FOR IMMEDIATE RELEASE
NATIONAL SCAM TARGETS ELDERLY AND PROMISES HIGH PROFITS
FOR RISK-FREE INVESTMENT
Department Warns Consumers of Promissory Note Scam and Yanks Agents License
Superintendent of Insurance Neil D. Levin today announced the revocation of insurance agent Tiber Tomshaws license for the illegal sale of securities and issued a warning to New York consumers concerning the sale of fraudulent promissory notes in New York State. The sale of fraudulent promissory notes continues to be a nationwide problem that often targets elderly consumers and promises high profits for their risk free investment.
"The Tomshaw case illustrates the need for consumer to be informed about promissory notes as the Department continues to take action to halt their fraudulent sales and put the spotlight on this serious problem," said Levin.
This month, the Department announced that insurance agent Tiber Tomshaws license was revoked after a Department investigation determined that Mr. Tomshaw had sold phony and high risk promissory notes that caused a loss of approximately $433,000 to be sustained by his clients. Tomshaw had sold these securities in the form of promissory notes between April 1998 and January 1999 without having a license to sell securities in the State of New York and the issuers of the securities had not filed the required registration statements with the State Department of Law. Tomshaw misrepresented information to his clients to convince them that the promissory notes were financially sound and safe investments and based on his recommendation, his clients withdrew funds from IRA accounts, annuities, life insurance policies and other secure investments to finance the purchase of these promissory notes.
"We remain vigilant in protecting New York States residents from these hideous scams," added Levin.
The Department advises consumers to protect themselves by following these guidelines:
- Before investing in any promissory note investors should check with the Department to assure that the company or person you are dealing with is licensed by the state and determine if any complaints have been filed against them. Contact the Department at 1-800-342-3736;
- Beware of any investment that is sold as "guaranteed" or "no risk" and has a high rate of return;
- Beware of any investment being promoted as guaranteed by an offshore insurance company;
- Never feel pressured to make an immediate investment decision; and
- It is never advisable to put all of your savings into one type of investment.
In 2000, the Department issued Circular Letter #17 advising the public to be aware of this scheme and alerting our licensees that they would be subject to disciplinary action if they were improperly selling these notes. Promissory notes promise a high rate of return of interest over a short period of time. A company borrows money by selling those notes and promises to pay it back quickly with interest. Both the seller and the buyer of promissory notes need to be financially strong enough to handle any risk.