Has Anyone Seen My $200 Million?

by Jason Dieter 24. May 2012

HelmetWhat's the first thing that comes to mind when you hear these names: Mike Tyson, Johnny Unitas or Lawrence Taylor? Or how about Evander Holyfield, Latrell Sprewell or Warren Sapp?

If you said that they are famous athletes of past generations, you would be right. If you said a few of them are Hall of Fame athletes in their respective sports, you would also be right. However, in light of what you are about to learn, the correct answer would be, they are all athletes who have filed for bankruptcy at some point in their lives. With that being said, the first question we 9-to-5-ers ask ourselves is, how is it possible that a person with all this fame and fortune can speed through his money as quickly as he gets up and down the court, throws a punch or runs the bases? Well, in the case of the athletes noted above, the reasons can be too numerous to mention.

In the meantime, let's consider a few facts:

  • 78% of former NFL players go bankrupt or are under financial stress by the time they have been retired for two years.
  • Within five years of retirement, 60% of former NBA players are broke.
  • Scottie Pippen, an NBA seven-time All-Star and Hall of Famer, made $120MM at one point in his career, only to retire $9MM in debt.
  • Mike Tyson made over $400MM in his prime only to lose it all in a nasty divorce, a Federal rape charge, felony drug possession and several DUI’s, among other not-so-memorable times.

Now, let’s take a step back and explore why these athletes, who often earn millions of dollars in salary and signing bonuses, get to the point of “losing it all” (or in some cases, most of it). Truth is, there can be many reasons, and they can intertwine.Big Spender

Let’s explore a few possibilities below:

  • Athletes often come from less-than-fortunate financial backgrounds and have no experience in handling the “big” money that is thrown their way at such a young age, nor do they take the time to educate themselves on becoming financially savvy. Additionally, they don’t understand the concept of investing their money for retirement.
  • Athletes make the mistake of thinking their careers will last forever, hence being employed longer. According to the NFL Players Association, the average career of an NFL player lasts only 3.3 years due in part to injury, retirement or getting cut.
  • Living lavish lifestyles. Pro athletes’ fortunes may dwindle down quickly because of expensive houses, cars, jewelry etc. High priced wardrobes, gambling, hanging out in night clubs and drugs can be contributing factors as well.
  • Athletes have also been linked to making bad investment decisions. Athletes may be lured into putting their money into tangible investment opportunities such as inventions, nightclubs, car dealerships and the like. These same athletes are considered financial prey to disreputable people who see them as easy targets.
  • In some cases, athletes will hire the wrong people as financial advisors to manage their money. Typically they will compound the problem by trusting that same person way too much.

So what lessons can we learn through the misfortunes and actions of the pro-athlete? For starters, it’s a fact that most athletes will not earn the same amount of money in post retirement as they do during their playing days. Hence, their highest earning period is often very short. However, no matter how much money we make or how old we are, we all need to save for retirement, emergencies and times in life when our income of tomorrow isn’t as much as it is today. In short, save money during the prosperous times to be ready for the lean times.

Also, before you hire a money manager or advisor, ask some basic questions and do your research. Is the person certified by a national accrediting organization or firm? Have there been complaints or lawsuits filed against him or her? Do they come with strong references? Most importantly, trust your gut. If they seem “shady”, they probably are.

Don’t invest your money blindly. Avoid risky investments or what may appear to be a risky investment. Remember, investing isn’t the same thing as gambling. You don’t want to be too risky with your money, and there is absolutely no such thing as a “can’t miss” investment.

It’s certainly okay to be loyal and generous to your family and friends. Besides, where would any of us be without them? However, it should not cost you your own personal long-term financial security. Don’t carry more than you can bear. Take care of yourself first and your immediate family second. After that, be careful, and use your judgment before you extend your financial security among others.

(Sources: Sports Illustrated, Kidzworld)

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I'll take "What is Check Fraud?" for 500, Alex.

by Jason Dieter 9. November 2011

What is Check Fraud?
Check fraud has many ugly faces.

Check fraud does not discriminate. It doesn’t care if you’re a person or a business, wealthy or not, the customer or the Bank. Check fraud and those committing check fraud look for ways to deceive, manipulate, alter and perpetrate. Simply put, a way, any way, to illegally acquire, nay steal, funds that do not exist within an account balance or account holder’s legal ownership.

Want some stats? Of course you do.

  • According to FinanceNook, in one year, merchants take in over $13 billion dollars in bad checks. Even with more purchases being made online, this number is expected to grow annually by 18%.
  • According to the American Collectors Association, Americans write around 1.7 million bad checks each day, totaling more than $50 million in bad check losses.
  • The National Check Fraud Center has reported that check fraud and counterfeiting are the largest and fastest growing problem that the United States financial system faces today. These estimated losses produced annually are over $10 billion and are expected to continue rising.

Trust No One

To protect yourself or your business against check fraud, it is suggested by many experts to start with this basic axiom, “Trust No One.” Anyone can commit fraud. You, me, your doctor, your friend, your neighbor or even your favorite Uncle can commit fraud and there are many ways to do it. Check fraud prevention is not a simple task. There are many things to be done that, when executed together, will help to protect yourself from check fraud. While I may offer you some tips to help you fight check fraud, I do not want to lead you to believe or suggest that you can ever be 100% fraud-proof.

Forms (yes, form(S) as in plural, as in numerous) of Check Fraud

  • Forgery - Forgery usually takes place when an employee issues a check without proper authorization. Often times, criminals will steal a check, endorse it and present it for payment at a bank or a retail location using bogus identification.
  • Counterfeiting and Alteration – Counterfeiting or altering a check by using readily available desktop publishing equipment consisting of a PC, scanner or high-grade laser printer or simply duplicating a check with advanced color photocopiers.
  • Paperhanging – People who purposely write checks on closed accounts (their own or others) or who re-order checks on closed accounts (their own or others).

Great, so how do you prevent check fraud from happening to you?

Remember, trust NO ONE! (sorry to be so blunt)

  • Secure all reserve supplies of checks, deposit slips and other banking documents in a locked facility. Limit the number of people with access to your checks and keep blank checks locked up at all times. If your checks fall into possession of unscrupulous employees, you could be liable for substantial losses. Never leave checks or bank records unattended.
  • Make sure that your checks include security features that will help combat counterfeiting and alteration.
  • Assign accounts payable functions to more than one person and make each one responsible for different payment areas. This division of responsibility makes it more difficult for employees to tamper with checks and payments.
  • Limit the number of official signers. The fewer check signers you have, the lower your chances are of being defrauded.
  • Require more than one signature on large dollar check amounts. In this way, any losses you may incur will be low denominations only.
  • Check with your business banker to see if they provide products such as Positive Pay to help prevent check fraud. Basically, a business owner writes checks and if there are any discrepancies between the checks written and the checks clearing the account, the business owner has the option to either pay or return the items.
  • Separate the check writing and account reconcilement functions. Try not to have the same person who balanced the bank statement issue checks. This provides greater safeguards against an employee writing fraudulent checks and covering it up. The reconciler would be able to prevent the crime unless of course the employees are in collusion.

So what have we learned here?

Check fraud is everywhere and coming to a dishonest individual near you.

There are many different ways that check fraud is perpetrated as well as many different ways to prevent or safeguard it from happening. This blog merely scratches the surface of, check fraud underground world. Educating yourself further on this ever growing problem is an ongoing process and is strongly suggested for even the smallest of business owners (as well as individuals).

Remember, when it comes to your well earned money, “Trust No One,” and never think for a second that it can’t happen to you. As a matter of fact, it’s happening to someone right now – is it you?



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