Advance fee frauds ask investors to pay a fee up front—in advance of receiving any proceeds, money, stock, or warrants—in order for the deal to go through. The advance payment may be described as a fee, tax, commission, or incidental expense that will be repaid later.

Some advance fee schemes target investors who already purchased underperforming securities and will offer to sell those securities if an advance fee is paid—or target investors who have already lost money in investment schemes. Fraudsters often direct investors to wire advance fees to escrow agents or lawyers to give investors comfort and to lend an air of legitimacy to their schemes. Fraudsters may also try to fool investors with official-sounding websites and e-mail addresses.

Advance fee frauds may involve the sale of products or services, the offering of investments, lottery winnings, found money, or many other so-called opportunities. Fraudsters carrying out advance fee schemes may:

• Offer common financial instruments such as bank guarantees, old government or corporate bonds, medium or long term notes, stand-by letters of credit, blocked funds programs, fresh cut or seasoned paper, and proofs of funds;

• Offer to find financing arrangements for clients who pay a finder’s fee in advance; or

• Pose as legitimate U.S. brokers or firms and offer to help investors recover their stock market losses by exchanging worthless stock—but requiring investors to pay an upfront security deposit or post an insurance or performance bond.

In Maine, advance fee frauds are illegal and are considered a form of financial scam where individuals are asked to pay money upfront for the promise of receiving a larger sum of money or financial benefit later, which typically never materializes. These schemes often involve the fraudulent offer of financial instruments, assistance in recovering stock market losses, or securing financing in exchange for an advance fee. Maine's Uniform Securities Act (Title 32, Chapter 135) regulates securities and protects investors from fraudulent practices, including advance fee schemes. Additionally, federal laws such as the Securities Exchange Act of 1934 and the Federal Trade Commission Act also provide a framework to combat securities fraud and deceptive business practices. Victims of advance fee frauds in Maine can report the matter to the Maine Office of Securities or the Federal Trade Commission. It is advisable for individuals to consult with an attorney if they suspect they have been targeted by an advance fee scheme to understand their legal rights and potential remedies.