The high-risk pay telephone investments that recently received national attention are nothing new in South Florida. Hundreds of area residents, many of them elderly retirees, have fallen victim to these unscrupulous investments. But now, insurance agents, financial planners, and other investment professionals need to be on their guard as well, before they find themselves selling investments that are unregistered or fraudulent. According to DBF, insurance agents not registered to sell securities sold these investments. Florida Comptroller Bob Milligan, who directs DBF, issued a complaint in July 2000 seeking an order to stop sales in Florida.
Final action is pending.
The seller leases back the phones and services them, usually for a fee, while the investor is promised annual returns of up to 15 percent. But regulators say the interest payments, if they are paid at all, are often just enough to keep previous investors on board while the seller courts new investors in what amounts to a Ponzi scheme.