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The Indomitable Investor: Why a Few Succeed in the Stock Market When Everyone Else Fails by Steven M. Sears

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Safe Havens in the Age of Madoff

In April 2011, the SEC investigated a Florida Ponzi scheme that defrauded more than 100 investors.23 Many of the people scammed were Florida teachers or retirees. The remarkable fact about the scheme was not that the fund told investors that it earned annual investment returns of 14 to 124 percent, but that the alleged scam occurred in the shadows of Bernard Madoff’s Ponzi scheme that had long dominated national and international news—especially in Florida where Madoff bamboozled so many people.

The SEC alleged that James Davis Risher used Safe Harbor Private Equity Fund, Managed Capital Fund, and Preservation of Principal Fund as part of a Ponzi scheme. The fund names likely appealed to people as the worst financial crisis since the 1929 stock market crash had people everywhere worried about safeguarding their money. Risher distributed materials that portrayed Risher as someone with substantial experience in trading stocks and providing wealth and asset management services.

“In reality, Risher had no such experience but rather a lengthy criminal history, spending 11 of the last 21 years in jail instead of growing a thriving retail brokerage business as he claimed,” the SEC stated in an August 2011 press release announcing charges.

But Risher knew how to treat clients. He held golf tournaments and promotional events for investors. At a March 2010 event at an Orlando resort, attendees heard a rousing speech with universal appeal. They were told investing ...

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