WASHINGTON – Mutual fund practices, investment fraud involving senior citizens and variable annuities are the newest additions to the list of schemes investors are likely to face in 2004. Based on a survey of state securities regulators conducted by the North American Securities Administrators Association (NASAA), the top 10 schemes run the gamut from Internet fraud to ponzi schemes, the perennial list maker. NASAA is the trade group of the 50 state securities agencies. "Our fight against fraud never stops because each year con artists discover new ways to fleece the public," said Ralph Lambiase, NASAA's president and director of the Connecticut Division of Securities. "Sadly, many of the age-old scams still work to cheat victims of their hard-earned savings as well." Lambiase said that oft-repeated adage still holds true: "It pays to remember that if an investment opportunity sounds too good to be true, it usually is." NASAA said the top 10 list of scams, schemes and scandals involve the following: Ponzi schemes – Named for swindler Charles Ponzi, who in the early 1900s took investors for $10 million by promising 40% returns, the premise is a promise of high returns to investors and the use of money from previous investors to pay new investors. Inevitably, the schemes collapse and the only people who consistently make money are the promoters who set the Ponzi in motion, NASAA said. Senior investment fraud – Older investors are being targeted with increasingly complex investment scams involving unregistered securities, promissory notes, charitable gift annuities, viatical settlements, and Ponzi schemes all promising inflated returns, NASAA said. These schemes offer products and pitches that may sound tempting to many seniors who've seen their retirement accounts and income dwindle in recent years, Lambiase said. Promissory notes – A long-time member of the Top 10 list, these short-term debt instruments often are sold by independent insurance agents and issued by little known or non-existent companies promising high returns – upwards of 15% monthly – with little or no risk. When interest rates are low, investors often are lured by the higher, fixed returns that promissory notes offer but the issuer often has no intention or capability of ever delivering the returns promised by the sales person. Unscrupulous brokers – Despite the stock market's rebound in 2003, state securities regulators say they are still receiving a high level of complaints from investors of brokers "cutting corners or resorting to outright fraud to fatten their wallets," Lambiase said. Affinity fraud – Scammers often use their victim's religious or ethnic identity to gain their trust and then steal their life savings, NASAA found. Insurance agents and other unlicensed securities sellers – While most independent agents are honest professionals, NASAA said many are lured by high commissions into selling fraudulent or high-risk investments, such as promissory notes, ATM and payphone investment contracts and viatical settlements. Prime bank schemes – Another perennial favorite of con artists who promise investors triple-digit returns through access to the investment portfolios of the world's elite banks. Instead of using the word "bank," NASAA said fraudsters might describe the deal as "risk free guaranteed high yield instruments." Internet fraud – From emails sent by so-called business officials needing help in depositing money in overseas accounts to con artists that fail to deliver the goods or services after being paid, the FTC said cyberfraudsters swindled $122 million from online surfers in 2002. Mutual fund business practices – In light of the litany of industry scandals, state and federal regulators have uncovered sales contests where investors have been steered to funds paying higher commissions to brokers; market timing and late trading practices. Variable annuities – Investors are not being told about high surrender charges and the steep sales commissions agents often earn when they move investors into variable annuities, NASAA found. Some are also misled with claims of guaranteed returns when variable annuity returns actually are vulnerable to the volatility of the stock market. NASAA's Web site has tips on how to detect con artists and avoid becoming a victim; an Investor "Bill of Rights;" instructions on how to file an investment-related complaint; and contact information for each state securities regulator. A special section for senior citizens can also be found at www.nasaa.org [email protected]