Jupiter, Florida is a long way from Wall Street. Yet the financial explosions that have rocked that bastion of investment have had repercussions in Palm Beach County. Lessons, some new, some old, can be learned and repeated.
First, and I've said this before, your mother was right. If it's too good to be true, you should avoid it. Like a diet that says "eat all you want and lose weight" an investment product that has consistently high returns through all markets is likely a fraud. Nobody is that good.
Second, just because it's called a CD, doesn't make it FDIC insured. The Stanford investment product was called a CD, but the bank (in Antigua, of all places) was not FDIC insured. And it was not in the business of lending money at a higher rate. It was investing the money in whatever it felt like. That makes these CDs much more like shares in a mutual fund or investment partnership than a CD. And there was absolutely no FDIC insurance.
Third, another tribute to your mother. Don't put all of your eggs in one basket. There was a recent report of a professional athlete whose entire liquid net worth was frozen by the SEC's action against Stanford. At one point he was quoted as saying that all he had was the $13 in his wallet. Don't let this happen to you.
Finally, trust but verify. In my opinion, part of what made these alleged scams so successful, was the beautiful public face they put on. Who would believe that Madoff, a now-former scion of the securities business, was engaging in the wrongdoing he has admitted? Stanford spent millions building its brand in the arts and sports. But no one bothered to check on how the books were kept or who the auditors were. It turned out the auditors may have been ill-equipped, or fraught with conflict, when it came to these large clients. The SEC said that the Stanford Bank's auditors in Antigua didn't even answer the phone.
Diversify, examine and think. This will provide you with most of the tools to protect yourself from scammers.
That's the view from The Law Planet -- Jupiter, Florida.