- The Washington Times - Wednesday, August 31, 2005

REUTERS NEWS AGENCY

Financial scammers are already hitting investors with post-Hurricane Katrina stock scams tied to speculation about spiking energy prices, U.S. market regulators warned yesterday.

After catastrophes like Katrina, scammers often rush to repackage old schemes around the latest sensational headlines, the U.S. Securities and Exchange Commission said.

“Already we are seeing e-mails touting stocks on the basis of hurricane activity in the Gulf [of Mexico],” said Susan Wyderko, director of the SEC’s Office of Investor Education.

“Unfortunately, disasters always bring out scammers who prey on human suffering,” she said.

One spam e-mail making the rounds on the Internet refers to “a spate of refinery glitches and an unusually active hurricane season” and says investors could more than double their money in just days on certain penny stocks, the SEC said.

“This one is certainly worth watching All Week!! You may want to act very early tomorrow morning,” the pitch says.

Such scams often target the elderly and can spread quickly via e-mail, junk fax and through boiler-room operators using telephone cold-call lists, the SEC said.

“We often see opportunistic pitches like this following disasters,” Miss Wyderko said.

After the terrorist attacks of September 11, 2001, the SEC accused Texon Energy Corp. of soliciting elderly people to invest in an oil and gas Ponzi scheme by telling them Texon would profit from rising energy prices owing to the war on terrorism.

Texon sold unregistered stock to investors and fraudulently promised them “an annual 12-percent ‘dividend’ derived from Texon’s oil and gas profits,” the SEC said.

“Instead, Texon paid investors the so-called ‘dividend’ with money raised from other investors,” the SEC said.

A 2002 court judgment ordered Texon to repay $1.2 million in ill-gotten gains after a settlement agreement with the SEC.

Yesterday, benchmark oil prices eased from record highs above $70 per barrel after the United States offered to loan crude oil to replace output lost to Katrina.

But energy experts, warning of a supply shock on the scale of the 1970s, said a two-year bull run that took oil to $70.85 Tuesday may not have run its course.

Katrina, one of the most powerful hurricanes in U.S. history, forced operators to close more than 10 percent of the country’s refining capacity and a quarter of its crude-oil output, spurring a spike in gasoline and heating-oil prices.

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