How to protect yourself from financial fraud after dozens of victims lose money in alleged Ponzi scheme

Expert offers tips on steering clear of financial fraud after unraveling of Westlake Ponzi scheme

CLEVELAND, Ohio (WOIO) - Dozens of Northeast Ohio families are still reeling after losing thousands of dollars in an alleged Ponzi scheme.

Westlake financial adviser Raymond Erker and two of his associates, Tara Brunst and Kevin Krantz, face federal charges for allegedly stealing $9.3 million from 54 people.

We reported extensively on this story earlier this week, you can read more here.

19 Investigates has learned many of the victims were family friends.

We found the Ohio Department of Commerce revoked Raymond Erker’s investment adviser license back in 2018, around the time the federal investigation may have begun.

19 Investigates is digging into how you can protect yourself from financial fraud.

“Make sure you’re protecting your money at all costs,” said Bryan Bibbo, a financial adviser with The JL Smith Group in Avon.

Bibbo said he has spoken with some of the victims in the alleged Ponzi scheme case.

“One thing when we talk about advisers, make sure you do your due diligence on financial advisers. Because there’s always going to be bad apples out there that make the bunch look bad,” Bibbo said.

HOW TO RESEARCH FINANCIAL ADVISERS

You can start by looking up the agent or agency to make sure their license is in good standing.

You can do this by checking the Ohio Department of Insurance’s agent/agency locator.

You can also look up financial advisers and the firms they work for on this U.S. Securities and Exchange Commission website.

It breaks down their record, including bankruptcy or fraud in the past.

Bibbo said thoroughly checking your statements this is also key.

“Don’t just trust the statements, the statements a financial adviser gives you. You want to do your due diligence where you have an online log in. I always tell people, you have two forms, you have a paper statement and you also have an online log in,” he said.

He said you should also verify all of your investments.

“Make sure you’re looking at everything and not just trusting one person’s word,” Bibbo said.

FRAUD TO WATCH OUT FOR

Over the past few months, we’ve also seen thieves trying to steal money, claiming to be the IRS or Social Security.

If you get a phone call from someone claiming to be with the IRS or Social Security, keep in mind if there really is an issue, you should have already received notices in the mail.

Here is how Bibbo suggests you can watch out for fraud:

-Look up the latest types of fraud online.

-Avoid clicking on hyperlinks in your emails if you don’t know what it is.

-Don’t give out any financial information.

-And anyone asking for payment through gift cards and wire transfers should also raise red flags.

“So wire transfers aren’t that prominent in the sense of day-to-day activity, usually it’s a bank transfer, it’s a check, you pay your bills with autopay, so it someone’s telling you to do some sort of wire transfer, your radar should be up saying, hey I want to avoid that situation,” Bibbo said.

Bibbo said go with your gut and verify everything.

And when it comes to investing, if that rate of return is much higher than what the bank’s paying, watch out.

“So if it’s too good to be true, run for the hills, it usually isn’t true and it’s some sort of Ponzi scheme or fraud you’re getting yourself into,” he said.

Copyright 2020 WOIO. All rights reserved.