Sunday, October 9, 2005

Facing up to fraud

By JULIE TRIPP

Hanging on to hopes that a bad investment will recover often plays right into the hands of the people who mismanaged your money in the first place, says Portland securities attorney Robert Banks Jr.

" The mistake I see with private placement deals, in every single case I've seen, the promoter will do everything in his power to reassure and convince people not to take action, while he's busy moving the money offshore or hoping that you'll just give up," Banks says.

Promoters will send letters and reports to investors with updates on when they might get their money back, followed by more letters and excuses about why they haven't, Banks says.

" Meanwhile, the statute of limitations is starting to run," Banks says. Oregon has a fairly good statute of limitations for investment fraud: two years from when a reasonable person should have realized there was a problem.

" The longer you wait, the more likely it is that there'll be no money left or that they'll flee," Banks says.
An attorney who deals with broker abuses or investment scams can help an investor see the telltale signs.

Sometimes investors continue to believe in the honesty and trustworthiness of promoters long after they
should have been suspicious, Banks says.

Finally, he repeats the advice that most people have heard but that many seem to forget: " If it sounds too good to be true, it probably is," Banks says.

Julie Tripp does not give individual financial advice, although readers are encouraged to contact her with questions, comments or ideas for future columns. Contact her at 503-221-8208 or julietripp@news.oregonian.com. For reprints of this or a previous column, call 503-221-8242.
© 2005 The Oregonian