(originally published March 2009)
A current pending criminal case shows just how far fraudsters will go to reach potential victims. An Indiana woman allegedly solicited investors through the website Craig’s List, claiming to offer a business opportunity where individuals would invest in her company with a promise of future returns. She also promised returns on loans the investors would personally secure on behalf of the business.
Ultimately, the woman used the investors’ money for personal expenses. My office’s Prosecution Assistance Unit and the Indiana State Police conducted a joint investigation that resulted in the filing of criminal charges.
In today’s modern society, scam artists are getting smarter and adapting to advances in technology. From e-mail to websites to online social networking, fraudsters are using the internet as a new avenue to reach potential victims. Hoosiers need to be especially cautious of online investing opportunities to protect their hard-earned savings from fraud.
During these difficult financial times, fraudsters will often exploit people’s fear of losing money in the stock market. Perpetrators may use the internet to promote “alternative” investment opportunities that are “guaranteed” to provide big returns. However, no investment is guaranteed to make money and Hoosiers need to be on alert for alternative investments that might really be fraud.
When considering investment opportunities online, it can be difficult to fully assess the person promoting the investment. One way to make sure the person is legitimate is to request a face-to-face meeting and proof of identification. You should also contact my office’s Securities Division at 1-800-223-8791 to make sure he or she is licensed to sell investments.
Another important tip is to never provide personal information unless you are sure the person and/or company is legitimate. Fraudsters will sometimes impersonate a bank or company by creating a fake website or email address that appears genuine, but really isn’t. In “phishing scams,” scam artists send an email asking to update or verify your account information, but that information never makes it to the actual company. Avoid phishing scams by deleting unsolicited emails and utilizing spam blockers available through your email or internet browser.
In a related scheme known as the Nigerian “419” scam, a fraudster will send an email claiming he or she recently came into a large sum of money but can’t access the account without your help. The fraudster will ask you to wire them money and promise a large portion of the funds in return.
This scam is referred to as Nigerian because of its prevalence in that country, but it’s not limited to that area alone. In fact, as people have caught on to the Nigerian email scam, fraudsters are again adapting their techniques and using a new approach: pretending to be American soldiers returning home from the war.
Preying on Hoosiers’ generosity and patriotism, these emails seek your help in transferring money the solider found in a war-torn country to the states with the promise that you will get a portion of the funds. As with Nigerian scams, once the fraudster has collected your money, you will never hear from him or her again. Avoid these scams by deleting these emails immediately.
You can report email scams to the Federal Trade Commission by forwarding them to firstname.lastname@example.org or by calling 1-877-382-4357. To learn more about avoiding investment fraud, visit http://www.indianainvestmentwatch.com/.
The charges described in this article are merely an allegation. The defendant is presumed innocent unless and until proven guilty.
- Search database for licensed brokers and advisers
- Contact the Securities Division