YOUR MONEY: Madoff mess should make us more wary of scams

I don't know about you, but I've sort of gotten tired of Bernard L. Madoff.

Call it Madoff overload. I've seen rerun after rerun of a CNBC special on Madoff's now-famous Ponzi scheme. "Frontline" on PBS had its documentary called "The Madoff Affair," as well.

So I had to ask John M. Gannon, senior vice president of the Financial Industry Regulatory Authority, if, maybe, people somehow would be much more skeptical, much less likely to be scammed now that we all have heard about Madoff's alleged $50 billion fraud — over and over again.

Gannon's answer surprised me. He said FINRA asked a similar question to a group of seniors to gauge the impact of the widespread publicity about the Madoff scandal.

The answer from that focus group: Everyday investors feel they aren't anything like the well-to-do executives or celebrities who lost millions when they invested their retirement savings or their charitable money with Madoff.

So Madoff didn't matter much to them.

"They just felt it wasn't that relevant to them," he said.

They, sad to say, are wrong.

The Madoff game plan mirrored many scams: A friend or family member introduces you to the money man or woman with all the answers; there's a promise of outstanding returns; some investors are so charmed that they can't imagine how all that money vanished once the jig is up. He was such a great guy.

Business owners and managers, surprisingly, can do their part to protect investors.

One way some working people lost their retirement savings was after they attended financial seminars that targeted early retirees who had worked at the same plant or company. The broker told them they could make as much on investments as their old jobs. Things did not turn out that way.

Because some past frauds have been so devastating to investors, FINRA will review seminar materials for human resource managers or company executives who are considering allowing a broker or planner to give a financial seminar at the factory or office. See www.finra.org or call FINRA's office of investor education at 202-728-6964.

"Investment-fraud victims are not dumb and gullible — smart people get taken by this," Gannon said.

Investors can be even more vulnerable now given all the buyout programs in the auto industry and elsewhere, the job cuts, the market meltdown that reduced retirement savings dramatically.

(Tompor is the personal finance columnist for the Detroit Free Press. She can be reached at stompor@freepress.com.)

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Tags: money, bernard madoff, business, investing, scams, saving, retirement