If I said the name Bernie Madoff, you’d probably know who I was talking about, but if I said the name Graeme Hoy, you’d probably give me a blank look.
While Bernie ‘the weasel’ Madoff, as he was called by David Letterman, ran the biggest ponzi scheme in history, Graeme ‘the weasel’ Hoy was slightly more humble, confining his ponzi scheme to Geelong.
Hoy was recently sentenced to 13 years in prison for his part in an $82 million fraud, and while it pales in comparison to Madoff’s $20 billion crime, the damage done to those involved was the same.
Hoy’s company, Chartwell Enterprises, sprung out of nowhere to trade commodities and currencies – in Geelong of all places – promising annual returns of 50 to 80 per cent.
He also drove a million dollar Rolls Royce and owned a seven million dollar boat, which seemed to serve as validation of his methods because more investors rushed to hand over their money.
Unsurprisingly, no trading happened and the returns were false; anyone redeeming an amazing profit was being paid with another investor’s money.
When the financial crisis hit, worried investors wanted their money back all at once – then the whole thing collapsed.
The strangest thing?
People believed someone, who out of the blue, set up a complex trading company, could reliably predict movements in areas where even major banks and investment houses have no consistency.
Or maybe not so strange.
Investors continue to be caught up in these scams, suggesting financial literacy in the community remains at a very low level.
Conmen will always prey on the greedy, the ignorant and the vulnerable, so awareness is the best defence.
If something looks too good to be true, it probably is and if someone promises returns of 50 per cent, they should be viewed with great suspicion.
Financial education is critical for protection against the weasels!
Peter Mancell is a director of Mancell Financial Group and FYG Planners AFSL 224543. This information is general in nature and readers should seek professional advice specific to their circumstances. If you want help with your financial future, we think we’re Australia’s top financial adviser. We think we’re the best financial advisers in Tasmania.
