Harry Gross: Some words to the not-so-wise on investing

Dear Harry: About three years ago, my boss recommended that I put my savings into an account with his investment guru. The fellow had a very pleasant personality, and referred me to a list of his clients. He suggested that I contact any two I chose. I did, and they were happy as a dog with a bone. He said he was investing only in U.S. securities, but with his own technique of using puts, calls, options and who knows what else to generate higher returns. I gave him $50,000. His statements showed a return of nearly 10 percent. They went up and down very little. Last week, I got a notice that my account was frozen because the SEC was on to a Ponzi scheme in which he seemed to be involved. My boss told me that it was a Ponzi scheme. There were no investments. The statements we received were all fakes, and it is uncertain what, if anything, we'll get back. I thought I did everything by the book with the recommendations from my boss and the others. What else can I do to protect myself in the future?

What Harry says: Bernie Madoff was perhaps the biggest of the schemes, but there are still plenty more that have not come to light. Every investor must follow certain ways to protect himself from unscrupulous advisers. You did the right thing by asking to contact clients. However, no adviser should have custody of your funds. Use a well-known broker as custodian. This way, you get a clear statement each month from someone who is independent. Although others may not agree, I do not want anyone to have independent control of my investments. They may suggest, but I want to make the final decision. And remember, the only person who can steal from you is a person you trust. If you don't trust me, you won't let me close to your assets.

Write Harry Gross c/o the Daily News, 400 N. Broad St., Philadelphia, PA 19130. Harry urges all his readers to give blood - contact the American Red Cross at 800-Red Cross.