At least 120 people were arrested in what the agency called the biggest infiltration of Wall Street by organized crime in history. The schemers supposedly swindled investors out of US$50 million.

Implicated along with members of some of New York's biggest crime families were a former Big Apple police detective, an investment advisor, various stock promoters, brokers, and directors and officers of certain companies.

The Mob is far from a pioneer in hoodwinking investors. In fact, they probably just got jealous watching others get rich off of rubes desperate for investment profits. They wanted a piece of the action. In a way you can't really blame them.

So this news of crime bosses invading the turf of briefcase-carrying, chain-smoking yuppies shouldn't scare you.

Pump and Dump: Sounds like some sort of Mob hit technique, doesn't it?

Well, this ploy was in fact a central piece of the Mob swindle mentioned earlier. But no guns were involved.

With pump and dump, owners and promoters of thinly traded stocks pump up the value by hyping them, or using bribes and threats to get brokers to do their dirty work. Suckers buy. The crooks sell at a peak and then short the stock. The price plummets. The suckers are left with a huge loss. This con works best with stocks that are thinly traded, because the prices of these stocks can be manipulated more easily than those of securities that are more widely held.

As with most cons, the pump and dump can easily be modified for the Internet. Crooks can post misleading messages to bulletin boards, create phony Web newsletters, and produce bogus press releases. In fact, some of the techniques they've developed are very slick indeed, so you need to be more wary than ever.

The Boiler Room: You remember the boiler room in the basement of your elementary school. A forbidding place, dark and dank, filled with a maze of pipes and mysterious gauges. No one wanted to go there.

Which made the boiler room a great place to hide if you didn't want to be found.

Now, the boiler room we're talking about here could be any room, in any city, in a hotel or office building. And these boiler rooms serve as refuges for those who don't want to be found.

Here, crooks sit and "cold call" you, your neighbor, anybody... to pitch "can't miss," "risk-free," "high flying" investments. Here's how the SEC describes a typical boiler room operation:

"Unregistered salespeople, working from various offices in lower Manhattan, cold-called investors using a high-pressure sales pitch that included numerous material misrepresentations and omissions. The defendants used mail drops and telephone forwarding services so that investors would not know their actual location. The unregistered salespeople were paid undisclosed cash commissions of approximately thirty percent."

These vermin are good at the high-pressure game. According to the SEC, "Aggressive cold callers speak from persuasive scripts that include retorts for your every objection. As long as you stay on the phone, they'll keep trying to sell."

Now, sometimes the cold call multiplies into cold calls — plural. They warm you up in the first call, trying to create trust. Second, they set you up by whetting your appetite for this great deal they can supposedly get for you (as if they were doing you a personal favor). And then, the third time, they close the deal — telling you to buy now or miss out.

Plain OldHype and Misrepresentation: In a recent case cited by the SEC, hucksters solicited investors by telling them the company was going to acquire and operate funeral homes. Not a very sexy business. But a lucrative one. After all... there's always going to be steady demand for their services.

Representatives of the company claimed they had already acquired several funeral homes. Not true. They even hooked an institutional investor, saying there were other, more sophisticated investors involved, and that they themselves had money in the company.

Using these tactics, this company raised more than US$4.3 million from 56 investors. The problem is, the company did very little burying. Rather, its officers shifted the money to other ventures — and their own pockets.

Needless to say, the company is now six feet under and the investors' money went up the chimney.

The ultimate misrepresentation is selling a company that does not exist. Fictitious microcap stocks are particularly easy to create, because there's less press coverage about microcaps in general, and fewer filing requirements.

Sometimes the misrepresentation isn't quite criminal, just excessive hype or "puffery." Even so, you should always be on the alert for misleading company press releases.

Phony Inside Information: First, let's get one thing straight. It's illegal to trade when you have genuine inside information about a company. While it's not technically a con, trading on real inside information can get you into serious hot water.

But when information is leaked to make you think it's inside information, and it's not, you're not a criminal. You're just a sucker.

Bait and Switch: Scamsters will lure you in by encouraging you to buy well-known, widely traded blue chip stocks. Then they pressure you into investing in smaller, lesser-known stocks as well.

"Churning:" Among unscrupulous brokers, churning is one of the oldest tricks in the books. The broker simply keeps buying and selling stocks to create hefty commissions for himself. The trades have little to do with your investment goals, and a lot to do with making the next payment on the broker's boat.

Outright Theft: Lest you believe you're too smart... too sophisticated... too worldly to get hoodwinked, think again. Just take a look at this hot new scandal in Hollywood, home of glamorous stars and sophisticated agents.

A well-known broker has apparently bamboozled big name stars out of more than US$9 million. A 37-year old Wall Street professional, whose clients included Leonardo DiCaprio, Courteney Cox Arquette, Cameron Diaz and Matt Damon, pleaded guilty to raiding client accounts to pay for his lavish lifestyle.

This was a simple asset-kiting scheme, where he used funds from one client's account to make up for money he stole from another client.

He even falsified statements.

Now, these are people who can afford the best, most expensive advice there is. And still they get their gold-lined pockets picked.

This Hollywood broker was clearly nothing but a common pickpocket, except occasionally he slipped a bit of cash from one victim's pocket to another to keep people from noticing they were being robbed.

There are many more scams than these. In fact, the list is virtually endless. But you get the idea. These guys are coming at you from all directions.

Sure, written information in itself doesn't prove the investment's genuine or the broker's above board. The written materials might be total fabrications too... but at least you have something to look at, show to advisers... and hand over to the authorities if necessary.

We're not suggesting you run out and get an MBA. Frankly, most of this stuff isn't rocket science (unless you're investing in Lockheed or Boeing).

But there's plenty of information out there to help even neophyte investors check into any company being pitched to them. Where do you start your research? Well, acquire the company's latest annual report, financial statements, prospectus, and other documents filed with the SEC.

This is one of the upsides to the Internet. Yeah, the "Worldwide Wait" makes it easier to conduct scams, but it also gives the ordinary investor access to materials that can expose them.

When you hear claims about new products or developments, lucrative contracts... whatever... don't take a stranger's word for it. Verify them for yourself.

Call customers of the recommended company. Check with their suppliers. Find out if the company's really in business, and if it's a fully operational enterprise.

Avoid this trap. Even with a genuine investment, you need to understand what you're getting yourself into. After all, it's your money. If you don't look after it, who will?

If you're not getting answers you can understand, keep pressing. There's a line in the sitcom "Mad About You" where someone explains to Paul the red tape he must navigate just to register for a course. He replies, "Tell me again. But this time, talk to me like I'm four." That's what you should say to a broker who's talking over your head.

Even when dealing with your very own advisers, brokers, lawyers, and yes, doctors, make them earn their money — by explaining things to you in a way that you can understand.

Whether you're talking to a broker you've known for years or a cold caller, if you don't understand what he's saying, one of three things is happening.

First, it may be something you simply aren't clear on.

Second, it could be that the salesman or adviser himself doesn't understand.

That is not at all farfetched. How often have you run into some seeming know-it-all who condescendingly tries to explain something to you in tones that imply you're a total moron? But, eventually, in response to persistent questions, he sheepishly admits he doesn't fully understand it himself, and slinks into the back room to ask his supervisor.

And the third possibility is that you don't understand because the hawker of a particular investment doesn't want you to. He is purposely clouding the issue with red herrings and fabricated details.

How can you tell which of these it is?

Let's face it, no stranger's going to call you out of the blue simply to give you a great deal. In fact, no stranger could possibly know whether the stock is right for you or not. He won't know your risk tolerance, the nature of your investment portfolio... or even whether you can afford to invest at all.

So when you do get one of these cold calls — and you will someday, if you haven't already — hang up. No need to be polite. Believe me, these guys are used to it.

If you are in the market for a broker or money manager, shop around. Interview several candidates. Get references. Visit them at the office — and grill them about what they can do for you.

Find out what the salesman is getting out of the deal. Unless he's wearing a priest's collar, he's not going to be in it out of altruism. (And a broker in a priest's collar is reason enough for suspicion.) He's getting a commission, a flat fee, a piece of the action, something. Ask for an explanation of his compensation — in writing.

While you're at it, ask him whether he's registered with the state securities agency. And then confirm this for yourself. If he's licensed, he's also accountable to the state.

What we mean is, if something just doesn't feel right, trust your instincts. As the saying goes, "If it seems too good to be true, it probably is." For example, if they claim you can make 1,000% at no risk to you, run, don't walk, in the opposite direction.

But if something does go wrong... if you have a bad day and let some nefarious character take advantage of you... react as soon as you know you've been hoodwinked.

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