The Bottom Line: On financial schemes

The pitch is blatant: "Are you sick and tired of watching your hard-earned retirement go up in flames on the stock market? Purchase gold, silver, platinum or palladium and hold your investments in an Individual Retirement Account" instead.

That's the "advice" of a growing number of virtually unregulated IRA-holding and commodities-selling companies -- most charging hefty fees for their services, and all setting desperate retirement account holders up for gold's inevitable bubble burst. (Perhaps you've seen the television ads?) Indeed, the notion that gold will preserve retirement account value at this point is laughable; all you have to do is look at oil's current $48 price per barrel to see that those sucked into peak-priced commodities (like oil's late-2008 peak of $145) are destined to lose their shirt.

So while IRAs can invest in bullion and certain gold or silver coins, the pitch is representative of the types of financial schemes making inroads during this recession where the rich get richer and the poor, well, they stay there. Pitches for Ponzi and chain-letter pyramid schemes -- both out and out illegal and rarely trickle down to final participants -- are up, finds a new National Consumers League survey.

"Since pyramid-schemes operators often try to disguise their scams as legitimate home-based businesses," reports the NCL study, "the 31 percent of survey respondents who reported being more likely to consider a home-based business due to the current economic environment could be especially vulnerable."

NCL's "How Can You Tell If You Are Being Ripped Off?" publication provides a check list for any "business opportunity," but sources of financial schemes go well beyond business opps. "Whether you realize it or not," says best-selling financial author David Bach in an Associated Press review, "we are all engaged in a never-ending battle with giant corporations and economic institutions whose only goal is to separate us from our hard-earned dollars."

No sector is safe. Even the Neighborhood Assistance Corporation of America, a HUD-certified non-profit promising help with mortgage refinancing with a nationwide tour, charges a whopping $50 per month (over five to 10 years) for its pre-home-purchase contract review. That's $3,000 to $6,000 charged to those who, arguably, can least afford it.

As my spry grandmother still reminds me: "Nothing ever comes free; at some point, someone will have to pay." For Gatherers faced with this new rash of financial schemes, it's time to ensure you won't be paying that price.

RESOURCE: Think you're being targeted with a fraud? Check out http://www.fraud.org/ for help.

		Jennifer D. Meacham, Gather Money Correspondent
	Jennifer's column, "The Bottom Line," is published every week to the Gather Essentials: Money channel. Jennifer is a business and personal finance columnist who covers money matters for RedwoodAge.com and Gather.com, and co-authored the best-selling retirement investing guide "IRA Wealth: Revolutionary IRA Strategies for Real Estate Investment" (Square One Publishers, New York). Keep up on the latest news and analysis into how you can take control of your business and personal financial future by joining Jennifer's "Self-Directed Investing 101" network.

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