How to Protect Yourself from Scams and Rip-offs - Episode 97
Join me today as I talk with R Persichitte, a money expert who helps people avoid scams. We chat about what fraud is, how it is different from rip-offs, and ways you can keep your money safe. R shares real stories about people who lost their savings and gives easy tips to protect yourself. Listen in to learn how to keep your money where it belongs.
About our guest
R Persichitte, CPA/PFS, CFP®, CFE, guides business leaders and individuals with tax and investment decisions. He is an accountant at heart and an award-winning analyst known for using data to make sound decisions. He is driven to help clients invest wisely by avoiding scams and other pitfalls of investing and personal finance. He’s been an auditor for 10 years and now works as an auditor on your side.
Delagify Financial is a company dedicated to helping consumers keep their money. They help clients avoid and recover from financial pitfalls. They offer tax, accounting, and financial planning services.
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TRANSCRIPT:
Naseema: [00:00:00] R. Pasquidi guides business leaders and individuals with tax and investment decisions. He's an accountant at heart and an award winning analyst known for using data to make sound decisions. He is driven to help clients invest wisely by avoiding scams and other pitfalls of investing in personal finance.
He's been an auditor for 10 years and now works as an auditor on your side.
The leg of 5 financial is a company dedicated to helping consumers keep their money. They help clients avoid and recover from financial pitfalls. They offer tax accounting and financial planning services What's up, my financially intentional people. So I'm excited to be joined by. Our persecuting.
R Persichitte: You got it. The first try.
Naseema: Cause I knew I was going to mess that up. But anyway, we are going to delve into this crazy world of financial fraud. [00:01:00] Talk about what fraud is and what's the difference between frauds and ripoffs, but just try to set the stage for you to avoid.
R Persichitte: Yeah, they're all bad, right? We don't want, we don't want any of them happening to us.
Naseema: Yeah.
R Persichitte: but a lot of people use these terms interchangeably,
Naseema: Mm hmm.
R Persichitte: to us fraud professionals, it's difficult, because fraud is a really, really high bar, and basically, most states are going to set the definition for this, but most states, it is an intentional deception.
To get something of value, right? Those three elements need to be there. You can't accidentally commit fraud anywhere. You always have to be intentional. So one of the excuses against fraud, if you go to say a roofing company and you pay them to do their roof, and then They go bankrupt, right? They're trying really hard.
They're just not good at pricing stuff out. You gave them the money and then they went out of business. That's not necessarily fraud unless they planned on going out of [00:02:00] business. They knew they were going to go out of business. They never had the intention of fixing your roof. If they try to fix your roof and they're just bad at business, they lost the money.
They got robbed on the way to the bank or something like that. That's not fraud. That's just bad business. They're just bad at what they do. They have to be trying to take your money from you and it has to be some type of illegal conversion of assets. So I think the easiest one to wrap our head around is larceny, which is physically grabbing cash and walking out, right?
If I went into your house and said, Hey, I'm the money inspector, show me all your money, grabbed your money, and then walked out of the house, that would be larceny and fraud. I would have been guilty of two crimes there. The intent is what's really important and the protections are what's really important.
Now, the difference between fraud and a ripoff is a lot of times a ripoff, there is no deceitful action that's involved that maybe it's hidden or they try to redirect your attention, but all the information was there. And the [00:03:00] example that I like to give Is if you're walking into a baseball game and there is someone on the side of the street saying, give me five bucks and I'll give you a coupon for a free hot dog inside.
And that's fake. There is no hot dog inside. They just took your five bucks. There's nothing in exchange. That's fraud. They lied about what that coupon does. And they took your money through that lie, through the process of lying. Once you get into the stadium, 15, 20 for a hot dog is not a fair price, but you might see that in there.
That might happen. That's a ripoff, right? It's all transparent. You could have, Reasonably guessed that you're going to overpay for a hot dog at the baseball stadium and you can see the prices up there And you know that special chili dog with the extras and they're charging you 20 bucks for it You knew when you're going into it that it was going to cost that much Even if you didn't look at the sign, even if you got to the front of the line and were surprised at it Nobody's going to stick up for you It's not going to say that they lied to you about the hot dog or that you [00:04:00] shouldn't Have been charged so much for the hot dog, but still a rip off and we still want to avoid it here You The reason I want to make that distinction is because in a lot of investment schemes, the people who are ripping you off make that distinction, and they're using very technical, finely tuned language to talk about things.
Another example of that from the investing world is a multi level marketing scheme. And one thing that they love to say all the time, this is not an illegal pyramid scheme. And they will use those exact words, an illegal pyramid scheme. The reason that they use those exact words is because it is a pyramid scheme
Naseema: It's just not illegal.
R Persichitte: It's just not illegal because it's not under the SEC's regulatory umbrella, right?
It doesn't count as a security. So it's not an illegal security. It's not an illegal pyramid scheme. It's just a regular pyramid scheme. So that would be our 1st example of something that is not fraud. It's all there. It's written down for you. You can [00:05:00] read the contract and everybody knows it.
It's not like you go talk to somebody. And they say, Oh yeah, I got this new multi level marketing thing, this new pyramid scheme. That's going great. I love it. And all your family members say, yeah, that sounds perfect. Sign me up for the level below you. That never happens because it's all there. We have that information and it's available to us specifically if we choose to ignore it and give them our money.
Anyway, that's a rip off and it sucks. But it's not fraud, it's not a crime, no crime has been committed there.
Naseema: Let's just go back though. Like, how did you even get into this space? Because I know it has to be an interesting story. Like, how did you become a fraud expert? Mm hmm.
R Persichitte: I've always loved fraud and I went into accounting in college because I wanted to make money. And I looked and of all the programs that my school offered, what was the highest paying job that my college specialized in and it was accounting. There's no engineering program there. So I, that was all that I had and I thought [00:06:00] I'm going to do this.
About halfway in, I got roped into the Association of Certified Fraud Examiners, had some meetings. And I immediately fell in love with fraud and people always like to say that accounting is boring and that there's nothing to do in accounting. I will point out that Andy Fastow, who's the accountant for Enron, chartered a private jet.
And filled it with hookers and cocaine.
Naseema: That's a lot of fun and accounting.
R Persichitte: yeah, if you think that's boring, I don't know what's going on in your day to day life. That is so much more exciting than that, but that is very exciting to me. think it's fascinating and unwinding the lies and the deceit that goes in there is really fascinating, but when I started my career and I was working with the victims of fraud and, People who had already been convicted of fraud.
That's really where I started my career. It's really a human element to the story and in things like tax accounting, we don't get to [00:07:00] see it. And we know that there's these numbers on a page and those translate to a check that someone has to write. In my opinion, that's very different from somebody who lost their retirement savings is now 70 years old, having to go find a job again, because they trusted the wrong people.
To me, that is a much more impactful. and meaningful interaction with it. And it's not numbers on a page. They're behind every single fraud story. There are two stories. There is the story of the criminal, the fraudster and the story of the victim. And they are both fascinating stories to watch.
It's really like working inside a true crime
Naseema: That's what I was going to say. That is exactly what I was going to say. I was like, this sounds like some kind of true crime documentary that that is your life.
R Persichitte: Yeah. Yeah. It's great. It's really fun. I don't know why more people don't do it.
Naseema: Talk about stories, because I feel like people learn more from stories than, rather than just like [00:08:00] these broad examples. Do you have any stories you can share with names being protected? Personal information being protected about some cases that you've seen of some really, really bad fraud?
R Persichitte: Oh, really, really bad spot. So probably. The most impact. I'm going to give you two different stories of something that's really impactful. So the first one is a conservatorship case. And when I was working and nobody knew what those were now, that's a little bit more popular because of Britney Spears.
I did not work with Britney Spears. That was not where I am in the state of Colorado. Sorry. But basically, there were twin boys. I say, boys, they were. In their late forties, when I interacted with them but severely mentally disabled and their parents had left them a lot of money in a account they tried to put it in the trust, but they didn't quite get it right.
And so it wound up in the probate courts [00:09:00] because there were problems with it. And. A nurse who was claiming to take care of him had been skimming money off the top.
Naseema: not the nurse. Not the nurse.
R Persichitte: I know, yeah, I'm sorry. She had been skimming off the top. And while the amount of money Was not very large compared to a lot of the cases that I've worked.
The amount of money was about 120, 000 dollars, which is big. But, when you're talking about Bernie made off 8Billion dollars, small for them in particular. That was all the money in the world. They did not have the means to be able to earn their own paycheck. They were relying on this inheritance to.
bridge the gap for the rest of their lives and allow them to have a decent quality of life, not be a ward of the state for the rest of their lives. So 120, 000 [00:10:00] is a pretty good chunk of change. It's not huge compared to some of these other fraud cases, but for them, that was all the money in the world.
They're never getting any of this money back. And I was working for the state at the time, we're able to fully recover those funds for them.
Naseema: Nice.
R Persichitte: so that's a really fun outcome.
Naseema: How did this even get brought to the state? Like, how did this get flagged enough to was it because it was in probate court did it automatically had to get reviewed or how did this happen? Because did they didn't have the wherewithal? I'm assuming to try to get this investigated.
Right?
R Persichitte: It was blind luck. It was randomly selected for audit through the probate courts.
Naseema: See, that's crazy. Then imagine like, all
R Persichitte: Yeah, there's probably 50 more cases that we didn't see.
Naseema: yes. Oh, my God. That's wild. I'm getting nervous. Yeah.
R Persichitte: don't wind up. With a lot of assets tied up probate is really the default option. If there's no other [00:11:00] way for title to pass with something, that's where it has to go. So they didn't have capacity to enter their own contracts. The state had to step in and say we got to choose something here and this lady seems as good as anybody else.
Let's let her handle it. That in retrospect. Was a mistake that there should have been. I shouldn't say there should have been. This is not the opinion of the judicial branch of Colorado. But that was a suboptimal outcome for them. They had their money entrusted to someone who wasn't and there could have been a lot of worse outcomes out there.
We were making the best decision based on the information that we had, but they just didn't have a lot of good choices.
Naseema: And I was going to talk about that, but I didn't want to derail your story too much, but the importance of trying to keep inheritances out of probate court, because they can only make decisions off of the information that they have, and they try to make the best decisions, but ultimately it's Might not be the best for your family, and it's very expensive to go through probate [00:12:00] court.
Yes, you're right. Make sure you have your state set up properly. Okay, let's go to the next story.
R Persichitte: So the next story is a little bit more relevant to my day to day life now. And fella we'll call him Charlie, created a scam. If you've ever seen the movie, The Producers, with there's a Mel Brooks version, and then there is a newer version with Matthew Proderick same scam in both movies.
That was a scam. He did not do it with a musical though, he did it with oil wells. And he said, give me your money. I'm going to use this money to see if there's oil and in this spot and he did it in Boulder, Colorado. Not a lot of oil in Boulder, Colorado. I'll tell you that.
Naseema: used to live there.
R Persichitte: oh, yeah, that's where I got my start was working in Boulder, Colorado.
So you didn't I can tell you didn't strike it rich from oil.
Naseema: I did not unfortunately.
R Persichitte: Yeah. So he's claiming to drill these exploratory wells. He really did. He hired [00:13:00] geologists to drill a well, but he drilled it in the spot that he knew that there wasn't any oil and was able to give him a receipt to say, Hey, you gave me 10, 000 to drill for oil.
I drilled for oil and there was no oil there. Here's the receipt to prove that I drilled for oil and then use that same receipt for the next 5 or 10 people down the line. and use the rest of the money in his pocket. And so Charlie was extremely charismatic. Everybody loved this guy. And we used to get We get letters back.
We would collect restitution payments from Charlie. He was old by the time we were collecting money from him. And his victims would say, Oh, poor Charlie, leave him alone. Don't you send me any of Charlie's money. He tried his best. I'm like, no, they proved beyond a reasonable doubt in a court of law that Charlie stole your money.
And I'm like, no, I don't want it. And, he distributed that to the other victims of his crime. And that was their choice to [00:14:00] not accept those restitution payments or to waive those restitution payments. But what I found really interesting is even after we proved we laid out the entire case, he was ripping you off.
He never planned on striking it rich with this oil. He never planned to find oil. He was intentionally losing your money to cover up his losses. So nobody would look and see that he was taking money out of the business. That was fraud, and that was proven in the court to be fraud. So he had a jury of his peers determine that he was guilty of fraud.
And the victims were still not on board with it. And they were still bought into it. And Why I bring that up as an example, and why that's so important today is, I don't think I'm going to get through to anyone today who is currently the victim of fraud. I don't think anybody who is. In that situation personally is going [00:15:00] to listen to a word that I'm saying because
Naseema: into this story.
R Persichitte: and I am so boring and not fun that they probably like the criminal better than they like me.
Like this nerd over here is trying to tell me what to do with my money. What does he know I can be more effective. Is if your family member or a friend of yours might be victim to fraud, you can use some of this information to help peel back that curtain. Or if someone calls you when they're on the fence about something and says, Hey, I heard this thing.
I think it might be awesome. I want to put all my money into it. What do we do then? And how do we ask the right questions to avoid it beforehand?
Naseema: Okay. So I love this because number one, I want to ask how did this case get brought to your attention?
R Persichitte: So this case, I was working in the probation department. So he was already convicted of a crime before he got to me. I didn't have [00:16:00] to do any investigations. I got because everybody loved the guy. Basically. An institutional investor lost money on it. And so their compliance department got involved and said wait a minute, this doesn't quite add up, started asking questions.
And then that one got turned over a lot of these fraud. So I'll tell you statistically, the most fraud cases are detected by a whistleblower. So someone who is not an accountant is not an auditor, it's not someone whose job is to detect fraud. It is someone who's just living their life and they see it and they go, wow, that's suspicious and they raise it up the chain.
And that is the vast majority of how we detect fraud cases. I think in the top five is also blind luck where we weren't looking for it. And just like that first case study, We were looking for it and here it is. Oh my gosh. This is very surprising to everyone involved, but we just randomly fell across this [00:17:00] case.
Naseema: Can I just say my heart is racing only because this stuff is so these scams are so real and I'm going to give you a personal example. I'm in the personal finance space, but a lot of the stuff that I have is free or 20 dollars. And I had 1 of my followers reach out to me, and say. Was this you I was talking to? Because I just sent. You 30, 000. I said me, I said, but my 20 product are you serious? Wait, no, I said, this isn't me. They said the person told me, I saw that the account was based in Nigeria and they told me that I was just vacationing that you were just vacation in Nigeria.
I was like, listen, if I was taking a vacation in Nigeria, it would be a really big deal. Everybody in the world would know it would not be a private thing. But what happened was, when you have a lot of followers on Instagram, people make copycat accounts [00:18:00] and they would send these messages.
And there was nothing that I can do except put a warning on my page. I will not ask you for any money. I don't deal in this stuff. But she cashed out her retirement account. Sent this people this money went back and forth with them for months and then just randomly decided she had my email obviously Decided to email me like is this you and I was like, baby That's not me.
And I don't I didn't take your money and I don't even know how to help you because I don't even know and it was overseas, so like Things like that happen all the time and it's crazy. And the thing is, she was not asking me because she wanted her money back. She was just asking me because again, she believed this story and she was so invested in it.
She was like should I put more money into it? Basically.
R Persichitte: That is a fantastic segment. There, there are 2 things that come out of that. Number 1, I get a lot of calls and a lot of [00:19:00] questions of what is AI going to do for fraud? And in my opinion, It is a new tool for fraudsters to use. However, people have been lying to each other for thousands of years.
That is not a new invention. Being deceitful is not something that we need a computer to help us with. And in fact, your story reminds me a lot of some of the earliest scams on the internet the Nigerian prince, just the country. That's one of the, that's what they call it. It's one of the oldest scams
Naseema: It's old because I remember when I was going to college there, when I was going in college, I was going to Ghana, which is neighboring to Nigeria. And they were just like, do not do any business. I did. That was like art. And that was 20 plus years ago,
R Persichitte: tale of the Internet itself
Naseema: yes,
R Persichitte: the nature of the scheme is I got an investment opportunity for you. Give me a processing fee or a transaction fee and then we're both going to be rich [00:20:00] and you send them the money and it's silence. The. A lot of kind of offshoots of that scam, but you just have to fall for it once.
And that's the other component of it. Funny story. I was working as an auditor and we got a phishing email. We got a fake email like
Naseema: mm hmm, mm
R Persichitte: And my boss's name, Tim said, Hey, this is me, your boss, Tim. I need you to download this attachment right away and tell me what you think. And you go to click the link and it immediately asks for your credentials on a fake email.
Website and we sent this to a group of auditors and so we immediately start laughing at it and I'm leaning over to the guy next to me. I say, can you believe this? How stupid do they think we're a bunch of auditors? No way. Any of us are going to fall for
Naseema: he's
R Persichitte: And then. Someone comes walking around the corner like, Hey, I tried to open Tim's email and I entered my password.
Yeah, no, you idiot. That was a scam. And it's your job to find this stuff. How are you this [00:21:00] bad at this? So it happens and the danger that AI poses, the danger that any of it poses is not that it's new or new schemes. It's just the volume of those is going to be increasing dramatically. And If you can detect 99 percent of schemes out there and save yourself from 99 percent of schemes, that's still not good enough. That's still not going to protect you 100 percent and one of the kind of scary new pieces of evolution is these investment schemes that show you fake returns and ask for more money. And the term for it is a pig butchering. That's what the FBI is calling it, where it's, you'll wire them 30, 000, a large amount of money, and they'll show a fake bank account where that doubled or tripled in value, and then ask for more money.
But the reality is if you try to withdraw a dollar, the whole thing would shut down and you'd never hear from them again. So the [00:22:00] innovation becomes not necessarily the words that scammers are using. Cause again, all does the internet itself. The innovation is how they're taking it from you.
Naseema: I actually heard a story about this on planet money or something. I think the lady had lost like 700, 000 of her retirement investments and she was still trying to like, believe them, like that they will give her her money back. And her family was like, you have gotten. And the thing is, is that she was saying the FBI won't even take her case because they get so many of these cases.
They have to pick and choose which cases to take. Because they're just overwhelmed. Not only are they overwhelmed. They don't even have the technology or the the resources to even investigate to that level, which is super scary. So prevention is what we're talking [00:23:00] about
R Persichitte: Absolutely. Yeah. Especially if ever you hear someone asking for a wire transfer to remember, those are irreversible. There's once that money is gone, it's the same as taking the cash and putting it in a package and dropping it in the mail. It's the same equivalent. You can't. Call anyone and say, where did it go?
How do I get it back? It is irreversible, which is why that method is favored by a lot of scammers. Some other methods like, they're getting a little bit better. But they transfer certified funds. So some types of transactions through Zeller irreversible. Anytime you're doing something that's irreversible, really ask yourself, Why would they do it this way?
Why would they transact this way? Same with cryptocurrencies. If they want you to convert it to Bitcoin and send it to them or tether and send it to them, that's a huge red flag. Legitimate businesses don't generally do that. That's very, very rare to conduct [00:24:00] business that way. So ask those questions.
And if you're seeing that red flags, come on, let's put some brakes on this and talk to somebody. Get a second opinion. That's one of the most effective ways to prevent fraud is even if it sounds awesome and great and you need to jump on this opportunity right away, run by somebody else and see what questions they're coming up with and seeing it from a third party perspective.
If you can't explain it to them and they're not quite getting it. Maybe that's a red flag.
Naseema: I think the issue is that a lot of people don't know where to turn to, to vet. These deals, because there's not a lot of people that are financially savvy or people that will pick up on no, that doesn't sound right. I wouldn't do that because there are so many people. That get trapped and hooked into these schemes.
I'm just thinking about like, all even like the Internet schemes there was this [00:25:00] whole scheme that happened with this guy, everybody trusted. He had a big following on the Internet and he, during the pandemic bought this land, that was supposed to be like the new Tulsa, right? Like by black, like we're going to have black owned businesses.
This is going to be a community for black people. And he totally scammed people out of millions of dollars. And I just see it so much. And it's just people did not know who to trust because they trusted him. He was the one that they went to for financial advice, and it's so scary out there, but you have a product out there to help people take a look at these things.
R Persichitte: That's right. Yeah. So I have a second look, so you can get their second look. delagify. com, D E L A G I F Y. com. And basically it's given a sniff test and trying to figure out, is this a good deal or is this a bad deal? And beyond just the [00:26:00] fraud element of it, this was really difficult for me when I started working in private practice because people would come to me and say, is this fraud?
And Yeah. Yeah, 80 percent of the time I'm screaming, yes, obviously don't have to wait until I get paid. Now even if it's not fraud, it's also helpful to look at it if it's a rip off. And one of the things that I see a lot of are things that are technically legal. They're just built to screw people over.
And one of the things that was going through my head as you were talking is one of my favorite places to look for protection is things like the banking FDIC. There's a lot of well regulated pieces in there. One of the problems for victimization related to what You were talking about, though, especially in the black community is historically they got screwed over by those people.
And so it is hard to find [00:27:00] that place that you can trust it. If you have this banking system that is systematically oppressing you for 40 years it's not longer, now it's hard to say, okay, that they are going to look out for me. They are going to look for what I'm doing. I think that is such a challenge to overcome and really asking those questions about who are they trying to protect and who is this for and who is this benefit for?
I will say in most cases, it's for the consumer and it's for the consumer, regardless Your background, regardless of the amount of money that you have. However, that's not always the case and hasn't historically always been the case
Naseema: I appreciate you bringing that up because a lot of times that's often swept under the rug or just being like, oh, but still, you should trust these people. And my dad for years didn't have a bank account. This is my father not to move. He did not trust banks [00:28:00] because banks are.
Ripped a whole lot of people off. They stole black people's money historically and redistributed it and they had no recourse. I talk about that, but a lot of people don't even understand the systemization of this corruption that happened in our communities of color, historically that had built this mistrust, but then also now you're trying to trust people that look like you that have similar backgrounds and then you're getting scammed by them too.
It's crazy. So it's hard. And so just the podcast that's going to air a week before this 1 we talked about even in the home mortgage space there's still
R Persichitte: I think that's the biggest 1, the redlining that, yeah
Naseema: there's so much fraud and then we were talking about, I feel like it's a rise of the, some prime mortgages again, those mortgage products that are like crazy, like too good to be true.
She was telling me like on Tik TOK, there's all these ads about [00:29:00] these mortgages that they you don't have to pay any money into, and then they take a portion of your equity and then they put a balloon payment at the end of it. And so most people don't even understand what a balloon payment is.
And then the background then they owe all this money, but the thing is, is that these things are perfectly legal, right? Like they're legal.
R Persichitte: they're the ripoff category.
Naseema: Yes.
R Persichitte: I think the other 1 that you see in a lot of community you don't have financial education, you see a lot of commission products. Where you're going to someone because you think they're an expert and they are getting paid on the back end based on what your decision is.
And so they're not making the decision for you. Annuities tend to be really bad offenders of this where if you sell this annuity. You get paid. If you don't sell the annuity, you don't get paid. So anybody coming [00:30:00] to a broker who has that commission structure, of course, they're going to tell you to buy an annuity.
And this was an example of a ripoff. This was one of those very early in my career, working directly with clients, they had a guaranteed pension from their employer. And this pension was so good. It was guaranteed by the federal government, PBGC, and they promised them 1, 200 a month from, I think it was age 65 until they died.
And this insurance salesman talked him into buying, cashing that out and buying an annuity with it. So they went from about 1, 200 a month to 900 a month
Naseema: and
R Persichitte: the same thing.
Naseema: all the fees up front and he just moved on to the next person and they're
not worried about you.
R Persichitte: so you're paying 300 a month forever for effectively nothing. And it's because you trusted somebody who's getting paid to rip you off. That's one of the most important questions when dealing with a financial professional. How do you get paid? And any [00:31:00] time that you see a broker Anytime you see someone who is working off of commission, sometimes you have to work with those people, but don't let them make the decision for you.
They're making the decision for what puts money in their pocket, not necessarily what's best for you. Even more recently, there's been criticism of a lot of financial advisors that pay a percentage of assets. They have also a conflict of interest. And I'll tell you one that came up very recently for me, that client had a really, really good retirement plan with their new job.
And he's saying should I let you manage this money? Or should we put it into this retirement plan? And under the AUM model, the assets under management model, that percentage model, of course, the I only get paid if I manage it, so I'm going to look for any justification to say, I should manage this money and talking to some of my colleagues that still use that model.
They were making those justifications. They were [00:32:00] saying. Maybe if they want to take it out to buy a house, like why would they want to do that? It's a terrible plan. No, that doesn't make any sense. Maybe if they don't care about the fees, who doesn't care about the fees? Who wants to have less than their retirement fund?
That
Naseema: because people don't know to care about fees, which is a scary thing.
R Persichitte: Yeah. I think it comes, I think it comes down to, they don't teach this stuff. So I'm really grateful for things like your podcast, educating people on what to look out for, what questions to ask, because nobody learns this in school and nobody is getting this handed to them. I think it's intentionally obtuse by design because there are some people that make a lot of money by.
You, the consumer not understanding the money that's coming out of your pocket and the ways that you're getting ripped off. And it's a big reason why I do what I do to give the ability to have that second look, to understand. What are the fees? How is this [00:33:00] person getting paid? And what are the conflicts that are there?
Because in some ways, the protections are great. And like we talked about in some ways, the protections have fallen through for a large portion of the population.
Naseema: It's sad. It's sad because I see this and I, I warn people about it. I'm just like, especially in our communities, like there are people that sell us these products because all they have to say is this is what the rich use. This is what the rich use to stay rich. This is what you need to be doing. And we're sold into these products like these, whole life insurance policies are these that aren't beneficial to us where we're paying these. These fees that a lot are unaffordable for a lot of people really high fees thinking that they went to an insurance person. Number 1 for investment advice, which was the 1st mistake. But that's the only point of contact that they know, because you said, there's a lot of information that has been gate kept.
And so people [00:34:00] don't know who they have access to and who has the best interest for them. Because if you're a financial professional, obviously, you have my best interest at heart. Mm
R Persichitte: know, as a fiduciary, I have a legal obligation to put my clients first. Insurance agents are not fiduciaries. They are allowed to put their interests ahead of the client's interests. And even with that, you got to find someone you can trust because fiduciary or no there's people find ways around these
Naseema: That's what I'm saying, even in the fiduciary space, there's some wiggle room, right? You can be a fiduciary in 1 area and not in this area. But across the board, it seems like to people that you're a fiduciary. So then I should, they should trust you. It's scary out here. It's yeah,
R Persichitte: do. This is another one I worked at a high net worth firm. And if you think about this to think through it, logically of, let's say a trust. Is what the rich and a lot of people who are subject to state tax [00:35:00] do need a trust and that is very expensive to set up if you're setting up a trust for the purposes of lowering your inheritance tax your estate tax, you're looking between attorneys and accountants probably 10 Now, if that's going to save you a million dollars because you have 50 million dollars in the bank, right?
That's a great deal. That's a fantastic deal. If you're investing 20, 000 and you just give it to attorneys and accountants, that's a terrible deal. You just lost 100 percent of your money. And there was no way it was going to save you more than that because most people in general don't have to pay estate taxes.
It's only applicable for people with more than about 13 million. And so if you're not to that level, You shouldn't even be talking about life insurance. You shouldn't even be talking about these things because you're trying to save money on something that doesn't [00:36:00] cost you. Your current cost is zero.
So you're gonna pay a ton of fees to save 0. That makes no sense.
Naseema: Yeah, but these are the products that I feel are oversold to our communities and it is and I'm glad you're saying it because sometimes people just, I'm just a nurse. What do I know?
R Persichitte: We can look at the data, we can look at the census data, we can look at the historical data and The number one factor to determine your wealth bracket in the world, the number one factor is not your job. It's not your industry. It's nothing else. It is what wealth bracket where your parents in.
Naseema: Hmm.
R Persichitte: And if we are looking at communities that have been marginalized for decades. Over a hundred years, it would be surprising if your parents were in the top echelon of wealth, that's it. It happens. It's certainly possible. It's just not common. And so when you have Even, moving it back to today, [00:37:00] I don't view it as much as a racial problem as a socioeconomic problem
Naseema: Mm hmm.
R Persichitte: of what did your parents look like financially?
What was their situation financially? And we're not protecting the people who didn't get the leg up. And so you gotta protect yourself. You have to have the knowledge and the mindset to ask these questions. Really, every single time, every time money changes hands, you How are you getting paid?
Naseema: Yeah.
R Persichitte: And to your point, you're getting these subscriptions, you're getting that money straight forward.
You're not selling something. You're not getting kickbacks. You're not getting something on the other end of things. That makes a lot more sense than if you, every time you give money to this MLM or this other crazy insurance scheme, I'm getting some money back.
Naseema: Exactly. Yeah, and so my audience is primarily they're the first generations that have First generation like professionals that are making over 100, 000 a year [00:38:00] and we're never taught anything about money. And so they're the ones that are being hit with these things because not because they're stupid, they're very intelligent.
It's just that they weren't taught that and then they're being inundated with these messages on things that they should be doing. Are these messages online about these products that they feel like? Okay. I wasn't taught about investing. They're presenting me with this opportunity. It seems legit.
I'm going to do it and. Like they are the ones that have the potential to break that cycle, to be that person in their family. However, they're facing major setbacks because they've fallen for these things. And so that's why I'm grateful for this episode, because people. Just don't know what they don't know, and then they don't know if they have any kind of recourse.
So they don't know what they can do in the front end to protect themselves. And then in the back end, after it's happened, they're just like I guess I'm starting over.
R Persichitte: Here's the other thing. [00:39:00] The biggest rip offs tend to have the biggest marketing budgets.
Naseema: Yes.
R Persichitte: so if you have an annuity product that is paying, 10, 15 percent fees up front, which is, that's normal. They can be worse than that. They can be better than that. But if I saw that, yeah, that wouldn't be. Shocking to me, you can afford a lot of ads and you can afford. So every time that person logs into their email, that's what they're seeing. Every time they hear something, that's what they're hearing. Because the bigger the ripoff is, the bigger your budget is to rip people off. And. You just have to really do that self guided research, understand the options that are out there, understand that there's really three ways professionals are getting paid, and it is commission based, it's based off of the assets, or it's a fee for service, where they're getting a fixed amount.
And that fee for service, in my [00:40:00] opinion, really removes the most conflicts of interest, and Especially if you find someone who says, we can walk away at the end of this. we can do the analysis and you have to pay me no matter what. 'cause you're getting I'm getting paid to do the analysis not to get your money.
And if someone's offering you free analysis, really think, what are they getting, what are they getting outta that?
Naseema: yeah. Mm-Hmm. . Yep.
R Persichitte: But be, really figure it out. Figure out how they're getting paid, where it's coming from. And especially if you're the first in your gener. So I'm the first of my family to go to college. family, a lot of farmers, a lot of ranchers. My mom had me at a very young age. My mom had me, she's 18. And when we were going through that process, I had no idea. And I'm just throwing darts at a board. I don't know how to do networking. I don't know how to get a job. I don't know how to do anything.
And then now my younger brother, who's much younger than me, [00:41:00] he's 16 years younger than me. I can be that voice or even make his path easier. Think about it from the same perspective of your kids of put in that work now, your kids, your nieces, your nephew, whatever you have going on in your family, be that person, be that first person to understand it.
understand how it works. You're putting, I know it takes a lot of work, especially as a working professional, you're spending a lot of time and effort doing that. But once you have it, this knowledge is generational and it really moves forward and makes a huge difference on the outcomes.
Naseema: A hundred percent. A hundred percent. I just appreciate you bringing. This to our attention, like awareness is everything. And like you said, this is not probably for the person that's getting scammed because they won't be able to even hear it, but it's for those people around them. That was like, that heard about it.
It was just like, I don't know these are things that are so super, super duper real, [00:42:00] super duper prevalent, so prevalent, it's scary. And, but it's not new. I just, I'm grateful that there are people like you that do work on the other side of spotting these things. I don't think we talked actually about what repercussions people have in the back end for fraud versus, just a really bad deal.
R Persichitte: It's not good for either one. And sometimes the government will step in and have class action lawsuits or fines if it's big enough. Usually, they're not enough to cover the losses. Usually, if you do get that back, it's going to be delayed for years. And we can look for something like FTX, where it throws all the client's assets at the very bottom of the crypto market, and is giving them cash back now, even though those assets would have been double or triple what they're worth now.
Generally, I'm not a fan of crypto because there are a lot of scams there. It makes it very easy to scam people. That's just one [00:43:00] example of once it's gone, it's gone. And if you are getting something back, whether it's a scam or a ripoff, you're getting pennies on the dollar. And ripoffs are actually, I think, harder to recover from because when you go to try to recover, they pull up that contract and say, Hey look here, what we have.
You signed up to give us 20 percent of your wealth. Okay. You signed up for this 15 percent commission and you, I know you didn't read your 300 page contract, but it was right there in the middle. Same with the the subprime loans, the really bad loans when their houses were getting foreclosed on, they said, I didn't understand this.
I, nobody explained this to me and it was buried in pages and pages of documents.
Naseema: Mm hmm.
R Persichitte: Nobody came to protect those people. It didn't matter. It wasn't on there. So really just don't get scammed in the first place. Talk to somebody, understand something before you commit to it, especially if you're sending money their way.
Naseema: I love it. [00:44:00] Prevention is everything in this situation. Yeah, I like basically don't expect to get anything back and, just be mindful. Mm hmm. Who you're sending your money to Yeah, it's scary, I really appreciate the conversation I think It's really eye opening and like you said, even auditors, even professionals like missus.
So I don't want people to come away from this feeling bad if they've been victims. I don't want people to think that it's too late. Just, it's just about spreading awareness for yourself for everyone else and, learn, what you don't know, you don't know now, but also, you can reach out to our for resources.
Again share the information about how people can get in contact with you, how they can work with you.
R Persichitte: Yeah. So delagify. com has a lot of the resources where I'm available. If you want a second look, especially if you're working with someone who says they're a financial professional or says that [00:45:00] they know what they're doing Get a second look. And it, if you go to the site, you use the code podcast, you can get 200 off that second look service with the 200 off.
It's 600 bucks. That is a lot cheaper than losing your entire retirement. And if you're making a big life decision, You want as many eyes on that as possible and not just me. Obviously I got a horse in the race. I want you, but not just me. Talk to someone that you trust, talk to somebody and bounce it off them.
And every step of the way, ask the question, how do you get paid?
Naseema: Yes. I love that. Thank you so much for coming on the podcast. So much good information. I really appreciate you.
R Persichitte: Absolutely. Thank you for having me.
Hey there I’m Naseema
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