Consumer Tips

Prime Bank And Other Banking-Related Investment Schemes

Lured by the promise of astronomical profits and the chance to be part of an exclusive, international investing program, investors are once again falling prey to bogus 'prime bank' schemes. These fraudulent schemes involve the purported issuance, trading, or use of so-called 'prime' bank, 'prime' European bank or 'prime' world bank financial instruments, or other 'high yield investment programs' ('HYIP's). The fraud artists who promote these schemes often use the word 'prime' or a synonymous phrase, such as 'top fifty world banks' to cloak their programs with an air of legitimacy. They seek to mislead investors by suggesting that well regarded and financially sound institutions participate in these bogus programs. But prime bank and other related schemes have no connection whatsoever to the world's leading financial institutions or to banks with the word "prime" in their names. The Securities and Exchange Commission and other federal and state
agencies are continuing to warn investors about these schemes.

Prime bank programs often claim investors' funds will be used to purchase and trade 'prime bank' financial instruments on clandestine overseas markets in order to generate huge returns in which the investor will share. However, neither these instruments, nor the markets on which they allegedly trade, exist. To give the scheme an air of legitimacy, the promoters distribute documents that appear complex, sophisticated and official. The sellers frequently tell potential investors that they have special access to programs that otherwise would be reserved for top financiers on Wall Street, or in London, Geneva or other world financial centers. Investors are also told that profits of 100% or more are possible with little risk.

Individuals and entities are targeted, including municipalities, charitable associations and other non-profit organizations. The promoters of these schemes have demonstrated remarkable audacity, advertising in national newspapers, such as USA Today and the Wall Street Journal. Some promoters of these schemes avoid using the term 'Prime Bank note,' and tell prospective investors that their programs do not involve prime bank instruments in an effort to demonstrate that their programs are not fraudulent. Regardless of the terminology, the basic pitch that the program involves trading in international financial instruments remains the same, and investors should continue to be vigilant against such fraud.

Signs of Banking-Related Investment Fraud are Excessive Guaranteed Returns, Fictitious Financial Instrument, Extreme Secrecy, Exclusive Opportunity, and Claims Of Inordinate Complexity.