Is This A Scam?
Presentation by
Illinois Secretary of State
Securities Department
Is This a Scam?
1. For a minimum investment of $25, you can
buy into a venture that owns 1 million acres of
land in Texas – experts say the shares could
triple in value.
NOT A SCAM
• The Texas Pacific Land Trust (symbol TPL) is
one of the oldest, least-known and most
unusual listings on the New York Stock
Exchange. It started more than a century ago
when the Texas & Pacific Railway company
went bankrupt and put 3 million acres of land
into the hands of a trustee to manage and sell
off when the price is right.
Is This a Scam?
• 2. You see an ad in a national newspaper for
an investment opportunity in ‘prime bank’
financial instruments issued by the world’s top
50 banks. The ad claims the opportunity is
‘risk-free, guaranteed by the World Bank and
trades in overseas markets’ and will ‘generate
monthly returns of 20% to 200%.
*SCAM*
• Whenever you hear or read the term prime
bank, watch out. Criminals use it to make
their pitch sound legitimate. The pitches
usually are vague and sometimes claim
regulatory officials would deny knowledge of
such financial institutions, according to the
Securities and Exchange Commission. The
reality is these financial institutions don’t
exist.
Is This a Scam?
• 3. Ever consider a career in worm farming?
All you need is dirt, a starter kit and some
worm stock to get started. For an investment
of several thousand dollars to $50,000, you’ll
be able to sell your worm stock at $8 a pound
or more.
*SCAM*
• In 2003 and 2004, several worm-farm scams
slithered across the country, with many
investors putting up to $50,000 in the scheme.
Is This a Scam?
• 4. Jojoba, a shrub native to deserts in Arizona,
California and Mexico, yields beans with a wax
that can be turned into a biofuel. Investment
banks offered limited partnerships in jojoba
acreage.
NOT A SCAM
• The limited partnerships were sold in the
1980s, but changes in the tax law made them
unattractive and ended the investment.
Is This a Scam?
• 5. You can invest in a company that’s
salvaging a half-billion dollars of sunken
treasure from a shipwreck in the Atlantic off
the coast of Europe.
NOT A SCAM
• The public treasure-hunting company,
Odyssey Marine Exploration (OMEX), is
salvaging such a wreck. Shares of the
company, based in Tampa, currently trade for
about $4. But be warned: Many treasurehunting investments really are scams.
Is This a Scam?
• 6. Someone says that you can buy
international reply coupons, the equivalent of
a self-addressed stamped envelope for
overseas mail, and make a bundle by trading
them in for US stamps.
*SCAM*
• In fact, this was the original scam that Carlo
Ponzi, one of the greatest scam artists in history,
began in 1919. Although the stamp scheme in
fact wasn’t profitable (Ponzi claimed investors
would reap a 400% return), enough people
believed it to invest with Ponzi. He then paid
some of the invested money back to investors,
who thought it was a moneymaking enterprise
and encouraged more people to be duped. Such
swindles are now referred to as Ponzi schemes.
Is This a Scam?
• 7. You get a call from someone claiming to be
from the Federal Trade Commission. He says
you’ve won the lottery or sweepstakes, but
first you must pay federal income tax and
insurance before you can receive your
winnings.
*SCAM*
• The crooks gain credibility by using Web
technology and make it look as though they’re
calling from Washington DC and “FTC” even
shows up on their targets’ caller IDs. The
caller asks the ‘winner’ to wire money or send
a check for an amount between $1000 and
$10,000. Of course, there is no prize. FYI:
Real sweepstakes don’t require you to send
money to claim a prize.
Is This a Scam?
• 8. One way to squeeze countries that sponsor
terrorism is to not invest in companies that do
business with them. Some funds guarantee
their investments are free of any firm
connected with Iran, Syria, Sudan or North
Korea.
NOT A SCAM
• The First Focus Balanced (FOBAX) and Growth
Opportunities (FOGRX) funds use a filter to
eliminate such companies
Remember: Investigate Before You
Invest!
• Call the Secretary of State Securities
Department toll free at 1-800-628-7937 or
visit www.avoidthescam.net