Scams, schemes hit Butte area

By Tim Trainor of The Montana Standard - 01/04/2009

By Tim Trainor of The Montana Standard

If it sounds too good to be true, it probably is.

Everyone knows that old axiom, but in today's economy some are having a difficult time passing on the possibility — however remote — that a great business opportunity just showed up at the door.

Fraudulent investments, pyramid schemes and scams of all sorts have become more commonplace locally and nationwide.

One such scheme has been known to target Butte and the surrounding communities.

The Montana Securities Department received

information indicating an investment program titled World Ventures may be

operating a fraudulent pyramid scheme in the area.

In the scheme, the company asks investors to put approximately $400 of their own money into the company and then recruit two new

participants into the program. Once a participant brings enough new recruits, they can climb up the pyramid and begin sharing in the money from new recruits.

Pyramid schemes are illegal because at some point the scheme gets too big and the promoter cannot raise enough money from new recruits to pay off earlier investors. The pyramid will collapse and many people will have lost their money.

"One can never be too careful when it comes to money and investments," Montana State Auditor John Morrison said in a news release. "If someone claims you will get something for nothing, you should always be on the lookout. The best thing

an investor can do is investigate before

investing."

Kids' shopping spree?

In another dubious circumstance, a number of local citizens were contacted by a Washington State charity called "Needy Children's Shopping Spree."

JoAnn Piazzola of Butte received a call from the group in each of the last two years. She said at first she thought it was a legitimate local charity, but after a little research she realized it was an out-of-state group that she had not heard of.

Piazzola continued to look into the organization by calling the Washington Secretary of State's Office, the Washington consumer protection division.

She got in-depth information on the non-profit, which uses 52 percent of its budget for "fundraising and administrative costs."

Piazzola, who often donates to local charities, said she will be more suspicious about donations over the phone.

An online Web site that tracks unwanted and possibly fraudulent telephone calls, www.800notes.com, has dozens of complaints filed from a Seattle phone number often claiming to be that charity.

Piazzola's advice to Montanans wanting to donate to local charities is "use local ones that you already trust and know have a good track record in the community."

Other scams

A number of other scams are circulating as well. One includes letters that look like they come from legitimate companies and contain checks and instructions to cash them or deposit them in a checking account.

The group then tries to get access to the individual's banking and financial information.

The American Association of Retired Persons said many of these scams target the elderly.

E. John Morocco, commissioner of public safety for AARP, said in a news release issued by the group that the checks are often for amounts between $3,900 and $4,800 with instructions to cash them and keep a portion of the money. Some of the letters claim the person's name was randomly selected from Publisher's Clearinghouse or Reader's Digest entries.

Colleen Gollinger of Butte received a similar offer, a check for $3,090 from a company called Reed Marketing Services out of Rockville, Md.

"It was more or less to be a mystery shopper," Gollinger said. "It's a real big racket. I knew right away it was phony."

She immediately called Federal Bureau of Consumer Protection, the Federal Safety Commission and Phonebusters, a Canadian anti-fraud call center.

She said the plain white envelope had a Canadian stamp affixed and instructed her to deposit the entire amount into her bank account.

"They wanted me to keep $400 for myself and send them back the rest," Gollinger said. "It was a fake check, and I would have been out the entire amount."

Gollinger said she never considered cashing it, however.

"You've got to remember nobody is going to send you a check from someone that you don't know and you don't know why."

AARP said scams such as the one that targeted Gollinger are often directed toward the elderly, but they aren't limited to one section of the population.

"Nobody is exempt. These are tough times, and the checks look real," Morocco said. "It's scary. I've seen money orders that are so good they look real. I've also seen American Express Traveler's Checks that were done so well that the banks didn't recognize them as a forgery. It took an expert to recognize the differences."

The detective bureau is investigating several reported cases, he said.

Reporter Tim Trainor may be reached via e-mail at tim.trainor@lee.net or call 496-5519.

More info ...

If you feel you've been scammed, or are

suspicious of a proposed transaction, the state's Office of Consumer Protection is a good place to get help. Online, visit http://www.doj.mt.gov/consumer/.

The office also provides statewide access through a toll-free number, (800) 481-6896. And when consumers call with problems, someone answers that line so they aren't further

frustrated by a recorded menu.

Also, AARP offers a free brochure listing common frauds and scams and provides tips to consumers about how they can avoid becoming a victim. The brochure, "The Top Frauds and Scams," is available at no charge by calling (888) OUR-AARP ((888) 687-2277), along with "Consumer Protection: A Guide to your Rights and Choices."