Money Monday: Avoid Investment Fraud

BET.com shows you how to protect your money.

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Scams Don’t Care Who You Are  - With the NFL draft just days away, many players look forward to becoming instant millionaires, but if you have money one day, it isn’t promised you’ll have it the next. “I’m in hell,” former Cincinnati Bengal Terrell Owens told GQ magazine. In just 16 years, the 38-year-old had spent nearly all of the $80 million he made during his career and owes $44,600 a month in child support for his four children. Some may question how someone can go broke so quickly without knowing, and in the case of Owens it’s because of his financial advisors. Your net worth can make you the target for investment scams and with the help of the U.S. Securities and Exchange Commission, BET.com breaks down how to avoid fraud. — Danielle Wright(Photo: AP Photo/Don Wright, File)

Photo By AP Photo/Don Wright

Ask Questions and Check Out the Answers - Fraudsters rely on the fact that many people simply don't bother to investigate before they invest. It's not enough to ask a potential advisor for more information or for references — fraudsters have no incentive to set you straight. Savvy investors take the time to do their own independent research. Make sure you ask questions and when you do, verify the answers you are being told. (Photo: Comstock/Getty Images)

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Ask Questions and Check Out the Answers - Fraudsters rely on the fact that many people simply don't bother to investigate before they invest. It's not enough to ask a potential advisor for more information or for references — fraudsters have no incentive to set you straight. Savvy investors take the time to do their own independent research. Make sure you ask questions and when you do, verify the answers you are being told. (Photo: Comstock/Getty Images)

Research the Company Before You Invest - You'll want to fully understand the company's business and its products or services before investing. Before buying any stock, check out the company's financial statements on the SEC's website, or contact your state securities regulator. All but the smallest public companies have to file financial statements with the SEC. Don’t use unsolicited e-mails, message board postings and company news releases as the sole basis for your investment decisions.  (Photo: moodboard/Getty Images)

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Research the Company Before You Invest - You'll want to fully understand the company's business and its products or services before investing. Before buying any stock, check out the company's financial statements on the SEC's website, or contact your state securities regulator. All but the smallest public companies have to file financial statements with the SEC. Don’t use unsolicited e-mails, message board postings and company news releases as the sole basis for your investment decisions.  (Photo: moodboard/Getty Images)

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Know the Salesperson - Spend some time checking out the person touting the investment before you invest — even if you already know the person socially. Always find out whether the securities salespeople who contact you are licensed to sell securities in your state and whether they or their firms have had run-ins with regulators or other investors. You can check out the disciplinary history of brokers and advisers quickly — and for free — using the SEC's  and FINRA's online databases. Your state securities regulator may have additional information.(Photo: Image Source/Getty Images)

Photo By Photo: Image Source/Getty Images

Danger Ahead - The Treasury Department on Oct. 3 issued a report warning that failing to raise the debt ceiling could lead to a recession worse than the one that followed the 2008 financial crisis. It could result in frozen credit markets, a plummeting dollar value and skyrocketing interest rates.(Photo: Mario Tama/Getty Images)

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Be Wary of Unsolicited Offers - Be especially careful if you receive an unsolicited fax or e-mail about a company — or see it praised on an Internet bulletin board — but can find no current financial information about the company from other independent sources. Many fraudsters use e-mail, faxes and Internet postings to tout thinly traded stocks, or stocks exchanged in low volumes, in the hopes of creating a buying frenzy that will push the share price up so that they can sell their shares. Once they dump their stock and quit promoting the company, the share price quickly falls.(Photo: Mario Tama/Getty Images)

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Return Preparer Fraud - Be careful of tax preparers. Most may be honest, but in some cases return preparers have skimmed off their clients’ refunds, charged inflated fees for return preparation services and attracted new clients by promising guaranteed funds.   In 2012, every paid preparer needs to have a Preparer Tax Identification Number (PTIN) and enter it on the returns he or she prepares.Signals to watch for when you are dealing with an unscrupulous return preparer include:−Preparer does not sign the return or add a Preparer Tax Identification Number.−Does not give you a copy of your tax return.−Promises larger than normal tax refunds.−Charges a percentage of the refund amount as a preparation fee.−Requires you to split the refund to pay the preparation fee.(Photo: CHRISTIAN HARTMANN/Landov)

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Be Careful About Overseas Offers - Be extra wary if someone you don't know and trust recommends foreign or "off-shore" investments. When you send your money abroad, and something goes wrong, it's more difficult to find out what happened and to locate your money.(Photo: Reuters)

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If It Sounds Too Good to Be True It Probably Is - Be careful of opportunities that claim you'll get a substantially higher rate of return than similar investments on well-know stock indexes. The investment could be highly risky and that means you might lose money.(Photo: Chris Hondros/Getty Images)

Photo By Photo: Chris Hondros/Getty Images

Don’t Be Fooled by Fancy Websites  - Don't be lured in by a pretty website — they are remarkably easy to create. If you'd like to see what an online fraud looks like, click here.(Photo: Adam Gault/Getty Images)

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Don’t Be Fooled by Fancy Websites  - Don't be lured in by a pretty website — they are remarkably easy to create. If you'd like to see what an online fraud looks like, click here.(Photo: Adam Gault/Getty Images)

"Guaranteed Returns" Usually Aren't - Every investment carries some degree of risk, and the level of risk typically correlates with the return you can expect to receive. Low risk generally means low yields, and high yields typically involve high risk. If your money is perfectly safe, you'll most likely get a low return. Most fraudsters spend a lot of time trying to convince investors that extremely high returns are "guaranteed" or "can't miss." Don't believe it. (Photo: Brendan McDermid/Landov)

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"Guaranteed Returns" Usually Aren't - Every investment carries some degree of risk, and the level of risk typically correlates with the return you can expect to receive. Low risk generally means low yields, and high yields typically involve high risk. If your money is perfectly safe, you'll most likely get a low return. Most fraudsters spend a lot of time trying to convince investors that extremely high returns are "guaranteed" or "can't miss." Don't believe it. (Photo: Brendan McDermid/Landov)

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Don’t Feel Pressured to Send Money Immediately or RIGHT NOW! - Scam artists often tell their victims that this is a once-in-a-lifetime offer, and it will be gone tomorrow. But resist the pressure to invest quickly, and take the time you need to investigate before sending money. If it is that good an opportunity, it will wait.(Photo: REUTERS/Eric Thayer)

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If You Suspect Fraud - If you suspect fraud or you are a victim of fraud, make a complaint with the Securities and Exchange Commission here.(Photo: JGI/Jamie Grill/Getty Images)