Although the Persian Gulf war brought out many fine American traits such as patriotism and generosity, it unfortunately also summoned a few financial lizards out from under their rocks.
U.S. telephone lines were jingling with the pitches of hucksters even before hostilities with Iraq began. The high-pressure push of war-related "sure things" continued throughout the conflict and are still being modified in its aftermath to suit circumstances. Some examples of phone scams eminating from "boiler room" operations include:- Oil and gas partnerships and precious metals deals based on the premise that prices would shoot sky-high during the war. They didn't, and the enormous commissions being charged by many crooked salespeople would've soaked up investor profits even if they had.
- Equipment and drilling projects tied to the rebuilding of Kuwait. The investor is told that the unprecedented needs of this damaged country offer amazing opportunities for those willing to commit immediately to special partnerships.
- Stock index futures, foreign currency contracts or Treasury bond vehicles sold on the concept that, with war over, recession will end quickly and the investor can make an immediate financial killing. While the investment itself may be legitimate, the pitchman often has no intention of actually selling anything, and is merely using convenient logic and promises of doubling your money in order to get your dollars.
- Requests for outright donations of money over the phone, with the promise that it will be used right away to help people in the Persian Gulf, servicemen or the families of servicemen. There are worthwhile charitable efforts to help people, but the fraudulent phone callers have no intention of helping anyone but themselves and their own pocketbooks.
"We encountered a $14,000-a-share interest being offered in a non-existing pipeline, all tied to the idea of the Persian Gulf war," said John Perkins, president of the North American Securities Administrators Association and also Missouri's securities commissioner. "Whenever someone calls you on the phone and you say you'd like to receive information about some investment, your name goes onto lists and you'd be surprised to find how many phone calls you'll receive from a variety of people in coming months trying to sell you things."
Some of the oil and gas scam artists actually went to the federal government to obtain lists of people who'd invested in partnerships before. These pitchmen live off newspaper headlines, gleaning the hottest, latest idea and converting it into a sales strategy.
"Some of the people making the calls are legitimate in the sense that they are registered and are selling legitimate instruments, using the war as a reason why prices will move dramatically," said Douglas Campbell, chief investigator for the National Futures Association based in Chicago. "Just because they're registered doesn't mean that you shouldn't check them out with the National Futures Association or the Commodity Futures Trading Commission, for there are some rogues and hooligans even among the registered and the size of commissions is also worth watching."
To say that some of the crooks using the phones lack human kindness is an understatement.
"One recent scam is that they ask for your calling card number, using the false premise that service people will be able to use it to call you at home, and they run up thousands of dollars on your bill," said Linda Golodner, executive director of the National Consumers League in Washington, D.C.
When approached by telephone salespeople, always find out who you're dealing with. Depending on the pitch and investment, this could mean contacting your state securities administrator, the CFTC, the NFA, the Better Business Bureau or the U.S. Consumer Protection Agency.
Beware cries of urgency, a common trick in these phone scams. You should be given time to sort through any investment. Remember that anything that seems too good to be true probably is too good to be true.
It's important that you have the confidence to simply say no, rather than get involved in informational forms or mailings that will draw you in later.