Get dressed up, go to a party, ring in the New Year -- and get fleeced.

Utahns are expected to lose more than $50 million to investment scams in 2006, and the Utah Division of Securities at the Utah Department of Commerce hopes to do something about it. It has released a top-10 list of scams it expects to pervade the state this year.

"With Christmas and the New Year, we tend to get together with old friends and family for parties and to exchange gifts and someone typically says 'Hey, I've got a deal for you,' " said Clark H. Caras of the Utah Department of Commerce.

"We are putting this list out now because it is the season to take a new look at everything," he said. "We are hoping that people will realize that if something looks too good to be true in the coming year, it is."

The best protection against investment scams is to call the Department of Commerce and make sure that anyone offering to invest your money is licensed, he said.

"We want people to know the tools that are available to protect one of the most personal things we have, the money that we earn," he said.

The top-10 list includes perennial scams, some new ones that have hit Utah recently and scams that have hit states nearby and are expected to surface here in the new year, he said.

"People need to be warned," he said.

The top 10:

1. Instant Messaging Stock Tips: Promoters of penny stock companies "mistakenly" send text messages to your cell phone. The messages contain stock tips purporting to be inside information. This is modeled after a successful 2005 scam using faxes and voice mail messages claiming inside information. Once the stock price soared, promoters sold their shares and the stock became worthless.

2. Iraqi Currency: Advertisements in newspapers promise wealth by purchasing the new Iraqi dinar. Promoters explain that as democracy comes to Iraq, the expected peace will stimulate the economy and value of the dinar. What investors are not told is dinars can be redeemed only in Iraq and the sellers already have doubled their money. Thus, the dinar would have to more than double in value and investors would have to book a trip to Iraq to collect any profit.

3. Antique Foreign Bonds: A Utah promoter sold Paraguayan bonds issued in the 1930s claiming they still were valid and paid interest. While the bond certificates looked official, they had expired many years ago. The promoter is paying $12,000 in restitution and has paid a $10,000 fine. Other exotic foreign investments include buying land in South American resort cities and Latin American mines excavating valuable stone used in construction.

4. Advance Fees: This scam targets businesses offering to arrange large loans at low interest rates after payment of an advance fee. In the end, promoters steal the fee and no loans are ever made. Michael B. Scharbarth pleaded guilty in Logan last month to two counts of securities violations and will pay $250,000 in restitution. An Ogden company, Masada Capital, was ordered in November to cease and desist making advance fee loans and will repay $5,250 to victims as well as pay a fine.

5. Fake Regulatory Agencies: Some scam artists have created bogus investment-related "regulatory" Web sites to add legitimacy to their ploys. At least one of these is headquartered in Utah. Fake Internet pages are set up to look like the official Web site of regulatory agencies. You are led to believe you are dealing with a legitimate regulator who is vouching for a particular investment or a seller of securities. Names of fake regulators include the Regulatory Compliance Commission, the International Compliance Commission and the International Exchange Regulatory Commission. Often, these groups ask you to pay a fee to release "restricted stock" in public companies, promising to share the profits. They have no shares and just steal your money.

6. Promissory Notes/Factoring: You will be asked to loan money to fund a company's operations, getting a promissory note in return. These offerings have been unusually successful because they often are offered by insurance or real estate salespersons who don't realize the promissory notes are worthless and who are not licensed to sell securities. In December, an insurance agent in Brigham City was charged with four felonies for selling promissory notes and other fraudulent practices. A related scheme involves factoring, selling accounts receivable at a discount with a promise that when the customer pays his bill, you will receive the full amount.

7. Foreign Currency Trading: Radio and television advertisements seek to convince Utah residents they can earn huge profits by buying and selling the euro, the yen, Russian ruble, or Canadian dollar. Promoters of these programs claim it is easy to make a profit when, in fact, profits depend on economic outlook and fiscal policies of each country. The promoters make their profit by charging high commissions or selling supposedly "foolproof" investment strategies. Ask yourself why they are selling you this strategy rather than using it themselves.

8. Senior Specialists: Some sales persons have begun calling themselves "senior specialists" in an effort to sell financial products to seniors. Be sure to check the credentials of anyone claiming to be a "senior specialist" or some other designation claiming expertise in providing services to seniors. There are those who try to disguise a fraudulent investment or trick you into disclosing confidential financial information.

9. Prime Bank: In this scam, you are told certain secret European banks offer higher profits than are available at U.S. banks. The crooks say the money will be used to facilitate money transfers between these banks and your investment is guaranteed. In reality, there are no such prime banks and investors lose all their money.

10. Affinity Fraud: This is a catch-all phrase for the many types of investment scams that are pitched to certain groups of victims. Often they target employees at one company or members of a church. Promoters hope your guard will be down if the investment is sold by someone you know and other members of your group also invest. Members of several Utah churches sent more than $21 million to a California real estate scam in a case prosecuted in 2005. In November, Arizona regulators shut down Marathon Management which raised $150 million from investors by touting the credibility of company officers as former Christian missionaries.

Caleb Warnock can be reached at 756-7669 ext. 19 or This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

Investors are encouraged to check out any investment opportunity and verify the salespersons are licensed by calling the Utah Division of Securities at (801) 530-6600. For information visit www.securities.utah.gov.