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Scams Targeting Seniors Top Ohio List for 2005
"COLUMBUS, Ohio -- For the third time since 2002, scams targeting senior citizens lead this year's list of the top five investment scams perpetrated against Ohioans, according to Doug White, director. "Ohio's seniors should be on guard against con artists who pitch investments with promises of little or no risk or guarantees of high returns," White said. "All investments carry a degree of risk. To protect their interests, investors should always investigate before they invest."The top five investment scams in Ohio for 2005 are:Schemes targeting seniors. Many scam artists prey on Ohio's senior citizens, who have had a lifetime to work and save money. The con artists typically dress professionally, act polite, and use professional sounding pitches. Promissory notes. Promissory notes are short-term debt instruments. Investors should avoid notes promising high returns -- sometimes more than 12% monthly -- from little known companies. Promissory notes are the only scam that has appeared in all four top five scam lists published by the Division. During the last five years, Ohio prosecutors have pursued criminal cases against 37 defendants involving the sale of promissory notes to Ohioans that have resulted in 35 convictions. In addition, the Division of Securities has pursued four civil cases in various Common Pleas courts and brought approximately 170 administrative actions during the past five years involving promissory note sales to Ohio investors. Affinity fraud. Affinity fraud occurs when an investment promoter plays on something the promoter has in common with a potential investor -- such as attending the same place of worship, being a member of the same race or ethnic group, or sharing similar values or life experiences. Unregistered sales of securities. In order to sell securities to Ohio investors, the investment product must be properly registered with the Division of Securities, or be exempt from registration. The Division is seeing an increasing number of cases where Ohioans are being sold unregistered securities. Investment contracts. One type of investment contract recently marketed in Ohio involves investors buying units of pay telephones, water treatment systems and web booth kiosks. Under these investments, the investor leases back the unit to a service provider and the investor doesn't exercise control over the managerial decisions of the business. Salespeople often mislead investors when pitching these investments by saying they are not securities.When seniors receive investment pitches in person, over the phone, or through the computer, Jewell encourages older investors are advised to tell the person "I'm not interested" and end the discussion immediately and also to delete unsolicited e-mails, said Dale Jewell, Ohio Securities commissioner. He encourages seniors to get an independent opinion from a third party they trust.It is critical for investors to investigate before you invest -- no matter who is promoting the investment, Jewell added. Prospective investors should be especially aware of testimonials from others who express enthusiasm for their investment's success. In many affinity fraud scams, the con artist will use money from later investors to pay high returns to earlier investors, Jewell noted.Before purchasing any investment, Jewell advises investors to ask the following questions:Does the investment meet my personal investment goals?Are claims made for the investment realistic or do they sound too good to be true?Has the seller provided written information that fully explains the investment? In addition, potential investors can call the division's Investor Protection Hotline, (800) 788-1194, to ask if the brokerage firm and salesperson are licensed to sell securities in Ohio, whether any enforcement actions have been taken against them and whether the security has been properly registered with the Division of Securities.Visit the Ohio Securities Division: www.securities.state.oh.us "