The Exact Steps to Sidestep Fraud (Without Becoming Paranoid)

The point about due diligence isn’t TRUST NO ONE and isn’t to be paranoid. it’s to be… diligent. That’s it. Be thorough, competent, and invest with eyes wide open instead of squeezing the trigger with your eyes closed hoping you hit a target.

That’s the mindset to avoid fraud.

Not fear. Not suspicion. Not cynicism.

Just awareness and personal responsibility.

Most investors don’t lose money because the fraudster is highly sophisticated.

They lose money because they lean on shortcuts:

• reputation and “track record”

• referrals and warm intros

• group trust and community hype

• charisma that feels like competence

• confidence that feels like credibility

Fraud, and plain bad investing, thrive where no one slows down long enough to verify. The most important thing you can do to guard yourself from fraud understand what you’re investing in, instead of outsourcing judgment or assuming things unsaid.

I say this as someone who has been on the losing end. I didn’t blindly wire money. I ran the math. I checked the repayment structure. I analyzed the projected returns.

But I trusted the inputs. I trusted the fact that other people trusted these people.

I assumed the numbers I was given were accurate. In reality, they were inflated or outright false. The underwriting logic was fine. The data feeding it wasn’t. I also trusted their experience based on their stated claims rather than making the uncomfortable request and waiting until I actually received the proof of their experience. Pitching an AirBnB wedding venue? Show me you’ve got a successful one (or three) in your portfolio. Boutique hotel? Same.

The distinction between claims and proof cost me $230,000.

So I built the system I wish I had then. Created the education I didn’t have and no one else was saying while others tell you to joint venture with others, find your sherpa, or leaders. None of them actually teach you how to verify yourself. Just continue to outsource trust to keep you reliant. On their mentorship. On their software. On their next shiny object of investment or new fund.

And here are five simple steps for you to sidestep fraud and build your own due diligence process.

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Step 1 — Separate the Deal from the Person from the Information

Most investors lump everything into one bucket and call it “due diligence.”

That’s where mistakes begin.

Each category requires its own process.

1️⃣ The Deal

This is the math, structure, risk, exit, and collateral.

You should be able to answer clearly:

• How does this investment actually make money?

• What are the downside scenarios?

• Where does repayment come from?

• What is the true collateral value, verified independently?

• What lien position am I in? And when?

• What would default look like in real life?

If you cannot explain the deal simply and logically,

you do not understand the deal.

And if you do not understand the deal,

do not wire money.

2️⃣ The Person

This is where most investors stop.

They like the person.

They trust the person.

They were referred.

They feel safe.

That’s affinity bias.

Do this instead:

• verify identity

• verify experience

• verify performance

• verify financial stability

• verify legal history

Personality does not reduce risk.

Process does.

Someone can be charismatic, confident, well-spoken, well-liked…

and still be reckless, negligent, or dishonest.

3️⃣ The Verified Information

This is the piece nearly everyone skips.

Verification means documentation from independent and third-party sources:

• public records

• recorded liens

• filed releases

• title commitments

• sale records

• statements

• court filings

What doesn’t count:

• spreadsheets

• claims

• decks

• “trust me”

• group reassurance

• storytelling

If it isn’t documented, it isn’t verified.

If it isn’t verified, it doesn’t count.

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This is the core principle

Don’t invest in the deal.

Deals don’t default.

People do.

Don’t invest in the person.

People drip honey when they want your money.

Invest in the verified information.

Numbers, filings, liens, and paper trails don’t flatter you or charm you.

They don’t make you feel special.

They don’t sell you a story.

They tell the truth, if you know how to read them.

That one shift prevents a significant amount of unnecessary loss.

And yes.

It slows you down.

Good.

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Step 2 — Assume Misunderstanding Before Malice

Most failed investments don’t begin as scams.

They begin with:

• overconfidence

• weak underwriting

• poor controls

• scaling too fast

• unverified data

• inexperience

The outcome for you is the same.

So stop trying to judge intent.

Judge structure.

Ask:

If this operator disappeared tomorrow, what protects me?

If your answer is:

• “relationship”

• “reputation”

• “the group”

• “they’re good people”

You are not protected.

You are relying on faith.

Faith is not a risk-mitigation strategy.

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Step 3 — Make Verification Your Standard Practice

Fraud and failure thrive where:

• nobody checks

• everyone trusts

• speed is rewarded

• questions feel uncomfortable

Your job is not to be agreeable. Your job is to protect capital. You didn’t earn that money in a day and you don’t want to lose it the same day you send a wire.

So:

• ask for documents

• confirm filings

• read the agreements

• verify data independently

• follow up

• confirm reality

If someone becomes defensive when asked for proof?

That is data.

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Step 4 — Trust Without Competence Is Still Risk

A trustworthy person without risk controls can still lose your money.

So ask:

• What is your underwriting process?

• What are your default procedures?

• What happens when the market shifts?

• Who executes?

• What safeguards exist?

• How are claims verified?

Sloppy operators lose investor money.

Not because they’re evil.

Because their systems are weak.

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Step 5 — Never Outsource Your Judgment

Mentors endorse people and get an affiliate. Notice how quickly they remove themselves when money is lost versus when it’s made?

Connectors earn when deals move.

Groups normalize bad investment behavior.

Everyone means well.

But when it goes wrong, the consequences sit with you.

So yes, listen.

But verify yourself until you understand the risk.

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Swap fear for personal agency. For competence. Clarity. Ownership of your role as a lender or investor.

You should:

• understand what you’re funding

• control downside risk

• verify before wiring

• know exactly where your protection lives

That isn’t paranoia. It is professionalism. The bank has processes, so should you.

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If you want to build that skillset I’m rolling out practical, digestible, real-world due diligence training for independent investors and lenders.

So you’re not guessing. You’re not outsourcing your thinking. You’re not gambling with capital.

More details coming.

Until then: Slow down.

Don’t Trust, Verify.