Who among us wants to admit that they fell for a Ponzi scheme or some other kind of financial fraud? Even among ordinary people who aren’t trained to discriminate between legitimate investments and phony ones, acknowledging that you were duped isn’t easy.

That’s why Mitch Anthony’s column in this month’s Financial Advisor took a lot of guts to write. Anecdotal conversations with numerous financial advisors confirm that incidents of lousy private investments, some constituting financial fraud, is happening with increasing frequency.

The fact of the matter is that almost a decade after the mammoth scams of Bernie Madoff and Allen Stanford collapsed, financial fraud is a lot more prevalent than many of us want to believe. The president of the Philadelphia Federal Reserve Bank, Patrick Harker, goes so far as to call it a threat to the gigantic, sprawling U.S. economy.

Why? Never before in our history have their been so many people, most of them over 60 years old, with so much money. Yet for a majority of today's retirees, their 401k plans and other assets are barely sufficient to sustain them for what could be a 30-year retirement.

Faced with trying to make that money last, they are acutely vulnerable not just to frauds, but to bad investments as well. Central bank monetary policy, combined with increased longevity, has forced them to consider far riskier asset allocation strategies than previous generations of retirees.

All too often, fraud is perpetrated by someone the victim knows. Sometimes the agent of financial destruction can be a true believer who isn’t acting maliciously but is a hoodwinked victim himself.

In Mitch Anthony’s case, the advisor who recommended the bogus real estate investments was his accountant, who had provided services for a suicide prevention non-profit Anthony founded and never charged a cent to do it. In Mitch’s words, he is a “decent guy who got caught up in a scheme” way over his head and didn’t know how to get out of it.

Anthony’s mother lost her entire life savings and the accountant has repaid her at least 50 percent of what she lost. This accountant may not have been a bad person, but it’s extremely likely that he wanted to be guy who could tell his clients about a lot of sexy private deals.

What can be done to curtail financial fraud? On February 5, advisors and brokers will be required to oversee and ensure that family members are acting in an older client’s best interest.

But more needs to be done. The statute of limitations covering most of these crimes lasts only five years. It was written in 1954.

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