By Dr. Neill Slater, Guest WriterI never thought I would become a victim of financial fraud. I guess no one does. I've been a partner in an ER physician group for 15 years. I'm well-versed in personal finance and naturally skeptical, and I think of myself as an astute judge of character. I own several businesses, and I have extensively invested in residential and commercial real estate. I even have a non-medical MBA. Yet, I was conned like anyone else.
What I'm about to tell you is embarrassing. I accept that failure is a part of business and life. However, trying and failing is emotionally different from being duped, so this is one story I’ve kept to myself for years. I'm only telling it now because of recent developments and so others may learn from my errors. This is the story of how I got scammed out of $75,000 by a smooth-talking dentist.
Financial Fraud
If you search online for “doctors and fraud,” you will get a list of articles about physicians committing crimes. Even when you Google “doctors being victims of fraud in the USA,” you get results discussing Medicare fraud and other scams perpetrated by physicians. One of the only articles I could find concerning doctors as victims was from MedicalEconomics.com in 2016, titled 6 Reasons Doctors Get Scammed, by someone named Dr. Jim Dahle. Perhaps you’ve heard of him. You would be mistaken if this lack of media attention makes you think doctors and other medical professionals are not susceptible to fraud.
Approximately 2.4 million cases of financial fraud are committed in the US each year, causing billions of dollars in losses. While fraud cases have remained relatively constant, the economic losses have steadily increased. Financial fraud can be broken down into seven categories: products and services, charity, phantom debt, prize and grant, relationship and trust, employment, and investment. Criminals target different populations for each type of fraud, with physicians most often falling victim to investment fraud.
More information here:
Beware of Pump-and-Dump Schemes
The Encounter
I met “Trent” at an outdoor bar with my friend and business partner “Barry” in late 2017. It was one of those beautiful winter days in Austin, where you can enjoy being outside. Barry informed me that Trent’s dental business was a few steps ahead of our urgent care company, and he thought we could learn something about growth from the meeting. While we sat under a heat lamp and enjoyed a beer, Trent told us his story.
He graduated from dental school in San Antonio and then moved to Dallas, where he started a dental office. He got married, had kids, and focused on his business. In time, he learned about marketing, billing, and how to run a profitable dental practice. Like doctors, he told me that most dentists are bad at business because they are never taught in school. Once he figured things out, he rebranded to a slick, new dental format and brought on investors, which allowed him to expand rapidly and hire other dentists to work for him. After a few years, he had 11 profitable locations. He admitted that he let the success and money go to his head, and he was caught cheating on his wife. The resulting divorce forced him to sell his ownership of the business. He waited two years for his non-compete to end, and now he was back, doing things right this time. He had already raised money and had started a few dental offices in Austin, and he was looking to expand.
Trent was handsome, charismatic, and relatable. He came across as humbled by his divorce yet confident in his knowledge of the dentistry business. We discussed the similarities between the urgent care clinics that Barry and I owned and what Trent was doing. Trent did not ask me for any money, and I left feeling he was someone with whom I could be friends. He clearly knew marketing and branding. I had seen his offices and advertisements around town, and they were fresh, slick, and new—seemingly the perfect fit for Austin in 2017.
The Investments
Barry and a few friends had already invested in one of Trent’s dental clinics in a trendy Austin shopping district earlier that year. I was invited to join the LLC they were forming but passed on it, simply because I had several projects going on at the time and didn’t have enough bandwidth to deal with it. The investment had gone well, and they had already received some profit distributions. A few weeks after the meeting with Trent, one of Barry’s friends got engaged and needed to sell a portion of his investment in the dental office to help fund a lavish wedding. He asked if I wanted to buy out $25,000 of his stake. Since I knew the other participants and it was already profitable, I agreed and became an investor in my first dental office.
In February 2018, Trent learned about my investment and emailed me about a new clinic he was opening in an up-and-coming location. He told me he was buying an existing practice to rebrand and implement his operating system. I was already familiar with the dental office he was buying since it was close to where I lived. I had previously reviewed his offering documents the year before and had seen P&L statements from the other clinics, so I didn’t ask for any further information. After a few conversations, I received a contract by email, and in late February, I wired him $50,000.
Who Falls for Financial Fraud?
Why would I invest $75,000 with someone I hardly knew? Investing in private companies is not uncommon for medical professionals. An ER colleague of mine made a $1 million return on a mosquito spraying company in Florida. I know a CT surgeon who made a bundle in hotels. But just like stock returns, these examples demonstrate survivorship bias. We've all heard colleagues hyping their early investment in Apple or Tesla but rarely hear anyone discuss their losses in Enron or FTX. Similarly, doctors aren’t typically bragging in the lounge about the loss they took on an oil drilling venture or the pizza chain that went to zero. However, I understood the risk of investing in private companies, and I was aware of the existence of fraud.
So, what was it about me that made me susceptible?
Demographic and psychographic research on fraud victims is inconsistent at best. This may be due to the low reporting rates by victims or the fact that scams are continuously evolving. Some reports suggest higher levels of education and higher degrees of financial risk-taking lead to increased rates of fraud victimization.
While the data may be mixed, it is clear that doctors and other medical professionals make enticing victims. The six reasons outlined by Dr. Dahle in his article give us further insight. Doctors have no formal business or finance training despite our many years in school. Doctors are busy, and they tend to be overconfident and have an outsized trust of professionals. They also suddenly become accredited investors despite lacking experience. This combination of factors leads to physicians being a target for scams, particularly investment fraud. Looking in the WCI mirror, four of the six applied to me.
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The Realization
It didn’t take long for me to realize my mistake. By late May 2018, there was already a feeling that something wasn't right. Communications from Trent had slowed or ceased, and financial information was being withheld. Our investment group emailed Trent to request a meeting. He promptly replied, agreeing to talk the following Monday. That was the last time I ever heard from him.
In August, a lawsuit was filed against Trent by another group. He was allegedly selling the same interests to multiple investors. This filing reported that the south Austin location I invested in was a complete sham, as there was no agreement to purchase the existing practice. Our group had invested a total of $550,000 with Trent. All but one of us were physicians.
The Fallout
Only 14% of financial crimes are reported to the police. If it were up to me, I wouldn't have said anything to anyone except my accountant. I understand why victims are hesitant. There is embarrassment and shame when you realize you've been defrauded. I still feel ridiculous knowing that I was one of the last people to give Trent money before his house of cards collapsed. I also instinctively knew the money was gone forever. You don’t hear stories about con artists having all the money stashed away in an account somewhere. Retaining a lawyer would also cost a significant amount. Why throw good money after bad? However, my friends wanted to pursue justice, so we filed a petition by the end of August.
I had to tell my wife what happened. We have an honest relationship . . . and I didn’t want correspondence from a lawyer’s office or the FBI to show up at our house unannounced. That would be awkward. Despite our financial security, it was an uncomfortable conversation. She trusts me to manage our family’s finances and investments. I take those responsibilities and her financial peace of mind seriously, so it was a humbling moment.
We were fortunate. I have a high income and have made other solid investments, and I am financially independent before age 50. If we were not FI, my feelings of guilt, shame, and anger would have been amplified. I am in the privileged position of being able to consider it an expensive lesson; losing $75,000 to a con artist hurt my ego more than my net worth. However, not all victims of financial crimes are so lucky. Some have their retirement savings wiped out and must return to work, while others lose their home, requiring them to move in with family or worse. Financial crime victims have been found to have a higher incidence of depression and suicidal thoughts.
The Analysis: My 3 Mistakes
I made at least three mistakes that contributed to my being defrauded.
Transferring Trust
The term con men is short for confidence men, fraudsters who gain your trust before ripping you off. Affinity fraud is perpetrated by those with whom you have things in common: profession, hobbies, military service, religion, ethnicity, etc. Con artists often infiltrate tight-knit communities and get the other members to spread their investment ideas for them, inadvertently ensnaring their friends. Trent and I were about the same age. We were both medical professionals. We lived in the same city, and we were interested in growing medical businesses. He infiltrated my friend group and gained their confidence. My mistake was transferring trust; I trusted my friends because they had earned it, but Trent had not.
FOMO
The fear of missing out is insidiously powerful. I had passed on the investment once before—not because of the merits of the deal, but because I was preoccupied with other things at the time. I get a lot of investment opportunities, and I almost always say no. But I doubted myself when my friends started making money. A voice in the back of my head told me I was missing out. When I had a second chance to invest in an already “profitable” venture, I joined without hesitation, which led to my third and most egregious error.
Laziness
I didn't do any due diligence. None. Dr. Dahle was generous when he included “being busy” as a reason doctors get swindled. I was just lazy. While it is excusable that I didn't seek references since my friends were already investors, doing no other diligence is not. How long would it have taken to look up Trent's record with the state dental board, the secretary of state, and the Better Business Bureau? I would have quickly discovered that he voluntarily surrendered his Texas dental license in 2016 and that his owning a dental practice in the state wasn't even legal. It would have taken 20 minutes on Google to discover an arrest record for assaulting a girlfriend, dental board actions, and other suspicious news articles. Any of those items would have deterred me, but I didn't take the time. This mistake is the hardest to accept because I have always prided myself on being hard-working. In this case, I fell short.
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The Consequences
Over the next 5 1/2 years, I would hear periodic updates about Trent from the other defrauded investors—something in the news, a Facebook post showing him in Costa Rica, or correspondence from an FBI agent. Otherwise, I forgot the whole thing and moved on with my life.
I never blamed Barry for what happened. There was no malice when he introduced me to Trent. He was just passing along an opportunity that had been passed to him. Unfortunately, this is how affinity fraud works. I alone am responsible for the decisions I make, and losing a long-time friend would just compound my mistakes. We are still great friends and business partners.
I received a letter from the US Department of Justice on October 26, 2023, reporting that Trent pled guilty and was convicted of one count of wire fraud. I was given the option to provide a written Victim Impact Statement: “In preparing your statement, you may want to think about how this crime has affected your life and made you feel.” The judge considers these statements when determining the sentence. I didn’t send the statement, but the letter inspired me to write this guest post.
A press release from the Department of Justice dated January 29, 2024, stated that “In addition to imposing the 36-month prison sentence, the court sentenced ****** to a supervised release term of three years and ordered him to pay $2,182,760.63 in restitution.” I don't think that I will ever see a penny of the money I invested. Still, I am happy that the case is now closed. I feel bad for Trent. I know I shouldn’t, but I do. I don’t know when he jumped the shark from legitimate entrepreneur to fraudster, but by 2016, he was likely running a Ponzi scheme, paying out distributions from later investors. I genuinely can’t understand why someone would work so hard to become a dentist and then throw it all away.
How to Protect Yourself
Before you invest, there are ways to protect yourself. Start with the basics: Don’t be pressured into acting quickly, don’t invest in anything you don’t understand, beware of promised high returns or no-risk investments, and be wary of any investment that finds you. I have four additional action items to help keep you out of trouble.
#1 Educate Yourself About Investing and Finance
Doctor salary + Lack of financial education = Target for criminals.
You can remove one variable from this equation by educating yourself. If you’re reading The White Coat Investor, you are already on the right path. But don't get overconfident, even if you read every book and blog. Have you ever seen someone who knew just enough karate to get themselves beat up? That was me. Today’s financial fraudsters can be quite sophisticated with complicated digital financial crimes being common. And don’t underestimate the persuasive power of a good old-fashioned con artist.
#2 Perform Due Diligence
This one should be obvious, but sometimes, the easiest things are what we forget. I did. No matter how much you like or trust someone and no matter how charming they are or who else is investing with them, look them up before you give them money. Perform a Google search and online background check, scour their social media pages, and verify any professional certifications or degrees. If they are a financial professional, visit websites like BrokerCheck to confirm credentials and check for complaints. Ask for references and actually call them. Review financial documents and projections to ensure they make sense. Trust your instincts and refrain from investing if you find anything irregular during due diligence. Where there is smoke, there is fire.
#3 Seek Advice
Before you invest with anyone, talk to the people in your life about it. Discuss with your spouse, best friend, accountant, lawyer, or financial advisor (fee-only, of course). Not everyone is the visionary you are, and perhaps they can’t see what you do in the investment. But visionaries sometimes hallucinate, so it’s good to have another set of eyes to advise you. You don’t always have to follow their advice, but you’ll rarely regret the second opinion.
#4 Diversify Your Investments
I walked away from this fiasco relatively unscathed because I didn't invest a substantial portion of my net worth. I invest in securities, real estate, and private businesses. I also diversify within those asset classes, using broad-based index funds, commercial and residential real estate in different cities, and multiple private company investments. If your investments are too highly concentrated, the impact of fraud is magnified along with your losses. I even diversify between brokerages, with my securities split between accounts at Vanguard and E-Trade. My real estate holdings are within a Texas Series LLC, and I only keep cash up to the FDIC-insured limit at each bank. This may be overkill, but broad diversification can keep you from being totally wiped out by a bad decision or fraud.
#5 Other Resources
Here's a list of websites that can further help.
- https://www.investor.gov
- https://brokercheck.finra.org
- https://www.sec.gov/enforce/public-alerts
- https://www.sec.gov/litigations/sec-action-look-up
The Bottom Line
Anyone can become a victim of financial fraud, regardless of income or profession. Your high salary as a medical professional makes you an especially appealing target. While gaining a financial education is a critical step, it isn’t enough to prevent fraud. For every Nigerian prince, there is a Bernie Madoff, former chairman of the NASDAQ and (formerly) one of the most respected men on Wall Street. For every huckster peddling penny stock, there is a Sam Bankman-Fried, who briefly conned his way to a $26 billion net worth. A con artist can be your neighbor, colleague, church member, or dentist. There is a Trent in every state and every town, including yours.
The first step toward protecting yourself is knowing that investment fraud exists and acknowledging that it can happen to you. If you are suspicious of an investment opportunity or have been the victim of fraud, peruse the list of resources above. I encourage you to speak up against those who have committed financial crimes. It may be too late to recover your money, but you can protect others from becoming victims.
Have you ever been the victim of a financial scam? What happened? How else can people avoid con artists?
Thanks for sharing your story. Not an easy thing to write I’m sure, but a helpful reminder to us all.
One minor correction: Madoff was chairman of Nasdaq, not the SEC.
Andy,
You are correct, my mistake. Don’t want to give Madoff any undue credit!
Thanks. We’ll get it corrected.
Thank you for being vulnerable and sharing your story. It may prevent someone else getting taken advantage of.
Those of us who haven’t been scammed are lucky. It could happen to any of us.
What is the point in shielding the real name of the fraudster? He is convicted. This is a matter of public record. This sort of post is a helpful thing to share to warn others. Part of that warning might reasonably include the actual name of the criminal.
The con man is identifiable by Google search, given the mention of “dental office”, “Austin Tx”, and the specific dollar value of the fine.
https://cbsaustin.com/news/local/former-owner-of-austin-dental-practices-sentenced-to-3-years-for-wire-fraud
People love internet sleuthing. I would argue it doesn’t really matter who the fraudster was. You’re not getting the money and the takeaway lessons shouldn’t be “don’t trust this guy.” It reminds me of outdoors people who upon hearing a rescue story want the details of the mistake the person who got rescued made so they can, in their mind, convince themselves that couldn’t happen to them. The truth is that it can happen to them, whether a fraud or an incident while adventuring.
Fun2bfree,
WCI is a very public forum, three years isn’t that long, and criminals can be very unpredictable. Why poke an incarcerated bear with a stick? I also figured that I left enough clues that an intelligent reader could figure it out should they desire. From the other replies to your comment it looks like I was right.
All these private investments seem to come with a high potential of making one’s life complicated and stressful. Would you still have been able to attain your financial goals if you put all your money throughout your career into an S&P500 index fund?
Certainly most docs would. Private investments are definitely on the optional list.
GK,
I guess it depends on how you define private investments. If you mean investments in private companies that I have no control over, I’ve only ever made decent returns with a few real estate syndications. Otherwise, they haven’t panned out. I’ve kept these investments as a very small part of my overall portfolio, and its fun to swing for the fences occasionally. However, I would certainly have done better by investing in a broad-based index fund.
If a private investment means anything that isn’t invested in the stock or bond market, then it is a different story. I have made most of my money from businesses that I have started and controlled. I have failed at some of these as well, but have had two big winners. If I simply worked as an ER doc and only invested in index funds, I would not be where I am today financially. However, I would still be doing ok.
Thank you for sharing.
I understand why you’re hard on yourself, but also, it sounds like you made 99 right decisions in a row with respect to personal finance and business, and then you made 1 bad one. It happens.
Question: did Barry’s friend, who needed to withdraw the $25K for the wedding, really exist? Was that person another mutual friend? Or was it a fictional reason concocted by Trent to contact you again?
If Trent concocted the story about the friend needing to sell for a wedding, that’s extra devious. There’s a little bit of urgency there. It’s a natural story about why a profitable deal might exist.
I can imagine the next gen of fraudsters is asking Chat GPT right now, “what’s an innocent seeming reason I can reach out to an investor who passed on a deal that hints at a motivated seller”
Alex,
In this case, the wedding was legitimate. He was a friend of Barry’s who I had previously met a few times. But your are correct that fraudsters (and salespeople) will often create a false sense of urgency that affects our decision making. Everything seems to be “For a limited time only!” for a reason.
Good point.
I generally feel if a deal, sale or whatever is for “limited time only” then it’s not for me, or more likely, that “limited time” will come around again like it usually does, so why hurry.
Thanks for sharing.
Thank you for sharing. We all make mistakes regularly, big or small, personally and professionally. We grow by learning from hopefully someone else’s fumble and blunder. In the military it is required to discuss, share, and write down “lessons learned”, same as the medical M&M, so that we don’t repeat the same mistakes. But we do, repeatedly and regrettably, because as a former defense secretary Donald Rumsfeld put it, we can’t defend against all “known unknowns” and “unknown unknowns”. In other words, we can’t see our own blind spots. We can’t see them when we are tired, distracted, sick or compromised in other ways; sometimes we fail to see what is in front of us, in broad daylight with all of our senses intact. That is why we consult trusted mentors and post sentries to guard our own blind spots, regardless of how well we have known and tackled the same enemy right in front of us, because it is never the same enemy that will take our lunch money and kick out butts, again. Thank you again for sharing.
Thanks for sharing your experience. I have posted this story in the WCI forum in the past:
My father, a retired orthodontist in excellent financial shape, then 80 over ten years ago, got pulled into a fraudulent Medicare DME scheme as an investor. He was drawn in because his good friend, “Ralph”, a previously successful businessman had invested $150,000, and this deal was a “sure thing”, promising 20%+ annual returns and return of all investments within 5 years.
I learned from my sister that my father was planning to invest $25,000 in the scheme, and I confronted him. He was evasive and defensive. He told me that he had already given his word, that it was a sure thing, and that it had to be legit or else Ralph would not be investing in it. Plus, it was “only” $25,000.
Sure enough, it was a complete scam, and his total loss was revealed within a year. My father was embarrassed and would not talk about it further with me, other than to say that he learned his lesson and would not make investments outside the regulated stock market again.
Thank you for posting your fraud incident. I am familiar with being the victim of fraud. I’m a dentist and was working with another more senior dentist who was quite successful and his brother who was supposedly a savvy businessman who developed dental software. Long story short I was duped out of a similar amount of investment and discovered that this “businessman” was a con artist running ponzi schemes. My first clue should have been his ardent support of MLM businesses and his bragging nature of being “clever”. Later on I found out he has swindled other dentists and was embezzling funds as an office manager.
My second encounter with scams had to do with an entrepreneur who owned a chain of sandwich shops and “events” facilities marketing to dentists at dental seminars. Luckily I never invested with him and later learned he was investigated by the FBI for his scams. Fool me once, shame on you. Fool me twice, shame on me.
Even when I’m reading the White Coat Investor, I always read with a bit of skepticism.
Thank you for sharing your story.
That was an incredible story! I really appreciate your vulnerability and honesty in sharing this. I’m sure this will inspire others to double/triple check any investing “deals” before committing.
Right now I am involved with 3 private placement LLC properties run by a sole manager, one of which may yield a near-zero return of principal, and one of which stands at 50% return of principal if sold after 5 years. Most investors are clueless and willing to send capital call dollars any time requested, escalation of commitment, and failing to recognize sunk cost. The manager has had at least two prior ventures where investors not only lost their entire principal but did not receive the full value of their cash call back. The manager collected management fees on gross income right through to the very end in those ventures. That’s his hallmark — collecting fees, not running profitable LLCs for investors. Of course, with a glitzy Private Placement Memorandum, unless one has very specific knowledge, it is difficult to identify these frauds in advance.
I would add to never invest with “individuals,” only well-known and established companies whose entire track record is open for review. The guy I invested with has a “company,” a glitzy website, etc, but until you find the other investors who have felt conned and cheated, there is no way I know of to find out about his past failures.
Personally, I will no longer invest in private placements. Sticking with ETFs and well-known companies. Of course, that is not foolproof (viz, Enron, Worldcom, ad nauseam).
Rags2Rags,
I’m sorry that you are having to go through that. I can’t tell for sure if you’re talking about real estate syndications or not, but I know that right now a lot of limited partners in these investments are not receiving any distributions. Many operators who did well when interest rates were low and cap rates were compressing are now struggling when their loans are coming due and interest rates have doubled! Add a significant increase in commercial RE insurance premiums and a lot of operators are in trouble. Unfortunately, this comes back to the limited partners (investors).
Yes, Neill, real estate. Unbeknownst to those who are currently invested with him at the time they invested, this syndicator had two failed ventures in the 20-teens, well before COVID, interest rate dislocations, and the like — ventures where the investors received back less than the amount of their capital calls (in other words, full loss of principal). In person he is apparently a very affable character, and there are still investors who would follow him off a cliff.
I’m very fortunate to be a partner in a very lucrative private practice. my wife and I have a way to go before we retire but are not that far from being FI… we’re young and like work. So in our financial situation it’s easy for me to say this, but I don’t understand the desire to side hustle into more money, invest in potential disasters and own a bunch of crap. How much do people need? Why take these risks? Why drop money into something that you either don’t know a lot about, or with someone you don’t know very well when that money can be used in the market for a fairly predictable return. It reminds me of the Simpsons episode where Homer tells Mr. Burns that he’s the richest guy he knows and Mr. Burns responds with something like “ah yes, but I’d trade it all… for just a little more.” We may get 10% in the market over the course of our investing, but that 10% compounds and requires almost no work. I don’t research investment opportunities (businesses, real estate or anything else), spend my time learning about a new industry (pizza was mentioned above… seriously WTF), take family time to meet with people about opportunities, drive around looking at properties to invest in, drive around checking in on properties I’ve already invested in or blindly throw money into the next thing only to endure the stress of whatever that is. I respect this post and the desire to share to share the story so that other people can learn. And the business world needs risk takers. But to me the only take away is number one. Have some financial and investment knowledge… skip the rest. A well balanced portfolio will take care of you. I spend my time on the business that I know best, my private practice, on keeping up to date in my field, and enjoying my family. For some people making money is a hobby I guess, but I enjoy the stability and security of money. Not the pursuit of more.
GETOUTSIDE,
Thanks for sharing your perspective. While I understand and now share your disdain for private investments, I’m a little confused by your seeming enmity towards business and real estate. You took the risky path less traveled by starting (or buying into) a private practice that could have failed. 74% of physicians are now employees, yet you are in the minority as a business owner. You could have taken a “safe” job as an employee, with good benefits and a generous retirement package, then invested in index funds to your heart’s content. But you didn’t. While it sounds like you are now conservative with your investments, many physicians may consider you an adventurous risk-taker. And, because you took that risk, you now get to reap the outsized rewards.
I’m not suggesting that people invest in private businesses that they don’t understand—quite the opposite. I shared my story to be a cautionary tale. However, despite several snafus, I am FI. Morbidly obese FI. And I didn’t get there at my age just by working shifts in the ER. I also started the ER version of a private practice, then expanded into other businesses and real estate. While it has been hard work and hasn’t been stress-free (I’d argue that anything worthwhile usually isn’t), it has been fun, exciting, challenging, and rewarding. I now spend more quality time with my family than almost anyone I know (I’m currently in Hawaii with my family for five weeks and will travel to Europe for another five later this summer) – certainly more than if I were still slinging 15 ER shifts a month for a paycheck.
I love that you are young and like to work, yet are nearing financial independence. Through your hard work and risk, you have given yourself options, one of which is to invest conservatively and focus on your family and medical career. You are absolutely an example for most physicians out there to follow. Every physician should be FI. But I think you said it best in your last two sentences. “I enjoy the stability and security of money. Not the pursuit of more.” Different strokes for different folks. There are many ways to get there.
Respectfully,
Neill
getoutside, “Why drop money into something that you either don’t know a lot about, or with someone you don’t know very well when that money can be used in the market for a fairly predictable return,” can only answer for myself. Had read “The Ivy Portfolio” and it was my attempt to “diversify” beyond traditional stocks/bonds/CDs with someone who I thought was a fiduciary and experienced real estate manager. Turns out in this case “experience” was the process of making the same mistake over and over and “fiduciary” is not in his vocabulary. Mistake? Yes, definitely. The lesson I will try to pass on to my children and grandchildren is stick with the traditional, regulated markets.
Probably many doctors have lost $75k or more through poor investments, be it single publicly traded stocks or whole life insurance. If that’s the worst mistake you made you aren’t doing too bad, particularly if you stick to more conventional investments from here on out.
I first met a few of my clients just after a sad realization like this, when they wanted someone to audit everything else, and in cases less clear cut than yours, determine the full extent of the fraud or embezzlement.
It is near impossible for there to be fraud without trust. Whether the victim is trusting a phone scam, a business contact, a ‘good’ employee or a friends introduction, they are t.r.u.s.t.i.n.g.
Most of my clients did not want to be publicly identified in any subsequent legal proceedings. I agree with them. Most of them were targeted because they own businesses. If they become part of the drama and naming on the TV News, it has a negative impact on their own name, brand and perceived intelligence and reliability.
As for my own ‘intelligence and reliability’? Yepp, I have been scammed too. Sigh.
Thank you for this post. I wish I had read it a year ago. I recently lost 300k in a similar real estate Ponzi scheme run by a physician in SoCal. I am only 1 of about 300 investors who invested a total of roughly 50 million dollars. Reading this article was a chilling and embarrassing experience for me. Thankfully, I am only 2 years into my career as an attending, I’m confident I will bounce back from this catastrophe, and I have decided I will never give a penny of my hard-earned money to anyone.
Sasha,
I’m sorry that this happened to you. If it makes you feel any better, the $75,000 loss I wrote about was just one of the many things I have gotten wrong with money over the years.
I was bored one day and compiled my top 15 money mistakes. I took how much money I lost due to each error, then calculated how much money I would have currently had I instead invested in an 80/20 mix of stock/bond index funds. The results are truly staggering. https://businessisthebestmedicine.com/15-money-mistakes-that-have-cost-me-millions/
The good news is that I still became financially independent in my 40s. As you said, you are early in your career and have time to recover. And you’re reading the White Coat Investor! Thanks for sharing your experience.
Fun idea for a post. I think my biggest “mistake” dollar-wise was paying for med school via the HPSP scholarship. I calculated it out once at a $180,000 “mistake.” $180,000 at 8% for 30 years is $1.8 million.
thanks for sharing Neill takes a lot courage and is helpful to have these stories out there so docs can learn from our experience. I lost $50,000 to whole life insurance, but have bounced back to become financially literate. but your story teaches me that even with being financially literate we have to be forever vigilant.
Rikki,
I also purchased a variable life insurance policy in 2008. Since the White Coat Investor wasn’t started until 2011, I entirely blame Dr. Dahle for that error.
I also blame Dr. Dahle for having purchased a whole life insurance policy during medical school.
Thank you for sharing your story. My own father was conned out of about $100,000 by a dishonest insurance agent. It truly can happen to anyone. Misplaced trust and (often) heightened emotions are at the heart of any con, and given that we all have to trust others at least occasionally and we all have emotions, we’re all vulnerable to the right con artist if we cross his or her path at the wrong time.
I hate investments in limited partnerships in general. Someone always seems to be getting more than me, it’s impossible to understand the financials, and forget about ever trying to sell. These securities don’t have a market and aren’t traded like stocks. They are like timeshares – good luck ever selling. I tried my luck in a Publicly Traded Partnership, a MLP that was tax-advantaged. Lost a ton of money, sold at a loss. At least I was able to sell. In real estate, as another example, there’s a market and you can sell, even though you incur lots of costs when you go to sell. To me, stocks, mutual funds, and ETFs offer the cheapest, most user-friendly, and most diversified investment pathway. Everyone loves talking about getting into an investment. What I always want to know about is how to get out. As they say with bear attacks, you don’t need to be the fastest runner, only faster than the slowest guy.
Well, that’s certainly one way to avoid this type of scam. Feels a bit like throwing out the baby with the bathwater though.
LOL, 75K – small potatoes. I lost 330K in Ideal Implant (FDA approved and marketed breast implants, what could go wrong? Horrific mismanagement, IMO. They should have marketed the whole thing and sold to a rival), another 100K in IntegroFuels. It’s only money, folks. Get out there, and make more! The bright side is that I won’t have to pay capital gains tax for a long time.
We should have a contest to see who’s lost the most in a scam.
Haha. Unfortunately I’ve lost more than 75k in various investments (not scams) as I’ve intimated in the comments , however, the dental scam was the most interesting. As for Goober’scousin, this is one contest I’m happy to lose to you. But I do agree with you that opportunities abound for us to make more money. Thanks for commenting.
General rule
Only invest in stocks, ETFs, mutual funds where you can calculate your net worth daily by looking at day end prices in the 📰 newspaper!
If you want an easy, cheap, very profitable investment, put 2/3 in SPY, and 1/3 in QQQ. Over ten years, you will trounce any advisor or Dr Lounge investment!!
Ugh…QQQ.Not my favorite anything.
Thank you so much for having the testicular fortitude to share your experience, Dr. Slater. I’ve shared it with my wife and a few friends as well. Your post reinforces what I’ve found to be the two biggest words of my adult (and medical) life: DUE DILIGENCE. There really is no substitute for it and it almost always keeps you out of trouble or at least mitigates it.
Under the “products and services” category of types of scams, I would add publishing scams, and since so many doctors are writing and publishing these days, they should be alert for it. I’ve summarized the essentials here: https://www.kevinmd.com/2024/06/scams-perpetrated-on-authors-by-impersonators-and-bad-actors.html
Thanks for the information and warning Arthur. As a budding writer this isn’t something I had thought about previously, so I appreciate the heads up!
I am interested to know if you or any of your investors were aware that this dentist had his license revoked in 2016? I read the mention of divorce as reason he sold his offices in Dallas, but was it disclosed to you that he was no longer licensed to practice dentistry as of August 2016? I’ve been following this story for years, and interested to learn what circumstances led to the fraud. Thanks for your time.
The article says this:
So yea….anyone who read this article is aware of that.