank with until they write you a check (or you have your bank research the deposit after the fact). So he couldn’t have been relying on BofA’s credibility when he chose to do business with someone he “researched” online - not that it would have been reasonable to do so anyway.

[progree]

5. Maybe if BOA put a stop on the checks after they were asked to, he would have been more understanding

No fan of BofA here… but nothing in the story points a finger plausibly at them

Even after my lawyer alerted them to what was happening, they cleared a check I'd written to the scammers. They ignored requests from my bank to look at the fraud, and after three requests, my bank gave up.

That said, there's not enough info in the article about the timeline. Hopefully they would have stopped any further checks.

[FBaggins]

6. The receiving bank doesn't stop checks

You put a “stop payment” on a check with your own bank. The receiving bank doesn’t “clear a check”… they present it to the bank that it’s drawn on (the victim’s in this case)

[progree]

8. The writer's point is that they should - after presenting evidence to the BOA as the lawyer did. But oh well.

[FBaggins]

9. Right... and I'm saying that the guy whose financial savvy...

… led him to this scam - doesn’t appear to understand banking either.

[progree]

10. I'm still not getting it either -- why should the BOA keep clearing checks he's written when presented with strong

evidence that it's part of a scam? Couldn't they do a little pause? Oh well. Anyway, not everyone is as super-savvy as the message board experts one encounters online.

[question everything]

16. Never heard about all eggs in one basket?

[progree]

17. Absolutely. That's the biggest problem I have with the article.

I'm thinking of removing "Savvy" from the OP title, as that was a self-description of himself, and your comment highlights the most questionable aspect of his decision-making.

[question everything]

23. OK, I do put all eggs in one basket. All our retirements funds are with Vanguard which now has very unhappy customers

see my new post.

But if one does not use its brokerage account, or does not need assistance then there are no problems. And I don't know if they have esoteric investments like bitcoin or land lease.

Ours are strictly bonds and stock. A former employer had our 401Ks with Vanguard. Mostly. When both of us were the victims of "reduction in force" and it was clear that we would have to move, our CPA suggested to leave the funds there. It is a conservative company with conservative 401Ks he said.

And 20 years ago I've read that one should not keep 401K with former employers. I think that the rule since has changed but we did rolled them to IRAs.

We have played with different funds, got some free advice when we rolled from other custodians and since retired have not played with them except for the RMDs.

[progree]

24. Vanguard holdings

see my new post.

Done and I added some more (the Alan Sloan thing)

But if one does not use its brokerage account, or does not need assistance then there are no problems.

On brokerage account, I am confused. Vanguard used to be a mutual fund company and a brokerage, and they were separate entities. Then about 5 years (?) ago they changed to where its all part of Vanguard brokerage: (name and account numbers changed)

Wile E. Progree — Brokerage Account — 12345601
Wile E. Progree — Traditional IRA Brokerage Account — 65432102
Wile E. Progree — Roth IRA Brokerage Account — 77227703

(it was in a thread just yesterday that we were discussing desertification, and I remarked that without deserts, the world would never have experienced the pure genius of Wile E. Coyote and ACME Company and Road Runner. So that's how that fake name came to mind )

They all have regular Vanguard mutual funds. But my first one has some Sempra stock - my only individual stock holding.
The 2nd one is gone (at last all converted to Roth in a multi-decade process. But until recently it had Vanguard mutual funds in it)
The 3rd one is all Vanguard mutual funds plus a TIPS bond that I purchased on the secondary market.

I've needed assistance on occasion. Damn Trustone screwed up the transfer of a Traditional IRA to Vanguard and Vanguard did what they could to monitor the process (long story) and straighten things out. Unfortunately it didn't get done in time to convert to Roth in 2022, which would have been a very good year for a conversion due to special tax circumstances (long story). So got screwed, but not by Vanguard. I've been happy with Vanguard customer service since 1984 or thereabouts.

And I don't know if they have esoteric investments like bitcoin or land lease.

Well, DAMN! How the hell can anyone afford a pot to micturate in without being able to take advantage of great growth opportunities like these?

Seriously, I never checked it out, but likely you're probably right. I have no interest in anything I don't understand. Though one exception on Vanguard and bitcoin - they probably will let you buy that new one and only bitcoin ETF. Just like one can buy other ETFs and semi-exotics like some closed end funds.

Ours are strictly bonds and stock.

Mine are almost entirely mainstream bond and equity mutual funds and ETFs (my ETFs are at Fidelity and Schwab), and no individual holdings besides Sempra stock, and the TIPS bond, and a small Treasury Direct account that only has I-bonds in it.

I've been reading "Kiplinger Investing For Income" newsletter for a couple of years to diversify my fixed income holdings. (I'm 60% equity and 40% fixed income in my investible assets). But I haven't done a darn thing with any of that. Too many choices and I can't get enthused about any of them.

And 20 years ago I've read that one should not keep 401K with former employers. I think that the rule since has changed but we did roll them to IRAs.

I can't keep up! I remember reading that too, and now I think it's a "it depends". Anyway, it's a non-issue for me too - I rolled my 401K into Vanguard a long time ago, and have since been 401K-less.

[Beakybird]

19. Exactly about all one's eggs in one basket.

My PhD cousin is the COO of a publicly traded company that might have the cure for all kinds of cancer. He's highly successful and considered the smartest person in our family. He thinks the stock is going to grow a hundred-fold in five years.
I had made 50% return in six months on a small investment. I decided to invest 7.5% of my portfolio in his company. There's no way I would risk my entire portfolio on what one person says, and I'm a dumb-ass musician who knows nothing about shit.

[progree]

22. Please see

Please see #21 last paragraph

I decided to invest 7.5% of my portfolio in his company.

Good for you. Only a ring-ring-ring-a-ding-dong would invest all their money with in one stock.

Unfortunately, a lot of people have a huge portion of their retirement savings tied up in their company's stock thru ESOP programs (though they may have put some limits on that finally)

[Bernardo de La Paz]

26. Really, all-in is not a good idea at all, unless you say goodbye to the money in advance. . . . . nt