DEAN GRAZIOSI INVESMENT SCAM

Dean Graziosi Tells You How to Spot an Investment Scam

Anti-Investment Scam Strategies by Dean Graziosi

About Dean Graziosi

Dean Graziosi is a real estate investor who is passionate about teaching others how to create wealth from real estate. Dean Graziosi writes books to teach others how to do what he has done. Dean Graziosi's books have become best sellers. Dean Graziosi has also hosted dozens of his own real estate shows on TV; Dean Graziosi is currently an active investor and has been since 1986. Dean Graziosi has literally built a fortune through buying and selling real estate.

From Dean Graziosi:

I’m not sharing this with you to brag. I simply want you to have a little background on me so you will know that I am a credible person. If you’re not familiar with me, you wouldn’t know the majority of my daily life revolves around teaching everyday people how to do what I’ve done.

Over the years I’ve seen my share of investment scams promising people money for nothing. Every day in this country, people are being victimized by these investment scams and wind up suffering tremendously! So I decided to hire a writer to research the investment scam problem and create this site for my readers and the general public. It’s my contribution to help inform and protect you from becoming the next victim of a investment scam. I sincerely hope this information helps you stay safe from investment scam and make smart decisions.

Investments Scams

Where Do Investment Scams Lurk?

Scam Online Investment Newsletters

Beware of sensationalized headlines. Some are genuine, some are hype. There are companies who pay people in cash or securities, to write online newsletters "touting" or recommending their stocks. While this isn't illegal, the federal securities laws require the newsletters to disclose who paid them, the amount, and the type of payment. But many scammers fail to do so. Instead, they'll lie about the payments they received, their independence, their so-called research, and their track records. Their newsletters masquerade as sources of unbiased information, when in fact they stand to profit handsomely if they convince investors to buy or sell particular stocks.

Some online newsletters falsely claim to independently research the stocks they profile. Others spread false information or promote worthless stocks. The most notorious sometimes "scalp" the stocks they hype, driving up the price of the stock with their baseless recommendations and then selling their own holdings at high prices and high profits. Before you buy into any advice in one of these newsletters, investigate who has compensated them.

Scam Bulletin Boards

Fraudsters often embellish a company or pretend to reveal "inside" information about upcoming announcements, new products, or lucrative contracts.

Also, you never know for certain who you're dealing with – or whether they're credible – because many bulletin boards allow users to hide their identity behind multiple aliases. People claiming to be unbiased observers who've carefully researched the company may actually be company insiders, large shareholders, or paid promoters. A single person can easily create the illusion of widespread interest in a small, thinly-traded stock by posting a series of messages under various aliases.

Scam E-mail Spam

Remember when "spam" meant meat in a can? Not anymore. Today’s “spam” or junk e-mail, is so cheap and easy to create, fraudsters increasingly use it to find investors for bogus investment schemes. They use it to spread false information about a company. Spam allows the unscrupulous to easily target many more potential investors than cold calling or mass mailing. Using a bulk e-mail program, spammers can send personalized messages to hundreds of thousands and even millions of Internet users at a time.

What Are the Most Common Scams?

The "Pump and Dump" Scam

This is a common scam and it works like this. You see a message posted online that urge readers to buy a stock quickly, or it tells you to sell before the price goes down. Often the writers will claim to have "inside" information about an impending development or to use an "infallible" combination of economic and stock market data to pick stocks. In reality, they may know nothing about the market; they may be paid promoters who stand to gain by selling their shares after the stock price is pumped up by gullible investors. Once these fraudsters sell their shares and stop hyping the stock, the price typically falls and investors lose their money. Fraudsters frequently use this ploy with small, thinly-traded companies because it's easier to manipulate a stock when there's little or no information available about the company. (Stock prices of small unknown publically traded companies are deemed to be thinly traded).

The Pyramid Scam

Be wary of messages that read: "How to Make Big Money from Your Home Computer!!!" One online promoter claimed that investors could "turn $5 into $60,000 in just three to six weeks." In reality, this program was nothing more than an electronic version of the classic pyramid or “Ponzi” scheme in which participants attempt to make money solely by recruiting new participants into the program. Named after Carl Ponzi, who collected $9.8 million from 10,550 people (including ¾ of the Boston Police Force) and then paid out $7.8 million in just 8 months in 1920 Boston by offering profits of 50% every 45 days.

A swindle of this nature, referred to as a "bubble" for the hundreds of years it has existed and now referred to as a "Ponzi scheme" is basically an investment fraud where investors are enticed with the promise of extremely high returns or dividends over a very short period of time.

This shorter period between payouts and high rate of return is required to create the impetus for the frenzy that is to follow as word leaks out, and is soon verified, by numerous sources. The truly experienced con will balance these two factors (payout period and promised rate of return) against the expected duration of the operation so as to maximize his take while still maintaining some semblance of credibility.
In the true sense of borrowing from Peter to pay Paul, ponzi schemes are a simple fraud whereby initial investors are paid exceptional dividends as interest checks from the deposits of a growing number of new investors.
"Profits" to investors are not created by the success of the underlying business venture but instead are derived fraudulently from the capital contributions of other investors

The "Risk-Free" Fraud Scam

"Exciting, Low-Risk Investment Opportunities" to participate in exotic-sounding investments – such as wireless cable projects, prime bank securities, and eel farms – have been offered through the Internet. But no investment is risk-free. And sometimes the investment products touted do not even exist – they're merely scams. Be wary of opportunities that promise spectacular profits or "guaranteed" returns. If the deal sounds too good to be true, then it probably is.

Off-shore Frauds & Scams

At one time, off-shore schemes targeting U.S. investors cost a great deal of money and were difficult to carry out. Conflicting time zones, differing currencies, and the high costs of international telephone calls and overnight mailings made it difficult for fraudsters to prey on U.S. residents. But the Internet has removed those obstacles. Be extra careful when considering any investment opportunity that comes from another country, because it's difficult for U.S. law enforcement agencies to investigate and prosecute foreign frauds.

How To Avoid Scams

Remember, do your research and check things out. If it sounds too good to be true, it probably is so don’t be afraid to ask questions!

Dean Graziosi

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