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.
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
* 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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