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Don’t Fall for an Investment Scam – Investor Alert

Oct. 10, 2019

The 申博体育网址’s 申博官网 of Investor Education and Advocacy (OIEA) and Retail Strategy Task Force (RSTF) want Main Street investors to be aware of tactics fraudsters use to lure investors into scams.  This Alert presents actual videos that defendants in 申博体育网址 enforcement actions allegedly used as part of their investment frauds.

Two simple steps can help protect you from being swindled in an investment scam:

  • Check the background of anyone selling or offering you an investment and confirm that the person is currently registered or licensed.  It only takes a few minutes using the free and simple search tools on Investor.gov.  Before you hand over any money or share your contact information, verify that the person is currently registered or licensed and find out if he or she has a disciplinary history.  Investors can also use SALI to find information about certain people who have had judgments or orders issued against them in 申博体育网址 court actions or administrative proceedings. 
  • Look out for common tricks that con artists use to attract investors.  Fraudsters use different means, including through promotional videos, social media, email, phone conversations, and in-person meetings, to lure victims into scams.  If it seems too good to be true, it probably is.  Here are a few examples of actual videos used to cheat investors out of millions of dollars (as alleged in 申博体育网址 v. Atkinson and 申博体育网址 v. Montano):
  • Get Rich Quickly and Easily.  One of the most common gimmicks con artists use is to promise investors that they will make a lot of money in a short period of time – that they will “get rich quick.”  Con artists may trick investors into believing that they will make tons of money with little or no effort (for example, for purchasing products or for performing trivial tasks, such as clicking on digital ads each day).  This tactic often uses images of lavish lifestyles and luxury items to create the illusion of future riches (for example, wealth, fancy cars, mansions, yachts, vacations, etc.). 
In 申博体育网址 v. Senderov and Babazara, the 申博体育网址 took action against a fraudulent multi-million dollar scheme that used boiler-room-like call centers to solicit investors.  The 申博体育网址 alleges that the call centers’ employees had a business practice of promising investors that the investments offered would be highly profitable.  Examples of these promises allegedly include employees telling investors: (1) “We will watch your money double in the next 30 days with no further investments”; (2) if you deposit $30,000 to $40,000, you can expect profits of $3,000 to $4,000 per month; and (3) the goal is for your investments to earn 7 percent per month.  According to the 申博体育网址’s complaint, many investors lost a significant portion of the money they invested.

In this deceptive video, people claim they made extraordinary amounts of money that made their dreams come true by simply clicking a button on an app every day.

Viewers of this deceptive video are invited to become a member of a "Secret Millionaire Society" complete with mansions and luxury cars.

  • Urgency.  Con artists often claim an investment opportunity will be gone tomorrow.  They create a false sense of urgency so investors turn over money “right now,” without researching the investment.  They may trick investors into believing that the investment “opportunity” is limited to a certain number of investors who can get in on it or has a deadline triggered by an event that will soon occur.  Some promotional videos may impose a deadline or feature a fake countdown (for example, “only 12 spots left…11…10…9….”).

An actor in this deceptive video claims, "We give a short window of just 10 minutes…between the time the links are clicked…until we remove the buy button.  And we accept only 10 people per day.  If those slots are gone, you will know that because you will see NO button below.  But if you DO see a button below…It’s available…but you may just have seconds left to get it."

In this deceptive video, viewers are enticed to cash in before the opportunity goes away.

In 申博体育网址 v. Petersen, the 申博体育网址 brought charges against the owners and operators of several boiler-room-like call centers for defrauding investors.  The 申博体育网址’s complaint alleges the call centers’ employees passed themselves off as “brokers” and “financial advisors” despite having little or no relevant experience.  These so-called “brokers” and “financial advisors” allegedly also tried to trick investors into making additional and often large deposits by creating a false sense of urgency.  The 申博体育网址 alleges that the defendants’ training materials stated that “you need to create urgency at the beginning of the call” and defined “urgency” as “giving the client a reason to proceed today and not tomorrow.”  According to the 申博体育网址’s complaint, the so-called “brokers” and “financial advisors” created this “urgency” by telling investors about supposed imminent market events that created profitable trading opportunities but only if the investor acted immediately.  The defendants’ alleged high-pressure sales tactics included citing upcoming earnings announcements by well-known public companies or expected public disclosures of economic news (for example, the jobless rate) to trick investors to invest more money.  
  • Fake Testimonials.  Con artists may pay people to post fake online reviews or appear in videos falsely claiming to have gotten rich from some investment opportunity.  Even testimonials that appear to be independent and unbiased reviews – for example on a website purporting to “review” products and investment opportunities – may be part of the scam.

The narrator in this deceptive video claims he is "for real" and his bank account grew by $8,500 the first day.

This deceptive video includes purportedly ordinary people who claim that they became millionaires in just 3 months.  The 申博体育网址’s complaint in 申博体育网址 v. Atkinson alleges that the narrator and purported millionaires in this video are paid actors.

Never rely solely on testimonials in making an investment decision.  Also, depictions of skyrocketing investment accounts often are fake.  The potential for high investment returns usually involves high risk.  Promises of high investment returns, with little or no risk, are classic warning signs of fraud.

Don’t be hoodwinked if someone tries to use these lines on you.  If you suspect that someone is trying to rip you off with an investment scam, protect yourself and others – report it to the 申博体育网址.

Additional Resources

Investor Alert: Don’t Invite Investment Scams to Find You

Investor Alert: Don’t Buy Into an Investment Scam

Call OIEA at 1-800-732-0330, ask a question using this online form, or email us at Help@申博体育网址.gov.

Visit Investor.gov, the 申博体育网址’s website for individual investors.

Receive Investor Alerts and Bulletins from OIEA by email or RSS feed. Follow OIEA on Twitter @申博体育网址_Investor_Ed. Like OIEA on Facebook at facebook.com/secinvestoreducation.

The 申博官网 of Investor Education and Advocacy has provided this information as a service to investors. It is neither a legal interpretation nor a statement of 申博体育网址 policy. If you have questions concerning the meaning or application of a particular law or rule, please consult with an attorney who specializes in securities law.
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