Personal Finance: Ask the Experts

Get advice on money matters from The Bee's Claudia Buck and a panel of local experts

November 6, 2012
Investors and consumers: Beware of Hurricane Sandy scams

It happens after every natural disaster: con artists try to exploit a tragedy for their own financial gain.

As cleanup of Hurricane Sandy's devastation continues on the East Coast, consumers and investors in California and nationwide are being reminded to be wary of phony solicitors, investment offers and other scams that prey on the disaster.

"Scammers are getting good at their game," said Joanne McNabb, director of Privacy Education and Policy for the state Attorney General's office in Sacramento. Just as with Hurricane Katrina in 2005 or Japan's earthquake/tsunami last year, phony solicitations for disaster-related donations can arrive by email, fax, phone, tweets, Facebook or other social media.

"Unless you initiated the contact, ignore it and delete it," said McNabb. "If you want to give to the Red Cross or another charity, check their web site or your phone book and contact them directly."

In other cases, investors can get duped by fraudulent appeals related to disaster-related technologies, such as water extraction, home restoration or earthquake-resistant buildings.

"Individuals, including those receiving lump sum insurance payouts, should be extremely wary of potential investment scams related to Hurricane Sandy," the SEC recently posted on its website.

Sometimes unethical companies try hyping their products or technologies in an effort to entice investors. For instance, after Japan's deadly earthquake affected a major nuclear power plant, one U.S. company was sanctioned for issuing press releases touting its "new generation" of radiation detectors. In another case, the SEC issued fines against officials of a Dallas-based home restoration company for falsely claiming Hurricane Katrina-related revenues that boosted its stock price.

"In particular, fraudsters may try to lure you with very aggressive, optimistic and potentially false and misleading statements or press releases that create unwarranted demand for shares of some small, thinly traded company," says FINRA, the federal regulatory agency, on its website. Once the stock price gets a boost, con artists sell off their inflated shares, leaving investors with worthless stock. It's called a "pump-and-dump" scam.

Another potential source of fraud: public WiFi connections, which became particularly essential after Hurricane Sandy's widespread power outages forced millions to resort to coffee shops and other public spaces to conduct business, banking and other activities on their smartphones or laptops.

"If you have friends or family on the eastern seaboard, remind them to be very careful conducting personal business on Wi-Fi networks and on their smartphones," said McNabb. "Intruders look for unprotected networks and distracted mobile users so they can eavesdrop, hack and freeload."

Never use a public WiFi connection to type in credit card numbers, banking information or passwords unless you know it's secure. That includes hotel business centers, McNabb said: "Use with caution, remember to log out and delete your data and browser history."

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Meet Our Financial Experts

Claudia Buck

Claudia Buck is The Sacramento Bee's personal finance columnist. Read all her columns here. Contact her at cbuck@sacbee.com

Terri Carpenter

Terri Carpenter offers advice on job hunting, retraining and career counseling. Carpenter works at Sacramento Works Inc., the career and job training arm of the Sacramento Employment and Training Agency (SETA). With 15 years in the field, she has hands-on experience with everyone from first-time job seekers to career professionals seeking advice after a layoff or looking for a mid-career change. Ask her a question.

Carlena Tapella

Carlena Tapella is a partner in the law firm of Webb & Tapella Law Corp. in Sacramento. The firm specializes in estate planning and probate, such as estates, trusts, conservatorships and litigation. She is a past president of the Sacramento County Bar Association's Estate Planning & Probate Section. Ask her a question.

Kimberly Foss

Kimberly Foss, certified financial planner, is the founder of Empyrion Wealth Management in Roseville. With nearly 30 years in the financial industry, her clients include women in transition, small business owners, retirees and "pre-retirees." Ask her a question.

Jesse Weller

Gregory Burke, a CPA and tax expert with John Waddell & Co. in Sacramento since 1984, worked as an IRS tax auditor for six years. He’s a past chairman of the California Society of CPAs. Ask him a question.

Daniel Tahara

Daniel Tahara takes your questions about California taxes. Tahara, a spokesman for the state Franchise Tax Board, has 10 years of experience as a tax auditor. Ask him a question.



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