Widmann: "If it sounds too good to be true, it usually is"
WASHINGTON (March 24, 2005) - The North American Securities Administrators Association (NASAA) today identified the most common ploys being used to cheat investors out of hundreds of millions of dollars.

"Investors should keep their guard up anytime anyone offers an investment opportunity. It pays to remember that if an investment sounds too good to be true, it usually is," said Franklin L. Widmann, NASAA's President and Chief of the New Jersey Bureau of Securities.

The following ranking of NASAA's Top 10 threats to investors for 2005 is based on the order of prevalence and seriousness as identified by an annual survey of state securities regulators:

1. PONZI SCHEMES
The premise is simple: pay 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. Remember: No license, no sale.   

3. UNREGISTERED INVESTMENT PRODUCTS
Con artists bypass stringent state registration requirements 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 they have built a lifetime of savings, seniors continue to face investment fraud by con artists peddling unsecured promissory notes, viatical settlements and other investments that are either fraudulent or unsuitable for them based on their particular financial needs.

6. HIGH-YIELD INVESTMENTS
Con artists lure investors with promises of triple-digit returns through access to "risk free guaranteed high yield instruments" or something equally deceptive.

7. INTERNET FRAUD
Stock promoters are using online "boiler rooms," instant messaging, and fake websites to lure investors into "pump-and-dump" stock schemes.

8. AFFINITY FRAUD
Con artists are increasingly targeting religious, ethnic, cultural and professional groups.

9. VARIABLE ANNUITY SALES PRACTICES
Senior investors, in particular, should beware of the high surrender fees and steep sales commissions agents often earn when they move investors into variable annuities.

10. OIL & GAS SCAMS
With oil prices at record levels and continued Middle East instability, regulators warn that con artists may renew schemes promising quick profits in oil and gas ventures.

Dishonorable Mention
Three investment opportunities also were cited for "dishonorable mention," including: penny stocks, private placements, and investment seminars.

This content is courtesy of The National Center on Elder Abuse