Maryland Attorney General J. Joseph Curran Jr. today warned Maryland consumers to watch out for five new telemarketing scams promoting bonus investments or get-rich-quick schemes.
Today's warning comes in the wake of coordinated raids in three western states against "boiler-room" operations. The raids, announced today in Los Angeles, were conducted yesterday by securities agencies from 16 states. Ten people have been arrested this far in Los Angeles, Dallas and Salt Lake City as part of the effort, known as the Multistate Law Enforcement Sweep.
Curran said he expected authorities to turn up names of Maryland victims when they sift through records seized in the raids.
"These are not isolated cases," he said.
"We'll make every effort to help with restitution when these cases come to trial," Curran said, "but these scams are set up to be quick, get the money and run . . . The likelihood is the money's gone."
Curran said the scams, which have surfaced in the last 12 to 18 months, were designed to exploit people's fears because of the recession or to emphasize new technologies. Maryland's prosperity, he said, made the state a natural target.
"There's a lot of money here," he said. "What we want to do is to alert people to be very very suspect of telemarketing offers for investments. They can call us and we can tell them if the investment's registered and if the people are licensed. If they're not, that should be a great big red flag.
Ellyn L. Brown, state securities commissioner, said she expected to receive names of victims in several weeks. She said the Securities Division would contact them by letter and ask them to cooperate by furnishing information.
"These people [the telemarketers] are thieves. They use telephones instead of guns to take your money . . . The only way to stop them is to put them in jail."
Brown said that very often the telemarketing frauds had connections with organized crime, money-laundering operations and drug trafficking.
Curran said the recession, coupled with the availability of cheap long-distance phone rates and computerized mailing lists and dialing equipment, had propelled telemarketing fraud to new heights. It now totals more than $10 billion a year, according to the North American Securities Administrators Association, made up of securities commissioners from the 50 states.
Today's warning alerted Maryland consumers about pyramid schemes and scams involving wireless cable lotteries, international investments, horizontal oil drilling and gas programs as well as loan brokers who charge an advance fee for loans that never materialize.
Brown said fraud involving pyramid schemes was the most prevalent in Maryland.
"In economic hard times pyramid schemes really take off," said Brown. "In the last year and particularly the last six months, we've had hundreds of complaints or inquiries."
People's losses, she said, can vary from several hundred to thousands of dollars.
Scams involving Federal Communications Commission lotteries for wireless cable TV franchises also find a ready market here, she said, along with those promoting bogus investments abroad.
Also, she said, "we've gotten lots of complaints involving purchase of tax liens on distressed real estate."
The public can get copies of the free bulletin, "Top Five New Telemarketing Scams" by writing: Maryland Division of Securities, Office of the Attorney General, 200 St. Paul Place, 20th Floor, Baltimore, Md. 21202. Attention: Telemarketing Scams.