Plus: make sure the advisor you hire has this
Ric Edelman: It's Tuesday, August 29th. I want to throw some names out at you. Do you know any of these people? Steve Swenson, Shawn Good, Chris Carpenter, and Dave Ramsey - all of them involved in scams. Steve Swenson was a financial advisor. He killed himself because he was running a Ponzi scheme for two decades and was about to be found out. Mark and Barbara Fox lost $850,000 in his scam. They filed a lawsuit against Wealth Navigation Advisors, which does business under the name Oak Lane Advisors. That's the firm where Steve Swenson worked. The couple claimed that the firm failed to prevent or detect the fraud. Not only did they lose $850,000, a total of 50 investors lost $29 million. One moral of the story is you might want to make sure you're working with a very big firm that has lots of assets and lots of E&O insurance, errors and omissions, so that if one of their reps does something inappropriate, shall we say, likely they'll stand behind you and not the rep and help you get your money back or reimburse you out of their own pocket.
Meanwhile, there's Shawn Good, a former Morgan Stanley advisor. He was just sentenced to seven years in prison for conducting a $7 million Ponzi scheme out of Wilmington, North Carolina. He was also ordered to repay the investors he stole from, at least 12 victims, total of $7.2 million. I don't know if he's going to be able to repay the money in restitution. He used the cash he stole to buy a house in North Carolina, a condo in Florida, a Mercedes, a Porsche, a Tesla, an Alfa Romeo, and an Alexis. He also paid for trips to Italy and France, and other locations.
And how about Chris Carpenter? Do you know that name? You do if you're a baseball fan. He was a pitcher for the Boston Red Sox. Later, the Cincinnati Reds. The Chris Carpenter I'm talking about is not the Chris Carpenter who played for the Toronto Blue Jays and the Saint Louis Cardinals. Yeah, go figure. There are two Chris Carpenter's, both of them professional baseball players, two different people. Only one of them became a crook. The Chris Carpenter I'm talking about after he left, baseball became a financial advisor. He's now been barred by FINRA for refusing to produce information requested for an investigation. The moral of the story there, I imagine, is don't hire a financial adviser merely because they used to be famous in a different career as an athlete or an actor or a recording artist or what have you. Evaluate them for their own experience and skills, doing what you're hiring them to do as opposed to something that they used to do.
And finally, Dave Ramsey. Ever listen to his radio show? For years, he has told his listeners how to get out of timeshares. And now, 17 of those listeners have filed a $150 million lawsuit against Dave Ramsey. They say they've lost millions of dollars because they hired a company that Dave Ramsey promoted on his show where he said that this company would help them get rid of their timeshares. The lawsuit says that Dave Ramsey was paid $30 million over six years to endorse a company called Timeshare Exit Team. That company allegedly collected $200 million in fees, including $70 Million from Dave Ramsey listeners. That company is no longer in business. It reportedly settled with the state of Washington for more than $2.5 million over allegedly deceptive business practices.
This new lawsuit against Dave Ramsey says that he engaged in negligent misrepresentation, unjust enrichment, and violation of consumer protection laws by promoting the timeshare company, which promised a 100% money back guarantee. Dave Ramsey allegedly once said on his show that he promoted the company because it was, quote, “doing the right thing and getting people out of timeshares”, unquote. The lawsuit says that Dave Ramsey used deceptive, incomplete, and false information that he knew or should have known was false. This is not the first time Dave Ramsey has been sued. A former employee says she was fired for being pregnant and unmarried, according to NBC. Another former employee has reportedly filed a lawsuit for discrimination. So, the lesson there is maybe you should listen to this podcast instead of that one.
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