Business Booms for Opportunity Crooks : Fraud: Swindlers find fertile ground among those looking for a chance to make money.

As a retired Oregon state policeman, Larry Jensen thought he knew how to protect himself.

Looking for a business to supplement his income, he had run across a company that sold portable car alarms and claimed to be looking for people to sell them. So Jensen, of Tigard, Ore., did some checking. He went to the Better Business Bureau, law enforcement officials, even the publisher of the magazine where he had seen the company’s ad. No one knew of problems, so Jensen and his wife signed up.

But the Jensens became victims anyway. After running an extensive local ad campaign as the company instructed, they sold exactly one alarm--and it didn’t work.

“We were victimized by this company. It could happen to anybody,” Jensen said.

State and federal officials caution people that business opportunity scams are the fastest-growing type of fraud in the country today.

Changes in the U.S. economy have created a fertile field for crooks. Corporate downsizings have left many people out of work, and those lucky enough to have jobs are seeing their earning power erode. People whose nest eggs are small or who fear a severance check won’t be enough to tide them over make easy targets, officials say.

Con artists who a few years ago might offer worthless sweepstakes tickets, penny stocks or gold and silver contracts are now pushing “opportunities” to earn $35,000 or $40,000 a year with just a few hours’ work a week. They often place classified ads in newspapers or run commercials on local TV. Some even run prominent, expensive ads in reputable national publications.

Typically, the offers involve gadgets--gum-ball machines, pay telephones, electronic games or display racks for greeting cards or compact discs. The swindler promises to provide the machines, find good locations for them and provide servicing and supplies. The investor is usually is responsible for cleaning and restocking the machines and collecting the money.

It may sounds straightforward enough, but it often doesn’t work out that way. Victims are required to pay large sums upfront--to buy the machines or have exclusive rights to a territory--only to find that the products don’t work and that there is little or no support from the people selling them, regulators say.

Deborah Bortner of the Washington State Securities Division told of a 51-year-old single woman from Mercer Island, Wash., who wanted to supplement her income so she could pay for her three daughters’ education. She invested $13,000 in video pool and video bowling games that broke down within three months. When she tried to get them repaired, the company sent her more machines, which she had not ordered.

There are no comprehensive figures for the losses these scams have caused, but officials estimate that they run into the hundreds of millions of dollars. Three cases recently brought by the Federal Trade Commission involve losses totaling $64 million, FTC Chairman Robert Pitofsky said.

Much of the fraud goes unreported. “Victims think of themselves as intelligent,” and they don’t want friends and relatives to know they have been taken, Maryland Atty. Gen. J. Joseph Curran Jr. said.

In an attempt to curb such fraud, officials of the FTC, Justice Department and North American Securities Administrators Assn.--a group of state regulators--earlier this month announced a coordinated effort to crack down on the crooks and warn potential investors. They have changed their usual stance of waiting for consumer complaints in favor of sending out investigators posing as potential investors to answer suspicious newspaper and TV ads. The effort so far has resulted in nearly 100 legal actions against people suspected of operating scams.

But “tough laws and even tougher enforcement are not the entire answer,” Bortner said.

Investors must be suspicious themselves, and be aware that even checking with the authorities may not be enough.

Business opportunity crooks are “stealth con artists,” said Eileen Harrington of the FTC. They change names, locations and other means of identification, so there may well be no complaints on file against them.

They also plant references, so that if you “call the people who are purportedly successful operators and hear from them about the ease and success with which they’ve been able to achieve phenomenal earnings, you’re talking to liars,” Harrington said. “These are people who are getting paid by the crooks.”

Investors should check anyway, of course, and they should also consult experts such as lawyers or accountants, the officials say.

And, of course, as always: Be wary of opportunities that sound too good.