Finance & Loans

5 Ways to Avoid a Ponzi Scheme:

Imagine trusting your hard-earned money—such as your retirement savings—to a financial adviser only to lose it all in a fraudulent scheme. Obsessing about whether your money manager could be the next Bernard Madoff, the alleged mastermind of a $50 billion Ponzi scheme, isn’t going to do much good, but some healthy skepticism won’t hurt. Here are five tips for investors so they can avoid getting taken to the cleaners:

Make sure your adviser is legit. If you’re looking for an adviser, ask friends and relatives for recommendations—but don’t stop there. A scary truth is that anyone can call himself or herself a financial planner or adviser, so it pays to check with national organizations that issue credentials. They include the National Association of Personal Financial Advisers, the Financial Planning Association, and the Certified Financial Board of Standards. Each offers a searchable database with contact information for planners in each state. The American Institute of Certified Public Accountants has a list of CPAs who’ve earned the personal financial specialist designation.

Dig deep. Put on your gumshoes and find out how long the adviser has been in the business. Ask to see his or her ADV Form, Part II, which a planner files with the Securities and Exchange Commission. It contains information about the adviser’s background, services, and fees. Check for complaints filed though your state’s securities regulator (contact information is available here). A site visit might also be helpful, says Tim Kochis, chief executive of Aspiriant, a wealth management firm with offices in San Francisco and Los Angeles that caters to high-net-worth clients. "Reputation and apparent track record are not enough," he says. "You have to go way beyond that to really investigate the operations of the org and find out if what is claimed is real."

Understand the difference between a manager and a custodian. A custodian, which would include the Fidelitys and Charles Schwabs of the world, is in possession of your investment account and issues periodic statements of transactions. The manager of assets executes those transactions. "A lot of people fail to understand why it’s important to separate these functions," says Kochis. "Frauds almost always occur when those two things are put together." In other words, look out for an investment manager who wants complete control of your money and asks that checks be made out to him or her. You can sleep tight if your funds are in the custody of a broker-dealer firm regulated by the Financial Industry Regulatory Authority and backed by the Securities Investor Protection Corp. But make sure you receive at least quarterly statements, says Mickey Cargile, founder and managing partner WNB Private Client Services, which is based in Midland, Texas. "The key is that you get it directly from the custodian and not from the adviser."

Be skeptical of pitches for exotic or obscure products. Banks, brokerages, and planners offer a wide range of financial products, including exotic investments that incorporate leverage and complex derivatives. If you get a pitch for an asset class you’re not familiar with, make sure you understand the process by which it achieves returns. Jim Wiandt, editor and publisher of the Journal of Indexes and publisher of IndexUniverse.com, puts it like this: "If you don’t understand it, you shouldn’t be in it." Cargile takes it a step further: "Only invest in transparent assets. We don’t invest in anything we can’t turn to cash in three days or less, which limits us to stocks, bonds, mutual funds, and exchange-traded funds." A hedge fund, which isn’t required to disclose its holdings, is an example of a nontransparent investment. Also, be especially wary if your adviser downplays or denies risk.

Be especially vigilant if you’re nearing or in retirement. According to a recent study by the North American Securities Administrators Association, nearly half of all investor complaints submitted to state securities agencies came from the senior set. According to the association, bogus operators sometimes con older investors through free-lunch seminars that are followed by calls from salespeople a few days later (a common recommendation is to liquidate securities and use the proceeds to buy indexed or variable annuities).

How to Choose Commercial Office Space

Article submitted by www.pbcenters.com

Choosing commercial office space gives you a wide array of choices to choose the perfect space for your office. Location should be an important part of your decision-making process. You need to be in an area where you are accessible to your clients. Also, you need to take into consideration your employees. You certainly do not want them to drive two hours one way just to get to work each day. Other things you need to consider when it comes to location is how noisy or quiet your surroundings are, what type of view you have and what restaurants and businesses are close by. The location you choose will have a direct impact on your business.

Most executive suites will have some type of building security. This is crucial as working in a secure building is needed for a productive working environment. Building security may include state-of-the-art cameras and equipment or security personnel. If the building has cameras, you want to make sure that they are closely monitored. If the building has security personnel, you should inquire as to what the hiring process is. Ask about any incidents that have happened in the past in the building.

Office space Mission Valley should reflect the style that you want to portray to your clients. Look for buildings that have an architectural significance which will portray a more upscale atmosphere for your business. You want your office facility to give your clients an amazing first impression. In addition, having a nice building tends to build employee morale.

Fraud cases raise questions about the work of attorneys whose clients later faced criminal charges

(Times Union (Albany, NY) Via Acquire Media NewsEdge) Oct. 26–SARATOGA SPRINGS — The money was supposed to come from overseas: a $100 million deal to finance a ski resort in Utah.

The wealthy investor on the other end of the telephone line listened closely to three men from Saratoga County, including an attorney, who cast themselves as international financiers with access to billions.

The investor, Brent Ferrin, who lives in Park City, Utah, was skeptical. The men making the pitch were speaking in garbled sentences about Latvian banks, Patriot Act restrictions and shadowy European bank executives who, it would turn out, actually lived in Las Vegas.

But Ferrin played along. He questioned why the paper work for a major international loan was being handled by a “personal injury lawyer” from Saratoga Springs.

The attorney, John M. Hogan Jr., jumped in to defend himself.

“Let me tell you why,” Hogan said. “Because I, I am tenacious. I don’t let go of things when I get my hands onto them. I was for, did they say I was an accountant before I was a lawyer? … And did they tell you that ah, I don’t like to lose and that I’m a bulldog? That’s what people call me.”

Unbeknownst to Hogan and his partners in the deal, Ferrin was recording every word for the FBI.

It wasn’t the first time Hogan, 73, a member of a longtime Saratoga Springs law firm, played a role, knowingly or not, in a questionable loan deal, court records show. But like several upstate New York attorneys who figured in recent federal investigations of real estate and mortgage fraud, Hogan was not charged.

Indeed, a months-long Times Union examination has uncovered instances in which federal authorities investigated the roles of lawyers and other licensed professionals embroiled in schemes involving mortgage or bank fraud, without bringing charges.

It comes as other lawyers and their clients, who have been prosecuted in upstate federal courts, are accusing the Justice Department of being selective in its prosecutions and of failing to pursue potential conspirators due to a mix of whimsical decision-making and limited law enforcement resources.

As the U.S. economy is reeling in the wake of years of sloppy mortgage lending, the government’s decision to limit its prosecutions has exposed a gap in law enforcement priorities. It also highlights a shift in focus by the FBI and Justice Department toward combating terrorism and child pornography.

In June, that issue bubbled up in a federal courtroom in Albany as U.S. District Judge Gary L. Sharpe sentenced two men, Thomas Disonell and Matthew Kupic, to prison for a series of mortgage fraud crimes that could have put them behind bars for much longer than the 24 months they received. Sharpe reacted strongly as the government sought to credit the men for cooperation that was never used to prosecute anyone else.

“This case caused me to crack an eyebrow,” Sharpe declared on the bench that day. “How can they do what they did without the complicity of the lawyers that are involved in the closing? … I’m not oblivious to the fact that the criminal cases filed with the FBI as the investigating agency is almost nil compared to what they were before 9/11. I know where their resources are. And I’m not attacking that one iota. … But I happen to know that the amount of time and energy invested in white-collar fraud in criminal investigations is not what it was prior to 9/11.”

Andrew T. Baxter, acting U.S. attorney for New York’s Northern District, while declining to comment on any specific case, said it is not a matter of being selective. He said that “attorney-client privilege can make it more difficult to gather evidence.”

“In investigating a fraudulent scheme, a key issue as to every subject is the strength of the evidence of the knowledge of the fraudulent nature of relevant transactions and the criminal intent of those involved,” Baxter said. “The fact that a subject of an investigation is a lawyer or licensed professional may affect our ability to prove knowledge and intent.”

Still, the Saratoga County case and others like it have exposed a trend in which people accused of federal fraud-related charges turned to attorneys and other professionals who, unwittingly or not, allegedly helped them complete their crimes.

In 2005, a year after Ferrin recorded his telephone conversation with Hogan, two other men on the conference call that day, Philip Rechnitzer of Clifton Park and Ronald Persaud of Saratoga Springs, were indicted by a federal grand jury in Albany. The indictment accused them of bilking Ferrin and other investors of more than $1.6 million. Persaud’s wife, Indranie, his ex-wife, Esther, and their son, Shawn, a student at Albany Law School, also were indicted.

The charges allege numerous investors lost money while seeking financing for high-end development projects like theme parks, Caribbean resorts and even a Lake George hotel.

The investors have testified in federal court they believed they were dealing with high-powered financiers who had access to billions of dollars in overseas funding, and not a husband-and-wife team from upstate New York who were having financial troubles.

In 2004, at a time when Esther Persaud was claiming to be the managing director of at least three overseas banks, she listed her job as an office manager and stated she had $50 cash on hand when she filed for bankruptcy in Albany. Ronald Persaud, whom prosecutors have cast as the ringleader, also filed for bankruptcy that year, claiming assets of under $11,000. It took place at a time when federal prosecutors say he was fabricating official-looking European bank notes purported to be worth billions of dollars and using those, often with local lawyers at his side, to convince investors to give him money to secure multimillion-dollar loans.

Defense attorneys in the case say lawyers were integral in the deals. As the ongoing trial of Ronald and Esther Persaud opened two weeks ago, their criminal attorneys cast blame on at least five business attorneys, including Hogan. Their pitch to the jury in Albany is that lawyers approved documents and wire transfers, and handed over the fraudulent bank notes to investors. The only attorney charged in connection with the scheme was William Tessitore, who lost his law license and pleaded guilty to bank fraud Aug. 11, admitting he looted $624,000 from his escrow accounts.

Prosecutors agree that the presence of attorneys is exactly why many victims fell for the scheme, but they have been silent on whether any of the other attorneys violated any laws. In their trial briefs and other court filings in the Persaud case, they make clear that “the subject fraud was advanced through the assistance of attorneys” and “attorney accounts were used to receive alleged wire fraud proceeds.”

According to court records in the case, and the testimony of witnesses at Persaud’s trial, Hogan played a key role. He served as a point of contact for duped investors and attended at least one purported “closing” for a loan in Zurich, Switzerland, that never took place.

Also, Hogan’s law firm helped Ronald and Esther Persaud file for bankruptcy in 2004. Early that year, Ronald Persaud listed assets of less than $11,000 and his job as a “mortgage consultant” while months later he was posing as an overseas banker during conversations with Hogan and investors. The bankruptcy documents make no mention of Persaud’s purported work as an international financier.

“Hogan, by virtue of his law license and his status as a member in good standing of the bar, gave the outward appearance of legitimacy to the fraud conspiracy,” according to a government memorandum filed in Persaud’s case.

Still, court records and an FBI document shared with the Times Union show Hogan wasn’t the only attorney who aided — if unwittingly — in the alleged crimes of Rechnitzer and Persaud.

Anthony Ianniello, a well-known real estate lawyer in Clifton Park, handled the closing on a mortgage in which Persaud’s wife, Indranie, a $40,000-a-year postal worker, sharply inflated her income on loan documents so her husband could secretly obtain an $890,000 home in Saratoga Springs. Ianniello also set up a partnership through which Persaud purchased a $135,000 Porsche coupe a year after filing for bankruptcy, and with the proceeds of his alleged crimes, according to the indictment.

There is no indication that Ianniello knew Indranie Persaud was committing mortgage fraud. Ianniello declined to comment.

But the Porsche deal raised suspicions of authorities. A state motor vehicle investigator who examined the Porsche transaction, and Ianniello’s files, concluded in a government report that “the unsatisfactory and illogical explanations provided by the attorney, lead him to the conclusion that the Porsche transaction was ‘classic money laundering to hide an asset,’ ” according to a memo filed in court by the U.S. Attorney’s Office. Ianniello was never charged.

Last year, Ianniello was called in for an interview with the FBI and federal prosecutors. He appeared alone. An FBI report detailing Ianniello’s responses to questions indicates he gave carefully worded answers about his dealings with the Persauds, for whom he had handled dozens of real estate transactions. The FBI report indicates Ianniello said he was unaware Ronald Persaud and his wife had laundered money through Ianniello’s private attorney escrow accounts.

“He also did not know why money would be transferred from Latvia,” the FBI report states. “Ianiello advised that he never dreamed there was a Latvian bank involved. … He did not recall his staff telling him about these transfers. … He stated that he was busy and preoccupied.”

Both Ianniello and Hogan are listed as witnesses by the government in the ongoing trial of Ronald, Esther and Shawn Persaud in U.S. District Court in Albany. It’s unclear whether they will testify.

During a conference in court Thursday, U.S. District Judge Thomas J. McAvoy asked prosecutors whether Hogan would be able to testify this week. The judge told the attorneys that based on what has transpired in the courtroom, including new information that Hogan was allegedly a member of the board of directors of at least one of the shell banks controlled by the Persauds in Scandinavia, that Hogan could put himself in legal jeopardy by testifying.

“He’s in danger,” McAvoy told the attorneys, referring to Hogan.

Assistant U.S. Attorney Thomas A. Capezza responded that the government had not offered Hogan an immunity deal.

“We will have backup witnesses in the event something happens with John Hogan,” Capezza told the judge.

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