FIRST OF ALL: You must learn to be abrupt on the telephone when unknown people call you and they begin to ask for personal information such as your birth date and social security number.  I know you have always been a polite person, but this fact is EXACTLY what the scam artist seeks to exploit when he or she gets you on the phone.  NEVER, NEVER under any circumstance whatsoever, NEVER give your birth date, social security number or your mother's maiden name to anyone over the phone or in the mail or on the internet!  STOP BEING SO NICE!  Scam artists take advantage of you if you are nice.  Learn to be ABRUPT on the telephone. Cut them off. STOP LISTENING to their spiel.  HANG UP! SURE they offer you something free. Sure, their deal sounds good.  IT IS ALL A LIE.  ALL THEY WANT IS TO PUT YOU AT EASE SO THEY CAN GET YOUR PERSONAL INFORMATION.  Please kindly read below the information provided by the Securities and Exchange Commission and the US Post Office to help you to AVOID FALLING INTO THE TRAP OF INVESTMENT FRAUD:

How to Use the Internet to Invest Wisely

Information from the Securities and Exchange Commission to help guide you. to safe investments:
If you want to invest wisely and steer clear of frauds, you must get the facts. Never, ever, make an investment based solely on what you read in an online newsletter or bulletin board posting, especially if the investment involves a small, thinly-traded company that isn't well known. And don't even think about investing on your own in small companies that don't file regular reports with the SEC, unless you are willing to investigate each company thoroughly and to check the truth of every statement about the company. For instance, you'll need to:

get financial statements from the company and be able to analyze them;

verify the claims about new product developments or lucrative contracts;

call every supplier or customer of the company and ask if they really do business with the company; and

check out the people running the company and find out if they've ever made money for investors before.
And it doesn't stop there. For a more detailed list of questions you'll need to ask – and have answered – read Ask Questions. And always watch out for tell-tale signs of fraud.

Here's how you can use the internet to help you invest wisely:

Start With the SEC's EDGAR Database
The federal securities laws require many public companies to register with the SEC and file annual reports containing audited financial statements. For example, the following companies must file reports with the SEC:


All U.S. companies with more than 500 investors and $10 million in net assets; and

All companies that list their securities on The Nasdaq Stock Market or a major national stock exchange such as the New York Stock Exchange.
Anyone can access and download these reports from the SEC's EDGAR database for free. Before you invest in a company, check to see whether it's registered with the SEC and read its reports.

But some companies don't have to register their securities or file reports on EDGAR. For example, companies raising less than $5 million in a 12-month period may be exempt from registering the transaction under a rule known as "Regulation A." Instead, these companies must file a hard copy of the "offering circular" with the SEC containing financial statements and other information. Also, smaller companies raising less than one million dollars don't have to register with the SEC, but they must file a "Form D." Form D is a brief notice which includes the names and addresses of owners and stock promoters, but little other information. If you can't find a company on EDGAR, call the SEC at (202) 551-8090 to find out if the company filed an offering circular under Regulation A or a Form D. And be sure to request a copy.

The difference between investing in companies that register with the SEC and those that don't is like the difference between driving on a clear sunny day and driving at night without your headlights. You're asking for serious losses if you invest in small, thinly-traded companies that aren't widely known just by following the signs you read on Internet bulletin boards or online newsletters.

Contact Your State Securities Regulators
Don't stop with the SEC. You should always check with your state securities regulator, which you can find on the website of the North American Securities Administrators Association, to see if they have more information about the company and the people behind it. They can check the Central Registration Depository (CRD) and tell you whether the broker touting the stock or the broker's firm has a disciplinary history. They can also tell you whether they've cleared the offering for sale in your state.

Check with NASD
To check the disciplinary history of the broker or firm that's touting the stock, use NASD's BrokerCheck website, or call NASD's BrokerCheck Program hotline at (800) 289-9999.

Online Investment Fraud:
New Medium, Same Old Scam
The types of investment fraud seen online mirror the frauds perpetrated over the phone or through the mail. Remember that fraudsters can use a variety of Internet tools to spread false information, including bulletin boards, online newsletters, spam, or chat (including Internet Relay Chat or Web Page Chat). They can also build a glitzy, sophisticated web page. All of these tools cost very little money and can be found at the fingertips of fraudsters.

Consider all offers with skepticism. Investment frauds usually fit one of the following categories:

The "Pump And Dump" Scam
It's common to see messages posted online that urge readers to buy a stock quickly or tell you to sell before the price goes down. Often the writers will claim to have "inside" information about an impending development or to use an "infallible" combination of economic and stock market data to pick stocks. In reality, they may be insiders or paid promoters who stand to gain by selling their shares after the stock price is pumped up by gullible investors. Once these fraudsters sell their shares and stop hyping the stock, the price typically falls and investors lose their money. Fraudsters frequently use this ploy with small, thinly-traded companies because it's easier to manipulate a stock when there's little or no information available about the company.

The Pyramid
Be wary of messages that read: "How To Make Big Money From Your Home Computer!!!" One online promoter claimed that investors could "turn $5 into $60,000 in just three to six weeks." In reality, this program was nothing more than an electronic version of the classic "pyramid" scheme in which participants attempt to make money solely by recruiting new participants into the program.

The "Risk-Free" Fraud
"Exciting, Low-Risk Investment Opportunities" to participate in exotic-sounding investments – such as wireless cable projects, prime bank securities, and eel farms – have been offered through the Internet. But no investment is risk-free. And sometimes the investment products touted do not even exist – they're merely scams. Be wary of opportunities that promise spectacular profits or "guaranteed" returns. If the deal sounds too good to be true, then it probably is.

Off-shore Frauds
At one time, off-shore schemes targeting U.S. investors cost a great deal of money and were difficult to carry out. Conflicting time zones, differing currencies, and the high costs of international telephone calls and overnight mailings made it difficult for fraudsters to prey on U.S. residents. But the Internet has removed those obstacles. Be extra careful when considering any investment opportunity that comes from another country, because it's difficult for U.S. law enforcement agencies to investigate and prosecute foreign frauds.

The SEC Is Tracking Fraud
The SEC actively investigates allegations of Internet investment fraud and, in many cases, has taken quick action to stop scams. We've also coordinated with federal and state criminal authorities to put Internet fraudsters in jail. Here's a sampling of recent cases in which the SEC took action to fight Internet fraud:

Francis A. Tribble and Sloane Fitzgerald, Inc. sent more than six million unsolicited e-mails, built bogus web sites, and distributed an online newsletter over a ten-month period to promote two small, thinly traded "microcap" companies. Because they failed to tell investors that the companies they were touting had agreed to pay them in cash and securities, the SEC sued both Tribble and Sloane to stop them from violating the law again and imposed a $15,000 penalty on Tribble. Their massive spamming campaign triggered the largest number of complaints to the SEC's online Enforcement Complaint Center.

Charles O. Huttoe and twelve other defendants secretly distributed to friends and family nearly 42 million shares of Systems of Excellence Inc., known by its ticker symbol "SEXI." Huttoe drove up the price of SEXI shares through false press releases claiming non-existent multi-million dollar sales, an acquisition that had not occurred, and revenue projections that had no basis in reality. He also bribed co-defendant SGA Goldstar to tout SEXI to subscribers of SGA Goldstar's online "Whisper Stocks" newsletter. The SEC obtained court orders freezing Huttoe's assets and those of various others who participated in the scheme or who received fraud proceeds. Six people, including Huttoe and Theodore R. Melcher, Jr., the author of the online newsletter, were also convicted of criminal violations. Both Huttoe and Melcher were sentenced to federal prison. The SEC has thus far recovered approximately $11 million in illegal profits from the various defendants.

Matthew Bowin recruited investors for his company, Interactive Products and Services, in a direct public offering done entirely over the Internet. He raised $190,000 from 150 investors. But instead of using the money to build the company, Bowin pocketed the proceeds and bought groceries and stereo equipment. The SEC sued Bowin in a civil case, and the Santa Cruz, CA District Attorney's Office prosecuted him criminally. He was convicted of 54 felony counts and sentenced to 10 years in jail.

IVT Systems solicited investments to finance the construction of an ethanol plant in the Dominican Republic. The Internet solicitations promised a return of 50% or more with no reasonable basis for the prediction. Their literature contained lies about contracts with well known companies and omitted other important information for investors. After the SEC filed a complaint, they agreed to stop breaking the law.

Gene Block and Renate Haag were caught offering "prime bank" securities, a type of security that doesn't even exist. They collected over $3.5 million by promising to double investors' money in four months. The SEC has frozen their assets and stopped them from continuing their fraud.

Daniel Odulo was stopped from soliciting investors for a proposed eel farm. Odulo promised investors a "whopping 20% return," claiming that the investment was "low risk." When he was caught by the SEC, he consented to the court order stopping him from breaking the securities laws.

 

Investment Fraud Schemes
Information from the United States Postal Service to guide you:

Fraudulent investment schemes are often marketed by telephone salespersons armed with high pressure and sophisticated selling techniques. Some swindlers surround themselves with the trappings of legitimacy -- rented office space, a receptionist, investment counselors, and professionally designed color brochures describing the investment.

Seniors are a prime target for fraudulent investment schemes since many have saved a good amount of money for their retirement years. Fraudulent schemes require you to invest your money -- often lots of it. Most promise you either a large increase in the value of your investment or higher-than-market interest on your capital, or both.

These schemes are fraught with danger: in most cases, you will never again see the funds you invested. And you may not even receive the promised interest. If you do receive interest, you will often be paid late. Often, unbeknownst to you, your interest will be paid from the investments of others who are newly brought into the program in order to keep it alive. The swindler hopes these payments will allay any suspicions you might have as to the strength of your investment.

If answers to any of the following questions are yes, you may be dealing with a swindler who wants you to put money in to a fraudulent investment:

Does the salesperson make it sound as you can't lose?

Are you promised an unusually high rate of return or interest payment on your capital?

Are you pressured to make a decision immediately or within a short period of time because new investment units "are selling fast?"

Does the salesman have any prior successful experience in the investment area he is promoting?
Protect yourself. Be suspicious of any deal that promises fantastic return at little risk. Know whom you are dealing with. If you are not sure, check the company's reputation with your local Better Business Bureau, Postal Inspector's Office, or District Attorney's Consumer Protection Unit. Protect your retirement nest egg. If you've been the victim of an investment fraud where the mail was used, contact your local postmaster or the nearest Postal Inspector.
 

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