In a report out last week, The Los Angeles Times reported on the top scams consumers should be watching out for. Among the top 3 scams on the horizon is commodities fraud, a growing scam that has drained millions from investors. The latest story centers on a man in California who created a commodity pool of at least 42 participants who invested around $1.6 million. Michael J. Leighton allegedly defrauded and deceived his investors from 2008 until 2011. Leighton told his pool participants that he was a successful trader and his pool was profitable. It is alleged that Leighton deposited at least $1.6 million into commodity pool trading accounts and that most of the monies deposited belonged to pool participants. It is also alleged that Leighton lost over $1.3 million trading the accounts. According to the complaint, Leighton never disclosed trading losses and in fact, he issued false statements to investors that painted a picture of profits. The worst part, many of Leighton’s victims were friends and colleagues who lost between $1.6 million and $2.5 million.
Leading fraud expert, Linda Webb, AKA The Fraud Dog says watch out for “Pump and Dump” investor scams. Fraudster are banking on the fact that an investor will not do their due diligence. Just like the case above, fraudsters will prey on those who will not suspect anything is awry. They go after people who trust them because its easy and there will less questions from someone who the fraudster already has a trusting, loyal relationship with.
It is not uncommon for fraudsters to do this worldwide, as well. The fraudster will sell American shell company (frequently used as a vehicle for fraud) investments overseas to investors from foreign countries. These fraudsters are “smooth talkers”, scamming you with stories about companies succeeding in the “American Dream”, only to find out later it was a nightmare with no return on investment and a total loss. These fraudsters move fast and try to convince investors of quick opportunities that won’t last long. The Fraud Dog says trust in only one thing, take the time to conduct a thorough due diligence check prior to investing. Otherwise, you may be left with nothing but a “pipe dream” that has gone up in smoke with nothing to show for it.
To report potentially fraudulent activity, contact Linda Webb aka The Fraud Dog, leading fraud expert at 1-855-FRAUD-DOG.