Scams are a big-time problem for folks year-round, but they always seem to increase dramatically during the Thanksgiving and Christmas holidays. According to Joe Borg, Commissioner of the Alabama Securities Commission, there are lots of scams being perpetrated in Alabama. Many of them target would-be investors. Commissioner Borg, in an interview with WSFA-TV in Montgomery, said there are five main investor traps. At the top of the list are Ponzi schemes — a scam Bernie Madoff made famous – and they are still a major problem. Concerning this type scam, Commissioner Borg observed:
We’ve had our own mini-Madoffs in Alabama. In a Ponzi scheme, someone promises you big returns on your investment when in fact, they’re just paying you back small portions of your money. This is the most common scam we see in Alabama, usually associated with affinity groups like a church or a club.
The second trap involves Short Term Commercial Promissory Notes. That’s when someone starting up a new business guarantees higher-than-normal rates of return.
The third trap involves Real Estate Investment Schemes. These often come in the wake of natural disasters like hurricanes. The concept is that they will pool money from investors and buy all this distressed property. These types of investments are not always legitimate.
Entertainment Investments are listed as trap number four. These can be legitimate, but investors should check out any investment proposals carefully before getting involved.
Trap number five on the list involves Gold Scams. Gold prices are at their highest levels in years and gold may well be a good investment. But folks need to watch out who they are dealing with. There is much fraudulent activity out there and just not enough gold to back up all of the proposals for investments.
Commissioner Borg advises all potential investors to check everything out before investing. Anyone who sells investment products in our state must be licensed by the Alabama Securities Commission. So when considering an investment, if there is any concern – or you don’t know the folks who are making a proposal – check with the Commission, which can be reached at 1-800-222-1253. For more information about the Alabama Securities Commission, check out its Web site at www.asc.state.al.us.
Source: WSFA-TV News
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