You work hard for your money, and there are legions of people working just as hard to steal it from you. So what’s hot in five-star boiler rooms these days? Crowdfunding, variable annuities and pot, among other things.
Con artists are a busy lot. Last year, state securities regulators received 11,304 complaints from investors and conducted 4,853 investigations, according to the North American Securities Administrators Association. Many of the top scams are tried-and-true favorites: Ponzi schemes, phony private stock offerings, real estate investments, and oil and gas schemes.
Recently, however, crowdfunding schemes have risen to the top of state regulators’ concerns. The Jumpstart our Business Startups Act (JOBS), signed into law in 2012, eased requirements for raising money for small businesses. Crowdfunding, raising money for businesses and causes online, has been on a roll ever since. The problem: It can be tough to figure out what’s a good investment or worthy cause and what’s just a scam.
“Crowdfunding is a good way for small businesses to raise money locally,” says Vermont deputy securities commissioner Michael Pieciak. But sometimes the crowd is simply funding a con artist’s dreams of big house and a flashy car. And you may have limited legal liability if a crowdfunded investment doesn’t work as expected, NASAA warns. And unfortunately, the only way go get additional information about the investment is to research it carefully.
