Bermudians could be losing their life savings by investing in scams such as bogus investment brokerages according to chairman and chief operating officer of Maximum Financial Ltd. Paul Comesky.

Mr. Comesky contacted The Royal Gazette this week after a number of Bermudians came to the company's office and asked for advice about bogus investments, many of them run from poorly regulated Caribbean nations initially named in the OECD's "hit list" as uncooperative tax havens.

Mr. Comesky said foreign investment companies from countries such as Barbuda and Antigua were calling Bermuda and soliciting business but the countries did not have regulatory boards and the safety structures that are set up in Bermuda and in the US.

"The reality is that people are blindly sending money to these firms because of the sales technique or whatever the case might be, and the fact of the matter is that nine times out of ten, they are investments that are going sour."

Mr. Comesky said his company's mandate was to protect the people of Bermuda but also said he did not want to discourage people making investments outside of Maximum Financial.

He said Maximum Financial was offering help. "We are offering a free service to at least take their investment structure that they have been offered, put it through the scrutiny, find out the information on the firm that is making the offer and the quality of the investment," he said.

He said a common ploy was to get people to open accounts as if they were just a normal brokerage account and then use what he called the old "bait and switch."

He explained: "They (investors) are being baited on commonly known well traded stocks and then shortly thereafter they are being introduced to the private placement arena, and in one case the company was in bankruptcy prior to the guy even knowing the investment he was making."

Mr. Comesky explained that a private placement - investing in a company before it goes public - required a full subscription agreement which actually has to state that the client has a $1 million net worth and earned $200,000 in the prior two years. Investors also have to check off and initial on each page a disclaimer to prove that they are an accredited investor and that they can afford the loss.

Mr. Comesky said some investors had come to his office who had been sold on this ploy and had never even heard of such a form. He asked if they had an account agreement or signed anything, and the answer was almost invariably no.

"So you have nothing to stand on, you basically sent the money for free."

Mr. Comesky said this was incredible to him and added: "I think it is our job. I think we need to get out there and just let investors know that if you are going to go this route, be prepared to lose your money."

Mr. Comesky's most important advice was: "Don't send your money to people you don't know."

Mr. Comesky said if people wanted the style of investment offered in other offshore jurisdictions, they should at least do it with someone local. "It doesn't have to be with us, but search to see if they have that product for you. I think we are just trying to step out there and be the watch dogs, and when we see these things arise, we need to notify the public and they need to take it in a very serious manner."

"Look at people, they will go to five, six, or ten different dealers to find a car, and yet they will take $50,000 of their hard earned cash and wire it off to some company of which they have no idea!"

As an example, he said last week a man came into Maximum Financial's office and said he had invested $50,000 in an offshore firm in Antigua being run by Chicago traders. "There is a reason why they are in Antigua, and the fact of the matter is, they had no subscription agreements, nothing was signed, they never gave out a new account form signed and opened by the guy. That's the perfect example, they flipped him into Nokia, they told him to send another $30,000, they bought him into a private placement and the company is in chapter 11 (bankruptcy)," said Mr. Comesky.

He added: "If it is at all possible, the best they (investors) can do is deal with someone that they can walk in the office and talk to. Because of the lack of the regulations on some of these other islands, at least they should have the comfort of coming in and speaking to someone and asking how is our investment doing, where are we, so on and so forth."

Mr. Comesky said the message needed to get out as he was finding that many residents were being scammed.

As another example, Mr. Comesky said another man came in to talk to one of the brokers. He said: "He comes in with a package and it is on oil drilling. I know the oil markets pretty well, and they are drilling in Kentucky. The picture on the brochure is of some guy in his back yard with 50 year-old equipment. It is ridiculous. And he came to us in reference to pulling people together. They need to stop and really wake up and smell the coffee and realise that if it was that great, they wouldn't be hearing it."

Mr. Comesky said he felt that Bermudians were looking for the "home run" investment.

"We really want to get out and help educate individuals on their investment decisions. We are not here solely to make them a client of Maximum Financial, we are here to help the community in general.

"We would like to be part of being the watchdog, being the pitbull at the gate, and sniff out the bad stuff that is coming in and warn people to stay away, that it is not real. If it is not real, okay fine, but what recourse do you really believe that you would then have to recover your earnings even if it was done in malice? There is none. It is done! Some guy is filling up his speedboat out on some Island somewhere and he is using your money for fuel!"

Mr. Comesky agreed that part of the reason scams were rarely publicised was the embarrassment factor. When asked if investors who had lost money were embarrassed, he said: "Absolutely. When the guy came into me he was embarrassed, and I am diligently trying to get their funds back for them, but it is next to impossible."

Mr. Comesky said that he wanted people to know that his firm realised that people were embarrassed by some of the bad investments they had made on their own. He said members of his firm were willing to speak with them in full confidentiality. "You go to your doctor to talk about your health problems, you come to us to talk about your investment situation," he said.

Mr. Comesky said he was willing to work with the department of Consumer Affairs to help publicise investment scams in which Bermudians get involved.

A Department of Community Affairs employee, who did not wish to be named as he is prevented from talking to the media without clearance, said the department had no complaints about dodgy investments from companies or organisations, but said that from time to time individuals had made complaints.

The Consumer Affairs employee said the types of investments where people were duped included pyramid schemes as well as investment seminars where people were required to pay large amounts of money to participate.

This type of scam is tricky as the scammers claim to be selling a service, but the legitimacy of the seminar is often questionable.

The employee also agreed that often people may be too embarrassed to go to the authorities and explain how they were duped.

To find out more, Maximum Financial is holding a seminar on July 3 at the Hamilton Princess Hotel at 5.30 p.m. which will largely be about investment scams.

"We want to address these firms that come into Bermuda and walk away with people's money," said Mr. Comesky.