The Florida State Comptroller's Office warned Monday of a recent increase in fraud involving the sale of so-called "prime" bank instruments.
The investments are reportedly sold under a "confusing and vague" array of names, such as debentures, letters of credit, commercial paper, or prime notes. Sales pitches offer "promises of unrealistic rates of return"-such as a 150% annual rate of profit.
Sellers often tout tactics like pooling investors' funds to buy "prime" bank instruments, often associating the investments with Federal Reserve, European Bank, or World Bank involvement.
The Florida Comptroller said federal supervisory agencies are unaware of any legitimate use of financial instruments called a "prime bank" note.
The comptroller said that many of the fraudulent schemes appear to involve overly complex loan funding mechanisms.