(MONEY Magazine) – ''DADDY TOLD ME THAT WHEN I'M 65 IT'S GOING TO TAKE ALMOST $2 MILLION A YEAR TO LIVE THE WAY I DO NOW. . . . SOUNDS LIKE A LOT OF MONEY. CALL MY DADDY. SHEEN FINANCIAL GROUP WILL MAKE SURE YOUR NEST EGG DOESN'T LOOK LIKE A HUMMINGBIRD EGG WHEN YOU NEED IT.'' THAT'S BRIAN SHEEN'S EIGHT-YEAR-OLD SON, ARIEL VOYAGER, IN A RECENT RADIO COMMERCIAL FOR HIS FATHER'S BOCA RATON, FLA. INVESTMENT ADVISORY FIRM. YOU CAN STILL HEAR HIS PITCH DURING SHEEN'S THREE-HOUR RADIO SHOW, FINANCIAL INSIGHTS, NOW BROADCAST WEEKDAY MORNINGS AND ON WEEKENDS ON SEVEN FLORIDA A.M. STATIONS. IF YOU'RE ONE OF SHEEN'S DEVOTED RADIO FOLLOWERS (AND HE SAYS THERE ARE ABOUT 100,000 OF THEM), JUST LISTENING TO THE SHOW WON'T COST YOU ANYTHING. BUT TAKING HIS ADVICE COULD. UNLIKE MOST RADIO HOSTS, WHO GET PAID TO BROADCAST, SHEEN ACTUALLY PAYS THE STATIONS TO PUT HIS SHOW ON THE AIR -- $200,000 LAST YEAR BY HIS OWN ESTIMATE. IN REALITY, HIS SHOW IS A MEGACOMMERCIAL DESIGNED TO LURE INVESTORS INTO THE OFFICES OF SHEEN FINANCIAL GROUP. SHEEN THE SALESMAN TAKES IT FROM THERE. FACE TO FACE, HE HAS PERSUADED SCORES OF HIS CLIENTS TO HAND OVER THEIR SAVINGS TO HIM, ONLY TO SEE THEIR MONEY DWINDLE IN HIGH-COMMISSION INVESTMENTS LIKE REAL ESTATE LIMITED PARTNERSHIPS AND INSURANCE COMPANY ANNUITIES. DESPITE ARIEL SHEEN'S PROMISES, MANY OF HIS DADDY'S CLIENTS, TYPICALLY ELDERLY RETIREES, HAVE WOUND UP HOLDING HUMMINGBIRD EGGS -- AND BROKEN ONES AT THAT. Some 900 AM and FM stations now broadcast financial advice shows of an hour or longer featuring the likes of NBC's popular nighttime host Bruce Williams (2.2 million listeners weekly) and Don McDonald of the Business Radio Network. These knowledgeable pros dispense advice that is often quite helpful. They don't peddle specific investments. If they read commercials, they clearly identify the prepared text as an ad, as mandated by the Federal Communications Commission. As many as 1,800 other stations run quick money tips sometime during the day. But Sheen and 200 to 300 other self-described money experts, now buying an estimated $15 million worth of air time on radio stations around the country, are another breed entirely. While they usually give the impression of offering impartial advice -- MONEY even quoted Sheen giving standard investing advice in a 1987 article -- these broadcast barkers are actually using the airwaves in major metropolitan areas from Florida to San Francisco to steer listeners to their investment firms or even into specific investments from which the hosts stand to profit personally. The worst of the shows amount to audio boiler rooms -- a way that telephone hucksters can sucker unsuspecting listeners into investing in con games. Bernard Meltzer, the host of a well- respected money show on New York City's WOR who considers himself a journalist, adds that ''the majority of hosts doing financial shows are salesmen.''

THE FINANCIAL DOLDRUMS in the radio industry suggest that even more self- serving moneymen (these hosts are rarely women) will be getting their own shows soon. Radio advertising had grown at a 9% annual rate in the '80s but eased off last year to only 5%. According to Robert Unmacht, publisher of M Street Journal, an industry newsletter, some 900 radio stations now gladly accept $50 to $5,000 an hour for paid programming of all kinds. Eight years ago, fewer than 500 stations broadcast such commercials. Some stations even go so far as soliciting self-styled financial experts, diet doctors, plastic surgeons and others with services to sell, to buy what might otherwise be dead air time. The worst of the radio rip-off artists aren't just misleading their listeners; they are endangering their wealth as well. Ellyn L. Brown, Maryland's state securities commissioner, is especially concerned. ''Radio is a very powerful medium,'' she says. ''A commercial masquerading as a regular show is a major problem. People can easily be taken in by what sounds like regular programming.'' If the notion of a 30-minute to three-hour radio commercial seems reminiscent of TV's infomercials (No-Money-Down Real Estate! Amazing Stain Removers!), it should. Both types of ''ad nauseam'' are the offspring of 1980s FCC rulings that freed commercial radio and TV broadcasts completely from the previous limit -- 16 to 18 minutes in any one hour -- so that ads now can be any length. Lately, both the FCC and the Federal Trade Commission have been cracking down on TV infomercials, accusing some of being fraudulent and demanding that others acknowledge their commercial nature more frequently to avoid confusing viewers. There have been few actions against radio hosts so far, however.

THERE IS NO DOUBT that unsophisticated investors are impressed, if not mesmerized, by radio's money show hosts. During our three-month investigation of this subject, listeners who lost money by investing with the pitchmen admitted repeatedly that they thought the hosts and their recommendations were okay because they were on the radio. Margie Anne Benante, 66, of Highland, Ind. was a regular listener to Warren Freiberg, a call-in-show host who has appeared on radio stations around Chicago for 30 years. In 1987, when Freiberg recommended the investment advice of a new host, Joseph Kobielak, Benante liked what she heard. But when she turned over $136,000 to Kobielak to invest, most of the money disappeared (see the box on page 82). ''I've been very sick about the whole thing,'' Benante says. Kobielak is now serving time in a Minnesota prison for defrauding two other investors. Brian Sheen, 38, does not deny the self-serving nature of his show, which he says helped develop enough leads for his firm to earn $4 million in commissions last year. ''It's very clear as I promote my books and seminars on the show that ((it's paid programming)),'' he said in an interview with MONEY. Listeners who call Sheen's show are always asked -- off the air -- for their full names and telephone numbers, a practice not followed by talk show hosts who are paid by the stations for their radio work. After the show, Sheen's sales staff phone those callers and invite them to counseling sessions in hopes of signing them up as clients. Defending the use of the show as a sales tool, Sheen says: ''There's no such thing as unbiased communications. What's important is, do the products I talk about make common sense?'' The answer: not often enough, according to a score of Sheen's clients and former business associates interviewed by MONEY. Former staffers say that Sheen pushes clients into investments -- partnerships, annuities, coins, life insurance and mutual funds -- that all have one thing in common: they throw off sizable commissions for the Sheen organization. Sheen told MONEY that his firm charges annual commissions averaging one-half of 1% to 1% of invested assets, about the same as any major brokerage. But several of his investors and former employees say that 4% to 8% commissions are more common, and some partnerships come with up-front charges as high as 15% of the amount invested. Sheen's former employees also say he has boosted his commissions by encouraging clients to shift cash from one investment to another. ''You have to move the money to make money,'' he has bellowed at staff meetings. John Hunter, who worked for Sheen as a financial planner for two years before starting a rival investment counseling firm last year, says of Sheen's operation: ''I've never been in a firm where there was so much dissatisfaction among the clients about their investment losses.'' Dorothy Jenkins, 62, a former client of Sheen's, is a case in point. She feels betrayed by what she claims were his flat-out lies. Jenkins has filed suit to recover the roughly $100,000 she lost from 1982 to 1987 investing on Sheen's recommendation in Kimberly Associates, a tax-sheltered, computer-leasing partnership. ''He personally assured me that it was a sound investment,'' Jenkins says. But the parent company of Kimberly Associates, Rothschild Reserve Group, went out of business in 1987, and the tax-shelter program became worthless. Sheen, who is contesting the lawsuit, told MONEY he ''never, never, never gave ((Jenkins)) such assurances.''

SOME OF THE BETTER radio financial talk show hosts have demonstrated expertise with business degrees and sharp investment insights. Sheen's educational background, however, is unorthodox. He claims in his own publications to have received certification in business, psychology and education from Hubbard College in England. Hubbard College, it turns out, is run by the Church of Scientology in England. Sheen also boasts in promotional pamphlets that he had been a respected employee of Dean Witter Reynolds and E.F. Hutton. What he doesn't publicize is that he was fired from both firms. (He says he tried to resign.) Sheen also was denied state registration in Florida as an investment adviser for 18 months in 1984 because, in his application, he denied that he had ever been discharged from a securities firm. Some of the guests on paid-programming shows like Sheen's are actually delivering cleverly disguised commercials for their businesses. These guests pay the hosts commercial rates to be interviewed for, generally, a few minutes on the air. Last year, the FCC fined radio talk show host Edward ''Buz'' Schwartz (now of KMNY in Pomona, Calif.) and KIEV, a nearby Glendale station where he formerly worked, $10,000 each because he did not disclose to listeners that his guests had paid to get on his shows. Roger Holberg, a lawyer with the FCC's complaints division, explains that there is nothing wrong with a host or a station selling time to a so-called guest as long as that is disclosed to listeners. ''Whether it's snake oil or securities, the same rule applies,'' says Holberg. Schwartz told MONEY that he paid the FCC penalty because it was easier than fighting the agency. ''A lawyer would cost you $20,000,'' he said, ''so it's cheaper to pay the $10,000 and forget it.'' At least one of those same paying guests still appears on Schwartz's KMNY show -- Rees Financial Services, a local brokerage house. Optima Energy, a Calgary, Canada oil and gas company, now pays $2,000 a month for its regular guest interviews. Schwartz adds the words: ''This program was sponsored in part by Optima Energy.'' Still, since the disclaimer airs a while after a taped Optima commercial, listeners may not realize that the guest Schwartz interviewed was actually a paying pitchman. One of the most appalling examples of guests who weren't really guests was on a 30-minute commercial called the Investment Line, broadcast last year across the country on stations such as KEZK in Seattle and WHK in Cleveland. The North Miami-based producers and stars of the show, Anthony Liggio and Gerald Seifer, called themselves the ATEAM -- for applied telemedia engineering and management. On their show, Liggio came on as a guest expert, usually talking with a locally recruited broadcaster about ''a gold rush to the airwaves'' -- he was referring to FCC licenses for wireless cable TV, in which programming is transmitted via microwave to small rooftop dish antennas. He then boasted that though such licenses were worth millions, the ATEAM would prepare the necessary paperwork and file your application for the FCC's license lotteries for $5,000. Those listeners who telephoned the ATEAM's 800 number were sent glossy brochures promising the potential of immediate wealth and were subjected to a barrage of phone calls from the firm's boiler room. More than 200 listeners shelled out upwards of $2 million over a year to get in on this bonanza. But what the ATEAM had not told them, according to an FTC complaint filed in April, was that of the more than 30,000 applications since 1983, only about 150 licenses were granted. The ATEAM also played down the fact that you need as much as $1 million to start a wireless cable operation. The FTC has frozen the ATEAM's assets and is seeking a permanent court injunction to stop it from making false claims. Through a lawyer, the ATEAM members declined comment.

HOSTS SOMETIMES tout investments on the air in which they have a vested interest. Perhaps the king of vested interests is Los Angeles-based R.G. Reynolds. According to the Securities and Exchange Commission and the U.S. Attorney for California's Central District, Reynolds defrauded hundreds of radio listeners who invested in his schemes from 1985 to 1987. A former insurance salesman whose Florida license was revoked in 1983 for allegedly pocketing clients' health insurance premiums, the charismatic promoter in 1985 began broadcasting The Reynolds Rap, a 90-minute daily show on Glendale station KIEV (where Buz Schwartz later worked). Reynolds quickly gained a following from among his 40,000-odd listeners while pushing speculative investments ranging from nonexistent rare-coin portfolios to penny stocks. Over and over again he said that he ''just wanted to help the little guys.'' From late 1985 to early 1987, Reynolds routinely used the show to plug the Moreland gold program, actually another boiler-room operation. He persuaded hundreds of people, including his radio fans, to buy shares in a scheme to smelt gold from the debris left behind at an abandoned mine in Kern County, Calif. (see MONEY, August 1989). During this same period, Reynolds persuaded listeners and others to invest more than $2 million in his Managed Account/ Loan Program, for which he guaranteed a 30% annual return. In 1990, acting on a suit filed by the SEC, a judge ordered Reynolds to pay nearly $6 million to his gold-mine and managed-account investors. But even after the SEC action, Reynolds wasn't forced off the air. He appealed the judgment and filed for bankruptcy, effectively staying the decision, and moved his show to a small San Fernando Valley radio station, KPLA. Last March, Reynolds was indicted on 60 counts of mail fraud resulting from his managed- account and rare-coin investments. The indictment called the managed- account program a classic Ponzi scheme: Some early investors were paid hefty returns from money put up by later investors. The rest are waiting, probably in vain, for Reynolds to pay them back. Reynolds is now in an L.A. jail pending his trial. If convicted, he faces up to 320 years in jail and $15 million in fines.

WHAT SHOULD YOU DO when listening to a radio money show? First, always be cautious about taking off-the-cuff advice too personally. Says Ron Roge, a spokesman for the National Association of Personal Financial Advisors, a group of fee-only financial planners: ''I have a general problem with these radio advisers. Someone may call in and get advice on a specific problem. But a lot of other people will turn around and implement that same advice even though it might not apply to them.'' Second, given the number of scoundrels behind the microphones, keep one hand on the dial and the other on your wallet. More than ever, be wary of broadcast authorities. When you hear a host for the first time, you may be wise to call the station and ask whether management hired him or whether he pays for the air time. The FCC demands that a radio station offering paid programming make a clear announcement to that effect. Such a disclaimer should say: ''This program is paid for, sponsored by, or furnished by, x company or person.'' Some other static signals: -- A guest will appear on the same show as a commercial for his or her company. What you are really hearing are two different types of commercial for the same business. -- The advice is remarkably similar for many callers, though each circumstance seems different -- purchase an investment that the host sells. For example: ''You should buy an annuity, and my firm has some good ones.'' -- The host frequently invites listeners to attend his seminars or to come to his office for consultation. This is a tip-off that the broadcaster is really trying to drum up business. Craig Hoogstra, director of the financial services department for the American Association of Retired Persons, offers this final warning: ''Charisma plays such a large role in whom we choose to do business with. But the truth is that charisma is not a reason for entrusting someone with your money.''