Investor Threats

According to the most recent “Securities Bulletin” from the Illinois Securities Department of the Secretary of State, these are the Top Ten Threats to Illinois Investors for 2005:

1. Ponzi Schemes – paying early investors with money raised from later investors. The only people who make money are the promoters who set the Ponzi in motion.
2. Unlicensed Individuals Selling Securities – Anyone selling securities without a valid securities license should be a red alert for investors.
3. Unregistered Investment Products – Con artists bypass stringent state registration requirement to pitch viatical settlements, pay telephone and ATM leasing contracts, and other investment contracts with the promise of “limited or no risk” and high returns.
4. Promissory Notes – Empty promises can leave these notes worth less than the paper on which they are printed.
5. Senior Investment Fraud – Because of their access to lifetime savings, senior citizens often are the target of con artists peddling fraudulent or unsuitable investments.
6. High Yield Investment Schemes – Promises of triple-digit returns through “risk-free, high-yield instruments” or something equally deceptive should signal a red alert.
7. Internet Fraud – Stock promoters are using online “boiler rooms”, messaging and fake web sites to lure investors into “pump-and-dump” stock schemes. Just a new twist to an old game.
8. Affinity Frauid – Con artists are increasingly targeting religious, ethnic, cultural and professional groups with this type of scheme.
9. Variable Annuity Sales – Senior investors especially should beware of the high surrender fees and steep sales commissions that agents often earn when moving investors into these investment products.
10. Oil and Gas Scams – With oil topping $50 a barrel and continued Middle East instability, schemes promising quick profits in oil and gas ventures are expected to be on the rise.

If you have been subject of one of these types of scams, or even if you just suspect that the offer being made to you is suspicious, Illinois’ Secretary of State Jesse White urges all investors to contact the Securities Department at 800-628-7937 with any questions about an investment product, broker/dealer, or adviser before committing your hard-earned dollars.
Remember – if an investment sounds too good to be true, it usually is.