Financial scams target residents in Carbon County

By Sun Advocate

With the hope of money for nothing hanging in the air, scam artists are reportedly getting ready to pick the pockets of unsuspecting Utahns.
Reviewing fraudulent financial activity perpetrated against residents last year the State of Utah Department of Commerce issued a cautionary prediction Tuesday about which scams are likely to hit the Internet and mailboxes in 2008.
The list of 10 includes real estate notes, secret homeland security projects, hedge funds run by unlicensed and unqualified advisors, unsuitable options trading programs, free meal sales seminars, fake Internet investment sites, oil and gas mining schemes, phishing for information on Internet stock trading, the 36 percent interest scam and letters of credit and advance fees.
“I don’t think a week goes by that one of our members isn’t a victim of some type of scam,” said Michael Milovich, president of the Eastern Utah Community Credit Union.
Milovich said members bring in fake checks they have received in the mail with instructions to send a certain portion of the full amount to the sender before depositing into accounts.
When a member deposits a check, it takes nine days before it can be cleared, explained the credit union president.
“The checks always come back and the members have lost the money they sent to secure it,” said Milovich.
The more ambitious and sophisticated con artists are targeting investors with similar approaches and netting tens of thousands of dollars, according to the department of commerce.
The department of commerce reported a scheme by a Cedar Hills man in which Utahns were putting $15,000 up front for the promise of a $2.5 million return. The man reportedly bilked $130,000 from people eager to “get rich quick,” according to the warning from the commerce department.
In addition to the letters and checks promising instant wealth, local residents may run into the the following scams:
•Real estate notes.
Investors are led to believe enormous profits are pending after money is sunk into a deal supposedly backed by real estate.
Utahns fell prey to several real estate schemes in 2007, including buying raw land to build subdivisions and development of resort properties in Mexico.
•Homeland security.
People are led to believe they are providing funds for top secret government projects.
•Hedge funds.
One local fund is under investigation after its money was sent to the Island of Malta and disappeared, the commerce department reports.
•Options trading.
Programs with unlicensed traders and the collapse of a $46 million Salt Lake-based funds have caught the eye of the department of commerce’s division of securities.
The division issued a particular caveat to retirees who might use their income to invest in options trading.
•Free educational meal sales seminars.
The commerce department reports that 100 percent of the presentations investigated across the country in 2007 turned out to be sales efforts fraught with misleading to fraudulent information.
•Fake Internet investment sites.
•Oil, gas and mining schemes.
Examples range from selling stock in oil companies and never sending in the money to garnering investments in non-existent gold mines.
•Phishing.
The activity involves sending investors e-mails that appear to be from the investor’s bank or brokerage firm and requesting sensitive financial information.
•High interest rates promised on investments.
Examples include companies offering 36 percent, 60 percent and even 240 percent annually.
The commerce department cautions “high returns always equal high risk.”
As for who is most susceptible to losing hard-earned cash, the department of commerce indicates that, contrary to popular belief, it isn’t elderly widows, but the educated married man who bites most often.
In addition, the department offers three personal traits that contribute to a scammer’s success:
•People who are swayed by the statement “trust me” are a con artist’s dream, cautioned the state agency.
•Simply being greedy leads investors straight into the con’s arms, indicated the report.
•Investors who are prone to denial and ignore all the warnings about a deal frequently fall victim to the scams, according to the report.
As the head of the local financial institution, Milovich appears to understand the challenges of stopping the scams and schemes that plague residents.
“Even when you explain to them (residents) that the deal is fraudulent, they fight you, they don’t want to believe it,” said Milovich.
For more information on fraudulent schemes, residents may contact Wayne Klein, director of Utah division of securities at (801) 530-6606.