Your Money In The Balance: Should I Be Suspicious?

Another local Ponzi scheme has swindled nearly $50 million from investors. You may scratch your head and think, "How on earth did they fall for that? I never would!" But are you sure?

Should I Be Suspicious?

On Thursday, Feb. 23, Gregory McKnight of Swartz Creek, Michigan pleaded guilty in federal court to running a massive Ponzi scheme the government says swindled nearly $50 million from more than 3,000 investors worldwide.

According to court documents, from 2005 to 2007, McKnight promised unsuspecting investors returns of 15 percent per month. McKnight’s scheme resulted in a loss to investors of over $49 million.

Bugs Bunny would have said “Whatta bunch of maroons!” But from Ponzi schemes to off-shore investments, individuals do fall prey to investment scams. And the victims usually aren’t maroons. 

The scam artist’s bag of tricks typically consists of two things: 

Targeting. Typically 50 to 65 year-olds who are financially literate, educated, confident and earning an above-average income. Scam artists also target affinity groups e.g., clubs, associations, places of worship.

Tactics. These include persistency, creating a sense of scarcity in their investment and an urgency to act immediately. Persuasion and a disarming demeanor help seal the deal. It is not uncommon for victims of scams and fraud to comment in sad disbelief “I thought he was my friend.”

What to do?  Be suspicious of any of these ‘red flag’ phrases:

  • You can’t lose!
  • Guaranteed to double your money!
  • I will personally guarantee your investment, and refund your money if you are not satisfied.
  • Low risk for high returns!
  • Let’s keep this investment a secret; we don’t want to let everyone in.
  • It isn’t important that you really understand your investments.
  • Trust me!
  • The more you invest, the more you will make – you should borrow money.
  • I’ll fill-in the blanks later, for now just sign this form.
  • You can lose your life savings in the stock market – protect your money by investing with us.
  • I’ll take you to the bank to get the money.
  • This is an off-shore investment opportunity.
  • I’ll have someone pick up your check.
  • You must decide now!


What to do?  Be a W.I.S.E. investor:

  • Wait: Don’t make a quick decision.
  • Investigate: Call The Office of Financial and Insurance Regulation @ 1-877-999-6442.
  • Seek information: Ask questions and check it out.
  • Educate yourself: Learn to check before you invest and learn the warning signs. 



  • If it sounds too good to be true, it probably is. 
  • Once your money is gone, it’s usually gone for good.
  • Do your research before you hand over your money.
  • The best defense against investor fraud is knowledge.
  • When in doubt, don’t! 
  • Check it out with OFIR.


Call OFIR’s Consumer Hotline: 1-877-999-6442.

Even if you don’t take the bait on a fishy sounding “opportunity,” OFIR wants to hear from you. You just might provide them with a missing piece of a larger puzzle and help stop would-be scammers from harming others.  

Part of the Michigan Department of Licensing and Regulatory Affairs (LARA), OFIR is the State of Michigan agency responsible for regulating Michigan’s financial industries including consumer finance, financial institutions, insurance and securities. The agency consists of over 350 professionals dedicated to protecting Michigan consumers by ensuring the companies that it regulates are financially solvent, follow state and federal law, and are entitled to the public confidence.  OFIR is primarily fee-funded, requiring minimal public tax dollars for its regulatory and consumer assistance activities. OFIR has securities, insurance and financial institutions information available online at www.michigan.gov/ofir.

Free, objective, education is available!

In addition to their regulation and investigation functions, OFIR also brings objective investor education programming to Michigan residents, at no cost. Free to attend and free from sales pitches, you can find these workshops being held at libraries all over town.

Contact your library and inquire about the Investor Education In Your Community program. Or find the comprehensive schedule online at http://detroit.cbslocal.com/category/investment-presentations/  

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.


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