Minneapolis, MN

A guide for new investors to avoid getting scammed

Stephanie Moua

MINNEAPOLIS, MN - Being an investor can be challenging. Besides having the capital to invest, you need to find where and how to invest your money safely and adequately.

A seasoned investor might have more experience and knowledge to speculate what will work and what simply is dull in a product or service. But, for a retail or newcomers investor, they are most likely be targeted for a scam.

First, do not buy or invest from unlicensed salespersons. Investors should check if the person they are dealing with is registered in Minnesota or unregistered. Con artists will avoid the state's registration requirements by claiming that their investments have high returns.

Second, promissory notes are attractive to investors with low-interest rates. However, they can also be risky since they are usually sold to individuals and institutions with limited resources. Securities registrations that appear to be exempted from securities regulation have been the source of many fraudulent activities revolving around promissory notes.

While many oil and gas investments are legitimate, some try to exploit the unsuspecting investors by fraud. Fraudulent oil and gas deals usually involve forming a limited partnership or other legal entity in one state and the operation of a second state. This structure makes it difficult for authorities to identify and prosecute fraudulent individuals.

There are also troublesome investments in real estate-related products, including non-traded real estate investments trusts and mortgage notes. These types of products are typically risky and have limited liquidity.

Lastly, Ponzi schemes are usually carried out by promoters who promise to make money from new investors. They often use a low risk with a high return marketing strategy. Before you make any decisions with your money, check with the Commerce Department to learn about the risks and fees involved.

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