Bloomberg Press reported that hedge fund investors are now hiring private eyes to conduct background checks before puttingmney into hedge funds. This, to say the least is a worthwhile idea. Anyone in fact who is not conducting background checks before putting their hard earned money almost anywhere today can be making a very foolish mistake.
We have all heard of the Madoff Ponzi Scheme. The article cites another case inFlorida where the two hedge fund managers may have cheated their clients otu of $72 Billion. then there are the smaller ones, if you consider tens and hundreds of millions smaller. There was one financial fraud case recently in Orange County, California, for a mere $73 Million and others scattered about the country.
If you are seirous about investing your serious money, and if you are thinking of engaging in partnerships or any co-ventures, you shoudl be conducting business research, including business credit reports on the entities and individuals of interest. It is a vicious financial climate out there. With the economy in a slump some people get even more desperate and make foolish and despicable moves. Others don’t need the economic downturn to justify bilking hedge fund investors or pension funds.
We may all know now of Bernard Madoff, a household name, but just a year ago few of us knew much about him. There are other scurrilous souls just like him. We take people’s words on their reputation, or put our money with one business manager, as int he case of Madoff, who spins around and turns it over to the guys like Bernie.
You want to know if the people and entity you are dealing with are reputable. You want to know whether or not they are scam artists with prior criminal records or civil records indicating financial fraud or other money scams. Do your corproate resarch. Run background checks. Check them out before you invest. That way you won’t be on the six o’clock news the fifth person to tell their sad story to the cameras.
