RICHMOND — Amid continued high energy prices and instability in the Middle East, oil and gas scams remain a favorite ploy of con artists nationwide. Virginians should be wary of investment schemes promising quick profits in unsuitable or fraudulent oil and gas ventures.

The State Corporation Commission (SCC) urges consumers to use caution before trying to cash in on high energy prices through investments in oil and gas deals. During the past two years alone, state securities regulators nationwide have opened more than 260 cases involving oil and gas-related schemes. These schemes typically are offered by out-of-state promoters.

T“Securities investments offering profit participation in oil and gas ventures can be legitimate for investors who understand and can afford the risk. But too often we are seeing questionable and even outright fraudulent energy deals aggressively promoted to the public,” said Ronald Thomas, director of the SCC’s Division of Securities and Retail Franchising.

TSkyrocketing prices of oil and natural gas in recent years have made a variety of traditional and alternative energy projects attractive to investors, Thomas said. Most of these investments are highly risky and not appropriate for smaller investors. Even when the underlying project is legitimate, any revenues realized can be absorbed by high sales commissions paid to the promoter and dubious ‘expenses’ skimmed off by the managing partner.

T “Unfortunately, most oil and gas fraud victims don’t realize they have been swindled until after their money is gone,” Thomas said. He urges Virginians to investigate before they invest. “Call our office first to determine if the investment and the promoter are properly licensed and registered in Virginia. If they are not, don’t invest,” he said.

TThomas also cautions against cold callers, high-pressure sales tactics, and unrealistic claims. “Investors should do three things before buying into any limited partnership in energy or any other industry. You need to independently research the background of the promoters, get a clear explanation of the deal in writing, and carefully read all the fine print,” he said.

T Scam artists tend to target individual victims and make an unsolicited contact, usually with a phone call, offering a “great” business opportunity. These swindlers usually tell prospective victims that they are licensed and their investment is registered - and they can be quite convincing, Thomas said. “But unless you can afford to lose your money, don’t take them at their word. Find out for sure.” Businesses trying to raise money by soliciting investors must comply with Virginia’s securities laws, he said.

TTo find out whether an individual and his or her company are licensed to sell securities in Virginia and whether they have a history of disciplinary action, contact the SCC’s Division of Securities and Retail Franchising toll-free in Virginia at 1-800-552-7945 or in Richmond at (804) 371-9187. You may e-mail the division at SEC_Registration@scc.virginia.gov, or visit its website at www.scc.virginia.gov/srf.

###