WASHINGTON -- As Russia's economic crisis deepens and worries linger over Asia and Latin America, state securities regulators are warning consumers not to be duped by scam artists promising quick profits from the volatile foreign currency markets.
People with a vague awareness of the economic turmoil abroad and a hunger for big investment returns are prime targets for risky foreign currency schemes, which have become the hottest new telemarketing fraud, the regulators said Friday.
In addition to making unsolicited phone calls to consumers, the promoters are advertising on television and radio, urging prospective investors to call a toll-free number.
"Con artists are attempting to exploit the situation in (Asia) and Russia to lure investors," said Denise Voigt Crawford, president of the North American Securities Administrators Association, who also is Texas' securities commissioner.
The group recently announced more than 100 enforcement actions by state regulators against allegedly fraudulent investment telemarketing operations, including 27 foreign currency companies selling to residents of Arizona, California, Idaho, Indiana and South Dakota.
And on Tuesday, Indiana authorities ordered Trump Financial Group Corp. of Coral Gables, Fla., to stop selling to Indiana residents, alleging that the company violated state antifraud laws. In one case, the authorities alleged, a Trump employee told a resident over the phone that he would make $312,250 quickly on an initial investment of $10,000 in futures contracts on the Japanese currency, the yen.
A man answering the phone at Trump's office Friday had no immediate comment. The company is unrelated to concerns owned by businessman Donald Trump.
The economic disasters overseas, marked by sudden devaluations of currencies, have made foreign-exchange markets more volatile. Predatory promoters have capitalized on the situation to push high-return investments in futures contracts on the yen, German marks and other currencies in overseas markets. A futures contract obligates a trader to buy or sell a currency at a fixed price at a specific time in the future.
In most cases, the investment schemes are a sham and none of the money handed over is actually invested, according to the regulators. Modest investors around the country are losing thousands of dollars, lured by a type of investment that even when it is legitimate, is among the riskiest and not suitable for the average person.
Defrauded investors have little chance of recovering any of their money, the regulators said.
Consumers can check out salespeople and their companies by contacting the securities regulator in their state or by calling the North American Securities Administrators Association at 202-737-0900.