Film helps emphasize fraud prevention

April 19--While the fraudulent practices of Bernie Madoff and Charles Ponzi have grabbed more headlines, similar scams and schemes are not uncommon in Montana.

On Wednesday, a free "Meal and a Movie" screening in Kalispell will aim to educate citizens on some of the common red flags that can alert consumers to investment fraud before it claims their savings.

Commissioner of Securities and Insurance Monica Lindeen is holding the event as part of a 28-town tour of the documentary, "Gold Diggers: Investment Fraud in the Treasure State," which includes a free meal and a question-and-answer session with the state auditor.

Now in its second statewide tour, the film was produced four years ago by the auditor's office. Actor Bill Pullman narrates the movie, which follows two high-profile insurance fraud cases in Montana -- those prosecuted against Art Heffelfinger and Anne Schlenker.

The nonprofit Investor Protection Trust provided the grant that funded the film's production, as well as the costs of touring it throughout the state.

While providing a narrative of the cases through interviews with the auditor's office staff and victims of the scams, the film also outlines the basic elements of common insurance-fraud schemes.

Lindeen said the screenings typically net a substantial turnout, although she noted the free meal is likely a draw for many of the attendees. Following a regional tour, she said her office typically gets upwards of 40 calls from attendees -- many of whom are concerned about a possible swindle targeting a friend, family member or themselves.

"Seeing something visually like that helps it to stick in somebody's memory better," she said. "You'll get people [calling later] who don't want to say anything in front of a crowd."

While education can help people avoid getting fleeced by a seemingly trustworthy financial advisor, Lindeen stresses that people shouldn't hesitate to call her office if they feel suspicious.

"Do your homework up front, make sure they are legitimately licensed, and if you don't understand the investment opportunity, call us," she said, invoking the adage, "If it seems too good to be true, it probably is."

Other ways consumers can practice due diligence when considering an investment opportunity include checking the adviser's financial practices history, keeping up-to-date with their investments' monthly and annual statements and never signing a blank form.

Not all such scams fall within the classic pyramid formula of a Ponzi scheme. "Churning" instead involves an adviser who begins buying and selling stocks and eating away at the principal while the adviser slowly cashes in by charging a fee each time.

There's no typical victim, but Lindeen noted that seniors should be especially on the lookout for financial flimflam.

"Any of us can be scammed, but they do seem to target seniors," she said. "When your life savings is gone, especially when you're a senior, you don't have any way to recoup that loss. It's difficult to watch those cases."

Lindeen's office employs about 85 people, most of whom work on insurance industry regulation.

About five full-time staffers are dedicated to uncovering and prosecuting fraudulent investment practices.

Despite investigating up to 100 such cases each year, the auditor's office typically only takes a half dozen all the way to trial, since most defendants plead out in the process. Lindeen said of those cases that have gone to trial, she hasn't lost one.

"On the security side, the overwhelming majority of what we do is following up on complaints, and if we find some wrongdoing, prosecuting them and trying to get the victim's money back," she said. "Once you get the information, the bank accounts, the money, it's really black-and-white."

And while the scams themselves are as numerous as those who perpetrate them, they almost always boil down to the same essential elements, making education the best prevention.

Lindeen added that while her office busies itself with tracking down the industry's less-than-scrupulous actors, the film is not intended as an indictment of all investment companies and advisers.

"Ninety-nine percent of them are doing a great job, it's really just a small number of people who end up scamming their customers," she said.

Wednesday's screening will take place at 5:30 p.m. at the Kalispell Hampton Inn, 1140 U.S. 2 West.

For more information or to reserve a space, call 1-800-332-6148 or visit www.csimt.gov/fraudtour.

Reporter Sam Wilson can be reached at 758-4407 or by email at [email protected].

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