Protect Yourself Against Investment Fraud: Regularly Review Your Account Statements

John Merchant, CPA, CFE

Do you have an investment account at a bank or with a brokerage firm?  And, if so, do you carefully study the transactions in your account, either online or when you receive a paper statement?  If not, you should, regardless of how much you trust your banker or investment firm.

Unfortunately, many people simply check their balance to see if they have gained or lost value and ignore the details of transactions.  Recently, a PNC Bank investment banker in Scranton, PA, Nicholas Polito, Jr., pled guilty in a federal court to diverting funds from the investment accounts of some of his clients and then using the funds for personal expenditures.  Over time, Polito diverted over $500,000 to his personal use.

His scheme was actually very simple.  He took checks intended to be deposited into client accounts, forged their endorsement on the back and deposited the funds into his own investment account.  Apparently, those clients were not paying close attention to their accounts and did not notice that deposits were missing.  As the prosecution mentions , there was a clear paper trail showing the graft.

The moral of this story is obvious – always check your account carefully.   When reviewing your statement, you should at the very least be examining the following two things:

  1. Reconcile the stated balance to what you believe it should be;
  2. Look for unexplained transactions or an absence of transactions that should have occurred.

If your statement does not seem right, raise a question. A little extra time and due diligence can save you from large financial losses and keep your assets safe.

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