Con-artists strike again!

  The headlines rarely feature con-artists yet conmen annually fleece billions from unsuspecting investors. Knowing the con-man's typical characteristics can help you keep their claws out of your pocket.

  Making any sort of investment is risky enough without worrying about whether your salesperson or investment advisor is out to fleece you. To be an informed investor, you must know what danger signs to look for, and some are very subtle.

Spot the con-artists:
Exaggerated self promotion

  While there are many reputable people who also market their seminars and products with these terms, the "dodgy gurus" like to promote themselves with fantastic self descriptions. "Australia's leading..", "the number one real estate adviser in the world today", "America's most respected" etc.

  Financial advisers that promote themselves with grandiose yet glib titles are guilty of more than just over-the-top advertising. In Australia licensed financial advisers cannot promote themselves like that at all. It is in fact a violation of the Trade Practices Act to call yourself "number one" in any form of advising unless you really can substantiate the claim with concrete evidence. Just because you've flogged a lot of seminars does not make you a leading investment adviser. Any specific claims, especially ones that provide a numerical statement of fact need to be absolutely justifiable by quantitative means.

Spot the con-artists:
The "master entrepreneur"

  Investment gurusmake out that people who work for a living are losers. Real wealth is made if you buy into their stuff. They say you don't need money to make money, a true master can go from zero to hero by his wits alone.

  While a genuine master trader could in theory do a few masterly plays on the futures market, or an investment in a particular fund at just the right time might reap astronomical returns, these things are not the norm.

  At any rate, most rags to riches tales involve someone betting the farm and this paying off. Rags to bankruptcy tales are far more common, though less likely to become the subject of a seminar.

Spot the con-artists:
Con Artists Like To Blend in

  Effective con artists disguise their true motives. Whether your first contact with the con artist is through an unsolicited phone call or a stranger ringing your doorbell, he takes great pains to look, sound and speak like you or me. Often, con artists like to blend in with others in your group whether that group be political, community, religious or whatever. They quickly get to know a lot of people in the group so they can count on this common bond to spread the word about their questionable investments and reel in unsuspecting investors.

Spot the con-artists:
Con Artists Dress For Success

  Even though con artists try to make out they are "just plain folk," they work very hard to come across as smooth, professional and successful, dressing like they are wealthy and working out of impressive looking offices. The office may bear a prestigious sounding address. Often, this is nothing more than a mail drop.

Spot the con-artists:
Con artists appeal to the dreamer in you

  Many people believe that a rags-to-riches story can become a reality for them if only they get the right break. To them, investing in untested technologies and cutting-edge products and international instruments such as letters of credit supposedly issued by foreign banks before anyone else does is a sure-fire way to make money.

  Scammers are dream saboteurs. They promise you the investment chance of a lifetime without giving you any meaningful written information on the product or the pitfalls involved.

Spot the con-artists:
Con Artists Are Fair Weather Friends

  Before you invest, con artists are very friendly. They take a personal interest in you out of the blue. They call back when they promised they would. Each time, they tell you even more good things about the investment.

  You may feel you're being pressured into investing. You are. Face it. Despite their kind words, they will do anything in their power to get your money.

  Once you have invested your money, contact with the con artist dwindles and then stops altogether. If you cannot get answers to your questions following your investment, this may signal danger.

Spot the con-artists:
Con Artists Often Push Poorly Understood Financial Products

  The wide range of financial products on offer today from a variety of institutions, from banks to brokerage firms to financial planners is confusing mix to choose from. It is no wonder that many people turn to financial advisers for guidance.

  Con artists know this and stand ready to pose as financial advisers and assume full responsibility for your investment decisions. Don't let them! When it comes to your money, think things through for yourself after getting all the facts.

  Never give someone control over your purse strings just because you think you are too old, young or financially inexperienced. If you really need help, only deal with registered financial advisers, broker-dealers or financial institutions with a proven track record.

Spot the con-artists:
Con-Artists Bring Out Your Worst

  Skilled con artists can bring out your worst traits, particularly greed, fear, and insecurity. Con-artists try to make you feel inadequate if you don't believe them. They know how to play on your emotions. If you find yourself making investment-related decisions based only on your emotions, watch out!

Spot the con-artists:
There is pressure to recruit others

  No self-respecting con-artist would actually admit that he or she was involved in a Ponzi scheme. The Ponzi scheme was named after Charles Ponzi, an Italian immigrant who, after being jailed in Canada for fraud, moved to Boston in the early part of this century. Ponzi solicited people to invest in International Postal Reply Coupons which could be redeemed for stamps. He promised them a 40 percent return in just 90 days. Ultimately, the authorities discovered that there weren't enough coupons in circulation to support Ponzi's schemes. Ponzi was imprisoned in Massachusetts and then deported to Italy. The scheme he created, however, continues to survive in many forms.

  Pyramid schemes are a variation of the Ponzi scam. Money is collected from people on the bottom to pay off other individuals farther up the pyramid. As more people invest, new pyramid levels are created, and your position in the pyramid rises. In theory, you would be entitled to more money. Many times, you must also buy a product to join.

  However, unlike a true multi-level marketing plan, selling the product is less important than recruiting others to join the network. Ultimately, there comes a time when no new money flows in. When this happens, the pyramid collapses.

Spot the con-artists:
Emphasis on how rich they are

  These guys posing in front of corporate jets and luxury yachts to imply their wealth, draw 100% of their credibility from inciting materialistic urges in those they try to impress. There is little correlation between the number of luxury cars they claim to own and the investment skills of the person giving the slide show or even the quality of the investments promoted.

Spot the con-artists:
Awesome Emotive Language

  Most good sales websites use language similar to the examples below. They are NOT all con-jobs. The fact is that marketing with this type of language has been proven to work time and again, online and offline. No wonder the scammers use it too:

• THE AWESOME CASH SECRETS OF NEW YORK MULTIMILLIONAIRES REVEALED!!! The jealously-guarded awesome cash secrets of the "Money Elite", New York "Wizards of Wealth", American "Movers and Shakers", and "International Banking Moguls!" can make you rich beyond your wildest imagination!

• "SPECIAL BANK ACCOUNTS" CAN MAKE YOU RICH WITHOUT ANY HARD WORK OR LARGE INVESTMENT! Even though this banking system is little known by the masses, it is a 100% legitimate banking transaction, approved by American Bankers Association, Federal Trade Commission, and US Treasury Service, The Attorney general of the State of New York as well as all International banking institutions.

• MAKE ALL YOUR DREAMS COME TRUE! One-in-a-million, lifetime, mega-monstrous, "le crème de la crème", mother lode cash opportunity.

• THE SECRETS OF THE RICH AND POWERFUL REVEALED!
Until now, these powerful SECRETS have been strictly kept away from the majority of the public, so that only the very lucky few have used them to become filthy rich! • Strictly limited offer valid for TWO weeks only. ORDER NOW and take $100 off.

Spot the con-artists:
An investment may sound too good to be true

  If it sounds too good to be true... it probably is. Take statements like these with a grain of salt:

• "I just got a hot tip from an inside source that this stock will go through the roof."

• "The rumor on the Street is that this deal is ready to take off."

• "Your return is guaranteed. There's no way you can lose money."

• "Gotta get in on the ground floor now or you'll be left out in the cold."

• "Where else can you earn such a large return? Not in CDs or in a savings account."

• "In just a short while, your profits will come rolling in."

• "This deal is so great, I invested in it myself."

• "If this doesn't perform as I just said, we'll refund your money no questions asked."

• "Everyone else that invested in this did very well."

Spot the con-artists:
Downplay of any downside or denial of risk.

Con artists usually are not very good at answering important questions. Watch out if the salesperson becomes reluctant to provide information on the following:

• The background, education and experience of the deal's promoters, principals or general partners

• Whether your investment money is segregated from other funds available to the business

• Written information on the business' financial condition, such as a balance sheet

• The prior track record of the business and its principals

• The salesperson's connection with the venture and any affiliates

• The salesperson's name, background and what commission is to be received

In addition, be wary if the salesperson doesn't ask you questions about your past investment experience and your ability to withstand risk. Even if the salesperson does ask a few related questions, take heed if you get the sense that he or she is merely going through the motions.

You are here:
Spotting Con-artists - How to recognize the typical characteristics of the conman after your money.

Offshore Scams and Rip-offs - an introduction to the biggest offshore investing danger.

Spotting a scam - How to recognize a scam. Common traits of offshore scams.

Spotting a Scam Business - The features of businesses and organizations which are out to take your money while under the guise of a legitimate business operation.

Common scams - a description of the main types of scam commonly perpetrated offshore and onshore.

Avoiding scams - How to go about avoiding being caught up in a scam onshore and offshore.

Reporting scams - Where to report scams and bodies that can be of assistance.

Information scams - a warning about a type of scam that targets small amounts from offshore information seekers.