Prepare yourself.
Do you want to hear something really scary? The kind of scary that could drain your accounts and seize your assets? The Motley Fool’s Robert Brokamp is back to shock, scare, and surprise you with stories from the dark side of finance. But fret not! He will also give you the keys to your survival.
To catch full episodes of all The Motley Fool’s free podcasts, check out our podcast center. To get started investing, check out our beginner’s guide to investing in stocks. A full transcript follows the video.
This video was recorded on Oct. 23, 2024.
David Gardner: There’s that memorable opening scene from Twilight Zone, The Movie. Two guys, telling each other scary stories. Do you remember it? My producer friend Rick just returned from his sabbatical reminded me that one of those two is Dan Aykroyd and check it. The other was Albert Brooks, driving down a rainy highway at night, ” Hey, man, you want to hear something scary?” He tells his buddy in the car a scary story. Makes a scary observation. Then his buddy thinks about it for a moment. Rain going down the highway. Chirps back. Yeah. That was scary. But you want to hear something scarier. Eventually, it gets to a point where they say, you want to hear something really scary. He pulls the car over. Well, I won’t give away the ending. Although seeing it as a kid, the year was 1983. I guess I was 17. That’s the last time I’ve seen that movie. Indeed, I did find that ending to that scene was really scary. Well, I’m not Albert Brooks and I don’t have Dan Aykroyd this week, but it is the scary month of year, which means in what is becoming a Rule Breaker Investing tradition, I have the Motley Fool’s retirement expert, Robert Brokamp, to tell some really scary stories. Now, we’re a money podcast, as you might expect. What scares us are financial horror stories. Financial Horror Stories Vol. 3. Only on this week’s Rule Breaker Investing.
Welcome back to Rule Breaker Investing. Now, normally, we say that’s the sound of rules being broken. Except this particular week each year, because for the third year in a row, this particular week before Halloween, we’re telling financial horror stories. So that sound you just heard, that’s not the sound of rules being broken. This week, that sounds to me more like the broken glass from a really scary intruder. It’s time to welcome back, my friend, our intruder, Robert Brokamp. Bro, great to have you back.
Robert Brokamp: So nice to haunt you again, David.
David Gardner: Thank you. Indeed. Haunt me very much. We did Financial Horror Stories Vol. 1. It was October 2022. It was entitled Volume 1. I think this is your title, Robert. Maybe. Maybe it was Rick, but Memento Mori. They were key lessons about wills and estates triggered by scary stories of those who didn’t do their wills and estates, Robert, some famous people.
Robert Brokamp: Some very famous people. People like Prince, multi millionaire did not have an estate plan or people who had an estate plan, but no one could find it, or it hadn’t been updated or it was poorly prepared.
David Gardner: It was a very scary and very well told episode. I suspect, dear listener, if this is relevant to you in your life, maybe you haven’t done your will yet, or maybe you have an older family member who may or may not have done his or her will. I hope that you’ll enjoy that episode. Maybe re listen to it. Again, October 2022, maybe share it out to somebody else who should be doing his or her will because, am I right, Robert Brokamp? By the way, that some of the scariest financial horror stories come about because some older people don’t take the time. We’re going to hammer this home one more time to do their wills.
Robert Brokamp: Right. Their wills, their trusts, their durable power of attorneys. They don’t update their beneficiary designations on their retirement accounts or their insurance policies so that money goes to people they didn’t really want it to go to. There’s a whole list of things you should do because we love the long term here at the Motley Fool, but there’s only a certain amount of long term we all have and you have to take care of it for your heirs. For the people older you like you’re saying, David, because if they don’t take care of their estate plan, you’re the one who’s going to pay the price, even if they won’t pay for it. So you know what? I will pay for you to see an attorney. You need to get an estate plan.
David Gardner: Thank you. So I think we’ve underlined that enough, but it is just worth mentioning that a lot of those listening to us today have done this and have done this work, and they would typically be older people. There are not a lot of 20 year olds who need to do a will. But, Robert, for those who are older who haven’t done it, sometimes, in some cases, they may not be fully with us. There are things like dementia. Now the longer we live, the more our minds can go. So it’s not always up to that 75-year-old, sometimes it’s up to that 50-year-old who’s related to that 75-year-old. That 50-year-old is listening to us right now. So it’s worth checking in with those older members of your family because one of the best things we can do as we leave this Earth is to put a smile on the faces of those who are left behind and say, “Gramps Brokamp. What a man? Let’s lift a glass to Gramps because he did it right and he set us up for success not the opposite.”
Robert Brokamp: Absolutely. I think I’m going to put that on my tombstone. Gramps Brokamp. What a man.
David Gardner: Gramp Brokamp or Gramps Brokamp. I don’t know. It almost does rhyme. Yes, he is quite a man. Well, this episode, we’re going to go over six financial horror stories. Robert, as best I can tell, there’s not a single theme to this one.
Robert Brokamp: No, not a single theme. Mostly people losing money to bad actors. Some of those bad actors are people. Some of those bad actors are natural forces. All threats to your finances.
David Gardner: Thank you. All of our stories on this podcast and each in this episodic series are true. So it’s one thing to make up a twilight zone story and make it really scary, but it’s even scarier really when you think about it. When it’s real and true. That is what you’re here to scare us with this week and speaking of scaring us, you’re not the only one who’s bringing the horror this week because my talented world class podcast producer, Rick Engdahl, will be listening carefully to each of the stories. In fact, I’m going to ask you to share the table of contents up front in his second, Robert, so that Rick, as he’s listening along and planning, can have the appropriate, bespoke sound effect that will evocatively lock down that story forever in our minds. If not for your story telling, Robert for Rick’s sound effects. So Rick is listening carefully. You’re going to give the table of contents up front. Could you do that right now?
Robert Brokamp: Yes, here we go. Number 1, There’s No Theft Like Home. Number 2, a Broker Making You Broker. Number 3, the Silence of the Hams. Number 4, Scamazon Prime. Number 5, the Perfect Storms and number 6, Guardians of the Graceland.
David Gardner: Excellent. You have hand crafted each of these titles. Robert, you’ve done your homework. These are all true stories. The last one, you’re like, I think this one’s true. We haven’t fully fact checked, but we’ll leave that to the end. Bro, without further ado, let’s get started. Chapter 1, Story Number 1, There’s No Theft Like Home.
Robert Brokamp: Well, David, imagine yourself, 33 years ago, buying a plot of land that you want to retire on one day. For those 33 years, you’ve been paying your property taxes every year, anticipating building this wonderful house on a plot of land, but one day you don’t get the property bill. So you call up the tax assessor in that county and say, “Why didn’t I get my tax bill?” They say, “It’s because you no longer own that house. It has been sold to somebody else.” This horror story actually happened to Dr. Omar Deraki who lived in South Carolina, but he had this plot of land in Concord, Massachusetts. It turns out that one day, somebody emailed a realtor and said, “I am Mrs. Deraki, I want to sell this house. Can you list it on the market?” The realtor did it. The sale went through to a developer who paid half of the going price for it only $500,000. The property was sold out from underneath them through a series of all kinds of falsified documents, a picture of a fake passport, a picture of a fake driver’s license, a fake notarized signature.
By the time the Deraki’s figured this out, not only had the land been sold, some of it had been cleared, and a house had been built on their property. Wasn’t finished, but it had been built. You might think this is a one off, but this actually happens not all that infrequently. In fact, another time in Massachusetts, the same thing happened to a fellow by the name of John Grimes. But fortunately, he got a call from an attorney named Alan Saraf, who said, “I’ve got this contract on my desk, but it seems a little suspicious. It says that you’re selling your house to someone in Canada and the name of a famous athlete in Canada. Is this true?” The guy said, “No, this is not true. I’m not selling my house.
David Gardner: [inaudible] .
Robert Brokamp: Exactly. [laughs] So he said, no, but even then the next day, an engineering firm arrived at this house, Mr. Grimes house and told him that they were hired to do a plot plan for the property that was being sold, but then Grimes reported it to the authorities. As for the other tale of the Deraki’s, they’ve hired an attorney. The attorney said that there’s been plenty of red flags that many people should have missed along the way, including the realtor and the attorney who settled it. So he thinks the Deraki’s will get the land back, but then what happens to this house that is now on their land? They don’t like the house, it may be that they just end up selling the property for a fair price to these folks, but regardless, they were looking to retire on this plot of land for more than 30 years and now it’s turned out to be a bit of a financial nightmare.
David Gardner: Part of what makes scary movies, especially slasher flicks and jump scares, part of what makes them scary is that we can’t do anything about it? We’re just sitting there watching the movie. We have no agency. But in life, we do have agency. These things can be slightly less scary, Robert, if we can figure things out or do the right thing or set ourselves up in the first place so that we don’t get scammed. You mentioned, it’s probably going to work out OK for them. But what is your lesson? For those of us who do have some agency, who prize our agency and try to do things right, what could happen here? How do I make sure this doesn’t happen to me?
Robert Brokamp: Well, it’s unfortunate, but there are only a few things you can really set up to be alerted about this type of. So fortunately, some location, states and counties will allow you to sign up for notifications that basically you get an email or something in the mail when anything has been changed to your property records. Unfortunately, this is not nationwide.
David Gardner: It sounds like it doesn’t happen in Massachusetts, for example, but I’m not sure. You did both of your stories keyed into the Commonwealth.
Robert Brokamp: In Massachusetts, you can’t sign up. So that’s what many of these articles recommend that you do and especially for the couple who was in South Carolina because they weren’t even there. They weren’t close enough to check on the property. If you don’t have that, it’s probably a good idea a few times a year to check the property records in your county or city or state, whatever your jurisdiction is, just to make sure everything’s OK. It’s all online. It should be easy to do anyhow. But it’s a sad state of affairs that you have to check to make sure you still own your own house, but that’s the way things are.
David Gardner: This sounds like almost the last thing I’ll remember to do. I mean, even checking it once a year, I think is beyond most of our can or at least our memory. I’m assuming you don’t go in a few times a year, Robert and check, whether you still own your home, but maybe, especially it’s worth pointing out for things where you’re not living right there on top of it and it’s not part of your life where you’re paying bills every year. If you own a property somewhere else, it does seem particularly worth doing.Buckeye
Robert Brokamp: I will say what I do is update my net worth statement at least once a year, sometimes more than that depending on what’s going on in the stock market and make sure that my retirement plan is still on track. So I think I will be adding this. Normally, what I do is I check Zillow just to see what the price of my house is. But now I think I’m going to go and check into the Fairfax County property records to make sure I still own my house.
David Gardner: Because if you didn’t, I mean, that would be an incredibly scary story. You need to come back a year later and explain, because you can’t have that happen to you now that you’re our storyteller.
Robert Brokamp: [laughs] That’s true. Yes. I certainly hope that in a future episode, I’m not talking about my own horror story.
David Gardner: Anything more you want to say about? There’s No Theft Like Home, Robert or shall we move on.
Robert Brokamp: Let’s move on, David.
David Gardner: Let’s move on. Well, Rick Engdahl, you already know the title of this one. Discerning listeners will remember, Chapter 2, a Broker Making You Broker.
Robert Brokamp: So when you’re scanning the world of financial crimes, right, you’ll often find culprits that are basically people who are calling themselves financial advisors, financial planners, often selling investments for a commission. So in the industry, they’re more technically known as brokers because they’re earning a commission. Unfortunately, the investments often turn out to be fraudulent, or a client gives money to the broker, instead of using it to buy something, they enrich themselves. So a case in point. In July, an ex broker in Ohio was arrested and indicted a 96 criminal counts after state law enforcement said he defrauded clients out of 1.2 million dollar. So according to the authorities 2019-2021, he solicited 10 Ohio residents, some of whom were elderly, because unfortunately, that often happens. They’re often the targets to invest what he called the Buckeye Income Fund. Unfortunately, this was not a real investment. He was arrested and charged with securities fraud, unlicensed securities activity, misrepresentation in the sale of the security and sale of unregistered securities theft and telecommunications fraud.
So that’s bad enough and that in itself, unfortunately, is not all that unique. But I think the really bad news is that this was not his first time. So the financial industry regulatory authority, otherwise known as FINRA, barred this fellow in 2018, after it said he had engaged in private securities transactions without telling his broker dealer to be a broker, you have to work with a broker dealer. You can’t make little side deals and he did that. Then as part of discussions about this, with authorities, he lied in written and on the record testimony.
Robert Brokamp: The thing here is that he shouldn’t have been giving advice to anybody. That information is out there on the Internet. You can check to see A, what his record is and B whether the securities he’s offering are good securities. That’s the real lesson with this situation, and that is, if you are ever going to work with a financial professional, you can go a few places to check out their history. One is BrokerCheck. It’s offered through FINRA, so you can just do an online search for BrokerCheck. Go to brokercheck.finra.org. You put in the name of person, and you’re going to see right in the case of this situation of this fellow, right at top, it says barred. He was not allowed to be giving any financial advice. Then you’ll see a list of complaints. In his situation, you’ll see various disputes, you can see that he was fired by one of his employers.
David Gardner: This is all public. This is all right out there on the Internets.
Robert Brokamp: Right. You can see that he was a subject of an investigation. Anyone working with this fellow should have done this. I should have done this. I don’t want to blame the victims. This is just a tip for the future. I will say that if you look this up for any advisor, you will likely find something. Anyone who’s been in the business for 20 or 30 years, they’ve had some dispute or another. You just want to make sure that it was a minor dispute and how it was resolved. But you definitely don’t want to see someone who was barred from the industry. A couple of other places, that’s BrokerCheck. Another place if someone is a fee only financial advisor, you would go to advisorinfo.acc.gov. Then if they say they have certain designations like certified financial planner practitioner, like me, or a CFA, or they’re a CPA, go to the websites of the governing bodies of those designations and check to make sure A, they actually have the designation and to make sure they didn’t lose the designation due to some crime or fraud in the past.
David Gardner: I really appreciate, first of all, not just the story, but the resources, the lessons, you’re almost forestalling that ever happening to us. The story would never have needed to be told if enough of us had known that these records are public. Robert, I don’t change brokers or financial professionals very often, but especially for new investors who might be like, who is this person? They’re telling me that they can manage my money, and I would like somebody to do it, but that would be a good opportunity. But you also mentioned what in our society is increasingly being called out as elder abuse, because people who are sometimes not fully in control of their minds. Especially, I would say, as elders, we all have usually more money than we do when we’re younger. That’s a 1, 2 combo punch, unfortunately, hurting a lot of the older people in our society who are targeted and lucratively so by this kind of a person.
Robert Brokamp: Absolutely. It can be a little tricky. What we know is that something like half of people over the age 80 have some cognitive issues. It might impair their ability to manage money or make them more susceptible to scams. While that’s happening, they’re not always recognizing it themselves, so you have to handle it gingerly and sensitively. But there’s no question that if you have older relatives, older parents, and you’re starting to see signs of some cognitive slipping, help them keep an eye on their finances because they will become targets.
David Gardner: Really good lesson and good to say, and not always easy to say and not always that commonly said in our society today, but there are far more people listening as podcast right now who are around the age of 55 than who are 25 or 85. Those of us who are somewhere in the middle of our tether; I wouldn’t even say we have a real forced responsibility to do this, but we have an opportunity at least, I would say, to observe and to ask. We talked earlier about wills and estates, but also just checking in and just seeing, how is money going for you. How is your retirement going? Who is managing? Or you’re about to change, let me do a record check online for you. Robert Brokamp, thank you for that resource. For story number 2, a broker making you broker. That’s a pretty great title, Robert. I’m not going to say that’s the best of these six, because they’re all your kids. You’re not going to pick out your favorite kid, right?
Robert Brokamp: I’m not. I have to say I’m a little sensitive that may maybe I’m making light of some very bad events in people’s lives, and I feel that the most with Chapter number 3.
David Gardner: I appreciate that. Obviously, we’re having fun this week. This is scary stuff, but it is real and true. And so, yes, we’re not trying to make light of any of these private figures, usually, but we’re trying to underline what’s happening, and to tell the story for the benefit of our Rule Breaker investing listeners and Fools worldwide, which you’ve been doing for years and years in so many different ways, Robert, thank you for doing it this week on this podcast. I’m not sure what sound effect Rick Angol has cued up for the silence of the Hams Chapter 3. But, Robert, why don’t you get us started?
Robert Brokamp: This one, I have to say, I do feel a little bad about because it is in reference to a scam known as pig butchering. Are you familiar with this at all, David?
David Gardner: I am not. I thought you were initially going to say you feel bad cause it’s actually from the life of a friend that you known was going to be me. [laughs] I’m glad it’s not about me. But I have had a fair amount of pork in my life., I will say. I know that we all should be more and more plant based with our diets, especially as we age, and I’m trying to get there. But I’m partly guilty here, although I don’t think I’m involved at all in what you’re about to say.
Robert Brokamp: Absolutely not. Pig butchering, again, it’s a term I don’t love because it’s demeaning to the victims.
David Gardner: Right.
Robert Brokamp: But this is what it’s all about. It’s basically a scam where someone contacts a victim through either social media, [Meta‘s] Facebook, Twitter, maybe a dating app. The profile is often a young attractive woman. They begin some online relationship and at which point, at some point, the scammer, impersonating a young attractive woman, gets the victim to hand over some money, and it might be because they say, I want to come see you, but I can’t afford a ticket, so send me some money. It could be that I’m in trouble, I need some help, or it could be I have a great investment idea. But pig butchering is the term that has been taken on. It’s become more prominent. There’s been some great articles in the Wall Street Journal about it. It’s called that way because basically you spend days, weeks, maybe even months fattening up the victim.
David Gardner: I see.
Robert Brokamp: Until you finally ask for the money. According to the Wall Street Journal, this is how it works. By the way, this is done by basically compounds in places like Myanmar or Cambodia or Thailand. There’s a very specific process that they file, in fact, a few of people who handle the scam. But what they try to do basically is; Day 1, they want to learn everything they can about the victim, the family, job, where you live. Day 2, you ask about hobbies, pretend like you like the same things.
David Gardner: Oh. No way I’m also into kayaking.
Robert Brokamp: Yes.
David Gardner: No way.
Robert Brokamp: Yeah, Day 3, chat about past relationships, and then maybe at night, you’re only going to confess, a little bit to drink and you get a little bit more personal. Then Day 4 is when you’re ready to start asking for money. The additional tragic part about this is that the people who are doing these crimes are also often victims themselves because what has happened is many of them come from very poor countries in the Wall Street Journal article talked about a young man from Ethiopia. He thought he was getting a legitimate tech job in Thailand. They go to Thailand, eventually taken to this compound, his passport is taken away. He’s told you’re not doing technical support, you’re going to be engaged in these scams. In the instance of this young man, he said, I don’t want to do that, and they physically harmed him until he agreed to do it. He was basically sold among these different compounds in Myanmar for over a year until his family raised $7,000 to pay for his ransom, and that involved his dad having to sell the house. So it’s a bad situation for the victims, and it’s a bad situation for the people on the front lines doing the crimes. People behind the scenes and it seems that most of these are actually criminal gains from China, although they’re not actually operating in China. So it’s just all around a very sad tale.
David Gardner: It is dystopian. That’s horrific in every way. I’m glad that it’s being made light of, whether it’s through the Wall Street Journal articles or you referring to those, Robert, and painting the picture for us? I didn’t know about this, but certainly that there are criminal operations out there, we can all recognize that they operate at scale, and they can be global, that they are centered in places that are somewhat lawless themselves, and that they bring in vulnerable people who don’t exactly know what’s happening and took a risk to go to another country is especially tragic. This is just horrible in every way, but I guess the lesson here is, it’s almost what you would tell your teenager before they sign onto a dating app for the first time. These are fairly common sensical suggestions we would be making to, in this case, adults.
Robert Brokamp: Be very careful about how you interact with anyone online, whether it’s Facebook or something like that. I’ve had that in the past, where all of a sudden, some random person comments on my picture on Facebook, and you look at the picture. It’s a young attractive woman and say, Oh, we want to be friends, be careful of that or if someone’s reaching out for text, phone, emails. A couple of other things to keep in mind is that you need to report the fraud as soon as possible if you have handed over any money. You got to contact your bank or other financial services provider, the sooner you do that, the more likelihood it is that it can be stopped. As you might suspect, a lot of this is done through crypto, which is harder to track, but not impossible.
But the longer you wait to report it, the lower the chances there will be that you’ll get your money back, and people are often, frankly reluctant to report it because they’re embarrassed, they fell for it, but that’s not the way. The best way to do it is to report it and then another place to report it is that the FBI has a site, the Internet Crime Complaint Center, otherwise known as ic3.gov, report the crime there. You may not get your money back, but at least you’re alerting the authorities to something that is happening, and hopefully it will bring more awareness and resources to stopping that type of crime.
David Gardner: Thank you for that. Again, I really feel as if our financial horror stories, episodes. This one, once again, are as much about giving people resources and answers. Some of our listeners probably have had their lives touched by these things over the last year or over the next year, may not be the listener, themselves, it might be a family member, but there are resources out there, and that’s what Robert is providing. Thank you for doing that. It occurs to me, we do this once a year, and it’s this week each year. I think it makes sense that we do that this week, each year, Robert. But as you come through the research that you do in the year intervening. You mentioned, for example, I think it was the previous story you said was in July, The guy, The broker. These are all very fresh, you’re not dipping back to the greats of the 1970s here. These are things that are happening. I’m curious. Do you find yourself with way more stories than you can use for this? Or is the world not as scary? It’s safer than I think, and it’s sometimes hard for you to come up with 61 year to the next.
Robert Brokamp: So far it has not been hard. It is not hard to find examples of fraud or crime or even estate planning horror stories. If we keep doing this, David, we might be repeating the same types of stories, but the characters change. I think part of it is the technology changes. I think probably next year, if not, in the next three years, you and I will be talking about scams from people who are using AI to impersonate grandma’s grandchildren, and the grand “grandchild calling grandma and saying, I am in serious danger, and I need $5,000 now.” It will look like the grandchild, it will sound like the grandchild, and the grandmother will fall for it.
David Gardner: I think that is likely it’s probably already happening, but the more we can raise awareness the more we can prepare our fellow Fools to be ready for these things, especially as we all age and can become more vulnerable to them, the better off things will be. Also, Robert, if we keep do this from one year to the next, I hope we’re spreading concentric waves of goodness and awareness that actually causes these things not to work so well, going forward, we’ll see. That’s half time for this year’s financial horror stories. There’s no theft like home. A broker making you broker in the silence of the hams, all of these Witty punny titles, of course, credited to my friend and co-collaborator, Robert Brokamp. Robert, let’s move on to number four. I think if I remember you saying this earlier, it’s Scamazon Prime.
[MUSIC]
Robert Brokamp: You are absolutely right. This one came out in February. It’s a story, a very long article told by Charlotte Kyles, who is a financial advice columnist for the Copas woman, successful woman, who worked at the New York Times. What’s most interesting about this is that she is not the type of person you would you would think to fall for a scam. The lesson is, I think a lot of us probably have maybe a little overconfident in our abilities to fall for some. Now, as I tell the story, you’re going to say to yourself, how did she fall for it. But I’ll talk about that at the end, and I give her a lot of credit because she wrote this very long story. I’m going to give the abridged version. I’m sure it was not easy for her to admit for this. So here we go.
It’s Halloween, and Miss Kyle is sitting there getting ready for the day. Her two-year-old is getting dressed, putting on a pizza costume for school, and then she gets a phone call somewhere around 12:00, 12:30. The caller ID says it’s from amazon.com. She answered it. A polite woman said that she was calling from Amazon and say, there’s been some unusual activity in your account. Did you just spend $8,000 on MacBooks and iPads? Miss Kyle said, no, and the service rep said, well, it says you actually have two accounts, and miss Kyle said, no, I only have one account. They said, it must be due to some identity theft. But then the Amazon rep said, we’ve been having a lot of problems with this. We have been working with the Federal Trade Commission. Can I send you over there to someone who can talk you through this, and she goes, sure. She’s connected to a man supposedly at the Federal Trade Commission.
I’m just going to read a paragraph from Miss Kyle’s article, “The man on the phone knew my home address, my Social Security number, the names of my family members, and that my two-year-old son was playing in our living room. He told me my home was being watched, my laptop had been hacked, and we were in imminent danger. I can help you, but only if you cooperate, he said, he’s first orders. I could not tell anyone about our conversation, not even my spouse or talk to the police or a lawyer”. The man basically said that 22 bank accounts, nine vehicles and four properties had been registered in her name. The bank accounts had wired $3,000,000 overseas and that a car rented in her name was abandoned on the Southern border of Texas with blood and drugs in the trunk.
There were warrants out for her arrest and that if she listened to him, he would do all he can to help her. The story goes on from there and it just gets worse, but the bottom line was this. She was told that her accounts were going to be frozen or seized, so she needed to get any cash out she needed for the next year, and then handed over to an undercover CIA agent. She went to the bank, got out $50,000, handed the money over to some men in a white SUV Mercedes. They took off, and then, at some point, it eventually dawned on her that she just got completely ripped off. It’s a sad tale. It’s a long tale, and as she wrote about it, she said I would talk to friends about this. When you talk to people, you find like, well, actually, that happened to me or that happened to someone I knew. She heard about a lawyer who got scammed out of 1.2 million dollars. She talked about someone a real estate developer who got duped into wiring $450,000 or a financial advisor who basically let someone, they met at a bar, drain their 401(k).
Again, this story is one of those, when you hear, you’re like, how did you fall for that? But I thought it was summed up very well by a podcast I listened to the Long view podcast from Morning Star. But the guest was Kathy Stokes, who was the director of Fraud Prevention at ARP. She says, basically, this is what they do. They get you emotionally, very excited, either with fear or excitement, like you won the lottery or you’re talking to someone who might want to date. It was on Halloween, miss Kayle is getting her son ready for Halloween. Get you emotionally out of joint and it shuts down your systems that would otherwise say, wait a second here. Maybe I shouldn’t be doing this. In a podcast that I listened to where miss Kyle was explaining this horrible event that happened to her. She said, basically they have this technique about blocking the exits. The whole don’t tell anyone. She said, she told this man, I think I should call my lawyer, and the man said, then we will determine that you are an uncooperative witness, and you will be arrested. The lessons, of course, as you might suspect, again, are, anytime someone calls you, anyone texts you, anyone emails you saying, it’s your bank, we have seen some fraud, anything like that. Never respond to those, hang up or ignore the email, and then use a phone number or a website or an email that you know is safe and reach out to them that way and say, listen, this is what I’ve heard. Is this true?
David Gardner: Rather than be a catcher’s mint, pick up your pitcher’s mint and take the ball into your own hands and communicate from you outward, not from someone else inward, especially Robert when they’re telling you, no, you can’t tell anybody else. I think of all the stories so far anyway. This is the one that hits home most for me, because I think so many of us have used Amazon Prime or have bought things online, our parents can be distracted at points, and it really did sound so legit, at least the first three minutes or so of the story where do you have a second account? You don’t, OK. It’s a nice professional sounding person, supposedly from Amazon, etc. This one hits home, I think for a lot of us, and because it’s a little bit of a lower bar. It’s not something dramatic like, I don’t know, a piece of property that you thought you owned for 33 years. All of a sudden, you don’t years later. It’s not some single operator who’s been barred on a FINRA website. This is just a call from Amazon checking on an order you made.
Robert Brokamp: Easy to spoof emails to have it. It seemed like your email is coming from Amazon or the FTC. Eventually, she spoke with someone who was “at the CIA”. Of course, that was not true, but it’s easy to spoof that. She said that she looking back on it, like, what made her really think it was accurate, was that the person knew so much about her, including your Social Security number. But these days, Dark Web or even Instagram or Facebook page. It’s so easy to get information about it. You could look up that. We said, property tax records, and then you can use Google Earth or something to get a picture of the house. In these conversations she was having with these scammers. They were sending her pictures of the drug bust and things like that and of the badge. See, here’s my badge. It was a very sophisticated operation. It took a lot of coordination, but it paid off.
David Gardner: Well, I don’t even know what else to say. How about this? Let’s go on to story number five. Chapter 5 is entitled The Perfect Storms, and surely, that’s not too difficult for Rick Engdahl to supplement. Robert, the Perfect Storms. Now, I remember there was a book to that effect that was turned into a movie, but I don’t think that’s what we’re talking about here.
Robert Brokamp: It’s not. It was interesting. That term, by the way, I looked this up. Perfect storm has been around since the 1800s. By perfect, we don’t mean good. We mean perfect as in absolute as in someone’s a perfect stranger. A perfect storm is a collaboration of various events that make a storm particularly dangerous. In this chapter, up to this point, we’ve been talking about bad actors who are humans trying to take your money. But there’s someone else out there that could make you poor, and that is mother nature. Of course, I’m talking about the natural disasters such as the recent hurricanes, Helen and Milton. As you know, I’m from Florida. I’ve been through a few hurricanes myself. All my relatives are still down there. All of them lost power at one point, one sister for many days in North Tampa was without power or water, but of course, the real tragedy of the storms has been the loss of life. More than 200 people were killed, I think approximately 100 are still missing mostly in North Carolina.
But these hurricanes will end up being financially devastating for thousands of Americans. The really scary part is that it’s going to come a surprise to many of them that they did not have enough insurance. Here’s why. The problem is a couple of things. First of all, there were two events, and second of all, flooding caused most of the damage, particularly with Helene, and most people don’t have flood insurance, and most people don’t know that most homeowners insurance policies don’t cover it. I think they’re going to be a lot of people who have homeowners insurance that at least I had that, but it won’t cover a lot of the damage. To get flood insurance these days, you mostly have to buy it separately through the National Flood Insurance program, the NFIP, which is a federal program that’s about how about 95% of the country gets their flood insurance. But a lot of people didn’t have it.
According to NBC news in the areas of Florida, most affected by the storm, no more than 25% of people had the flood insurance. Then according to the Wall Street Journal in the areas of North Carolina, they got really pummeled only 1% had flood insurance. Depending on your situation, that flood insurance will only cover up to 50% of what it deems the property to be worth, and that’s not including the land. There’s a limit on $250,000 for single family homes and $100,000 for the contents. Again, it’s also tricky because for those who got hit by Helene and then again by Milton, they are two separate events. Some policies, you might have certain limits on how much you’re going to get, and there might be some disputes, about which event caused which damage. In some cases, you might have these two policies like homeowners and flood insurance. But you also saw if you watch the news, and watch the pictures, a lot of the damage was done to cars, and there’s a big question of whether the auto insurance that you have will cover that. You have to have something that used to be known as comprehensive. Now it’s usually called not collision coverage. You have more than one event, more than one insurance company, and it’s going to be a while to figure out, OK, which insurance company, which damage was caused by which event and which insurance company is going to cover if you even had the insurance. It’s going to be a real mess for a lot of people.
David Gardner: It is really complex out there. Last week, we talked with Andy Cross, who brought got to know the Lingo. He brought the term combined ratio and educated us about the insurance industry. It’s easy to be cynical about the industry. I myself always say to my friends. I hate insurance. I just I was definitely raised to try not to go there. If you can afford it, just don’t pay for it, especially when you’re like the radio Shack two decades ago, and they’re like, would you like to get a pre warranty on this walkie talkie that you’re buying? Not necessary. But anyway, I don’t like insurance. The reality is it’s really important, and the people who are in the industry are not bad people. They’re running the math, and they’re trying to run a business that sustains itself. It’s more challenging certainly with these storms than maybe at any other point in our lifetime. We need our insurers to be profitable to have insurance at all. I try not to be cynical about, even though you can make it sound as if it’s so unfair. The truth is that if we were paying for all of the threats that we really could be subject to, a lot of us wouldn’t be able to afford the insurance. It can be a little bit spotty, and there can be gaps, and it can be very surprising and troubling. I guess, Robert, one of the lessons is, I’m just guessing here, know what you’re insured for.
Robert Brokamp: That’s exactly. You need to look at your policies because you’re going to see what is covered, and then what is not covered, often called exclusions. It will be certain events, whether it’s flooding, rain damage caused by winds, earthquakes, whatever it is. Then it will also exclude certain types of property. If you have really valuable jewelry collection, that may not be covered, and you have to look at your homeowners, you have to look at your auto. Then if flood is a risk, then you really should consider some flood insurance. A couple of other things to consider is basically, you got to document what you own before you have a loss. It’s helpful to keep receipts, especially of big ticket items. You’ll often see insurers recommending that you videotape everything in your house so that you have some proof or take pictures of something that you own. Now, the other things to think about is if there is an event coming and you have to evacuate, it’s probably a good idea to have your insurance information with you, maybe on your phone, maybe in the Cloud, because if something happens to your house, it burns down or it’s damaged by a tornado or something like that, you can’t get the policy easily. The thing about it is with filing insurance claims, you want to do it as soon as possible because it’s a first come first serve process.
If you wait three to five days to file your claim, that means everyone who filed a claim before you, they’re the ones who are going to see an adjuster first. You want to get that claim in as soon as possible. Another thing you have to understand about your policy is most of them expect you to limit damage on something happens. Let’s say if the tree falls in your house, your roof is collapsed. You are expected to do some things to cover up the whole to prevent further damage. If you don’t do that, they may deny some of your claim. Then once you do have a loss, document it thoroughly as possible with pictures, videos, call the insurance company as soon as possible and make it very clear that you are filing the claim, you’re not just calling for information purposes. As you go through the process, keep a log. Who did you speak to? What did they say? What did they tell you to do? What did they say was going to be the follow up so that you have a paper trail, because especially in places like Florida, Georgia, South Carolina, North Carolina, it’s going to be just a mess getting these claims verified, assessed, and then the money distributed.
David Gardner: Well, I’m always learning from week to week on this podcast, but Robert, the stories that you’re telling, we still have one more to come, but I feel as if this week’s podcast needs to be shared out with friends and family. I like all of my podcasts each year, even my best of the besties, but I’m not sure many deserve more pass around than this one each year, and this one yet again.
We’re not here to fear monger. I’m somebody who optimistically tries to dance through life. I’m not trying to protect every downside. Sometimes that’s to a fault, but you can also take that too far. We don’t want to push anybody too far that direction, but being cognizant of some of the latest tactics and just being reminded of some of the eternal verities, somebody is probably out there somewhere, trying to get other people’s money. While it’s often stories about other people, sometimes it comes home to root, and some of these stories come home directly to us Sir Robert, you’re protecting us ahead of time. The more we share this out with friends and family, I think the safer we all are and the harder it is to be a scammer.
Robert Brokamp: Yes, absolutely. The truth of the matter is, if you haven’t been a target of some scam, you will be, at some point in the future. Take steps now to protect yourself as much as possible.
David Gardner: There’s a perfect storm. By the way, I never did read the Sebastian Junger book, Perfect Storm. Did you see the movie?
Robert Brokamp: I did see the movie. It does not have a happy ending, and I just remember it being very moving.
David Gardner: A George Clooney Mark Wahlberg vehicle, the year was 2000. I’m just checking it. I haven’t seen it since, and I have a pretty bad memory, but. Perfect Storms are not just up there in light somewhere on the silver screen. They are around us, and we need to be vigilant.
Robert Brokamp: I will point out, by the way that the Perfect Storm was based on a true event that happened in the Northeast in October. The other name for that event was the Halloween nor’easter which is Apropos of this episode.
David Gardner: Timely, indeed, in a slightly troubling way, which is what we’re shooting for this month of October and our horror stories. Let’s go to your final one, Robert. Thank you again for taking the time to look all these up and then tell the stories in your inimitable way. What do you have for us? Rick Engdahl, what do you have for us with chapter 6, Guardians of the Graceland.
Robert Brokamp: David, the first installment of the series back in 2022 was all about estate planning horror stories, featuring not so famous people. Last year’s version was mostly on scams, but it also included a celebrity estate planning staff, who was the story of Aretha Franklin, who had two wills, one was in a drawer, one was on a couch, and there was a fight over which one was the right one. But our last segment for today has both scams and a couple of dearly departed celebrities. In fact, some might say royalty. Yes, we’re talking about the King.
David Gardner: We are. This story, I don’t know it in full. I’m looking forward to you telling it, but this is definitely out there. This is recent headline stuff.
Robert Brokamp: Yes. Although I will go back to 1977 when Elvis Presley passed away. I’m going to try to cover this roughly in chronological order because I’m going back very far. I’m going to abridge it, and as you hinted at the very beginning, I think I have 90% of my facts straight. Some of it I don’t have completely true, or at least, I’m not sure it’s true, because some of it is speculation of what’s going on. We will tell our tale with the disclaimer that, well, everything I say may not be 100% true.
David Gardner: That makes it even slightly scarier. I will say the truth will add over time. Listening back to this episode, years later, we’ll see how well he got it right. I bet he’s mostly on point go.
Robert Brokamp: Elvis passed away in 1977, at the age of 42, pretty young age. He did have an estate plan, unlike other famous singers like Prince. Graceland being, his home, and it is still, by the way, one of the most visited homes in America, as I understand it. It was passed to three beneficiaries when he died, including his grandmother, his father, and his daughter, Lisa Marie, who was nine at the time. Now, Elvis made his father, the executor. This may have been a slight mistake. Generally, you want to name your executor as someone who’s not older than you because Elvis’ dad did pass away three years after Elvis, just highlighting that as a potential lesson. Again Elvis was young. But it’s always important to consider who your executor is going to be because hopefully they will be around longer than you. His grandmother and his father both die within three years of Elvis and Lisa Marie’s inheritance was held in trust until her 25th birthday in 1993. At that point, she formed a new trust with her mom, Priscilla Presley and a bank to serve as the co-trustees.
But at some point, she removed her mom and appointed a business manager named Barry Siegel. Unfortunately, things didn’t seem to go so well. Again, this is a part where I don’t have all the details. I’ve seen conflicting reports, but basically, as I understand it. The trust at some point was worth well over $100 million, but lost a significant amount of value, maybe almost all of the value due to, depending on who you ask, bad investments or too much spending on Lisa Marie’s part. Eventually, Lisa Marie sued Siegel, saying, bad investments, and also, you didn’t provide me enough paperwork to show what was going on. Siegel counter-sued and said, I actually told you not to spend so much money, and you didn’t want paperwork because you didn’t want people to know how much you were spending. Now, these suits were never resolved because sadly, Lisa Marie died in 2023 at the age of 54. Despite her fame and fortune, she had millions of dollars in debts, and her estate plan was very unclear in all ways, including who would get custody of her teenage twins.
It would also be unclear who would be in charge of her trust, which held Graceland Elvis’ home. What happened after Lisa Marie passed away? While Priscilla Presley challenged a 2016 amendment to Lisa Marie’s trust, which would have removed Priscilla as a co-trustee. She filed this in Los Angeles Superior Court saying, I’m not sure this is a valid amendment to the trust because first of all, Priscilla’s name was misspelled, and that it was not notarized, and the signature didn’t look like Lisa Marie’s. Now, this caused you could call a conflict or just a disagreement with Lisa Marie’s daughter, Riley Keough, who’s a somewhat well known actor and performer. They had a bit of a battle between Elvis ex wife and Elvis’ granddaughter over who would get the property. Now, how this has played out is that it has been settled amicably. They both say they are on great terms. But if Lisa Marie had done everything perfectly and updated it up until the point where she died, everything would have been more clear. It’s even more important to do that whenever you’re going to remove someone from your state plan, whether as someone who will inherit anything or as a co-trustee. Anytime you’re taking someone out of the picture, you need to make sure that you are doing things absolutely perfectly. If you can, it’s probably best to inform that person and this was another issue that Priscilla Presley had and that she was not notified that she was being removed from the trust.
Again, they both say everything is fine. Priscilla Presley is going to get some money, and according to the agreement was something that was important to her that she will be able to be buried at Graceland as close as possible to Elvis. That’s the estate plan. But in the middle of all this, something else happened. A woman named Lisa Findley, who said she ran a company called Nessuno Investments, said, when Lisa Marie was alive, I lent her almost $4 million. Graceland was collateral. But she never paid it back. She actually filed notice to sell Graceland in an auction, in Tennessee.
David Gardner: This is the headline that I saw recently.
Robert Brokamp: Yes. It turns out that this woman is a complete scammer. She has aliases. She’s been convicted of crimes before. It’s rather audacious to try to sell anyone’s house. Let alone try to sell Graceland. She forged Lisa Marie’s signature. She forged the signature of a notary in Florida, and when this notary was contacted, she’s like, I have no idea who this person is. I don’t even know why she chose me. But regardless, in the end, the story here is that the Presley family seems to be happy with how things are resolved. As for this Lisa Findley person, she is now in jail, and she will go on trial in November.
David Gardner: I’m wondering, Robert, if in the years or decades ahead, as we tend to glamorize our criminals, like I don’t know, Bonnie and Clyde, or who was the, I remember Leonardo DiCaprio played this figure, the guy who would scammed the airlines and show up as a pilot, all different guys.
Robert Brokamp: Catch me if you can.
David Gardner: That’s it. It’s catch me if you can. We tend over time, sometimes to look backwards and glamorize these people, the woman who had the gall to claim a form in the face of what was already a real family scuffle with all the headlines. You’d think she would inevitably have to know she was going to get caught, I would think. But we’ll see what future filmmakers do with this one. I’m glad that you’re giving us a happy ending to this financial horror stories volume 3. I’m glad to know there’s been some restitution, some family, sounds like some peace across multiple sides of family, multiple generations. That’s how we hope things will end?
Robert Brokamp: Yes, absolutely. There was a good article about this by John Gorka at Kipling ears. I thought he summed up the estate planning lesson very well. He said, a good effective estate plan transfers the assets and legacy to number 1, the right people, two, at the right time, and three, keeps the wrong people out. One of the lessons here is that Elvis in his state plan, gave Lisa Marie all the money at 25, and she clearly wasn’t ready for it because she went through it. That’s an important consideration, with your state plan and this consideration with mine and my wife’s state plan, our kids will not get all their money immediately if something were to happen to us, we have spread it out and keep the wrong people out. Again, I mentioned that about if you want to disinherit someone, but it also-.
David Gardner: I recently got an email letting me know, I’m no longer in your estate, Robert. You talked about how it’s important to do that really well.
Robert Brokamp: Yes. Well, I think, from what I can tell, David, I think you’re going to be financially fine without my money when I passed away. I felt. [laughs]
David Gardner: I’m happy to be disinherited then. I was just checking and we hadn’t talked.[laughs] But slightly more seriously, just reflecting now back on all six stories, not trying to summarize at all, but if you were to highlight one or two things that pattern recognition across all of this that anybody could take away and be better off for what you’re about to say. Without amping up the pressure too much on you, Robert, what would be the one or two biggest takeaways from this week’s episode?
Robert Brokamp: David, one of my favorite books is a book by Robert Sapolsky called Why Zebras Don’t Get Ulcers. Basically, the point is, humans are the only animals who worry and have anxiety. One of his lessons is, it’s probably not good for you. But toward the end of the book he talks about, maybe you should preserve maybe 5% of your energy to thinking through, what’s the worst case scenario? What are things that could go wrong that could really affect me. We’ve talked about some of these scams. We’ve talked an awful lot elsewhere in the Motley Fool about the ups and downs of the stock market, which is why we often say any money you need the next few year should be in cash. Think about what are the real risks, and of course, as you point out, I have to say, I think you probably came up with Memento Mori as the title of our last year’s segment. But that’s Latin for basically, remember that you will die. You don’t want to spend too much time being consumed with that. But it is true. You do have to spend a little bit of time thinking, what could go wrong and what can I do to prevent it or at least mitigate it?
David Gardner: Really appreciate that takeaway and Why Zebras Don’t Get Ulcers. What a catchy title. I haven’t read the book before. You did remind me of another book recommendation for our listeners, though. This is for the younger people in your family, but I don’t know if did you ever read Don’t Let The Pigeon Drive The Bus?
Robert Brokamp: I don’t think I ever have.
David Gardner: It’s such a good one. It’s by Mo Willems. I totally recommend it to the world, especially to reading to 5-year-old. Don’t Let The Pigeon Drive The Bus. Anyway, also, Why Zebras Don’t Get Ulcers. Well, I don’t think we’ve given anyone an ulcer this week. I certainly hope not, Robert. I hope that we’ve given some good resources and good savvy to Rule Breaker investing listeners everywhere and fellow Fools everywhere. That would be because of you and your efforts. Robert, thank you very much for joining with us this week. Thank you for all you do with the Fool around the Fool. I know you for Motley Fool members who have access to Motley Fool Live, Robert, they can see you every week.
Robert Brokamp: That’s right, twice a week, Tuesday, the retirement show at 10:00 A.M, Easter Time, and then Wednesday at 10:00 A.M, Easter Time, the Financial Planning Power Hour, full contributor Dan Caplinger and I. Both, a couple of former CFPs, answer your financial planning question.
David Gardner: Absolutely. I only get you once a year, except that I have you on more times than once. For this special week, but you remain such a wonderful resource for so many Motley Fool members, twice a week on Motley Fool Live. Robert, thank you again. Thank you to my producer Rick Engdahl, just returned from his Sabbatical Rick providing memorable sound effects throughout this episode. I do feel, Robert is if you left us with a happy ending but doesn’t feel right for financial horror stories. Rick, I would simply ask you to end this week’s podcast with one of the scariest sound effects you can muster. I’ll just say ahead of time to our listeners. See you next week. Fool on.
