ATTORNEY GENERAL CURRAN ANNOUNCES CRACKDOWN ON HOTTEST INVESTMENT SCAM: PROMISSORY NOTE FRAUD
Baltimore - Attorney General J. Joseph Curran, Jr., announced today that his Securities Division is participating in a national crackdown on sellers of promissory notes, which promise investors high returns and low risk. The notes, often sold by insurance agents, are in fact very risky and often fraudulent. Promissory note fraud cases account for the majority of the cases handled by the Securities Division in the past two years and have cost Marylanders at least ten million dollars to-date. Many victims are elderly. Responding to complaints about promissory notes, securities regulators in 37 states and the District of Columbia formed a task force in May 1999.
Attorney General Curran announced 16 cases against issuers, marketing companies, and individual sales agents that his Securities Division has investigated over the past several months in Maryland. The cases against issuers alleged the offer and sale of unregistered promissory notes in violation of securities anti-fraud provisions. Cases against the marketing companies and individual sales agents vary from case-to-case in their alleged violations of securities laws. While some cases are still pending, others have resulted in restitution awards as high as $2.1 million to Maryland investors.
"Investors are attracted to this type of investment because it has an aura of safety with a higher rate of return," Attorney General Curran said. "They sometimes fail to remember that the higher the reward the greater the risk. In today's market there's no such thing as a ‘guaranteed' 10% or 15% return."
Cases against Issuers:
McDonald/Lubin v. AmeriTech Petroleum, Inc. and Brent Wagman (9/98)
Cases against Marketing Companies:
In the Matter of R&D Marketing and Russell Jones (7/98)
Cases against Individual Sales Agents:
In the Matter of Paul G. Hauf d/b/a Paul G. Hauf & Associates, Inc. (2/99)
Attorney General Curran warned that promissory notes are often sold by independent life insurance agents - lured by high commissions - who may know nothing about the promoters of the investment beyond what they're told. The agents may not realize that they must be licensed as securities brokers with state securities regulators to sell securities. Some notes are issued on behalf of companies that don't even exist. Investors often get official-looking promissory note certificates complete with legal-sounding language and gold embossed seals. Many of these notes were purportedly bonded or guaranteed by non-licensed insurance companies located offshore.
Curran's Tips to Protect Yourself and Your Money:
Contact Sean Caine at (410) 576-6357 to arrange an interview with Attorney General Curran and/or to speak to a Maryland "victim" of promissory note fraud.