Editorial: Seniors, beware of con artists

Monday, Sept. 10, 2007 | 7:01 a.m.

It must be frustrating for the Securities and Exchange Commission and other government agencies that work to protect senior citizens from con artists. Despite their efforts, thousands off seniors are stung every year, with many losing their life savings.

Testifying before the Senate Special Committee on Aging last week, SEC Chairman Christopher Cox said his agency over the past two years has taken legal action against more than 40 operations that existed solely to prey on seniors.

One operation involved 26 people who amassed $428 million by persuading seniors to invest in a fraudulent scheme involving time shares at several hotels in Cancun, Mexico. Also involved in that operation were numerous salespeople who collected an additional $72 million in commissions.

The scope of that scam showed the vulnerability of seniors, who tend to be more trusting than younger people.

Cox also told senators that his agency has been gathering facts on so-called "free lunch" seminars, in which seniors are invited to reputable hotels or restaurants, served a meal, and then hit with sales pitches by people calling themselves "senior financial investment specialists."

The chairman said these fast-talking "specialists" are apt to have earned their impressive-sounding credentials at weekend seminars, and by passing open-book, multiple-choice tests. Of course, the sales pitches are for investments whose high risk is not disclosed. This is one reason why seniors account for 30 percent of the country's fraud victims while accounting for only 15 percent of the population.

Congress and government agencies can pass laws and regulations designed to protect seniors, but, in reality, nothing works better for seniors than a highly developed sense of skepticism when confronted with deals by strangers.

Seniors wishing to become informed about the scams targeting them can visit www.sec.gov/investor/seniors.shtml. The site links to warnings about common scams and fraudulent information that are frequently marketed to them.