What’s behind the sudden uptick in fraud? Statistics from the FBI indicate that financial fraud cases increased 3 to 5 percent during and in the immediate aftermath of the last two recessions. One theory holds that the recession’s effects on business drive financial advisers to break the law.

Kenneth Springer, a former FBI special agent and certified fraud examiner who founded the company Corporate Resolutions, believes that financial fraud is probably more common than the statistics suggest.

Recessions just make fraudsters easier to spot, as weak stock markets and low investor confidence cause Ponzi schemes and other scams to come crashing down. Or as Springer, cribbing Warren Buffett, puts it, “When the tide goes out you see who’s swimming without trunks.”

Hard data isn’t available, but experts believe that most frauds aren’t discovered until aggrieved investors report the crime. And uncovering malfeasance takes longer these days. Technological advances have made financial crimes more sophisticated and difficult to detect.

Meanwhile, the resources available to regulators are insufficient; the Security and Exchange Commission’s (SEC) budget has barely kept pace with inflation, and many state agencies suffered budget cuts because of the financial crisis and lower tax revenues. A lack of financial support forces authorities to pick and choose which cases to pursue and prosecute. At the same time, the adviser-registration process only weeds out known bad actors–when it works.

The reality is that regulators operate on a reactionary basis; it’s up to investors to protect their nest eggs against fraud. Ultimately, common sense and a few simple web searches are your best line of defense.

If something sounds too good to be true, it probably is too good to be true. Between 1960 and 2009 the broad stock market returned 10.8 percent annually and the bond market return 7.1 percent. Springer advises investors to walk the other way if a financial adviser tells you that his or her equity strategy can consistently generate 15 percent annual returns but won’t–or can’t–explain how he or she does it.

He also suggests taking the simple step of verifying your adviser’s credentials, something many investors tend to accept on faith. “An adviser should be registered with either the Financial Industry Regulatory Authority or the SEC,” Springer said. “Your readers can check these registrations at www.finra.org or www.sec.gov.” 

In addition to telling you whether your adviser is registered, the two sites will also allow you to peruse his or her work history and tip you off about any customer complaints and past disciplinary actions. Springer emphasizes that the latter information is essential because it can reveal a pattern of questionable behavior.

It’s also important to verify any professional designations your adviser might use such as CFP (certified financial planner).

Outside of official channels, Google’s (NSDQ: GOOG) search engine is another effective due diligence tool. In this era of connectivity, if someone has a gripe they’re just as likely to take it to the Internet as they are to report it to law enforcement. Where there’s smoke there’s probably fire; if a lot of negative information pops up in the search results, you should probably be wary.

These types of reputational checks are vital because until recently one thing that Bernard Madoff and Sir Allen Stanford had in common was their lack of a criminal record. But simple reputational checks, while not revealing the depth and nature of the two men’s crimes, immediately would have raised red flags.

Don’t drop your guard once you establish a relationship with an adviser; vigilance is key.

Regularly check your banking and brokerage accounts online and go over statements sent to you by your adviser. If you notice any questionable or unauthorized transactions don’t be afraid to ask questions. Withdrawals are another red flag. Unless you’ve worked out some understanding with your adviser, discretionary authority typically doesn’t allow him or her to take money out of an account.

If you believe you’ve fallen victim to fraud, get law enforcement involved quickly. The faster authorities become involved after a problem is discovered, the more likely you are to recover your assets. Plus, while it may be cold comfort, you’ll be helping out the next potential victim.