The latest Ponzi scheme victims were duped just like Madoff's investors
I was just reading in Sports Illustrated about the latest Ponzi scheme to defraud investors of $55 million.
Yeah, that's right. Sports Illustrated.
It seems Houston "investment adviser" David Salinas specialized in conning college coaches and athletic directors.
He took $2.3 million from Billy Gillispie, the head hoops coach at Texas Tech; $1.1 million from Lute Olson, the retired basketball coach at Arizona; and $780,000 from Art Briles, Baylor's head football coach.
Sports Illustrated says the scam was "surprisingly crude."
Investors thought they had bought into a portfolio of blue chip corporate bonds that, in fact, didn't exist.
How did he fool everyone?
Salinas took in all of the money, held all of the investments and issued all of the statements his victims received through his investment firm, Select Asset Management.
That's exactly how crook-of-the-century Bernie Madoff misled his victims.
One of the surest ways to protect yourself from investment scams is to follow this key piece of advice from our 5 lessons to learn from Bernie Madoff.
Have a reputable third party hold your investments and do the trading.
"In the Madoff situation, all of his clients' money was accounted for only by Madoff's firm," says Mike Davis, president of Resource Consulting Group, a Florida financial planning and investment advisory firm.
Investments were held by Madoff's wealth management operation, which was at the heart of the scam, and trades supposedly were handled by Madoff's brokerage.
Clients got as many as 30 or 40 statements a month detailing trades and listing all of the stocks and bonds in their accounts.
They were totally fictitious -- and critical to perpetrating the fraud -- just as with Salinas.
So let your adviser decide what stocks and bonds to hold in your portfolio.
But hire a well-known broker such as Charles Schwab or Fidelity to serve as the custodian for your investments, execute trades and issue statements.
That's how to protect yourself from con artists like Madoff and Salinas.
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