Fraudulent investments and investment scams can come from a variety of sources and take many different shapes. Some of the most common signs of a fraudulent investment or scam are listed.

1. Identifying Scams, Ponzi Schemes & Other Fraud
Fraud is one thing most people think won’t happen to them. Of course, everyone thinks
it’s possible that it could happen, but most people don’t see how even an opportunity for
someone to defraud them would ever come around. After all, it’s common advice to shred
mail, bank statements, and other documents with sensitive personal information.
Computer experts urge the public to use strong passwords for online accounts and only
give out personal information to secure, trusted websites. Yet, most fraud victims are
often quoted as saying “they never saw it coming.”
Equity Trust Company knows fraudulent investments and investment scams can come
from a variety of sources and take many different shapes. As a passive custodian, we are
not permitted to evaluate investments for our clients. By providing self-directed IRAs, we
want our clients to feel fully empowered to thoroughly investigate and examine
investment opportunities that come their way. Equity Trust Company urges our clients to
reach out to CPAs, financial advisors, attorneys, and other trusted individuals from their
personal history to create a team of trusted advisors. Along with your knowledge and
personal expertise, your team can help you find and review opportunities to make sound
investment choices.
Asking the Right Questions
Equity Trust Company knows the sad truth is fraudulent investments, Ponzi schemes, and
scams can look legitimate and even come through a trusted source. Listed below are
some of the most common signs of a fraudulent investment or scam.
1. Did you find the investment or did the investment find you? Be cautions if
you receive unsolicited, unexpected calls, emails, mail, or even visits from
strangers or an unfamiliar company. This can be a tipoff that this is a fraudulent
investment or scam.
2. Does the deal sound just too good to be true? If the person pitching the
investment promises low or no risk, assures quick, high rate of return, or states the
investment is guaranteed, be very skeptical. We all want to believe in finding a
good opportunity, but there comes a time when good crosses over to too good.
Even the best investments come with the possibility of loss and a fair degree of
risk.
3. Did you feel bullied, harassed, or intimidated by the salesperson or
investment promoter to agree to the investment? There is no reason to tolerate
high pressure sales tactics, especially when it concerns investing. Take it as a
warning sign if the sales person is pushing a prospective investor to sign up
immediately or trying to talk them out of taking some time to think it over and
research the deal. Equity Trust Company urges our clients to keep their guard up,

2. do their due diligence and be prepared to walk away if an investment starts to
smell like a scam, fraud, or scheme of some sort. Legitimate investment
promoters understand getting a second opinion.
4. Can you explain, in your own words, what the investment is and how it
works? People trying to commit fraud or run a scam will seek out people who
may be unsophisticated or inexperienced in investing. Using fancy terms,
elaborate or complicated concepts or trying to make a person feel stupid or guilty
for asking questions or requesting documentation like a prospectus are all red
flags for fraud.
5. Does the investment sound like a conspiracy theory? Legitimate investments
don’t rely on “special secrets of the rich,” “inside information ‘they’ don’t want
the public to know,” or use rhetoric regarding how the U.S. Government is
keeping the ‘little guy’ from being rich.
6. Does this investment require all or the majority of your life savings or are
you being pressed to take out a loan or cash in your IRA? Legitimate
investment advisors advise their clients to diversify their investment holdings and
suggest investments that meet their clients’ tolerance for risk.
7. Can you verify who the investment promoter is? Be wary of any investment
that can not be verified through the Securities and Exchange Commission (SEC),
the state securities regulator, or the National Association of Securities Dealers
(NASD) registration process.
8. Can verify where your funds are and how they are being used in the
investment? Equity Trust Company stresses caution with any investments offered
from overseas or international locations or schemes to hide funds in tax shelters,
trusts, or offshore accounts.
9. Did you have any trouble cashing out or any delays in getting your money if
you want out of the investment? Fraud such as Ponzi schemes, pyramid
schemes, and other fraudulent investments rely on other victims’ funds to cover
the amount of payouts to earlier investors.
If you suspect an investment to be fraudulent or have any concerns about your
investment, report any wrongdoing or scams to these organizations.