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Getting duped by an Internet scam artist is one thing. When the feds do it, that's a whole other story. But it happened to close to 1 million Web surfers who tried to invest in a fake product touted on the Web site of the bogus McWhortle Enterprises.

The site touts ground-floor investment opportunities in a company that purportedly makes a handheld "Bio-Hazard Alert Detector" that can sniff out anthrax at distances up to 50 feet. But the site is a sham. Created by the U.S. Securities and Exchange Commission, it is meant to warn would-be investors about the risks of investing online.

"This site has been an unmitigated success for us," says Susan Wyderko, head of the SEC's Office of Investor Education and Assistance, which launched the site at the beginning of January.

Too Good to Be ...

McWhortle Enterprises sounds like a great investment opportunity. According to the Web site, analysts and customers are raving about the Bio-Hazard Alert Detector.

The company even plans to go public, and has scheduled a press conference at the SEC offices, according to a fake press release the SEC gave to the PR Newswire Association. PR Newswire, which distributes press releases to journalists, was in on the stunt and distributed the phony press release only online.

On Thursday, the SEC itself hosted the press conference, exposing its own hoax.

But visitors to the McWhortle site learned the lesson even sooner. There, they are promised investment gains of more than 400 percent in three months. The site asks for credit card information and a Social Security number "for identification purposes."

People who took the bait and clicked received a page warning them about rip-offs and urging them to do their homework before investing.

"If you responded to an investment idea like this, you could get scammed!" reads the message, which goes on to explain that McWhortle and its miracle device are complete fabrications.

The Jig isn't Up

McWhortle's offers are closed, but you may want to stay on your guard.

The SEC has planted two similar fake Web sites, hoping to snare and scare the gullible into thinking twice about online investments before they fork over their money.

In 2001, the SEC successfully prosecuted 77 cases of Internet-related investment scams, compared with 57 in 1999, according to John R. Stark, chief of the SEC Office of Internet Enforcement. He says his office gets about 350 e-mail reports of suspicious Web sites each day.

Internet users were scammed out of $117 million in 2001, according to the Internet Fraud Complaint Center, a cooperative law enforcement venture.

"We have seen a lot of scams that prey on the public's post-September 11 fears," Stark says.

Snagging Scammers

In December, Federal regulators sued a security firm, Spectrum Brands, and several individuals for an alleged attempt to exploit the nation's anthrax fears and manipulate Spectrum's stock price.

The SEC claims Spectrum had posted in early November a description of a handheld device called the DeGERMinator that could "wipe out surface germs in less than five seconds, including anthrax."

Spectrum's stock skyrocketed, rising to $14 on November 5 from around $4 on November 1, the SEC says. Spectrum is actually owned by a group of stock promoters in Hicksville, New York. Some of those sued have recently pled guilty to unrelated felony charges and are awaiting sentencing, according to the SEC.

The DeGERMinator device has not been shown to be effective against anthrax spores, an important distinction, because "exposure to anthrax spores causes anthrax disease," the SEC says.

Borrowed Tactics

The SEC's unorthodox approach to raising awareness and caution about online investing is similar to tactics of the Australian National Securities and Investment Commission.

In 1999, as an April Fool's joke to test the public's gullibility, the Australian agency set up a phony Millennium Bug Insurance Company online. Purporting to offer blue-chip companies insurance against losses caused by the Y2K bug, the site solicited investments in the company from Internet visitors.

More than 10,000 people visited the Web site, including 233 who offered to invest a total of $4 million in the company. On April 1, investors were told the Web site was part of an elaborate scam to teach investors to be more careful.

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