High Profile Personalities
Rules to Guide Our Wealthiest – and Often Most Vulnerable – Clients
Rule No. 1: It’s common to be seduced by the slick, perfectly presented promises produced by scamsters, even in the face of evidence challenging the claims. Information is power—but you have to use it. Here’s what happened when two recent clients let seduction overpower facts.
The NBA All-Star investor and the “Westchester investment banker”: Approached by an “investment banker” touted by his trusted advisers and people in his circle, this sports icon decided to go all-in with a multi-million-dollar investment…despite proof that the deal was a fraud. We provided documentation showing that the Westchester investment banker was actually an actor, with no investment experience or real ties to the polo set except in glossy tabloid photos. His New York high-society wife had mysteriously emerged from a life of trailer park-living and a career as a hairdresser.
Our client gambled on the sleekly packaged pitch instead of the facts – and lost millions.
Lesson: The pressure to go along with “trusted advisers” may overcome good judgment and facts obtained from credible and reputable unbiased sources.
The $15 million investment that disappeared: A very wealthy investor did the wise thing before handing over $15 million for an investment partially backed by a Swiss bank—he had one of the world’s top investigative firms check out the individual who would be receiving the funds. The investigative agency could not verify the identity of the person, but our client sent him money anyway—only to discover that the person had been using one of a number of phony names. We were hired when our client finally realized that his $15 million was gone, the bank would refund only part of his investment, and he had no idea where to look or who to look for.
Wanting to believe in a good outcome, our client put money into the deal because he trusted the person and his own judgment more than he trusted the investigative findings indicating that the person did not exist. After realizing his costly mistake, our client half-heartedly supported our subsequent investigation but eventually gave up when he realized that the emotional toll of reconstructing events was more than he was willing to pay.
Lesson: Enthusiasm for the deal may override independently verified facts—at a significant cost.
Rule No. 2: Even very smart people get fooled. You may have stellar credentials, awards and degrees, but none of that makes you invulnerable to greed or manipulation. Witness what happened to one highly intelligent client.
The Stanford and Yale-educated M.D. who lost $154,000 in a U.S.-New Zealand medical device scheme: Our client confidently sank his money into a high-yield U.S.-New Zealand deal involving medical devices. He got some initial good returns, but the income dried up and he began to suspect that the deal was a Ponzi scheme. He wanted to hire us to determine if the investment promoter had any current assets that he could go after, but because we concurred that a Ponzi scheme was likely, we contacted investigators at the SEC before signing the client agreement. The SEC told us that a raid was imminent, and within days, all U.S.-New Zealand medical device entity funds were frozen. Regulators were now in charge, and the M.D. and other early investors might be forced to pay back some or all of their high-yield returns.
Lesson: If a high-yielding investment seems too good to be true, it probably is, and may result in years of regulatory investigation, as well as personal emotional and financial hardship. If you don’t want to ask the hard questions about a deal, hire someone to do it for you before you lay your money down.
Rule No. 3: Wealth makes you a target—even of your own family. The greater your assets, the more important it is to professionally vet and monitor every deal and every person who handles your money, even those you trust the most.
The well-loved movie star and his abusive stepson: We investigated allegations of family abuse against the Academy-Award winning actor, including the possible misappropriation of millions of dollars of financial assets. Using evidence we compiled, the elderly actor sought court protection against his stepson who had acted as his financial manager for years. He testified in Congress, dramatically describing being a victim of elder abuse and being “stripped of the ability to make even the most basic decisions about my life.” The subsequent lawsuit was eventually settled, returning millions of dollars to the actor.
Lesson: Fame does not insulate against financial exploitation or abuse.