Entrepreneurs Must Continually Be Alert For Con Artists!

We’re seeing an amazing growth of new businesses nationwide, propelled by an entrepreneurial desire held by many Americans.

But this eager class of risk-takers is discovering that the challenges can be greater than they ever imagined.

To all the normal bedevilments of small business—tight financing, uncertain markets, strong rivals—add another: a new breed of unscrupulous moneymen who prey on entrepreneurs.

Con artists have been around for ages, of course. But the fatal combination of entrepreneurial fervor, financial need and naiveté makes fledgling business owners these days easy marks for a new variety of scamsters. Filled with enthusiasm for their own ideas, they can be startlingly inexperienced in finance.

“Technical entrepreneurs, especially, think what they do is important, but that the business side is trivial,” revealed Brad Bertash, director of a Salt Lake City nonprofit venture-capital consulting firm.

Above all, what makes emerging companies ripe for scammers is their often desperate thirst for capital, and the historical difficulty in obtaining funding for start-ups.

So entrepreneurs are left to swim in shark-infested waters. Well intentioned efforts by the government, to make it easier for small businesses to raise capital, have paradoxically created hotbeds of abuse.

In fact, many of the schemes used to squeeze money from unsuspecting entrepreneurs are technically legal. Operating just this side of the law, many sophisticated promoters take advantage of loose regulation.

“These guys are like tax attorneys—always looking out for a new loophole,” explained Howard Sirota a former securities dealer investigator. “They know exactly how far they can go, and still avoid trouble.”