NewHavenBIZ

26 n e w h a v e n B I Z | J u l y 2 0 2 2 | n e w h a v e n b i z . c o m 14 Bobala Road 3rd Floor Holyoke, MA 01040 Tel: 413.536.3970 Headquarters 280 Trumbull St 24th Floor Hartford, CT 06103 Tel: 860.522.3111 One Hamden Center 2319 Whitney Ave, Suite 2A Hamden, CT 06518 Tel: 203.397.2525 Largest Connecticut-Based Accounting Firm For over 60 years, Whittlesey's team of professionals has provided superior service and value-added advice, with specialization in the following areas: Assurance Advisory Tax Technology Learn more at WAdvising.com F O C U S : A c c o u n t i n g Fraudsters typically offer a "no-lose investment," and caution that if a potential investor waits too long, the deal will be gone. Another common phrase for scammers is "Don't you trust me?" she said. Legitimate promoters will not be concerned about investors running a background check on them, accord- ing to Titsworth. The FBI warns against unsolicited investment offers and high levels of pressure on you to invest. In Klein's case, for example, court documents show he allegedly used tactics such as making deals appear to be time-sensitive, and instructing people not to tell anyone about their investments. "Take your time," DeCusati said. " Many frauds depend on a sense of urgency. If you receive an unsolicited call or email and you're being pushed to decide before you have time to make a reasoned decision, that's a red flag." Do your homework Experts agree doing research on an investment opportunity is key. "Many frauds have a common element: the investor did not ask enough questions or request sufficient documentation prior to making their investment," DeCusati said. "Necessary steps should be taken to ensure that the person in whom you are trusting your investment funds is making a legitimate investment on your behalf." Titsworth said investors should ask for written information that fully explains the investment, such as a prospectus or offering circular. Read it carefully, and don't commit to an investment unless you fully understand it, Titsworth advises. If you do invest, keep copies of all written information and records of transactions, both in case of future problems and for tax purposes, she said. Investors should research an investment's potential, and check with regulators to see if there have been any complaints against a company or individual. Review a company's annual report, and request written financial information, according to the FBI. e agency also recommends checking with a financial advisor, broker or attorney about an investment before proceeding. Rudewicz said hiring a firm to do a background search is one option, but he noted that people can also research a company and people associated with it for free online. "Research the company through the individual state they are located in to make sure it is a viable company and not a sham," Rudewicz said. Investors also should find out if there is a strong accounting team in place, as its absence should give anyone pause, he added. DeCusati also recommends finding out who else has invested, and evaluating an investment target's chances for success. "Do they understand manufacturing and the channels of distribution? Do they have the equipment to succeed? If this is a new area of investment, who is helping provide expertise?" DeCusati said. He urges investors to think critically about the company's business model and if it makes sense. "If they're claiming a hot new product or an emerging market, what hard evidence is there for its success? Don't get bamboozled by fancy looking websites or technobabble — a nice website is easy to make, and is not evidence of a rock solid business," DeCusati said. Aer investing, Rudewicz recommends investors scrutinize all statements for any transactions that seem out of the ordinary. DeCusati also suggests familiarizing yourself with prior fraud cases — such as multibillion- dollar Ponzi schemer Bernard Madoff — because understanding how they transpired can help current investors avoid similar traps. Another recommendation? Never invest more than you can afford to lose, says DeCusati. If victimized, report it promptly, which could improve chances of reimbursement or restitution, and file a complaint with the SEC, state securities regulator, or law enforcement, according to the FBI. n Continued from page 25

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