The North American Securities Administrators Association has issued an investor alert about oil and gas scams.

It says that while oil prices have fallen since reaching an all-time high last summer, fraudulent oil and gas deals remain a favorite ploy of con artists.

“Securities investments offering profit participation in oil and gas ventures can be legitimate for those who understand and can afford the risk,” said Joseph Borg, NASAA’s president and director of the Alabama Securities Commission. “But too often we are seeing doubtful and even outright fraudulent energy deals aggressively promoted to the public.”

Skyrocketing prices of oil and natural gas in recent years have made a variety of traditional and alternative energy projects attractive to investors, Borg said. Most of these investments are highly risky and not appropriate for smaller investors. And even where the underlying project is legitimate, any revenues realized can be absorbed by high sales commissions paid to the promoter and dubious ‘expenses’ skimmed off by the managing partner.

Most scam deals, say regulators, are devastatingly simple. “The game isn’t really high-level fraud,” Borg said. “It’s usually more a total misuse of proceeds – take an investors’ money and buy yourself a fancy car or boat.”

Borg said NASAA has issued an alert to investors who may be considering oil and gas opportunities. Because these investments scams tend to be interstate in nature, NASAA also has coordinated a network of representatives from state securities agencies to share information on oil and gas investment schemes. Over the past two years, state securities regulators have opened more than 260 cases involving oil and gas-related schemes and have issued 122 cease and desist orders against promoters.