SEC warns of schemes targeting physicians

The government says thousands of doctors have been fleeced by "affinity fraud."

By Katherine Vogt, AMNews staff. Dec. 1, 2003.

Federal regulators say there's a trend of would-be scam artists luring physicians into fake investment opportunities by promising them a seat on a medical advisory board or review panel.

The Securities and Exchange Commission has taken action against at least four such scams in the last year and a half, said Susan Wyderko, director of the SEC's Office of Investor Education. Thousands of physicians collectively lost millions of dollars, she said. She declined to say whether the agency was investigating additional, similar cases.

Wyderko said the SEC prosecutes a lot of "affinity fraud" cases in which the victims share some link. Typically, the common thread is religious or ethnic background. So when SEC staff noticed that physicians had been targeted in two similar fraud cases this year, the agency began to investigate.

"We saw a troubling trend," Wyderko said. "What we saw is that fraudsters are targeting physicians and asking them to serve on a medical review board, a medical advisory board or some such concept, for a fraudulent enterprise. The physicians, who are busy, believe they have been sought out for their particular area of expertise, and they respond."

Under a typical scenario, the promoters of the scam claim to have advanced medical technology that they want the physician to review. They'll telephone or send the physician a fax that looks like an invitation to sit on a prestigious board. Once the physician accepts that role, the pitchmen tout their product.