Although these scams come in many varieties, they often share one important element: red flags. Is the investment strategy one you don’t quite understand? Are you promised risk-free, guaranteed returns? Must you act soon or lose your chance? Any “yes” answer should set off an alarm. To put you on alert, here’s a roundup of recent frauds alleged by prosecutors and regulators, along with a guide to some of the reddest flags.

From October 2020 to August 2023, a group known as Fundsz promised investors no-sweat annual profits of 365 percent through cryptocurrency trading and other “healthy and sustainable” sources of income, alleges a complaint filed by the Commodity Futures Trading Commission (CFTC). “Make Money While You Sleep” and “Passive Income With ZERO Effort On Your Part” reads one Fundsz marketing slide included in the complaint. An alleged ringleader touted a “proprietary algorithm,” but declined to reveal “the secret to our sauce.” A court-appointed receiver calculated that more than 9,000 investors lost a total of $15.7 million.
Red Flags: High Returns, Secret Formula, Easy Riches

In late 2022, the Securities and Exchange Commission alleged that Houston resident John Fernandez had fraudulently raised more than $4.3 million from about 175 investors, promising “guaranteed interest every month” from trading in currency markets. Rather than investing in foreign exchange markets, he sent investors computer screenshots of fabricated gains from trades, said the SEC. He paid out some money, but that was mostly a Ponzi scheme—a fraud in which the illusion of a successful operation is created by paying investors fake “profits” that are simply money paid in by other deceived investors. When that venture failed, Fernandez blamed a “tax blowback” and asked investors to move their money to a new investment, described as a “legitimate financial company.” This second venture, which promised annual returns of 5 to 100 percent, failed as well.
Red Flags: Guaranteed Returns, Sketchy Financial Statements, Insistence of Legitimacy, Excuses Excuses

Since 2021, a company called Agridime has raised $191 million from more than 2,100 investors in what the SEC says is a Ponzi scheme. The company allegedly agreed to sell investors beef calves for $2,000 apiece, then buy back the same animals at a higher price after a year, guaranteeing a return of at least 15 percent and allowing participants “to become a part of providing fellow Americans with the highest-quality farm-fresh beef available.” Instead, the SEC says, the company acquired far fewer cattle than it sold to investors, had less than $1.5 million in cash as of last September, and made at least $58 million in Ponzi payments to investors. In its advertising, the company acknowledged, “We know it sounds too good to be true.”
Red Flags: Exotic Investment, Guaranteed Returns, Insistence of Legitimacy, Appeal to Patriotism

In a settlement announced last October, the CFTC and regulators from 30 states alleged that precious metals dealer Safeguard Metals had deceived more than 450 investors by selling them $66 million in fraudulently priced silver coins. According to the settlement, the company pushed older Americans, most of whom were inexperienced investors, to empty their retirement accounts for silver purchases by preying on their fears and misrepresenting the safety of traditional retirement accounts. Sales representatives told one investor that the stock market was going to crash and the government would confiscate people’s IRAs, for example, and repeatedly called another to say “hurry up” and “make a decision.” Despite telling customers that it typically sold them silver anywhere from 4 to 23 percent above its own costs, Safeguard’s markups actually averaged 71 percent up until 2021, according to the CFTC.
Red Flags: Time Pressure, Appeal to Fear

Phillip Galles was found by a judge last November to have fraudulently obtained $5.3 million from 65 people for a pool of money to invest in commodities, then to have used that money instead for expenses including luxury car rentals and purchases at a jeweler, Macy’s and Best Buy. Among Galles’ false claims, the judge found: that he had an investment return of 238 percent in 2020; that he managed $1.7 billion in offshore entities and had just raised another $3 billion to invest; and that he employed at least five different automated trading models, including “algorithmically determined ‘inflection points’ [that] are filtered using order book dynamics/market microstructure analysis to profit from price movements in either direction around these areas.” When one client asked to withdraw some of his money, Galles put him off with a series of excuses for why he couldn’t, including bank mix-ups that prevented withdrawals and a visit to the emergency room: “A pill opened up in my throat by accident and closed my throat for 2 full minutes. I thought that it was an onion and tried to get it back up. It didn’t go so well.”
Red Flags: High Returns, Unverified Claims, Secret Formula, Excuses Excuses

Wilson Baston, who pleaded guilty to mail fraud and wire fraud in 2008 in a real estate scheme that cost an estimated 185 people more than $22 million, was accused by the SEC last June of launching a similar scheme not long after he was released from prison in 2017. This time around, the SEC says, he persuaded people to invest more than $10 million in several real estate deals (which he didn’t identify) by promising to repay their principal, with interest of up to 25 percent, within days or weeks. Baston, who allegedly hid his past by using the alias “Chanon Gordon,” touted his ability to flip undervalued properties, but he often used fresh investments to make Ponzi payments to other investors. After Baston failed to repay one investor—he had used that person’s money to pay off someone else—he persuaded the first investor not only to “roll over” the purported principal and interest into a new transaction but also to pay in an additional $4,000, says the SEC. Baston fended off requests for repayment by citing obstacles such as moving his office, not having his phone and dealing with multiple bouts of COVID-19, according to the complaint.
Red Flags: Guaranteed High Returns, Investment Secrecy, Unverified Claims, Excuses Excuses