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BROADCASTERS ASKED TO BEWARE SCAM ADS

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Firms promising sky-high returns on high-tech telecommunications ventures may be bilking hundreds of unsuspecting investors in Utah.

In one recent scheme that was widely advertised on local radio stations, investors probably lost more than $200,000 before regulators stepped in and stopped it, according to the Utah Department of Commerce.And with other similar "investment opportunities of a lifetime" presenting themselves to "those who hurry and act now," the loss estimate could climb into the millions.

Alarmed by the rash of bogus investments, state securities officials Thursday took the unprecedented step of asking the media to voluntarily stop accepting advertising from suspicious firms.

Securities Division director Mark J. Griffin said his agency has sent letters to more than 100 broadcast executives throughout Utah offering tips on how to spot the "scams" and asking them not to air the commercials.

Division officials noted that Utah law gives them the right to require the prior submission of all investment advertising, though they stressed the option would be exercised only as a "last resort."

They also said recent court cases suggest that broadcasters themselves could be held liable for losses in advertised investment scams.

However, Griffin said the main purpose of the letter is to provide a legal basis for ad programmers "to just say no." Responsible broadcasters routinely screen out questionable ads, and Griffin said it would be a "relatively simple matter" to apply some standards to investment pitches.

According to Griffin, the latest scams have a common profile that makes them easy to spot, beginning with offers of unrealistically high returns on investments in wireless cable television, microwave or other high-tech telecommunications systems. The firms are generally not registered, and their sales personnel are not licensed with the state.

Many of the ads offer more information through toll-free calls. People who "bite" are then subjected to an elaborate, scripted sales pitch followed by a slick brochure delivered by overnight courier. The sales materials could pass for those from a Fortune 500 company.

"For years, we've told people to just hang up when they are called and solicited by these out-of-state investment schemes; now the schemers have figured out how to package and promote their schemes in such a way to get unwary investors to pick up the phone and call them instead," Griffin said.

Division officials said they are not aware of a single case in which a company employing high-tech investment infomercials or radio spots has conveyed an accurate picture of the investments.

Griffin called the schemes "nothing more than financial black holes" that may be sucking in $30 million to $60 million a month nationwide. Individual losses in Utah have reached $75,000, with many of the victims being described as elderly and retired.

"And this is precisely the group most likely to assume that the ads are responsibly pre-screened for content before they are broadcast," Griffin said in his letter to broadcasters.

Victims often don't realize they have been duped until several years later, and by that time, their money and the crooks have usually disappeared, he added.

"Closing the advertising gate is the most effective means of curbing this type of investment fraud," Griffin said.