It's the season to scam.
I think I've used the phrase "low-life bum" more than I care to as I read story after story this past year of individual investors being ripped off in new and old scams.
Most recently, the Securities and Exchange Commission filed civil charges against two Maryland businessmen, accusing them of bilking investors of $8.2 million with promises of risk-free returns of between 1 percent and 5 percent per month.
In its complaint, the SEC said people were told that their money would be pooled with money from other investors in $1 million lots for the purchase of "debt obligations of the top 50 banks in the world." Investors were promised their money would be safe and secure.
But the SEC believes this was a classic "prime bank" scheme. It alleges that the money collected from investors was in fact used to engage in highly speculative and expensive trading in the precious metals markets.
The SEC says that in similar cases, investors are told their funds will be used to buy and trade "prime bank" financial instruments and are led to believe the investment, while low risk, will net high returns. But no such prime bank instruments exist.
With the ups and downs of the stock market (mostly down these days) investors, especially retirees, are becoming more vulnerable to fraud or, at the very least, open to putting their hard-earned money in inappropriate investments.
Con artists are diligent in gaining the trust of unsuspecting investors, in some cases even getting on their knees and praying with their victims to win them over.
In February, a federal jury convicted a Georgia man -- a preacher no less -- of stealing nearly $9 million from 1,600 small, black churches and other nonprofit organizations by promising them big returns on small investments.
Prosecutors in the case said the minister told the faithful (who then told their friends and relatives) that he was developing Christian resorts around the country and that for a fee of a few thousand dollars, their churches could be "members" of his company. In return, he promised that in time the churches would get a grant or a forgivable loan of up to $500,000.
Instead of a return, the man used his investors' money on private jets, cars, limousines and gambling trips to Las Vegas.
Last month, the North American Securities Administrators Association released its annual survey of state securities regulators, listing the most common ploys being used to cheat investors out of hundreds of millions of dollars. Here are just a few:
Ponzi schemes. This is a tried-and-true con in which the money collected from investors late to the scheme is used to pay early investors. The con collapses when not enough investors can be recruited to keep paying those who got in early. As old as this scam is, you would think people wouldn't be swindled. And yet last year, the Pennsylvania Securities Commission broke up a massive Ponzi scheme and returned $10.6 million to 300 investors in Pennsylvania, Delaware, Florida, New Jersey and Australia. Just so you know, it's highly unusual to recover money in this type of scam.
Affinity fraud. This is perhaps the most insidious form of fraud. It's how the Georgia minister did his dastardly con. In affinity fraud, con artists often use religion or ethnic status to gain people's trust -- and their life savings.
High-yield investments. Con artists promise investors high returns if they invest in "risk-free guaranteed high-yield instruments." It's a totally bogus prime bank scam.
For a complete list of the top 10 investment scams, go to the security administrators' Web site at www.nasaa.org.
Please watch out for investment promoters offering you a return on your money just low enough to sound plausible and not trigger warning bells -- but still high enough to be tempting.
One of my personal money mantras is "keep it simple." Don't invest in something you really don't understand.
Invest time before investing any of your money. Always check references with the appropriate state or local government agency, the state attorney general's office or the Better Business Bureau.
Don't let your desperation to increase your retirement savings or your kid's college fund lead you right into the hands of a swindler.
Finally, here's an investment truth you can bank on: There is no high-return investment that is low risk. Zip. Nada.
Mark this down on a note card and attach it to the front of your savings account or investment account statements: High return plus low risk equals lowdown dirty lie.