CRISIS IN THE PERSIAN GULF : Illegal Oil, Gold Offers on Rise, Officials Warn : Investment: The state Department of Corporations urges consumers to scrutinize proposals, especially those received over the phone.

Scam artists are already trying to cash in on escalating oil and gold prices resulting from the Middle East crisis, officials at the state Department of Corporations said Tuesday.

Michael Player, an investigator for the Department of Corporations, said he has already received complaints from out-of-state investors contacted by California con artists trying to capitalize on the Iraqi invasion of Kuwait and recent rise of gold prices to above $400 an ounce.

“One outfit I heard about in the last week claimed to have bought up mineral rights to a bunch of property in Colombia,” said Player. “They were raising money to buy dredging equipment to mine gold out of streams and rivers.”

The Department of Corporations on Tuesday joined with the North American Securities Administrators Assn., a group of state securities regulators, in issuing a bulletin to warn investors about the latest scams.

“Con artists follow the headlines,” said Christine W. Bender, California commissioner of corporations. “After the 1973-74 Arab oil embargo, the 1979 revolution in Iran and the ‘tanker war’ during the Iran-Iraq conflict, telemarketers were burning up the phone lines offering investors get-rich-quick opportunities to cash in on the conflict by investing in oil and gas deals or precious metals.”

Questionable oil and gold investments are usually sold over the telephone by unregistered sales people working in “boiler rooms.” Boiler rooms, named for the basements they traditionally were housed in, are companies that employ high-pressure telephone sales people to push a variety of illegal investment opportunities.

Southern California, especially Orange County, is home to an estimated 300 boiler rooms, Bender said. State law requires anyone selling investments over the phone to be registered, but scores of companies continue to operate in the area.

In a typical oil well scam, Bender said potential investors are offered an opportunity to invest $5,000 to $10,000 in an oil or gas limited partnership. Unfortunately, the wells are usually dry, non-existent or belong to someone else.

Player urges consumers to question anyone who offers an investment opportunity over the phone.

“Don’t let these people con you,” said Player. “You can call the Department of Corporations to see if the investment is registered and qualified to be sold in California.” The number of the department’s investigation division is (213) 736-2520.