"Advance Fee Fraud" Schemes

Advance fee fraud gets its name from the fact that an investor is asked to pay a fee up front or in advance of receiving any proceeds, money, stock or warrants in order for the deal to go through.  The fee may be in the form of a commission, regulatory fee or tax, or some other incidental expense. These secondary "advance fee" schemes work very similarly to boiler room operations, the difference being that an advance fee scheme generally targets investors who already purchased underperforming securities, perhaps through an affiliated boiler room, offering to arrange a lucrative sale of those securities, but first requiring the payment of an “advance fee.”

One type of advance fee fraud is known as a Nigerian “Advance Fee Fraud.”  In these schemes, someone pretending to be a Nigerian official or business-person asks ordinary individuals and companies to help move millions of dollars out of Nigeria in exchange for high, hassle-free profits. The fraudsters solicit investors through mass mailings, faxes, phone calls, and e-mails.

The U.S. Secret Service has set up a task force for addressing only Nigerian "Advance Fee Fraud" schemes.

If you have suffered a financial loss from a Nigerian “Advance Fee Fraud” scheme, please contact your local U.S. Secret Service Field Office. You can find the nearest office on the Secret Service website.

For more information about advance fee schemes and boiler rooms, please see the following:

• The Fleecing of Foreign Investors: Avoid Getting Burned by "Hot" U.S. Stocks
• Worthless Stock: How to Avoid Doubling Your Losses
• Protect Your Money: Check Out Brokers and Investment Advisers

http://www.sec.gov/answers/nigeria.htm