Oil and Gas Investment Schemes
By: Source: AARP.org Date Posted: 2006-05-30 16:22:00.630124-04:00
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An Idaho man who lost both legs in an industrial accident was looking for a "safe" place to invest $20,000 he received in a liability settlement. A blind man in his 80s from Alabama hoped to raise money to care for his wife who had Alzheimer's disease. Both men were victims of a fraudulent oil production scheme that cost 52 investors more than $1.5 million.
Yes, gasoline prices are sky-rocketing but investing money on natural gas or oil well leases may mean your money goes down the drain. Energy shortages don't necessarily put money in your pocket. Dreams of being like Jed Clampett of TV's "Beverly Hillbillies" are wonderful dreams, but he owned the land the oil was on; he didn't invest in a well somewhere else.
Black Gold or Crude Hoax
Since the first oil gusher, people have sought to strike it rich through a variety of investments in oil and gas. But before you open a pipeline to your wallet, consider the fact that many oil investments are not on the level. Some oil ventures originate in boiler rooms - nothing more than bare offices with a few desks and telephones. Boiler room telemarketers are trained to use high pressure sales tactics. They follow a carefully scripted sales pitch that generate huge profits - profits for them, not you. These scammers often use headlines about high gas prices and instability in the Middle East to scare people into investing in their bogus product. In the end, the wells turn up dry or don't exist at all. Investors are left with nothing.
Check It Out
Before you open a pipeline to your wallet, consider the following warning signs:
- Beware of unsolicited oil and gas investment cold calls from telemarketers, e-mails and Internet ads.
- Avoid high-pressure sales tactics and language promoting "once in a lifetime" opportunities.
- Carefully read any written material provided. Make sure that what you are hearing from the promoter is consistent with what is in print.
- Before investing, call your state securities regulator to determine if the investment and the promoter are properly licensed and registered in your state. If they aren't, don't invest.
What You Can Do
To check on an investment offer or salesperson, or to file a complaint, contact your state securities regulator. You can find state regulators at:
- www.nasaa.org (click "Contact your regulator")
- 1-888-OUR-AARP and ask for contact information for the securities regulator for your state
AARP Resources
AARP on Investment Fraud
Check out other articles exposing many investment frauds.
AARP on Financial Planning
Guidance on the basics of investing.
"Scam-proof Your Life"
By this AARP book at Borders to learn 377 ways to protect yourself.
AARP Message Boards
We've all seen "hot offers" that are too good to be true. If you have helpful ideas on how to avoid scams–or have learned the hard way–share your smarts with others.
Other Resources
North American Securities Administrators Association
Beware of Oil and Gas Scams
The NASAA cautions about investment in oil and gas scams.
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