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State uses 'Undercover Investor' to fight fraud

State uses 'Undercover Investor' to...

MADISON, Wis. - Line 2 inside the tennis shoe-wearing state investigator's cubicle is what's called "The Sucker Line."

Since Ronald Reagan was president, Wisconsin's primary "Undercover Investor" has answered his second phone line at the Department of Financial Institutions to field investment opportunities on everything from oil and gas leases, to non-existent oceanfront property to penny stocks. What the callers claim is an "opportunity," he says is often fraud.

"The investor shouldn't have to be concerned with fraud," he said. "Risk is one thing, but outright fraud, that's the type of thing I think I'm dealing with when I take these calls on the undercover phone. I'm dealing with people who are committing fraud."

We are not showing his face clearly or using his real name to ensure his undercover identity remains intact.

In addition to answering the "sucker line," he also attends investment dinners in an effort to make sure Wisconsin securities law is being followed. He's investigated a number of cases after the fact where a Wisconsin resident has lost their life savings to a fake investment and cherishes the chance to prevent the crimes from happening in the first place.

"They're always calling, thinking I'm going to be their next mark and they continue that until the end when I bust them," he said. "(In 30-plus years), it's never been the other way around. I've never gotten busted myself."

His investment tips can be summed up simply: If something sounds too good to be true, it most likely is.

"People should be leery, thinking they can get rich quick through a total stranger," he said. "It's just not a plausible scenario. Why would someone call a total stranger to invest when they could invest themselves or get their friends and relatives to invest?"

The "Undercover Investor" said most of his investment pitches these days concern oil and gas, precious metals like gold, silver and diamonds, and penny stocks. He takes the call, asks for more information and then, once he receives that either by email or mail, he can determine if the company's registered with the State of Wisconsin and whether its investment "opportunity" is registered as well. If not, he will send a "Cease and Desist" letter and scatter the fraudsters to other states or to different scams.

"I'm pretty realistic to understand that this is going to continue. I'm not going to stop it," he said. "It's kind of like a whack-a-mole. There's no end to it. The money is there. (These callers)  know they can make a good living for themselves by defrauding our investing public."

So, he will continue to answer line 2 at his downtown office, building files and collecting evidence to help as many people as possible.

"I can have an impact on people's lives by getting the bad guys out of our state," he said. "They're taking our money. They're taking the trust of people. They need to be stopped. That's the way I view it."


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