Cockroaches of the Investment Business
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The Cockroaches' Nest
Securities fraudsters seem to be attracted to a few geographical hot spots: Southern California, Southern Florida, New Jersey, New York — particularly Long Island — and Texas. All five states — and particularly Southern California and Southern Florida — have long had the largest populations of senior citizens (over 65 years old) in the country, according to the U.S. Census Bureau. (In fact, seniors account for nearly half of all fraud-related complaints received by state securities regulators, says a recent NASAA survey.) And, well, crooks naturally follow the money. New Jersey happens to be the state with the second highest per-capita income in the country, behind Connecticut. And Southern Florida, Southern California and Long Island are centers of conspicuous living — where it's easier to find a person whose pocket is worth picking and easier to spend your quick millions on a vintage Ferrari or a 50-ft. yacht without attracting too much notice.
Boca Raton, in particular, has long been known as the capital of securities fraud. So much so that just last year the NASD opened an office there. “There's a lot of money there, a fancy address, and quite honestly, at most of these micro-cap firms, they don't hold the money, they spend it. They live off of it,” says Borg.
Indeed, take a look at the stats. Boca Raton had a median household income of $60,248 in 1999, retail sales per capita of $20,000 in 1997 and 19.8 percent of the population was over 65 in 2000, according to the latest Census Bureau statistics. Nationwide, median household income was $43,318 in 2002, retail sales per capita sat at $10,615 in 2003 and the percent of the population over 65 was 12.4 percent in 2004. Of course, Nassau County in New York (Long Island) stacks up quite like Boca does: The area had a median household income of $71,226 in 2003 and retail sales per capita of $14,668 in 2002, while 15 percent of the population was over 65 in 2004. Southern California's Orange County, meanwhile, had median household income of $55,861 in 2003, retail sales per capita of $12,205 in 2002 and 10 percent of the population over 65 in 2004.
Oh, and, oddly enough, at least where California, Florida and Texas are concerned, some say the weather may have something to do with it. “The operative word in hot spots is ‘hot,’” says Saxon. “If you're going to perpetrate that kind of activity, why not live in a nice place. The perpetrators like to live the high life,” he says. Other regulators echoed this theme — when asked, some scamsters say it's the weather. Simple as that.
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