Published: October 06, 2008 10:51 pm         

State auditor coming to Beckley to talk about investment scams

Seniors, beware of the free lunch — you could wind up being like a mouse trapped into an investment scam.

Such is the warning state Auditor Glen Gainer III is bringing to Beckley Oct. 16, a timely topic with the meltdown on Wall Street and the hurry-up job by President Bush and Congress to bail out investors.

Gainer plans to appear at the Raleigh County Commission on Aging at 11 a.m. on the heels of Attorney General Darrell McGraw’s effort to explain the disparity in gasoline prices across the state.

“We’re working in programs with different senior centers around the state to make them aware of investment scams,” Justin Southern, communications director for the auditor’s office, said Monday.

“What’s going on in Wall Street definitely brought the investments fraud issues to the fore.”

Congress last week enacted a $700 billion measure and Bush promptly signed it as a “rescue” package intended to prevent an economic domino effect that supporters insisted would trigger a depression.

In the midst of the turmoil, Southern said, the focus began to shift to Main Street, where many have become jittery over pensions.

“People are starting to get worried about their money and being sold programs that are ‘the safest investment programs’ and all that,” Southern said.

Thus, Gainer is hitting the seniors circuit with advice on which programs indeed are safe and which ones must be avoided.

“Some of the things that have been happening around senior centers all over the country have been these free lunch seminars,” Southern said.

“Some of the states are really promoting that issue and are saying, ‘you need to think twice if someone offers a free lunch and some kind of an investment.’ They call it an ‘education program,’ but at the end of it, it’s actually a sales call.”

What is billed as an education seminar turns out to be the hard sell, usually a pitch for a variable annuity, the Gainer aide said.

Mindful of problems that have arisen elsewhere, Gainer’s office has forged a memorandum of understanding to work in tandem with the West Virginia Securities Commission.

For more detailed information and contacts, Gainer is asking seniors to tap in at a Web site, www.wvsao.gov or call his office toll-free at 888-724-3892, to learn more about his “Seniors Against Investment Fraud” campaign.

The insurance commission has entered the picture since the annuities are an insurance product, Southern explained.

“There have been a lot of complaints from seniors all over the country, or from family members,” he said.

In a typical scenario, an 80-year-old senior plunges into a 20-year annuity, only to learn of multiple and costly penalties for withdrawal, Southern explained.

Variable annuities are actually a worthy product, except some seniors may find themselves strapped for cash to cover medical and other emergencies, he said.

“There usually is a huge fee that is associated with pulling your money out early and all that,” he said.

“They might not be aware of that or it might not have been explained to them. In Florida, they have been offering these free lunches and when the seniors get there, it’s a scam. It’s the latest great scam right now.”

Gainer is expected to devote part of his appearance to discussing the Wall Street quagmire and the impact on West Virginia.

“There is a big issue with variable annuities,” Southern said. “So, it’s really timely this program is taking place.

“And what is outstanding is that we are the first state we know of in the country in which the insurance commission and the security commission have agreed to work on this.”

— E-mail:

mannix@register-herald.com