✅ SDIRA Investor Fraud Prevention & Reporting Checklist
For Syndications • Notes • Private Funds • Real Estate Deals
Purpose: Help SDIRA investors protect retirement funds, reduce fraud risk, and know what to do immediately if something goes wrong.
1) BEFORE YOU INVEST: “SDIRA SAFETY CHECKS”
Use this checklist before wiring funds from your SDIRA.
✅ Confirm the Investment is SDIRA-Eligible
- ☐ Confirm the asset type is permitted (real estate, notes, private placements, etc.)
- ☐ Confirm the investment does not involve collectibles or life insurance
- ☐ Understand whether the investment could trigger UBIT/UDFI (leveraged real estate, operating businesses)
✅ Confirm the Structure is IRA-Compliant
- ☐ The investment title will be properly held in the name of your IRA (not you personally)
- ☐ The subscription docs list your custodian/IRA correctly
- ☐ You will not provide services, management, or “sweat equity” to the investment
- ☐ You are not partnering with disqualified persons (spouse, parents, children, their spouses, certain controlled entities)
✅ Confirm You Will Not Have Personal Use or Benefit
- ☐ No personal use of any IRA-owned real estate (even 1 night)
- ☐ No self-dealing (buying, selling, or leasing with disqualified persons)
- ☐ No personal guarantees on loans to the IRA asset
- ☐ No reimbursement of personal expenses
2) SPONSOR & OFFERING DUE DILIGENCE (SYNDICATIONS/FUNDS)
✅ Verify the Sponsor/Operator
- ☐ Confirm legal entity name matches marketing materials
- ☐ Research sponsor background + past projects
- ☐ Search for lawsuits, bankruptcies, SEC actions, or investor complaints
- ☐ Confirm they have a real office address and business footprint
- ☐ Ask for references from prior investors (and actually call them)
✅ Validate the Investment Offering
- ☐ Review the PPM/Offering Memorandum (if provided)
- ☐ Review Operating Agreement / Subscription Agreement
- ☐ Verify the offering is properly structured (Reg D exemption, if applicable)
- ☐ Confirm who is paid compensation for raising money (and whether they are licensed)
✅ Confirm Banking & Funds Handling
- ☐ Verify wiring instructions match official offering documents
- ☐ Confirm funds go to escrow or a documented business account (not personal)
- ☐ Confirm the entity receiving funds matches the entity on the documents
- ☐ Be cautious with last-minute changes to wiring instructions (common fraud tactic)
3) DUE DILIGENCE FOR NOTES (PROMISSORY NOTES / DEBT)
✅ Confirm the Note is Real and Enforceable
- ☐ Receive executed promissory note (signed by borrower)
- ☐ Confirm collateral (if secured): deed of trust / mortgage recorded
- ☐ Verify the borrower owns the property and the lien position is correct
- ☐ Request proof of insurance (if secured by real estate)
- ☐ Confirm servicing process and reporting cadence
✅ Confirm Risk Disclosures Are Honest
- ☐ Beware of “guaranteed returns” language
- ☐ Confirm interest rate, default terms, maturity, and remedies
- ☐ Ask how the borrower will repay (sale, refinance, cash flow)
4) DOCUMENTATION CHECKLIST (SDIRA-SPECIFIC)
Before you submit anything to your custodian/administrator, ensure:
✅ Investment Packet is Complete
- ☐ Buy Direction / Investment Authorization form completed
- ☐ Subscription docs list IRA properly
- ☐ Operating agreement / note / purchase contract signed correctly
- ☐ All exhibits included (wiring instructions, escrow info, cap table, etc.)
- ☐ You understand ongoing obligations (capital calls, distributions, reporting)
✅ Verify “Who Signs What”
- ☐ Your custodian signs as the IRA owner (not you personally), if required
- ☐ You sign only in the capacity required (e.g., as “Read & Approved,” if permitted)
- ☐ You are not accidentally signing personally on contracts or guarantees
5) ONGOING MONITORING (AFTER YOU INVEST)
Fraud often appears after the money is in.
✅ Regular Monitoring
- ☐ Save monthly/quarterly reports
- ☐ Track distributions and compare to projections
- ☐ Watch for sudden delays with vague explanations
- ☐ Confirm property taxes and insurance are paid (if real estate backed)
✅ Red Flags After Funding
- ☐ Sponsor avoids questions or delays reporting
- ☐ Investor portal stops updating
- ☐ “New entity” created midstream without clear explanation
- ☐ Capital calls increase unexpectedly and urgently
- ☐ Sponsor requests money be wired somewhere different
- ☐ You can’t verify property ownership, management, or project progress
6) SDIRA-SPECIFIC RED FLAGS (BIG ONES)
These are common warning signs SDIRA investors overlook:
- ☐ You’re being asked to personally pay an expense tied to the IRA investment
- ☐ You’re asked to “help manage” the project or do work on the property
- ☐ The sponsor suggests “just reimburse the IRA later”
- ☐ Sponsor discourages you from involving your custodian/administrator
- ☐ The investment requires you to personally guarantee a loan
- ☐ The deal involves your personal residence, vacation home, or family members
🚨 IF YOU SUSPECT FRAUD: SDIRA IMMEDIATE ACTION PLAN
If something feels wrong, move quickly.
✅ Step 1: Stop the Money Flow
- ☐ Do not send additional funds
- ☐ Pause future capital calls
- ☐ Request written clarification and documentation
✅ Step 2: Preserve Evidence
- ☐ Save all emails, texts, investor portal screenshots
- ☐ Download offering documents and bank instructions
- ☐ Create a timeline of events and communications
✅ Step 3: Notify the Right Parties (in this order)
- ☐ Notify your custodian/administrator and request complete transaction records
- ☐ If wire fraud is suspected: contact your bank immediately
- ☐ Notify escrow/title company if used
- ☐ File a report with gov (FBI internet crime complaint)
- ☐ Report to your State Securities Regulator (via NASAA directory)
- ☐ File with the SEC TCR (Tips, Complaints, Referrals)
- ☐ Consult a securities attorney (rescission + recovery options)
✅ WHAT TO COLLECT (SDIRA INVESTOR EVIDENCE PACKET)
Keep these ready for regulators and attorneys:
- ☐ PPM / operating agreement / subscription docs
- ☐ Custodian transaction forms and statements
- ☐ Wire confirmations and bank receipts
- ☐ Investor updates, distribution records, K-1s
- ☐ Any marketing claims (deck, webinar recordings, emails)
- ☐ Timeline summary (1 page)
⭐ “SDIRA SMART RULE”
If the investment requires you to:
- personally use it,
- personally work on it,
- personally pay for it, or
- personally guarantee it…
…it’s likely not SDIRA-compliant and may be high risk.
Contact Us:
Whether you want to invest in real estate, crypto, or private companies, we can help you get started with a self-directed IRA. We’re here to help you stay compliant while you grow your retirement wealth confidently and intelligently.
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