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First Sandy, now Sandy scams

Oct 31, 2012 @ 3:53 pm

By Mark Schoeff Jr.

Hurricane Sandy, investment scams
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((Photo: Bloomberg News))

Typically, a period of calm follows in the wake of a major storm like Hurricane Sandy. But state securities regulators are worried that other disturbances -- this time, in the form of investment scams -- may begin to quickly churn up.

Indeed, the North American Securities Administrators Association Inc. on Wednesday told investors to steer clear of investment pools or bonds that purport to help storm victims or promote businesses and technologies that assist in the clean-up of damaged property or flooded areas.

Investors also should be wary of sales pitches about investments in real-estate restoration. In fact, they should be skeptical of any kind of storm-related cold calling.

“Unfortunately, we know from experience that disasters bring out the worst in people, especially those seeking to profit from the misfortunes of others,” Heath Abshure, Arkansas securities commissioner and NASAA president, said in a statement. “Potential investors should be very cautious, if approached with unsolicited Sandy-related investment offers.”

It's also a good idea to be careful about alturism following Sandy's destruction. The state regulators cautioned that charity drives may be fraudulent.

“Some will be looking for your money; some will be attempting to steal your credit card information for identity theft,” Mr. Abshure said. “As with any charitable contribution, people wanting to help with relief efforts following Sandy should send contributions to only those charities with an established track record.”

Andrew Stoltmann, a securities attorney and founder of the Stoltmann Law Offices in Chicago, sent out his own warning about Sandy ripoffs on Wednesday, cautioning investors to be wary of solicitations for investments and charities. He said that such bogus offerings were rife after Hurricane Katrina in 2005.

“Any time you have a high-profile disaster, the scams follow,” Mr. Stoltmann said. “Sandy follows in the line of Katrina very closely.”

Mr. Stoltmann added in an email: “Unfortunately, natural disasters bring out the best and worst in people.”

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