Instead, the man used his investors' money on private jets, cars, limousines and gambling trips to Las Vegas.
Last month, the North American Securities Administrators Association (NASAA) released its annual survey of state securities regulators, listing the most common ploys used to cheat investors out of hundreds of millions of dollars. Here are just a few:
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• Ponzi schemes. This is a tried-and-true con in which the money collected from later investors is used to pay early investors. The con collapses when not enough investors can be recruited to keep paying those who got in early. As old as this scam is, you would think people wouldn't be swindled. And yet last year, the Pennsylvania Securities Commission broke up a massive Ponzi scheme and returned $10.6 million to 300 investors in Pennsylvania, Delaware, Florida, New Jersey and Australia. Just so you know, it's highly unusual to recover money in this type of scam.
• Affinity fraud. This is perhaps the most insidious form of fraud. It's how the Georgia minister did his dastardly con. In affinity fraud, con artists often use religion or ethnic status to gain people's trust -- and their life savings.
• High-yield investments. Con artists promise investors high returns if they invest in "risk-free guaranteed high-yield instruments." It's a totally bogus prime bank scam.
For a list of the top 10 investment scams, go to NASAA's Web site at www.nasaa.org.
People, please watch out for investment promoters offering you a return on your money just low enough to sound plausible and not trigger warning bells -- but still high enough to be tempting.
One of my personal money mantras is "keep it simple." Keeping it simple can be the most sophisticated thing you do with your money. Don't invest in something you don't understand. Use your ignorance as a weapon against getting involved in bad investment deals.
Invest time before investing any of your money. Always check references with the appropriate state or local government agency, the state attorney general's office or the Better Business Bureau. A link on www.nasaa.org will give you all the information you need to contact your local securities regulator.
Don't let your desperation to increase your retirement savings or your kid's college fund lead you into the hands of a swindler.
Finally, here's an investment truth you can bank on: There is no high-return investment that is low-risk. Zip. Nada.
Mark this down on a note card and attach it to the front of your savings account or investment account statements: High return -- low risk -- lowdown, dirty lie.
Michelle Singletary discusses personal finance Tuesdays on NPR's "Day to Day" program and online at www.npr.org. Readers can write to her at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071. Send e-mail to singletarym@washpost.com. Comments and questions are welcome, but because of the volume of mail, personal responses may not be possible. Please also note that comments or questions may be used in a future column, with the writer's name, unless a specific request to do otherwise is indicated.
