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stream-of-income investments

These investments involve a company acting as a middleman for buyers and sellers.  

Companies introduce investors to individuals who may want to sell the income received  

on pension payments or government disability payments.

These transactions hold risks for both buyers and sellers.

Laws may prohibit the assignment of the stream of income/benefits. The seller typically 

maintains the legal right to redirect the payment, and if the seller does redirect the payment, 

the investor may be left with an unenforceable contract right.

In addition, the benefits are contingent on the life of the seller, and even life insurance 

policies on the seller’s life may be cancelled and do not protect an investor if a seller simply 

redirects the income stream. Persons who sell their benefits are often veterans and disabled 

persons. These individuals may be solicited when they are in financial distress and  

convinced to sell future benefit payments at a significant reduction to their actual value.

 

texas Case studies of investment Fraud

Each year, investors in Texas lose hundreds of millions of dollars through outright  

fraud or inappropriate investments. What follows are several case studies that the Texas 

State Securities Board investigated or prosecuted in criminal, civil, and administrative 

courts. We hope the facts of these cases will help investors recognize the warning  

signs of fraud and the importance of thoroughly investigating any investment before  

committing money.

In a financial fraud, investors rarely recover their funds. Some  

fraudsters use the money to keep their scams going. Others spend it  

in ways unimaginable to most of us. Based on cases the Texas State Securities Board 

has worked, here’s a small sampling of what fraudsters acquired with investors’ money:

•

  15-carat diamond ring

•

  Lamborghini, Maserati, Bentley, Mercedes-Benz, and other luxury models

•

  A commemorative Colt .45

•

  Oilmen revolver and a Blaser K 95 rifle

•

  A Picasso drawing and rare Gibson Les Paul Sunburst guitars

•

  A skybox at the Darrell K. Royal-Texas Memorial Stadium

•

  Private jet travel

A convicted oil-and-gas scammer even used investor funds to build a pool and patio  

in his mother’s backyard. And she didn’t swim.

 SPenDthRiFtS