According to several news reports, Walter Reinhardt of North Carolina, pled guilty to 40 charges of securities fraud, common law forgery and common law uttering in North Carolina yesterday. From 2005 to 2009, Reinhardt solicited fraudulent investments for businesses he claimed were owned by someone in Richmond, Virginia. He targeted teachers and sweet talked his way into faculty meetings at schools to make h
is pitch. Authorities believe he may have bilked investors out of a total of $3 million of their planned retirement income.
When we’re talking about investing large sums of retirement money, we always advocate hiring an investigator to look into the background of the person investing the money. This case is an excellent example as to why. We previously blogged about Gary Mares, the New Mexico landscaper who took 50% payment for landscaping work up front and then disappeared, never to actually do the work. In that case, we told you that a Google search of “Gary Mares” produced a trail of bad press, and would have dissuaded people from hiring Mares in the first place.
In this case, a Google search would not have been enough. But a good investigator would have known to check the FINRA records on Reinhardt. One look at FINRA’s records would have shown that, in 2001, Reinhardt was barred from selling securities by the National Association of Securities Dealers for engaging in private securities transactions and for forging the signatures of a public customer both without authorization. A phone call to the North Carolina Securities Division would have also revealed that Reinhardt was not licensed to sell securities in the state.
We would certainly be hesitant to invest our retirement funds with someone that was barred from selling securities and we’d guess that Reinhardt’s clients would have been too. This is yet another cautionary tale about doing your research before handing your money over to a potential fraudster.