For months, we’ve talked about the many “Corona Scams” that have plagued Americans, from fraudulent “corona cures” to scammy “business opportunities” that prove to be nothing more than cash grabs. With all this scamming happening, who’s doing anything about it?
We may have gotten some answers tonight, as U.S. Senator Catherine Cortez Masto (D) hosted an online forum with federal and state financial regulators to help investors identify scams and stop the spread of “Corona Scams”.
Why do we keep talking about “Corona Scams”?
There are two critical reasons why I decided earlier this year to dive so deep into the deeply disturbing world of “Corona Scams”. One: Thousands of people have been risking their own health and others’ safety just to get their hands on “the cure” that only makes them sicker. And two: These people are also losing money on fraudulent “cures” and disgusting “business opportunities” that are only guaranteed to work at separating victims from their money.
Whether it’s conspiracy peddlers who drop viral videos for the purpose of selling overpriced “dietary supplements” and/or “digital freedom” cash grabs, or multi-level marketing (MLM) salespeople who misuse the very real COVID-19 pandemic to shill for their fake-as-f–k, money-losing “business opportunities”, these seemingly “harmless” scams inflict real damage in real people’s lives. Yet while the FTC has stepped up in issuing warnings to the most egregious of offenders, such as Jim Bakker’s shilling of colloidal silver as a “coronavirus cure” and the multiple MLM’s that repeatedly peddled false health and/or financial claims, America remains incredibly overrun by “Corona Scams” everywhere we look.
So when I noticed this morning that FINRA (the private non-profit organization that oversees brokerage firms and exchange markets) would be hosting an online forum tonight with U.S. Senator Catherine Cortez Masto (D) and Deputy Secretary of State/Nevada Securities Administrator Erin Houston on how investors can protect themselves from “Corona Scams”, I knew I needed to watch this and report back to you.
“Be wary of anything that sounds too good to be true. Be careful of firms that guarantee high rates of return but don’t provide evidence to back it up.”
– Erin Houston, Nevada Securities Administrator
While this FINRA forum didn’t directly address the above mentioned examples of “Corona Scams”, they did touch upon some common threads that we’ve been noticing and keeping tabs on since March. Remember how “10X business guru” Grant Cardone told his fans in March to sell their houses, sell their stocks, empty their bank accounts and 401(k)’s, and throw all their money into his own Cardone Capital real estate fund? Remember how Grant Cardone has even been claiming that 401(k)’s themselves are “scams”? And remember how much money Cardone Capital has been losing since his debt-fueled financial house of cards began falling apart in March?
During the event, Erin Houston advised, “Be extremely deliberative on what you want to achieve with your investments. […] Check their licenses, and check their disclosure statements.” She then added, “Be wary of anything that sounds too good to be true. Be careful of firms that guarantee high rates of return but don’t provide evidence to back it up.”
FINRA Office of Investor Education Senior Vice President Gerri Walsch also advised against the kind of “10X everything!” messaging we hear from “gurus” like Grant Cardone: “The #1 tip is never invest more than you can afford to lose.” And in regards to these “gurus” who show alarming conflicts of interest when recommending things to invest in, Walsch warned, “Some of the recommendations are being made by people who are not qualified to give advice. Some of the recommendations are being made by people who stand to personally gain from their ‘advice’.”
“Always ask questions about the products you’re considering.”
– Gerri Walsch, FINRA
As we’ve been documenting since March, MLM’s and other shady entities have been luring Americans into their inverted funnel-shaped operations with promises that they’ll become wildly successful “boss babes” if they just sign up and pay for a “starter kit” that will somehow magically grow into their own businesses. During tonight’s FINRA program, all the panelists warned viewers not to fall for unrealistic claims of “fast, easy money”, and they encouraged viewers to question and investigate any solicitation for investment… And especially those solicitations that lack proper qualifications and documentation.
Whether it’s a “business opportunity” with a suspicious compensation model and a bizarre emphasis on recruitment, a Cardone Capital like real estate fund with a whole lot of red flags in its fine print, an offer to “get in on the ground floor” of a stock trading operation that doesn’t seem to make sense, or even a seemingly innocent-looking CD from a “bank” that can’t explain how it works, it never hurts to ask questions and demand honest answers.
As FINRA’s Gerri Walsch advised, “Always ask questions about the products you’re considering. What am I investing in? How does it work? How much does it cost? How can I afford it? Does it fit with my financial goals?” She also reminded everyone to disregard wild “get rich quick” claims and focus on the big picture: “Invest for the long term. […] Investing is really a long game, and you need to focus on the long term.”
“The coronavirus pandemic presents a real risk to investors because every economic downturn creates new incentives for scams and fraud.”
– U.S. Senator Catherine Cortez Masto
These days, the American economy feels more and more like a ruthlessly violent “Wild, Wild West” full of scams. Yet as powerless as millions of American workers, consumers, and investors can feel, Senator Catherine Cortez Masto encouraged the Nevadans watching tonight’s FINRA program not to lose hope. She also encouraged them to contact her Senate office and/or relevant federal and state agencies (such as the Nevada Attorney General’s office and the Nevada Secretary of State’s securities division) if they run into suspicious “business opportunities” and “big money-making investments”.
As Cortez Masto noted, “The coronavirus pandemic presents a real risk to investors because every economic downturn creates new incentives for scams and fraud.” She then encouraged federal and state regulators to, “Make sure we’re doing everything we can to educate investors and ensure they’re protected.”
While Americans have plenty of reasons to complain about the increasingly “rigged” state of the American economy, these seemingly “anti-establishment” scams that promise to show you how to “game the system” really just lead to further entrapment. While there are much more severe “big, structural” problems that the country will have to confront in the months ahead, there are actions we can take now to avoid getting “Corona Scammed”.