Wednesday, 5 October 2011

Investor Fraud: the IFFL Brost Sorenson Case and How to Caveat Investor

The indefatigable Ken Kivenko of (I don't know how he manages to keep positive given the seeming endless flood of info he collects and analyzes about the weaknesses of investor protection in Canada) sent along a CTV W5 video link to Who is protecting your investments? on the latest yet-to-be-proven-in-court fraud perpetrated on investors - that of the Institute for Financial Learning (IFFL) operated by Milowe Brost and Gary Sorenson. It's a sad and shocking tale, especially in view of the fact that the RCMP and the Alberta Securities Commission have been completely ineffectual in preventing the fraud. If the past is any guide, little or none of the many millions that have disappeared will be recovered and the perpetrators will not suffer any punishment, except for having to spend years going through the legal system while drinking their pina coladas in Panama or wherever.

It is one thing for us to indulge in gawking at the financial catastrophe of others or to stoke our anger at the various "SOBs" who fail in their duty to protect us. More important is to remind ourselves how to do due diligence or exercise caution before we invest - a penny of investigative prevention is worth a million dollars in lawyer cure.

1) Official Sources like the various provincial securities commissions, the RCMP, e.g. through links in my previous post on this subject Scam and Investor Fraud Alert Sources - Fraudsters often do it again and again so they may well show up in previous judgments (maybe it's the light penalties and sanctions that encourage them? just asking). Do a search for Brost in the ASC website and lo and behold we see him caught doing naughty things way back in 2005.

2) Google search - Ain't the Internet handy, typing in Milo Brost brings up a whole host of links that would or should raise a dubious attitude. One that is wryly amusing is this 2004 Institute for Financial Learning discussion thread on where a certain Winer says the promised 40% return is entirely reasonable and is not a warning flag! The Internet savvy will always have their idiot and BS detectors in operation I hope. Bottom line: Trust, but verify. The more the stakes, the more you need to verify. The hard-hit couple featured in the CTV story did the former but obviously not the latter. It might even be worthwhile to get a second opinion from someone else with your interests at heart and without an interest in the potential investment.

The obvious answer to the CTV W5 title question right now is "you yourself, my friend, you are the only one protecting your investments". Caveat investor.

PS In one of my Google searches for this post, I came across the Behind MLM blog, an amusing anti-scam site. It also displays Google ads, one of which advertized a "200% Return on Investment Exclusive Diamonds from £5k". With the Google good comes also the bad ...

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