Wednesday, July 18, 2007
Saturday, June 23, 2007
How do con artists rip people off with FOREX trading scams? The "brokers" make the usual appeals found in other financial scams:
- Invest now before it's too late!
- You'll make tons of money!
- Trust us--we're experts!
In short, Labell's broker's used scripted pitches to lure in customers while touting huge pofits--even as they avoided discussing the risks and the firm's abysmal track record in investing.At least 241 customers lost substantially all their assets.
But at last justice is served. Better make that at long last--the recent action stems from a complaint filed three years ago, and the robbing had been going on before that.The caveat: given Florida's demographics, at least some of those who were scammed are dead by now, even if the perps have any money to disgorge.
Image from the FBI White Collar Crime site.
Tuesday, June 12, 2007
Sunday, June 10, 2007
Before getting into the grey areas and clearly illegal stuff I promised, it's appropriate to lay out some basic realities about foreign currency, or FOREX, trading.
In short, FOREX trading is being marketed to individual investors like the malt liquor of the financial world.
Successfully trading foreign currencies requires a lot of highly specialized knowledge and capital. The arena is full of big players--international banking groups, hedge funds, and governments and their treasuries. Not the place for most individual investors.
But several things happened to make it very easy to market to those who should stick to mutual funds, or maybe even savings accounts.
Thanks to the fall of the Russian Ruble and the appreciation of the Euro, it became easy to market directional currency trading--the kind where you buy and hope to hell the price keeps going the way you want it to. However, investors still get their faces ripped off in these scenarios, and it's even worse when folks use leverage--borrow money via margin--and attempt to make money in the short term.
And the rise of internet trading platforms has taken place concurrently with internet-based marketing designed to harvest cash through ill-advised use of any number of online trading platforms.
And while FOREX used to require a big down payment, it's now possible to open a $250 "mini" account with a lot of leverage, so you can lose more than you had in the first place.
Now this is all the legal, above-board stuff. Wait'll you see what happens when you add in some good, old fashioned snake oil. I mentioned the phony fakir in a previous post--the futures trading guru who had no talent except in convincing people to believe he had talent.
Multi-million dollar FOREX scandals coming up . . . . .
Image from essays & effluvia.
Thursday, June 7, 2007
- You hear about it from spam.
- The company posts press releases about mundane developments.
- The company posts a press release announcing the hiring of a public relations firm to tout its stock.
- Claims are outrageous and/or idiotic.
- It tries to get you to exchange a legitimate investment for garbage.
- The spam is made to look like research of some sort.
- The promised return--900% in this case--is outrageous.
- The company or its promoter is based in Texas or Florida (this promoter's in Plano, TX, a notorious hive of con artists).
- Seemingly sincere discussion of the stock on bulletin boards. All that dialog is a drama designed to get your attention. It's produced by scripted touters and bashers.
The lure of easy money is always at the bottom of these things, be it stock promotion or Ponzi schemes. The art is in making the unbelievable return seem believable just long enough to harvest the suckers' assets.
If you received spam solicitation for garbage stocks, be sure to forward it to firstname.lastname@example.org. It only takes a second, and you could actually help someone else down the line avoid getting screwed.
Image from here.