Avoiding investment scams

Thursday, July 9, 1998

By KATHLEEN LYNN
Staff Writer

An investment scam that promised profits from wishing wells -- but collapsed in an alleged $1.9 million fraud -- highlights the need for investors to be careful before handing over their money.

R. Steven Stackpole of Cliffside Park pleaded guilty this week in state Superior Court in Hackensack to his role in a scam that cost 25 investors $1.9 million. Stackpole and his former partner, Douglas J. D'Arpino, allegedly promised investors 12 percent annual returns from coins collected in spiral wishing wells to be placed in malls and other spots. But prosecutors say D'Arpino kept their money, and is now a fugitive.

Investors can take steps to protect themselves from this kind of fraud, says the North American Securities Administrators Association Inc., an organization of state securities regulators:

Investigate the investment adviser by calling your state securities bureau -- in New Jersey, (973) 504-3600 -- to find out if he or she is licensed. If the individual is also licensed as a stockbroker, background information will be available through the state from the Central Registration Directory, a computerized reference system operated by the NASAA and the National Association of Securities Dealers.

Is the investment opportunity registered for sale in your state? If not, consider that a red flag.

Beware of "affinity-group" fraud. Some con artists target members of their churches, synagogues, or clubs, or people of the same ethnic background; or they sell first to a few members of these groups, then draw in others. In such cases, investors sometimes let down their guard. In the wishing well case, Stackpole allegedly defrauded many volunteer firefighters who heard about him from other firefighters.

Review your account statements and make sure you know where your money is being held.

Be skeptical about investment returns that sound too good to be true and about promises that there's no risk.

Keep notes about phone conversations and meetings with the investment adviser.