A Guide to Consumer Scams continued...

CON ARTISTS

"Good morning, Mr. Johnson. This is Jason Brown of Global US Internet Radio, Incorporated. Your name came up on a list of qualified investors who can spot and act on a great opportunity when they see one. We are currently creating a new company to take advantage of this new trend in internet radio communications. I don't have to tell you how hot this new trend is and how much money companies like Microsoft, Intel, and Digital have made overnight with very little initial investment in similar fields.

"Mr. Johnson, we are inviting special customers like you to participate as partners and shareholders in this new venture before the public offering is completed the day after tomorrow.

"I enjoy dealing with astute, seasoned investors like yourself. Let me put you down for just ten thousand shares, at a modest commitment of just $1,000. I really want you to have a piece of this action, not only for the sake of making some money on this sensational deal, but as the first step to creating a long-term, rewarding relationship with you.

"Let me send a federal express carrier to pick up that check from you so you don't miss out on this incredible opportunity. You don't want to take the chance of missing out on this one!" Pitches like this one come from fast talking telephone solicitors in a cheap office crammed with telephones, called a "boiler room." The first contact is made by a low-paid individual called an "opener." Once you express interest in the pitch, you will be turned over to a more accomplished high-pressure sales artist known as a "loader." The loader will often add additional "confidential" embellishments that make the idea seem plausible and very exciting. Investors discover, usually too late, that the entire investment is a hoax. This type of scam is called the "New Venture" scam. Investment fraud bilks Americans out of literally hundreds of millions of dollars a year.

These scams are perpetrated by sophisticated, experienced, and professional-sounding operators with temporary addresses located at prestigious Wall Street addresses, or the equivalent at other financial centers. This is particularly distressing because legitimate brokers also operate by phone and have similar addresses.