Top 10 investing scams exposed

Millions of Americans have been lured into the whirlwind trap of making a fast buck, becoming a millionaire over night. The line you want to look for is Just give us your money and we will show you how. Unfortunately, many of these Americans are seniors and they get hit the hardest because they are vulnerable.

October 8, 2004 -- Top 10 Investing Scams of 2004

1. Ponzi Shemes: This is an older scam named for Charles Ponzi, a scam artist from the early 1900s. Mr. Ponzi conned over one million dollars from his investors claiming he could earn them 40% returns. Though it may take many different forms, the basis of this scheme is simple: Promise high returns to investors while using their money to pay previous investors.

2. Senior Investment Fraud: Rising costs of healthcare and increased life expectancies have set seniors up as targets for many con artists. Ponzi shemes, unregistered securities, promissory notes, and charitable gift annuities are among the various means of defrauding Americas elderly.

3. Promissory Notes: Short-term debt instruments which are often issued by independent insurance agents or by little-known to nonexistent insurance companies. These investments may promise returns of over 15% monthly with minimal risk.

4. Unscrupulous Stock Brokers: As the stock market continues to stagger, some stock brokers have begun to cut corners or even resort to fraud. Securities regulators have become much more cautious of brokers who may begin charging unexpected fees, conducting unauthorized trades, or who employ other unethical business practices.

5. Affinity Fraud: This type of fraud deals with taking advantage of peoples tendency to trust those with whom they share similarities. Scam artists will often use religious or ethnic identities to gain trust and then proceed to steal their life savings. Various techniques range from foreign exchange scams to charitable gifting to churches.

6. Unlicensed Individuals Selling Securities: Scam artists have begun targeting inexperienced insurance agents, using them to sell investments which they may know very little about. The person running the scam will instruct the unlicensed sales force to promise high returns with little to no risk. If you are approached by an independent agent, call the states securities regulator and ask if the salesperson is properly licensed.

7. Prime Bank Schemes: Con artists will promise investors extremely high (triple digit) returns through access to the investment portfolios of the worlds elite investment banks.

8. Internet Fraud: Internet fraud has become a steadily growing business. During Operation Clean Sweep federal, state, and local governments targeted these criminals and identified more than 125,000 victims with extensive losses. A common scheme labeled the Nigerian 419 scandal encourages recipients of certain emails to give out personal banking information so that the Nigerian government can wire money into their accounts. The emails detail how the money will then be forwarded to another international account, at which time the victim will supposedly receive a portion of the total transfer as payment.

9. Mutual Fund Business Practices: The recent mutual fund scandals have attracted the attention of many investors and have prompted several governmental investigations.

10. Variable Annuities: As annuity sales have risen, so have the number of complaints from investors. Many investors are not aware and are not informed of costly surrender charges and large sales commissions involved in the sales of annuities. Variable annuities are often pitched to seniors in investment seminar settings. However, insurance regulators say that variable annuities are not suitable for many retirees.

Thomas R. Lee has been practicing Senior Law since 1974 and has represented over 10,000 seniors. Mr. Lee is a member of The National Academy of Elder Law Attorneys and The American Society on Aging. He formed a partnership with attorney Douglas M. Neistat called Senior Resources of America because they realize the significance of providing quality senior related services to people age 50+. This is a rapidly growing demographic and it is important that seniors and elders receive appropriate and skilled legal representation.

                                          
Media contact: Stacey Cohen 310-379-032                                  
www.seniorresourcesofamerica.com

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