Jul. 27--ECONOMIC TIMES ARE TOUGH, with even the wealthy feeling the pinch of the recession as stock portfolios, retirement savings, 401(k) plans and other investments take a beating.

It may be tempting for many to try to recoup the money they lost as quickly as possible -- and, as a result, financial experts say scam artists are on the hunt for gullible or vulnerable investors looking to make a quick buck.

"The recent history, over the last 24 months, has shown there are scams out there," said David Mulhall, a certified public accountant and investment adviser representative at LPL Financial Services in Naugatuck.

"Most individuals have suffered losses, to some degree, based on the current market conditions," he said. "People might be enticed to make their money back faster than usual."

To avoid being scammed by bogus investment opportunities, the Connecticut Society of Certified Public Accountants advises consumers to ask themselves a series of questions before handing over any money:

--Is it too good to be true? This should always be one's first question when considering spending money.

An investment promising guaranteed, rapid or unusually high returns should be examined closely. Look at the investment materials to determine how these assurances can be possible.

Also, keep in mind that high-yield securities also carry high risks, including the possibility of losing the entire investment.

Remember that just because a company has a nice office, attractive brochures and a good Web site doesn't mean it's poised for success, or even a legitimate business. Ask as many questions as possible.

"If you're nervous about an investment, that's the immediate red flag," Mulhall said. "Really follow your instincts."

--Is this company registered? Companies that register their securities with a government regulator are required to publish an annual report and a prospectus with details of its financial situation.

While it's possible to sell securities without registering, that should be another red flag to investors. If a company is trying to avoid regulation, and the disclosure that regulation requires, it may have something to hide.

"Do a background check," said Mulhall, adding that information on legitimate companies is readily available to consumers. Investors should not be afraid to look up a firm or broker's credentials, as well as the states in which they are registered.

--Does this investment have a track record? Some scams give investors the chance to get in on the ground floor of a new opportunity. While it may be tempting, it is best to choose an investment that has a proven history of success.

--What do I have to invest immediately? Many scams ask investors to send in money right away, claiming there are only a few shares of a company remaining.

Consumers should turn down such offers, as the con artists are merely trying to prevent them from asking questions.

--Is all invested money being used to buy securities? Salespeople often use high-pressure tactics to lure people into investing because they make commissions from any sales -- commissions that are deducted from investors' money.

Before investing, find out whether there are fees and costs involved and learn how much of the total outlay will actually be used to make investments.

Legitimate brokers charge transaction fees, but it is wise to ask in advance what those fees are in order to know what amount of money will be invested.

Overall, investors should follow their instincts and only invest money where and when they are comfortable doing so, Mulhall said. Those attending investing seminars, where they worry they may be taken advantage of, should bring a friend with them, and investors should always consider having their certified public accountant review any investment opportunities of which they are wary, he said.

-----

To see more of New Haven Register, or to subscribe to the newspaper, go to http://www.nhregister.com.

Copyright (c) 2009, New Haven Register, Conn.

Distributed by McClatchy-Tribune Information Services.

For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.

A service of YellowBrix, Inc.