How to industry sign banking north carolina presentation secure
well thank you all for sticking through this another loss I appreciate it we're going to be talking a little bit about investment fraud here and I want you to think that this is not just applying to people who are very wealthy of Wall Street investors all that kind of stuff investment call it fraud is alive and well in North Carolina unfortunately it attacks a lot of average people and you know a lot of our senior citizens remember when a savings account or a CD could get them 12% interest back in the 70s 80s went yeah right whoa some of you younger people don't know that but but some folks get very easily conned because they think they remember back to those good old days and that maybe they found something that will return those kind of things but fraudsters are working in every community across North Carolina we're doing this workshop in two different parts I'm going to talk generally and John is going to follow up with a little bit more about detail on some of these crimes okay crooks are real they're here in North Carolina and there's a good chance at some point one of them is going to target you you individually or certainly somebody that you're dealing with in your professional life so rather than doing something constructive with their lives these are very smart people who are set up all night long trying to figure how they can say things to make themselves attractive to others make others trust them so that therefore they can help them with their financial needs so we we want to make sure that people have a sporting chance in the investment world to make something with their retirement money nest egg money and you know seniors are the target there's a target for two reasons number one they're the ones with assets folks that are living credit card to credit card that are much younger are not necessarily their targets but seniors who have pensions coming in and Social Security coming in or maybe have sold their house and downsize and and have known to you know reap an asset that's when they come into play the second reason is that unfortunately it's a known fact that after a certain ages certain people's cognitive impairments decrease and so that makes them a little bit more of a target and then you compound that with loneliness and not being socialized much they're looking to make new friends new connections and fill certain emotional voids in their life by this new friendship that unfortunately sometimes turns sour now my job as Secretary of State is we all the stock brokers and investment advisors have to be registered with us in this area I have law enforcement authority I of prosecutors we are the cop on the beat in order for the feds to be interested in a securities issue here in North Carolina or anywhere else it is likely that an individual victim when I first started being Secretary of State the losses needed to be over $100,000 per person now it's up to more like five hundred thousand dollars per person so that is the zone that we work in and compounded with multiple victims some of the things that we do are huge amounts so criminals have learned how to operate in the internet world they've learned how to speed up things with the use of burner phones the electronic transfers that that sometimes people use and are not careful enough about protecting their computers all of those things are right for things to happen so the message I want you to to be alert about is that when people are saying or doing things that they've never said or done before or trusting someone relying on someone that only came into their life within the last few months and now kind of quoting them and talking about their wisdom to call us if somebody's pitching a product if you want to know if somebody's really legitimate in this field call us we call it check before you write one and I could stand up here all the rest of this day and tell you of losses that happened here in North Carolina that if someone would have called us and said is this person allowed to sell an investment product or is this product approved to be sold we could have saved hundreds of thousands and millions of maybe on the trillions of dollars lots of money from people if they have just called because products have to be registered with us if somebody says they've got an exception there are not very many the only person in the whole wide world that can clear an exemption for an investment is me right here or my staff so call us we had a guy in Raleigh that wrote a two million dollar check and then got a queasy feeling and wrote a three million dollar check and if he had called us before writing either one of those he'd have found that that that guy he was writing the check for had just been convicted in the state of Arizona for basically the same thing but he was turning federal evidence against some people higher up and he was going to need 4.9 million dollars to pay restitution we could have told you the whole story and stories like that happen all the time people get their license yanked involuntarily because these brokerage houses do not like to see their names in the newspaper these people frequently don't get charged when they should have been charged when they're leaving a brokerage house because the brokerage doesn't want the bad publicity but we've got that information technically it is there online but it's pretty difficult for mere mortals to read so just call us call us get the person's name and call us because we could we could prevent so so many crimes so here's some of the things that John and I are going to talk about here's what you need to know smart people get conned doctors get conned lawyers get conned but there's an embarrassment about it and we see that with senior citizens smart people prominent community people don't like it to be known that they you know have have lost some money and lots of times people in their profession they can make it up but if you're a 50 year old or a 60 year old working at what I call an average job in North Carolina you don't have enough time left to make up that retirement assets so they're called scam artists for a very good reason they're very crafty they're very crafty at what they do they put on good acts here's what they do they appear to be high standing and moral they give generously to charities whether they're churches or Boys Clubs Girls Clubs those kinds of things new swimming pool in the community a why whatever to get their picture in the paper look very upstanding but it's all a part of their act it's all a part of their their pitch they appear very non-threatening there is such a thing that's known as affinity crime people work through groups that are already together churches are one they will get into church group they will say the same language they will pray together they work on projects together they will you know comfort people they will do everything else that ordinary church member and ultimately they are working through that church group we had even one church who invested their building fund with one of these characters we had one church where they kind of signed a pledge not to tell what was going on one of the key things if somebody says it's a secret it's a secret don't tell anybody that's part of what the act that they're doing there are no secret investments out there lots and lots of research and analysis goes into you know picking investments in what have you if you don't understand how the money is made in the investment you ought not be talking about it if you don't understand what the product is you don't need to be thinking about being involved in and if they need your money to complete some big deal like finishing battleships or setting you know ocean liners you know my little $50,000 if I have $50,000 is gonna finish a big battleship come on then there are things that seem very mysterious and like over your head really mumbo-jumbo talk things like exchange-traded funds or index funds or certain world monetary things like and and and getting you to think that you can get a penny off of this and there's millions of transactions a day and you know if it seems too good to be true call us if it seems too good to be true if you can like thirty or forty percent interest people do fall for this I'm sorry to say and sometimes people will fight you when you try to tell them that this is not really real part of the con is that frequently the con will go on for a couple of years people may get payments that's only to get more people involved because that person that got good returns and they've been in it for a while whether they actually got money or just got something on paper they'll talk to their friends at the Hardys or or McDonald or wherever they gather with with people and somebody will saying I'm really having a hard time prices are gone up gas is going up and then somebody only ventures that we say well I found a good investment you know and they'll tell them about it so sometimes be people become unwilling salesmen for others let me tell you I talked in the other about those 12 counts those felonies the the for each three at three different offenses for each that guy up in Forsyth County was charged with ripping off about a million dollars and we don't know we think we're trying to find more victims there we did a cease-and-desist on him and then we did the the actual charges he's being held on five million dollars secured bond which is quite pleasing to me because sometimes judges don't put these folks under very much bond most of these folks that are frauding out there are going to be 50 years old or more they're going to appear to be mature respected people they're not going to be a bunch of whipper snappers although we did have one young guy about 21 years old that had ripped off a bunch of people down in down in Brunswick County but you know they don't look like the typical criminals but call us the moment that you think something is fishy John publishes a monthly investment newsletter and does a very good job with keeping up with the cases and explains what's happened in the cases sometimes that gives people an idea about something they're hearing from their neighbors of their family member talking about John also has something in their every month that explains some of these phrases that you hear maybe on Bloomsburg report or some of the other financial shows on TV he makes common sense out of those then we have a tracking of cases that are still pending and also tracking of all the investor education activities that we're doing throughout the state so we're that's a very good resource for you to use we had one of the ones up in the mountains recently this high living is very much a part of it this guy bought Jaguar and took his friends on you know nice trips and parties and restaurants and all that kind of stuff they'll tell you up and down they're not doing anything wrong they're not doing anything wrong and the worst one that slams me in addition to working through a church which I think ought to be an aggravating circumstance for for punishment is when they flat-out admit that they have violated the law but they say to the person if you want your money back if you turn me into the state or anybody else how you're going to get your money back unfortunately folks that's that's a flaw with the person who doesn't act also because they're if they've been scam and it's been stolen from them they're willing to let that person steal from somebody else to repay them you know I don't know we had the state had a very successful case that was around in the davidson area called Zeke rewards and there were people that went on for a long long time it was a penny stock kind of operation and that one became a very very successful case in that there were a lot of people in that part of the state and other states who had made a lot of money in it and it was a federal case not a state case I like taking my cases to federal court because they have asset recovery which is much easier than it is in North Carolina under North Carolina law and in that case maybe as much as 3/4 of the money was returned to the victims because under federal law they there was a receiver appointed who had all of the records from the company and he was liquidating properties and houses and yachts and boats and something over in Bermuda or some other place but also had the names and addresses of everybody who had invested earlier and saw what kind of profits they had made and they were made to disgorge that they were asked to voluntarily send back the money that they had earned and if they didn't federal law allowed the receiver to go after these people for the disgorge 'men and needless to say if you get a letter from somebody who's been appointed by the federal court saying send back this money most people do unfortunately here the cases that we work on the money's been wasted away either keeping up the scam or you know whatever may have caused somebody a boyfriend girlfriend substance abuse some type of addiction that became very expensive for them gambling addiction the money is is frittered away there they're kind of two categories of folks that we deal with some are the professionals who at one time we're licensed and then for some reason have lost their license generally it's for not following company rules whether that involves stealing or just selling a product that was not approved and then there's the out-and-out folks that never held a license and we have both varieties here in in North Carolina so those are the kind of things that I want to tell you is going on here we as southerners and we as older folks are just too cotton-picking polite we need to hang up the phone already today I have ignored four before coming here at noontime for telephone calls that look like they were from North Carolina some of them weren't I don't answer any telephone calls anymore unless I see somebody's name up there that I know would be calling me because you have just if you answer the phone you've just validated the fact that it's a live phone if you click that you don't want to get any more calls that validates that it's a live phone somebody's going to sell that and it's going to be marketed out to somebody else you're going to get more of these cotton-picking calls my best advice to you is do what I'm doing let it go to voicemail of those four telephone calls there wasn't a single voicemail left so they'll either want to sell me something or tell me I actually had one to leave the IRS scam that I was gonna be arrested for not paying the IRS actually left that message on my phone you know so one last thing I want to talk about and that's cryptocurrency how many of you heard of cryptocurrency how many of you all know what it is not a signal hey okay we got one here let me let me it's a new vocabulary it's kind of kind of be trendy in the securities area now cryptocurrency is privately made up units that mimic money on the internet they mimic money they are not backed by any government they are not actual currency in any traditional sense in fact they only exist on the internet through codes that let you buy them use them or sell them the most famous is Bitcoin and people have been fascinated because the price is going up and up and up that's one of the brand names there are quite a few out there they are not legal tender put out by any National Treasury and you know these these people behind these can create a new one every day or can create 10 a day out there you know anyway we don't regulate crypto currencies no government does but we do regulate investing so here's where the difference comes we've put two companies alleged companies Internet crowds out of business with cease and desist orders on the internet if you want to acquire cryptocurrency to buy things with if you want to take your next paycheck and turn it into cryptocurrency and go buy pizza with it and fill up your gas tank with it and all that kind of stuff pay your kids for taking out the trash or whatever you do in cryptocurrency that's fine that is not illegal but if someone sells cryptocurrency here in North Carolina for you to hold that becomes an investment that's just like a stock you buy a stock and you hope that it will spin off dividends or it will appreciate that's a
investment they have to be registered with us as an investment and the person selling has to be registered with us so we put two cryptocurrency promoters that were here in North Carolina a cease-and-desist on them on the one company they said they were in the United Kingdom the minute we put the cease-and-desist on the North Carolinian it that company disappeared from the web we have been trying to serve them to make our cease and desist order permanent and effective in the United Kingdom there is no address there is no there at the address that they say all that was on the internet was two little cartoon characters if you want to invest in Hello Kitty or something like that go right ahead but no I'm kidding about that the other one wasn't that was a 21 year old selling the other one was somebody in the Forsyth County a man who had been involved we've been watching him for a little while and he has now added cryptocurrency to his array of things he was promoting we were not sure he was crossing the line on some of these other stuff but when he started to encrypt though currency we put a cease and desist on him and took his we had a search warrant so we took his computer contents and are trying to follow up on some other things but that company also poof was just completely gone that one allegedly was in Dubai we've been trying to serve them and Dubai and have not been successful but poof they were gone now I'm sure they put up something else they're kind of like the Canadian pharmacies you take one down and poof you know they can put up something else so that's where we intersect with cryptocurrency so if you get somebody that's talking about that if they're buying it to hold to make a profit off of it then that is where we come in and the person selling it and the product have to be registered and there are no people registered in North Carolina to sell there are no currencies registered in North Carolina so buying it to hold is illegal here and it's not the only good for the buyer but it is it is illegal here in North Carolina so that's what we do we appreciate getting complaints we would rather have a hundred complaints that don't amount to anything that's really big because we do get some people to say I usually get my dividend check on the third day of the month and it didn't get here they're calling the afternoon of the third day we find out no there was something wrong with the computer drop on it or something in the mail and it comes to next day we would rather have a hundred of those we'd rather have 99 of those and missed that 100th one that really is a crime so please you know use us the complaint form is up there SOS NC dot-com SOS NC gov we used to be a dot-com and I'm going to turn it over to John and he's going to tell you about some of the more details that are very interesting and sometimes funny about the they're not funny though for the people that have lost their money I have about 10 minutes to get through a bunch of stuff so I'm gonna do like mr. Benson that did this morning and kind of push through really quickly through some of the things the first thing I want to point out is you know who's the most at risk obviously we know it's senior seniors are the number one target and why is it well it's because they have the cash right a lot of seniors are at the point of their lives where they have liquidated their assets they get a monthly check coming in of some sort and that's really what the crooks are looking for I do these presentations a lot before senior groups and I always have a bunch of them come up to me afterwards say well I'm on a fixed income I'm not really a target am I and I say yes ma'am oh yes sir because look at it from the perspective of the crook yes they hope you're Bill Gates's grandmother but that's not really what's their motivation their motivation is if I can get a dollar from you that's a dollar I didn't have to begin with so you don't have to be rich to be a target you just have to be someone who has assets and seniors are the number one target now there are some risk factors that beyond just being elderly that or having access to cash here's some you know you're familiar with these Duke University did a study that found that 35 percent of people over the age of 71 have some form of mild cognitive impairment or Alzheimer's UCLA did a study in 2012 that showed that older brains had a harder time recognizing the the kind of cues that younger brains are able to pick up when somebody is being dishonest or deceitful and so that all sort of combines to explain why seniors and older adults are more vulnerable now let's explode some of the myths that we may have out there the perceptions of who that the likely victim is I think we tend to think that it's older women the stereotype is that the you know the man was the one that did all the family finances and took care of everything he passed on and so it was his poor little widow who had now to figure out how to pay the cable guy and stuff like that we also think it's the bozos the dummies the people who are just really kind of too stupid to get out of bed in the morning and we also tend to think that it's people who are using these things as kind of like a home run just swinging for the fences people trying to hit it break well in reality the most likely victims of investment fraud tend to be male they tend to be college educated men they tend to be college-educated men having a higher than average income ladies you know who I'm talking about the kind of man who won't ask for directions like me right yeah you you you're self-aware aren't you sir so it's the kind of guy who says you know who's used to being the alpha male you know making the decisions in both business and at home I trust my judgment I know I'm a smart guy so therefore I know what to look out for I know I can't get scammed but as the secretary mentioned we had a well-known a prominent person here in the North Carolina gets snookered out of five million dollars okay look at the victims of Bernie Madoff all right you had to be the average person couldn't go and invest with Bernie you had to actually be invited to get ripped off by Bernie okay the very smart people so if they can get conned anybody can all right now an area that gives us a concern in the Secretary of State's office is so-called free lunch seminars now there is nothing inherently illegal about offering a free meal to get somebody to come listen to you to talk but you got to ask yourself why why are they giving me a free meal why you know we humans don't do anything if it doesn't involve money right and you know we see these thing here where it says leave your checkbook at home no cost or obligation nothing will be sold that's because they want to get you one on one okay they don't want to get in front of a big group and and have a bunch of people talking asking questions and everything they want to get you one on one so that's why they say they want to put you at ease you know leave your check but I'm not gonna try to sell you anything I'm gonna do that later nudge-nudge wink-wink okay now one of the areas that gives us concern with these is the over-reliance of these very fancy sounding names this person says he's been in the business for 20 years and he's a senior estate planning specialist now at first blush that sounds impressive until you ask the question well what is a senior estate planning specialist how do you get to be one Madam Secretary do you confer this title on anybody do the feds I don't know how you get to be one all right the point here is this the the financial industry is full of very fancy sounding titles and and but that's all they are they're all fancy sounding they are designed purposefully to try to invoke in your mind that the person that has one of these titles has some experience that you don't have now where we're really concerned is all those little letters that are after people's names okay now if I handed you a business card and it said john mayer and CH SG on it what would that say to you it says nothing no but you know see probably stands for certified so you know my point is this that this most of the time i get blank stares when i ask people about this and that's exactly the reaction I expect until you discover that CHS G stands for so now how many CHS teeth now but again the point is just be very careful and very skeptical of relying on somebody's credentials credentials can be faked credentials can be puffed up to make them sound like they more than they should be what do you what would you expect what would you hope the minimum level of education required to be a licensed lawfully registered stockbroker in the state of North Carolina anybody should be at least of high school Sarah you would think you don't have to graduate pre-k all you have to do is make a 70 or better on the licensing exam and you could be a stockbroker now how scary is that I'm not suggesting that the exam is easy I'm not suggesting that at all but I'm just saying it you don't have to be a graduate of the Duke Fuqua Business School to be a stockbroker okay now secretary mentioned cryptocurrency that's the biggest brightest glitziest thing right now as she mentioned these only exists they they may call themselves coins they may call them tokens there's nothing physical there they are purely a series of ones and zeros that exist exclusively on the Internet okay their values are only what people are prepared to pay for them or say that they are if we agreed that this little clicker is worth five dollars and you're happy with that exchange you give me a $5 bill I give you the clicker we're happy that's that's great but when you decide that no this isn't really worth five dollars you know I'm not going to accept it you know then the whole thing kind of can can collapse so just understand that there are over 1500 different crypto currencies it's open source coding so anybody with any bit of computer savvy could easily create their own digital coin you can have your own coin and put it out there on the internet for anybody to buy there's nothing again inherently illegal about that it's when you use it in investing where it becomes like a swell it becomes a security essentially and we see something called an initial coin offering they can be legitimate they can be a legitimate way for a business to raise financing capital to operate their business but it's oftentimes being used not that way it's being promoted as that but it's not really operating that way it's nothing more than a scam these kinds of things are very susceptible to pump-and-dump scams they will on they will get together and say at a certain time we're all going to buy this coin at this low price and then we're gonna get on our social networks and we're gonna just pump and pump and pump and just promote it and then when the price rises up here at 6 o'clock on Tuesday we're all gonna coordinated sell and we're gonna reap the profits and everybody else is gonna get out you know they're they say this blatantly on the Internet this is the case of the secretary alluded to these are our two cartoon characters this is Andrew and Mike I guess this is Andrew and this is Mike I don't know they're based somewhere in Central Europe what country is central Europe I don't know so would you trust a cartoon with your money well if so then these fellas have a deal for you all right very quickly because we're running out of time I did want to bring you to your attention some new things that are happening finra the Financial Industry Regulatory Authority they are the the self regulating organization that regulates the brokerage industry they had a rule that became effective in February that says that brokerage firms may place a temporary hold on disbursements from the accounts of specified adults when there is reasonable belief of financial exploitation all right so there's this thing that's out there now this rule the brokerage firms are expected to adhere to there is also an amendment to existing rule that says again effective February 5th the brokerage firms are required to make reasonable efforts to obtain contact information of a trusted contact person for that account holder so that if again if there's a suspicion of fraud or abuse exploitation then the brokerage firm can't reach out and contact somebody to make to make them aware of it okay right this is a FINRA rule so it only applies to brokerage firms so you know we we've done all kinds of partnership I and and our team has done over 1,300 different presentations we've partnered with a lot of different organizations like the conference of district attorneys in cp3 a the North Carolina senior Consumer Fraud Task Force of which I am a co-chair along with my partner in crime Stephanie bias we want people thinking with their heads and not their hearts okay the con artists want to make an emotional appeal they want you thinking emotionally all right they want you to think that you can have a ten layer triple fudge chocolate cake eat the entire thing and not gain an ounce but I'm here to tell you it doesn't work that way I have been looking for that magic cake secretary makes a great cake but it's not that magic here's you know if you ever have a complaint or an issue we want you to document document document it's going to be a he-said she-said situation if you run into any kind of a question whoever has the best paper trail generally has the better stronger case so document everything when you're talking to your your your brokerage or investment professional but red flags promises of a high rate of return it's the secretary said earlier there are no guarantees with investing if somebody says I can guarantee you X percent they are lying to you there are only two entities that can absolutely guarantee you any specific rate of return the US Treasury and your federally insured bank or credit union on their deposit accounts anybody else that says I can guarantee you ten fifteen twenty one hundred and twenty five percent they're lying to you they're lying to you don't let embarrassment keep you from contacting us that works to the advantage of the Kron artists they want you to feel shame they want you to feel be silenced into to let them just be and and do their work alright we want to get them off the street and all the justice that they deserve there's my contact information I want you to feel free to call me shoot me an email I do weddings and bar mitzvahs so if any of you have I don't do pony rides but but if you have a group of people in your neck of the woods where you think of a fraud prevention presentation would be helpful I'm more than happy to do it as long as she lets me travel and so far she's not clipping my wings so we love to do it I will hush at this point do you have any questions that we need to transition but any questions well we appreciate your your time and and this was the best one after all thank you all [Applause] you
