Stan's World - Protecting Your Pocket
It’s staggering when you consider how many people are trying to separate you from your money. Early in the post-Madoff days, I once joked to a colleague at a financial planner’s conference that we should add a fee for our integrity. Imagine the email clients receive at year-end: “I didn’t steal any of your money this year. Attached please find an invoice for my integrity.” Sadly, that gallows humor joke has yet to wear out as the years have passed.
Many years ago, a client called and asked me about an email she received stating she won a lottery in Nigeria. I replied, “Did you buy tickets for a lottery in Nigeria?” That was when I should have realized the internet would unleash havoc upon us all. Unfortunately, when it comes to internet crime, those were the good old days.
It saddens me to read stories about individual investors who have lost money to various scams. We’ve all heard about Bitcoin scams or the ‘grandchild who needs help’, or scams committed when a third party takes over your computer after you respond to a pop-up and then downloads your checking and savings account information. We’ve heard about phone calls from “Social Security” or the “IRS” seeking your hard-earned dollars. But it’s especially infuriating when I hear about scams committed by people who have a relationship with their victim; people who were known and trusted.
An article about the actor Al Pacino caught my eye recently because it disclosed that Pacino was ripped off by his own accountant to the tune of $50 million(!!).1 In our last newsletter, we discussed the tragic case of Barry Heitin, a retired attorney who lost $740,000 to scammers who passed themselves off as government investigators2. In recent news, we can point to the NJ-based real estate investment firm that defrauded hundreds of investors out of $658 million.3
Imagine how Ron Lieber felt when he opened the morning paper to read that his financial advisor was indicted for stealing $6 million from his clients. Considering that Lieber writes the “For Money” column for The New York Times, a personal finance column, one can only imagine his surprise. (As it turned out, Lieber was not one of the victims.)
The moral of all these stories is we’re all susceptible. We can’t write enough memos or newsletter articles warning you to stay vigilant about your money. There are bad actors with sophisticated software who can use that technology to imitate the voice of a family member, a government official, and everyone in between. Or use that technology to hack into a family member’s email account and then email you about an urgent problem that requires money NOW. These folks are good at what they do.
I should point out you have a few things working in your favor. Your accounts are held by third-party custodians, such as your 401(k) provider or Charles Schwab. That means your investment accounts are uniquely yours; they’re not held in a large pool of money and controlled by your financial advisor. Bernie Madoff kept his multi-billion-dollar scam going for years because he combined his clients' funds and controlled the information printed on client financial statements. Your statements, however, come directly from Schwab, and you can verify account balances 24 hours per day, either online or by phone (Schwab Alliance Team: 800 515-2157).
Schwab also has systems in place to prevent scammers from accessing your money. Should any of those scammers breach Schwab’s defenses, Schwab has coverage through an insurance policy written by Lloyd’s of London.
We also have systems in place to guard against fraud. One example: every time we receive an email requesting a wire transfer, we call the client to confirm (or not) the email request verbally. Requests to wire/transfer funds to a third party (e.g., a car dealership, an escrow agent for a real estate closing, or an overseas account) are especially scrutinized by Schwab.
We don’t share fraud stories to scare clients. Rather, we share them so you are more aware of the world around you. While that world can be scary, we’re here to help you navigate it. While it’s likely that most clients will never be impacted by a criminal event, some will. It’s also important to note that scams are often not successful if you don’t take any actions to aid them. Don’t click on pop-ups; don’t speak to unknown callers; and only call phone numbers you have secured from a web search (or the back of your credit card). Your inaction is your best defense; doing nothing virtually always works.
You should never hesitate to call or email us if you receive a questionable email, letter, or phone call. Or call a relative or a trusted friend. Call someone who can help you take a deep breath and review the situation. (Another clue to watch for: being pressured to act quickly is one of the telltale signs you’re being scammed.)
Many clients routinely send us emails when they receive trade confirmations from Schwab, seeking confirmation that we were the ones who placed the trade(s). Feel free to do the same because when it comes to vigilance, more is better than less.
It’s your money. Let’s continue working to keep it that way.
1 Mohamed, Theron. “Al Pacino Says He Went from $50 Million to Broke, Joining a Long List of Stars Who’ve Experienced Money Troubles.” Business Insider, Business Insider, 20 Oct. 2024,
2 Siegel Bernard, Tara. “How One Man Lost $740,000 to Scammers Targeting His Retirement Savings.” The New York Times, 29 July 2024.
3 Sheldon, Chris. “N.J. Ponzi Schemer Who ‘trampled’ on Clients’ Trust Will Spend 12 Years in Prison.” NJ.Com, 13 Nov. 2024.
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