Keep the following points in
mind before you invest:
- Obtain and review a written
proposal or prospectus on the venture and the company, including financial
- Consult an accountant, attorney
or other knowledgeable person whom you trust.
- Contact the Illinois Secretary
of State Securities Department to find out whether the company and the
promoter have any history of problems with authorities.
- Beware of schemes in which
recruitment of new members is more important than the product being
sold. Those in the scheme early may profit: those in late always lose.
Whenever in doubt, wait until
you can consult all available resources.
- Never send cash through
the mail or give it to a messenger sent by the salesperson, and never
give a credit card number over the phone.
- Keep all correspondence
and take notes of all conversations regarding an investment.
- Do not be pressured into
buying by "tomorrow will be too late" tactics. No legitimate
broker will rush you into an investment. High pressure is a good indicator
of fraudulent operations.
- Beware of testimonials.
Fraudulent companies sometimes hire people to claim that the firm's
investments brought them wealth. Other con artists exploit the trust
that members of churches and fraternal organizations have for one another:
When one member of a group invests, the promoter uses that person as
an unwitting accomplice by citing his or her investment to convince
other group members to invest also
- If in doubt, do not invest.
It is better to be safe than sorry. Also, if you become suspicious,
get out of the investment. Stop payment on your check or demand your
- If, after careful consideration,
you decide to invest, keep your initial investment small. Pressure to
put all your savings into a single investment is a sign of a scam. Most
reputable stockbrokers believe that diversification is a wise safeguard.
Also, never invest more than you can afford to lose.
- In general, if the deal
sounds "to good to be true" it probably is.