According to many financial advisors, today’s economy is ripe for scam and scandal – and real estate scams are some of the easiest to perpetrate thanks to the fact that often real estate investments are unregistered products[1]. “Unregistered limited partnerships, hedge funds, oil and gas deals [and] real estate products are prime areas for scammers to create the illusion of legitimacy,” explains Pat Huddlestone, former SEC enforcement branch chief and current CEO of Investor’s Watchdog, adding that the best-case scenario for a scammer is not just to gain the attention and trust of an individual investor, but to gain the trust of a financial adviser. Once they have achieved this goal and the adviser is placing clients’ money in the scam, “scammers can often devastate entire communities – and careers – with a single con.”

Huddleston admits that in today’s market, many retiring baby boomers are just hoping to “catch up” what they lost in 2008. As a result, the value – and appeal – of alternative investments like real estate is undeniable. And while millions of federal dollars are being devoted to busting real estate scams like the $30-million fraud case in Florida that could send 27 people to jail for taking out fraudulent loans, many of the highly-publicized cases hinge on past misdeeds rather than current ones (in this specific case, the illegal activities took place between 2006 and 2008)[2]. Huddleston recommends checking out the background of any investment through LexisNexis and other routes rather than just assuming that an operation is legitimate. Have you encountered any suspicious or downright fraudulent investing schemes that you found attractive?

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[1] http://www.bankinvestmentconsultant.com/blogs/retirement-planning-protection-from-scams-2674479-1.html

[2] http://www.bizjournals.com/southflorida/news/2011/08/02/mortgage-fraud-bust-27-people-30.html