Phony investment scams can empty your pockets

Do you know someone who is a prime target for bogus get‑rich‑quick schemes or other investment scams offered by unscrupulous promoters? If it’s you, then keep reading.

Far too many older people who knew better have been ripped‑off by the larceny of strangers who promised “the next Microsoft” but delivered shares of some high‑flying little outfit that turned out to be a fraud. When it comes to scam artists trying to steal someone’s life savings, millions of older Americans are particularly vulnerable, law‑enforcement officials say, because of frequent loneliness and the fear of losing financial independence. Even after getting cheated out of substantial sums, some elderly victims are tempted, just like an unlucky gambler, to keep mailing in checks in hope of recouping losses.

There are some tell‑tale signs that seniors should be on the lookout for to help determine whether a company offering a stock proposition is more likely to be naughty than nice. According to the Better Business Bureau (BBB), if the following clues show up, seniors would do well to be wary:

‑‑ The company claims to have developed the greatest product since false teeth, and despite having only three employees, says it expects to compete with and beat‑out IBM, AT&T or Procter & Gamble.

‑‑ The company claims to make something you have seen before only in "The Jetsons" cartoon or Star Trek show (robot butlers, flying cars, special healing machines).

‑‑ The company has recently changed its product line in unusual ways (from gold mining to biotechnology).

‑‑ The company went public by merging with a defunct public company, known as a shell, that still has outstanding shares (these deals allow companies to avoid some regulatory scrutiny).

‑‑ The company's factory is in a place where most small-time investors are unlikely to pay a casual visit (Bolivia, Hong Kong), or the headquarters are in a place where the weather is good: Florida, Southern California, Las Vegas (con artists seldom settle down in Dubuque, Iowa).

‑‑ The company's offices, when visited, turn out to be in an office suite that has one receptionist answering the phone for 30 different outfits, or an apartment building, mail box rental storefront or mini‑storage operation.

‑‑ The company is constantly announcing "major contracts" or "strategic alliances" with "major corporations" (almost always unnamed). Revenue from these deals, however mysteriously, never seems to materialize.

‑‑ The stock reportedly trades on Nasdaq's OTC bulletin board, except Nasdaq has no listing for the company.

The BBB recommends that you investigate before you invest. Have a healthy sense of skepticism when somebody promises you quick money. Ask lots of questions and verify everything. Take charge of your financial future by scouring financial publications, visiting brokerage offices and seeking the advice of trusted friends with financial savvy. If somebody sounds unreasonable or is rude on the phone, hang up.

For additional consumer protection information, visit www.bbb.org or contact the Better Business Bureau (BBB) by phoning (858) 637-6199 during regular business hours. Or, call the BBB's 24-hour Consumer Helpline at (858) 496-2131 or 1-800-600-7050 to obtain free information on local companies along with a list of BBB accredited businesses in a particular type of industry.