There’s a Get-Rich-Quick Scheme Born Every Minute

There may yet be hope for all those disappointed people who had wanted to make a million dollars raising earthworms.

Think larvae farms.

As in: “Grow Rich With Silk-Spinning Moths.”

Or how about growing fungus for use in exotic cosmetics?

For those too sophisticated for such come-ons, there’s always room to play around with mass-market tax shelters, or high-tech stocks or even designer jeans.

Sometimes they start out as legitimate business schemes and lapse into fraud when things don’t go as planned. But often, the originator knows going in that he and just a handful of his first investors are the only ones who will make the big bucks promised, authorities say.

Officials Find Pattern

The nation’s state securities administrators said Tuesday they have found a pattern in 30 major known or suspected Ponzi schemes in which tens of thousands of Americans were bilked out of more than $750 million over the past three years.

The North American Securities Administrators Assn. and the Council of Better Business Bureaus said the schemes, based in 14 states, appear to have defrauded investors in all 50 states.

A Ponzi scheme, named for its developer, can take as many different forms as the mind of a swindler can create. The common denominator is that the first few people who take the bait indeed do prosper--at the expense of later investors who end up losing all or most of their money to the promoter.

Earthworm farming has become old hat by now, but state regulators say larvae farming schemes could be the coming thing among quick-buck artists who always seem able to find a certain number of gullible investors eager to grow one easy-care creature or another.

‘Bewildering Array’

Nonetheless, it’s the more high-sounding schemes involving what the association calls a “bewildering array of new, poorly understood investment vehicles which have emerged in wake of the deregulation of the financial marketplace” that has them most worried.

The association said a two-month survey uncovered examples of Ponzi schemes masquerading as high-tech stock investments, mass-market tax shelters, deferred delivery contracts in commodities, currency futures, oil and gas funds, leverage contracts in precious metals, mutual funds, mortgage brokering, business opportunities, options and money market accounts.

One danger signal would be the absence of registration with the state securities office by the person or outfit offering the deal.

The officials said lack of registration in itself does not indicate a fraudulent scheme, but such an omission is a clear signal for the individual investor to make a thorough check before parting with his or her money.

But perhaps the surest gauge is the time-tested slogan that hangs on Ohio Securities Commissioner Roger Martin’s office wall: “If it seems too good to be true, it probably is.”

State securities officials know there’s at least one other scheme aborning for every one they shut down--they just can’t spot them in advance.

“We will hear about them when the checks start to bounce,” said Susan Rittenhouse, Maryland’s securities commissioner.