A widow invests her late husband’s insurance proceeds with the helpful insurance lady who picks up her prescriptions and drives her to doctors’ appointments. A widower allows the gentleman who drives him to church and mows his lawn to move into his house. An elderly couple’s tax preparer convinces them to invest in a bill-paying business started by his friend. What do these three people have in common? They were all victims of investment fraud in cases investigated by the Division of Securities in the Wisconsin Department of Financial Institutions (DFI). 

These scenarios are real, and unfortunately, most victims are unlikely to recover any money, even if after the successful prosecution of the deception. Investors must cautiously watch for red flags of fraud in any investment. 

Red Flags of Investment Fraud

  • High-pressure sales tactics, such as asking you to make an investment decision right away, without time to read the documentation (if they even offer you any) or get a second opinion.
  • The person offering the investment is promising high returns with little or no risk. 
  • There is no written information, or what is provided is riddled with misspellings and grammatical errors.
  • The person asking you to invest tells you to keep the opportunity quiet, since it is only being offered to a few carefully chosen people, or they ask you to misrepresent your assets and income on a form. 
  • The opportunity is unsolicited, and you are told to invest by wiring money overseas, using prepaid gift cards, or bitcoin. 
  • The most significant red flag is that the person selling the investment is not registered with DFI to offer securities.

Please check out the salesperson by using BrokerCheck.FINRA.org or adviserinfo.sec.gov, or call our Examiner of the Day at (608) 266-2139. Our staff can help explain the information in BrokerCheck or IARD.  Choosing to work with a registered financial professional can decrease the risk of fraud, but you should be aware that red flags may also exist in transactions involving registered professionals. 

If you believe you are a victim of investment fraud, please report it right away to the Division of Securities. Do not be embarrassed—many intelligent, wealthy, and famous people have been victimized (just think of the Madoff case), and scam artists are good at what they do. The sooner a scam is reported, the better the chances are that it can be shut down while there is still money to repay victims and prevent the scammer from defrauding others. We work closely with local law enforcement and other state and federal agencies, including the Office of the Wisconsin Commissioner of Insurance (OCI), the FBI, and the U.S. Securities & Exchange Commission. If we cannot handle a matter, we take steps to direct you to the appropriate agency to review your case.

June 15 is World Elder Abuse Awareness Day. Elder Abuse encompasses a range of behaviors including physical abuse, emotional abuse, sexual abuse, neglect, unreasonable confinement or restraint, and financial exploitation. In 2019, Dane County Adult Protective Services investigated 389 calls of elder abuse, with 81% of those calls substantiated as elder abuse.  Of those calls, 141 (36%-highest of all abuse categories) were for reports of financial exploitation.  Nationally, it is estimated that individuals over age 60 lose $36.5 billion each year as victims of financial exploitation. In 2020, the Securities Division opened approximately 58 investigations, and issued 28 orders against 53 perpetrators of investment fraud, with losses exceeding $24 million. Senior victims can be found in at least one-third of those cases.

Financial exploitation of seniors is a growing problem in Wisconsin, and we all need to work together to put a stop to it. That is why we recognize the importance of World Elder Abuse Awareness Day and have partnered with our colleagues at the Dane County Adult Protective Services, the Elder Rights Project at Legal Action of Wisconsin, the Wisconsin Department of Justice (DOJ), and the Wisconsin Department of Health Services (DHS) to share these important tips with you.

To report suspected abuse or neglect of adults age 60 and older, please call Wisconsin Elder Abuse Hotline at (toll-free) 1-833-586-0107 or Dane County Elder Abuse and Neglect Helpline at 608-261-9933.

Kathy Blumenfeld PortraitAbout DFI Secretary Kathy Blumenfeld

Secretary Kathy Blumenfeld is a leader with extensive experience in the financial services industry, business, and government.

In January 2019, Secretary Blumenfeld was appointed by Governor Tony Evers to her current role as the Secretary of the Wisconsin Department of Financial Institutions, commonly referred to as DFI.

Before taking this position, she served as Executive Vice President of Special Operations at TASC – the Total Administrative Services Corporation. There she led a federal contract modernizing the workplace charitable giving program for all federal employees and retirees.

Prior to her work at TASC, Secretary Blumenfeld was Vice President of Lending & Payment Security for CUNA Mutual Group, where she worked for 26 years. She began her career in the financial realm as a Certified Public Accountant and has also been active in her community serving on a variety of non-profit and business boards.

As secretary, she has been committed to developing caring and diverse teams that are passionate about their jobs and providing great customer service. A few of her top priorities at DFI include financial literacy and capability at all life stages, protecting consumers from financial fraud – particularly financial abuse of our seniors, entrepreneurship, and college affordability.