Oil And Gas Investment Frauds


If you are contemplating investing money, oil and gas wells may be 
among the options you are considering. Regardless of what 
investment opportunities you're considering, it is wise to gather 
all the information you can so you can make an informed decision. 
And beware.

Some oil- and gas-well deals are offered by "boiler rooms," or 
fly-by-night operations that consist of nothing more than bare 
office space and a dozen or so desks and telephones. Boiler room 
operators employ slick telephone solicitors trained to use high-
pressure sales tactics. These con artists will make repeated 
unsolicited telephone calls in which they follow a carefully 
scripted sales pitch that guarantees high profits. Some swindlers 
surround themselves with the trappings of legitimacy, including 
professionally designed color brochures.

In a fraudulent oil and gas scheme, scam artists promoting the 
investment often usually offer limited partnership interests to 
prospective investors who live outside the state where the well is 
located and outside the state the scam artists are calling from. 
This reduces chances for an investor to visit the site of a well 
or what may be a nonexistent company headquarters.

If you are subjected to a high-pressure sales pitch in an 
unsolicited telephone call, watch for the following tip-offs that 
you may be dealing with a swindler:

   *  The oil well investment "can't miss."
   *  There is very little risk involved.
   *  The promoter has hit oil or gas on every well drilled.
   *  A lot of oil or gas has been found in an adjacent field.
   *  A large reputable oil company is already operating near the 
company's leased property, or is planning to do so.
   *  A decision must be made immediately to invest in order to 
assure the purchase of the few interests remaining to be sold.
   *  The deal is only available to a few lucky and specially 
chosen investors.
   *  The salesperson has personally invested in the venture.
   *  A tip from a reputable geologist has given the company a 
unique opportunity to make its venture a success.

You can reduce your risk of being swindled by being suspicious of 
any deal that promises a fantastic return at little risk. If you 
are unsure whom you are dealing with, check the company's 
reputation with your local Better Business Bureau, the U.S. Postal 
Inspection Service, or State Attorney General's Consumer 
Protection Unit. If you have been the victim of an oil and gas 
investment fraud in which the U.S. Mail was used, contact your 
local postmaster or the nearest Postal Inspector.

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