The Impostor Scam Strikes Again

If you were a victim of investment fraud, watch out

Watch out for con artists who claim to be with the Securities Investor Protection Corporation (SIPC), a very real Washington organization that helps clients of failed brokerage firms recover their money.

Here's how the often two-step scam works:

First, you're phoned or emailed by a supposed SIPC rep, who promises recovery of money you lost in fraudulent investments. But first you need to send a "recovery fee."

If you comply, all you can expect is more requests for money, until you wise up.Second, if you're wise enough to give nothing, you may be contacted a few weeks later by another SIPC impersonator. This time, you're told that the assets of the company that defrauded you have been seized, and your vanished money is going to be returned.

This time, you're not asked to send a fee, just to fill out an application form that — surprise — asks for your Social Security number and other personal information. Perfect for identity theft or future scam attempts.

A spokesperson for SIPC tells Scam Alert that the corporation learned of this scam in mid-June from numerous people who'd received the calls. Most had previously lost money in investment fraud. "But we also heard from a few who in the past had been approached, but never invested in what later proved to be a fraudulent investment," the spokesperson says.

The SIPC says it has no information on how the impersonators identified their targets.

But in a similar scam last year that zeroed in on people who'd lost money in Bernard Madoff's infamous Ponzi scheme, it was clear how the names were obtained. They'd been made public during the long official investigation of Madoff.

Many of the now-imprisoned financier's victims were contacted by people claiming to be, not from the SIPC, but from a bogus sound-alike agency — the International Security Investor Protection Corporation, or ISIPC, supposedly based in Geneva.

For a while there was a website bearing this solid-sounding name, inviting Madoff victims to file claims for restitution. To do so, they had to provide detailed personal information. Of course, no restitution ever appeared.

Such schemes are variations on the classic impostor scam. The scammer variously poses as an official from a government agency or a company you do business with. Even your own grandchild may be impersonated. In each case the goal is the same: to get your money or personal information.

Perhaps the most frequent impostor scam involves email that purports to be from the IRS. Typically it asks you for personal information under the guise of getting a tax refund or "fixing" an improperly filed return.

The lessons of all these schemes: Never provide an upfront fee or personal information to anyone who comes to you unsolicited. If you think such a request might be real, first check out the claims by contacting the group that the person claims to represent. To do that, don't use any phone numbers or Web addresses that the person may provide — look them up yourself.

If you called the SIPC, a non-profit corporation chartered by Congress, you'd find out that it doesn't deal with investor fraud. If a brokerage firm fails, owing customers cash and securities that are missing from their accounts, SIPC acts as trustee or works with an independent court-appointed trustee in a brokerage insolvency case to recover funds. 

And, says SIPC President Stephen Harbeck: "When the liquidation of a brokerage firm is handled by SIPC, investors with missing stocks or cash do not pay a fee for recovery of those assets."

If you think you've heard from an SIPC impostor, email the organization at asksipc@sipc.org or call 202-371-8300.

by: Sid Kirchheimer Sid Kirchheimer is the author of Scam-Proof Your Life, published by AARP Books/Sterling.