With Layoffs and Internet Comes Crackdown on Scams

Federal and state law enforcement agencies on Wednesday announced a crackdown on “get rich quick” scams that they said may be growing because of corporate downsizing and the Internet.

Many of the scams were highly sophisticated and trapped people otherwise successful in business into investing and ultimately losing money, officials said.

The Federal Trade Commission said the illegal operations range from work-at-home schemes to prepackaged small businesses involving the sale of items such as medical supplies, water purification equipment and pay phones.

In some cases, a celebrity is used to promote the scheme without realizing it is a scam, officials said, citing former football star Joe Namath’s promotion of a business consulting firm.

Jodie Bernstein, director of the FTC’s bureau of consumer protection, said about 75 lawsuits have been filed against more than 100 companies in 24 states, including California, for alleged schemes that in some cases date to 1987. The suits ask for remedies that include freezing assets and cease-and-desist orders.

More actions are expected to be launched in the nationwide effort, called “Operation Missed Fortune,” the FTC said.

“The size of this project reflects the size of this problem,” Bernstein said. “It is enormous, and we see signs that as a result of business downsizing and the Internet, it may be growing.”

She said corporate layoffs had created a pool of people looking for places to invest their savings. The Internet and the growing use of personal computers at home have resulted in a new way for con artists to promote their schemes, she added.

“New or not,” Bernstein said, “some old advice applies: The promise of substantial earnings with minimal effort or training is a sure warning sign of fraud.”

Bernstein urged prospective investors to carefully investigate a firm’s references and to check them out with law enforcement agencies.