Monthly Archive for December, 2009 on Investor Watchdog

Property Tax Reduction Scam

By: Evor Vattuone | December 14, 2009

I’ve lately been receiving solicitations from very official looking companies stating that they’ll reduce your property tax bills…as long as you fill in personal information and send a check for several hundred dollars. I live in California, so we’re no strangers to greatly reduced property values. Naturally, reducing your property taxes, often by significant amounts, is a real possibility, and should be researched by homeowners.
However, you do not need to spend any money to lower your property taxes – that is – if they haven’t been reduced already by your county’s assessor’s office. In CA, we have Proposition 8, which was passed by CA voters in 1978 and provides a reduction in assessed values when the Proposition 13 value of a property exceeds the actual market value.

All you really need to do is wait until March of each year, and send in the Prop 8 request form, that’s attached to the back of a Prop 8 brochure. According to the assessor himself, his office will research your property’s value and adjust its tax basis if necessary. Why wait until March? The assessor’s office does their audits of property values starting in October, and ending in March. So, March will give you the most likely chance of getting a favorable assessment (as long as values have declined).

The other thing the solicitation does not state is that your property taxes can climb back up to original Prop 13 tax basis values at whatever rates the market is appreciating. For example, if property values suddenly rise by 20% in the year, your property taxes can also rise 20%, as long as they don’t exceed your original Prop 13 assessed rates.
Finally, once these firms acquire your personal data, don’t think for a minute they won’t sell it away to any and all seekers of such information!

In sum, don’t waste your time or money on solicitations claiming to reduce your property taxes…it’s just another way to separate you from your money.

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Reverse Mortgages and Annuities Don’t Usually Mix Well

By: Evor Vattuone | November 5, 2009

Using reverse mortgages to fund annuity premium payments has become an increasingly used scam by unscrupulous loan officers and annuity salespeople. Usually a reverse mortgage is for seniors who need the money for living expenses, not deferred annuity payments.

But, with the attraction of hefty commissions on annuity sales, there are a growing number of reverse mortgage lenders who seek to open annuities funded from reverse mortgage payments. The usual prey are naturally seniors who are easily befuddled by complex terms and who also have a high level of trust for their mortgage consultants and/or annuity salesperson – who all too frequently call themselves financial advisors.

Currently, there’s a warning out by the National Association of Insurance Commissioners to stop this practice. While not strictly illegal, it’s highly unethical and almost always bad for the customer.

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Evor Vattuone, CFP, Aspire Capital Management

By: Evor Vattuone | July 29, 2009

The Affinity Group

Alarming numbers of new scams are being originated from what are called “affinity groups”. These are groups of people with similar values, lifestyles and/or ethnic identities, such as churches and women’s or senior groups. Predators use the most respected members of affinity groups to gain access to their constituents – and their built-in level of trust. For example, endorsements coming from a pastor of a church can carry significant sway and new clients will therefore often skip the due-diligence portion of their research into new investments.

A major case that started in 2004, involved an innocuously named group – “Women Helping Women” aka “Women Empowering Women”. This group pitched unbelievable returns on their investments. For a small sum of $5,000 paid to WHW, they would invest it for you, all in the safety of dealing with other “trusted” women…how empowering. They pitched 300% to 400% returns with little risk of loss. It was uncovered by a CA Dept. of Corporations agent and District Attorney in Sacramento to be a Ponzi scheme and many members lost much more than $5,000. In addition, many members faced criminal charges who had no idea they were even perpetrating a crime! There is another group with the same name currently, but they’re not a scam from what I can see. However, this same scam is being reborn all over the country using different names.

You absolutely MUST do your homework, regardless of the name or affinity to which an organization ties into. Just remember to ASK QUESTIONS. Questioning a person or business you are thinking of engaging with usually uncovers many bad intentions. If you don’t get a straight answer or are confused, keep asking or get a second opinion. Trustworthy advisors, agents and others will spend as much time as needed to help you understand whatever it is you’re considering. Most importantly, investors should know exactly how to get out of an investment and how much it will cost. Getting in is the easy part. Scams usually leave you confused…so trust your instincts and get a good second opinion from a disinterested, independent, and qualified third party if you’re unsure. If it even hints at being too good to be true, just say “no”.

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