TOP TEN ECONOMIC FRAUD ISSUES IN CALIFORNIA

The North American Securities Administrators Association recently identified the top 10 frauds to which investors easily fall prey.

”Wall Street can be a mean street for people who aren’t careful with their money,” Denise Voigt Crawford, NASAA president, said in a statement. ”Uninformed, unsophisticated investors make tempting targets for crooks.”

NASAA estimates unwary investors lose $10 billion a year, or more than $1 million every hour, to investment fraud.

State regulators said the top investment fraud issues range from bogus franchise offerings and high-pressure telephone sales of speculative stocks to ”affinity group fraud” and scams promoted on the Internet.

From March 29 through April 4, state securities regulators, the Securities and Exchange Commission, financial industry and consumer groups plan a series of investor education events under the ”Facts on Savings and Investing Campaign.”

The top 10 issues are:

— Affinity group fraud – fraud on religious, ethnic and professional groups by members of the same groups.

— Internet fraud – market manipulation, insider trading and unlicensed broker and investment adviser activity on the Internet.

— Abusive sales practices – sales to unsuitable investors, fraudulent offerings and market manipulation.

— Investment seminars – state regulators watch for unlicensed activity, lack of disclosure of conflicts of interest and hidden fees and commissions.

— Telemarketing fraud – ”boiler rooms” or high-pressure telephone sales operations that peddle illegal or fraudulent investment products.

— Municipal bonds – risky bonds secured by over-valued real estate being marketed as ”safe” general obligation bonds.

— Immigration investments – investments that allegedly confer ”alien immigration status” on foreign nationals.

— Illegal franchise offerings – inadequate disclosure and fraud in connection with the offering of franchise investments, often through business opportunity and franchise shows.

— High-tech products and services – misleading or illegal offerings of high-tech investments targeting unsophisticated investors with promises of high profits and minimal risk.

— Entertainment – scams offering opportunities in movie deals and other entertainment products with promises of guaranteed profits that minimize or ignore risks.