Investor's Watchdog.com: Stock, finance and investment protection for investors

The U.S. Securities and Exchange Commission has charged Michael Bowen (“Bowen”) and three of his companies, Eagle Development Enterprises, Inc., Eagle Storage & Development, LLC, and Eagle Aviation Sales & Leasing, LLC, with conducting a $28 million securities fraud. Specifically, the SEC claims that Bowen and his companies induced investors to buy interests in the companies by claiming that they would soon be going public in a United Kingdom initial public offering.  According to the SEC, Bowen claimed that his companies invested in and/or operated storage facilities, assisted living facilities, and helicopter leasing operations.  The SEC also claims that Bowen embellished the companies’ assets and failed to tell investors that he was the subject of a prior cease and desist order imposed by the Alabama Securities Commission in 2005.  According to the SEC’s complaint, Bowen misappropriated at least $3 million of the $28 million raised and used that cash by luxuries, including luxury cars.

Notice four things about this case.  First, notice that the defendants claimed that they would soon be the subject of an initial public offerings.  Scam artists often make that claim, holding out the possibility that investors in unregistered offerings will receive shares in the initial public offering.

Second, notice that the defendants claimed that the initial public offering would take place in the United Kingdom.  By claiming an international connection and presence, scam artists hope to give a sophisticated and cosmopolitan impression.  Claiming that the offering will take place overseas also makes it less likely that prospective investors will be able to verify the claim.

Third, notice the failure to disclose prior allegations of securities fraud.  People who make their living by taking other peoples’ retirement savings frequently have a regulatory rap sheet.

Finally, notice the ever present use of investor assets to purchase luxury cars.  Scam artists buy them so often that the SEC could use luxury car ownership as an part of a effective profile of likely financial scamsters.

Never underestimate how difficult it is to tell a legitimate investment opportunity from a cleverly-disguised fraud.  Only someone who has seen hundreds of financial scams can hope to recognize the subtle hints that a company promising to grow your nest egg is really intent on taking it from you permanently.  To protect what you have worked so hard to save, do what banks do when they move cash.  Hire private protection.