INVESTMENT SWINDLES AND CON SCHEMES World Headquarters • tHe gregor building 716 West ave • austin, tX 78701-2727 • usa INVESTMENT SWINDLES AND CON SCHEMES TABLE OF CONTENTS I. INTRODUCTION ........................................................................................................................................... 1 II. INVESTMENT SWINDLES AND CON SCHEMES OVERVIEW .............................................. 3 Who Are the Perpetrators and Victims of These Schemes? .............................................................................. 3 Why Do the Perpetrators Commit These Con Schemes? .................................................................................. 3 Video Supplement ........................................................................................................................................... 4 Why Do Consumers Become Victims to These Schemes? ................................................................................ 4 What Are the Red Flags That Characterize These Con Schemes? .................................................................... 5 How Are These Con Schemes Executed? ............................................................................................................. 5 Effects on Consumers .............................................................................................................................................. 6 Review Questions ..................................................................................................................................................... 7 III. INVESTMENT SCHEMES ...................................................................................................................... 9 Introduction ............................................................................................................................................................... 9 Bonds 11 Junk Bonds ..................................................................................................................................................... 11 Zero-Coupon Bonds ..................................................................................................................................... 12 Certificates of Deposit ........................................................................................................................................... 13 Callable CDs ................................................................................................................................................... 14 Equity Indexed Certificates of Deposit ...................................................................................................... 17 Collectibles ............................................................................................................................................................... 17 Art .................................................................................................................................................................... 17 Precious Stones and Metals .......................................................................................................................... 17 Rare Coins ....................................................................................................................................................... 18 Commodities ........................................................................................................................................................... 19 Exotic Commodities ...................................................................................................................................... 19 Oil and Gas Investment Fraud .................................................................................................................... 19 Video Supplement ......................................................................................................................................... 19 Crowdfunding.......................................................................................................................................................... 20 Futures ...................................................................................................................................................................... 20 Commodities Futures Contracts .................................................................................................................. 21 Commodity Trading Systems ....................................................................................................................... 24 Commodity Pools .......................................................................................................................................... 25 “IRA-Approved” Investments .............................................................................................................................. 25 Variable Annuities.......................................................................................................................................... 26 Offshore and Overseas Investments ................................................................................................................... 26 Foreign Exchange (FOREX) Investment Fraud ...................................................................................... 26 Prime Bank Guarantees ................................................................................................................................ 27 Options ..................................................................................................................................................................... 27 Exchange-Traded Options ........................................................................................................................... 28 Relationship of the Underlying Instrument to the Option ...................................................................... 28 Option Values and Premiums ...................................................................................................................... 29 Over-the-Counter (OTC) Options ............................................................................................................. 29 Scalping Schemes ........................................................................................................................................... 29 Hedge Funds .................................................................................................................................................. 29 Investment Swindles and Con Schemes i INVESTMENT SWINDLES AND CON SCHEMES III. INVESTMENT SCHEMES (CONT.) Promissory Notes ................................................................................................................................................... 30 Real Estate Investment Scams .............................................................................................................................. 32 Real Estate Limited Partnerships ................................................................................................................ 32 Timeshares ...................................................................................................................................................... 33 Real Estate Options ....................................................................................................................................... 33 Securities ................................................................................................................................................................... 33 Repurchase Agreements ............................................................................................................................... 33 Treasury Securities ......................................................................................................................................... 34 Unregistered and Falsely Represented Securities ...................................................................................... 36 Stock Scams ............................................................................................................................................................. 36 Blind Pools ...................................................................................................................................................... 36 Late-Day Trading ........................................................................................................................................... 37 Micro-Cap Companies .................................................................................................................................. 37 Online Day Trading ....................................................................................................................................... 38 Penny Stock .................................................................................................................................................... 39 Worthless Stock ............................................................................................................................................. 39 Viatical Settlements ................................................................................................................................................. 40 Clean Sheeting ...............................................................................................................................................