--Pump and dump stock scams are vintage, which, oddly, though long ago exposed, still thrive, courtesy of active con men
Pump and Dump stock scams are still around. Here's how to spot the stock tips that emerge from these, and how to protect yourself:
Worthless stock. Tight float. Thinly traded. These are the basic prerequisites of the "Pump and Dump" stock scam. And, con men, who realize that the most powerful force in the universe is gossip, respond accordingly, to spread the word of these "opportunities."
First, a microcap company--one with capitalization so small that it is not required to comply with the normally rigid requirements of a stock exchange--is sought by the con men. Those found among the OTC "Pink Sheets" are some examples.
Next, tight float is sought. It's a must. This surfaces in stocks being held by the insiders and promoters of it, in general, rather than the buying public. This, then, spells out into the third leg of the three fundamental requirements, thin trading, which, in turn, creates the best setting for manipulation. This results in the Pump and Dump artist's being better able to control the price.
Say you've gotten into email exchanges with such a charlatan resulting from an internet chat room conversation. You are now set up for the Pump. Let's borrow from the old comic strip, Dick Tracy, and call the scam artist involved, Tess Trueheart. Tess plugs the meteoric rise of Moonbeam Techtronics--from ten cents a share to eighty cents in just two weeks. Wow! you think. You tell yourself the "big kill" is here. "Now. Right in front of my nose." You buy 5,000 shares, and feel like you are cornering the market, because the stock is thinly traded (as wild as this sounds, this reason is often, cynically, passed off to you as an "advantage").
You hold. Not for long. Just one month later you find the bottom has fallen out of the stock. It's now down to two cents a share. Now, when you find that Tess has suddenly disappeared, like a cockroach under a harsh light, the shock is like getting stood up at the alter.
You study. You learn. You now find that a simple procedure was followed, at your expense. The Pumpers were buying heavily--twenty cents, thirty cents, forty cents, on up the price ladder. Since the stock, sans public participation, was so thinly traded it didn't take long to drive the price up to the eighty cents level where you bought in. Then came the Dump: the unloading of the Pump and Dumpsters' entire holdings. Outcome? You, the innocent investor (sucker), get yet another empty bag to hold.
Yes, penny stocks are alive and well. And, suckerhood seems to be--forever--an embedded "way of life" in a corner of our investment community. Does the world's foundation of ignorance ever fade to one of studied, rational thought? one might ask. Seemingly, no.
The best defense appears to remain, as always: study up, learn all the tricks, fortify your resistance against con men. Then use all the weapons available to you. Many. Seek. Then:
Fire back. When in doubt, follow the instructions actually printed on a U.S. Rocket Launcher: "Aim toward the enemy." This, so as to best withstand the never-ending onslaught of the con men who, even through these old-fashioned means--the old Pump and Dump "beat" which goes ever on--would rob you of your innate instincts for value judgments. And, even more rudimentary, your "base" common sense.
If you lose $100 on a horse race, don't lose another $100 on the instant replay. Why is it so many investors ignore this basic lesson?
Monday, December 31, 2007
--Pump and dump stock scams are vintage, which, oddly, though long ago exposed, still thrive, courtesy of active con men
Posted by Jack Payne at 3:35 AM
Friday, December 28, 2007
--A psychological 11-step approach is methodically followed in setting up a "pigeon" through a phone scam
How does Teflon stick to the pan? This is the sort of question you could be asking yourself after being "taken" by a scam artist telemarketer. Legal phone scams can be devastating enough. No need to go further and fall into an outrightly illegal trap.
The professional con man does, however, have a big hurdle to leap, right up front in his operations. He must constantly cast his sucker-bait in order to find new victims. Often, the quickest, easiest way to do this is through just plain old cold-call telemarketing methods. The scam artist pays no heed to the No Call Registry. His plan is for a swift set-up, a fast fleece, resulting in a quick buck, then he will be gone before any law enforcement agency can even think to get out a warrant on him.
Say you are the scam artist. What does it take to get you started?
It requires a talented person to persuade someone to take the action you are conning them into--to make a decision that will line your pockets--based solely on the words and ideas that spill forth from your lips. An awesome feat. You know the average victim thinks indecision is the key to flexibility, and it's this inherent mental state that must be overcome.
So, now let's grab an example out of thin air: something you might be trying to sell. Let's say it's a solar panel lighting and heating system for your victim's house. Say it's cost is $15,000--only a third or one-half what the victim would normally expect to pay. Why the bargain price? Why not? This way you can start out with a big competitive advantage. Good talking point. Remember, the deposit you'd get on the $15,000 would be both gross and net to the scam artist: you. You don't plan on delivering anything, only walking off with the sucker's money. The scam artist doesn't suffer from stress; he's the carrier. That's Scam School 101.
How do you start? A number of steps are involved, to get the customer softened up so that he will accept an appointment with you.
1. Treat whoever answers the phone the same way you would the decision-maker--because this person will determine if you even get to talk to Mr.. Moneybags.
2. Squeeze the call screener for information. "I hope you can help me? I want to be fully prepared when I talk to..."(whoever the sucker).
3. If you have to leave a message you must be sure it contains a strongly hinted-at benefit. You must bait the hook, to ensure getting through to the mark. Be vague. No detailed descriptives.
4. When speaking directly to the decision-maker, start out with curiosity stimulation. "I understand a solar-panel heating system for a home your size normally costs upwards of $30,000." You've got to maneuver the victim compliantly into the next phase.
5. The questioning phase is next. This can be tricky. A little flattery is called for at this stage, to soften the mark up, but not to overdo. Use weasel words: maybe, perhaps, possibly. You must hint that you "might" have something of value to offer,and with the help of these non-threatening words, you are moving your pitch diplomatically forward.
6. Avoid going-nowhere questions: "Are you now having problems?" " What are your needs?" "What are you looking for?" You don't want the mark to think too much at this stage. If something goes without saying, let it..
7. If the victim starts to bubble and run off at the mouth, this is a good sign. He is opening up, just what you want. Be patient. "Tell me more." Remember, a closed mouth gathers no foot.
8. When objections occur, do not in any way get defensive. Merely backtrack, revisit the question phase. "Let's talk about that." This can easily be turned to an advantage, because it is a symptom of his real problem.
9. " What would happen if you did nothing about your problem?" This is a good approach to turning things around again and headed back your way. Here you have an open door to jump in with the $20,000 savings you offer, the benefits, all the goodies. You are now at the wrap-up stage of this phone call.
10. You should now be ready for your final push. In the questioning phase you've found out who all the decision makers are who must be sold. You've measured the mark as to his degree of gullibility. You know all the demographics. Make the appointment. Get all the necessary suckers involved together for your final face-to-face meeting.
Then you close the con. pick up a hefty deposit, and vacation in Cancun for a month.
Posted by Jack Payne at 2:23 AM
Friday, December 21, 2007
--Learn how polls are used by "legal" con artists to support forgone conclusions, promote an agenda, obfuscate, confuse, mislead, and persuade.
So, you thought the purpose of that poll showing 73% of California restaurants now providing salsa as a standing table-top offering was to provide factual data, right?
The true purpose of the poll scam, commissioned by a salsa processor, was to further an agenda--to get you to accept as bald fact that salsa, placed alongside salt, pepper, and sugar in that high percentage of restaurants proves its mass-market appeal.
Intent is to mislead you into believing it has now replaced ketchup as a table-top standby. If truly informative data were sought by a truly objective pollster, the actual figure would probably be closer to 20%, maybe as high as 35%. How, then, did the pollster in this case, get to the 73% stratosphere?
Easy! Through adapting con artists' tactics, the run up, or lead-in, questions in this poll scam paved the way.
These preliminary questions, asked of restaurant operators, were (something like): Do you feel salsa is a worthy addition to your customer's choice of offerings? (Key word, "choice," connotes big-heartedness, customer satisfaction, willingness to serve, to please. The "yes" response to this question would be substantial.)
Next question, please: Do you feel that having an ample supply readily available is important? (Key words here are "readily" and "important.") To the restaurateur-respondent, reaction is pre-ordained. " To himself he would say, "Of course, I just said it was good customer relations, yes, yes, a thousand times yes."
Now that the recipient has been pre-conditioned to say "yes," and the setup is complete, comes the big question, "Do you offer salsa as a standing table-top offering? With the way the restaurateur-respondent has been "set up," this will bring out puffery, exaggeration, hyperbole, and outright lies. It will jump the percentage of those saying yes way up, to the pollster's desired level of positive response. Viola, the 73% figure.
If you are ever polled, while you're wondering if this train of thought has a caboose, you might also be thinking: it's better to be thought of as a fool than to open my mouth wrong and remove all doubt. If you feel on the defensive, bingo.
That's exactly where the word-games-playing con artist pollster wants you.. Does the name, Pavlov, ring a bell? Bingo again. The pollster is trying to make you feel like Pavlov's dog, obedient, compliant, follow his leads, and, above all else, be polite and agreeable, so that you will give him the answers he wants.
It's not only the lead-in questions which are the enabler--to jack the percentage of the main-thrust answers for which the pollster is fishing. Often it's the choice of questions themselves.
Example from another poll scam:
If the pollster asks, "Do you believe in capitalism?" the yes answer would probably come to somewhere around 50%. (The term, "capitalism," has a negative connotation to many, bringing forth thoughts of greed, money barons, the exploitative rich, albeit it is still the generally accepted American economic system. That's why the split in opinion.) Yet, if the pollster con artist were to ask the exact same question, in different words, "Do you believe in the American free enterprise system?" (key words here are "free," and "enterprise," which does not carry capitalism's baggage), this alone would jerk upwards the positive response to at least 90%.
So, remember, when that friendly pollster next phones, you must ask yourself, "Does he actually seek informative data? Or, is he trying to manipulate me--to promote his own hidden agenda?"
If you decide his purpose is the latter, you might never again believe poll results you see, read, or hear.
Posted by Jack Payne at 4:23 AM
Friday, December 14, 2007
--Arrogantly regarding their victims, "smart as fish bait"--a common acronym--scam artists corral them in bunches.
Magalia, California--After getting a group of people together, the best way scam artists have found to get them in line, blend them into a unified force to back them, is through deft composition of a conspiracy theory. Seven of the steps employed are enumerated here, from the viewpoint of the scam artist. Paraphrasing from Legal Thriller author, Jack Payne's, writings over the past forty five years, these are some of those tactics:
You must first get your sucker-audience to focus strongly on some mythical enemy you are forced to fight--on their behalf, of course. It's best to make this enemy a sinister combination of evil, conspiring minds, determined to keep you, a crusader, from piercing their ranks with the truth about their oppressive behavior. Everybody loves a mystery, and, luckily the fighting spirit is an emotion that is easily tapable.
Now, light your fire. Get the smell of burning flesh--as you've had to walk the hot coal pit in your battle with these nefarious forces--firmly embedded in your sucker-audience's nostrils.
Talk with bravado about your heroic battles with these repressive forces. Instill in the minds of your sucker-audience that you will never surrender to these coercive entities, and that you will "burn in hell," taking all of your records with you, before you will yield to their dominating dictates.
Operate from areas soft on scams. Some states are more lenient than others, with Attorneys General who will quickly issue a "Cease and Desist" order, but are so flooded with bad guys to stop and limited budgets to operate under that they are quickly distracted and move on to something else.. Example: New Jersey is believed to be a particularly good playground for home repair scams.
Show no evidence of distress over those who defect, rather, sympathize with them for their inability to understand simple logic. In any group of people there will always be some malcontents. Most will merely slink off into the shadows, shamed into silence by the realization of their gullibility. With the few who will, instead, choose to denounce you in retaliation, you will label them agents of the "Big Conspiracy" dedicated to destroying your noble crusade.
Employ your scam artist's mastery of the art of distraction to the few remaining who would blacken your good name. Unleash a wave of endless, boring, meaningless detail upon them that will frustrate them, tire them to the point of either wanting to throw their arms in the air and run, screaming, away from you, or at the other extreme, lull them to sleep in order to avoid further conflict.
Silence, for all and forever, any remaining doubts about your "integrity" by threatening law suits to uphold your good name and the worthiness of your valiant attempts to forge a better life for your larger group of followers. Most will cower to these threats and climb down off your back.
Over a long career of writing (55 business books), legal thriller author, Jack Payne, can only sigh. "I've seen it all," he simply observes. He then adds this epilogue "Many people feel threatened by anyone with an ounce of ambition or intelligence This is why a conspiracy--an imaginary , cleverly woven amalgam of greed and brains making up this army you must fight--is such a good rallying point for scam artists. And, sadly, so many of these scam artists are so skilled that you would have to stuff wax in your ears and lash yourself to the mast in order to resist their polished efforts to get you to join their counter-insurgency.
"New! Improved! Pain-free! No work! No money down, no interest, ever! Be aware. At some point in your life, this dog and pony show is coming down the road. Right at you.
"Are you prepared?"
Posted by Jack Payne at 2:29 AM
Tuesday, December 11, 2007
--The following examines raids on consumer bank accounts by con men.
Wilma J., a former Pennsylvania real estate broker, placed a debit block on her bank account, but only after fraudulent withdrawals of $14,000 through debit card theft. "I didn't even know about debit block," she remorsefully admits. "If I had known, I could have saved myself a lot of money. I wouldn't have gotten cleaned out."
While on the subject of barn doors, locking, and disappearing horses, consider some of these additional debit card horror stories, as practiced by con men: An Ohio truck driver was cleaned of $19,000. A California high school teacher, $9,500. An Illinois Lutheran Minister, $6,000. An Arizona insurance agent, $11,000. Even a New York credit counselor, $18,300. These are just a few of the plentiful examples which move a grown-up to join the children, and cry.
Sadly, to go through the ritual of setting up a debit block is looked upon by many people as the equivalent of marrying someone your parents chose for you.It's not really all that bad. Try it. If you are one of the few who even know about this banking service, and, If your bank is one that offers it, it is nothing more than added identity theft insurance. We're not trying to sound like the sheep herder who cried, "wolf," here. But, if you wait until after the fact--until a raid is conducted against your bank account--trying to correct it would be like attempting to run the Marathon with a cracked shin bone.
With some 50% of all major U.S. corporations being hit up with unauthorized withdrawals last year, this lucrative reward for identity theft is now more widely used by con men to go after consumers too, yes, people just like you. Surprising it is, in light of this, that so few debit card users even know of the simple steps that can be taken to protect their accounts.
First, you might well say, I don't want any con men breaking the bank at my expense. How to prevent? Let's begin at the beginning. What is a debit block anyway?
An ACH block (Automated Clearing House) works like a stop-payment order on a check. So, how do you use it to protect everyday debit card transactions? A variety--or combination--of ways:
>You can allow no ACH debits to your account at all. Except your own, that is.This tightening of the screws puts out of reach your funds to all sources, both legitimate and illegitimate--prevents them from "tapping in" to your account. Not too practical, but effective. For con men, it totally denies them the intoxicating fragrance of easy money.
>You can set the block up to allow withdrawals only on certain dates of the month. This gives you a good measure of added protection, if only you know which days of the month your account will be active. Under this scenario you reverse the usual cat-and-mouse game with the con artist. You get to call the shots instead of him. You control the shell game yourself.
>It can be set up with a dollar limit, so that you cannot be cleaned out in one fell swoop. Limited in practicality, but effective in thwarting thieves. (Remember,you would be up against an adversary whose idea of the game is that it involves but one "sporting" gesture: when a victim is down, kick him.)
>You can structure it to allow payments to only payees on an approved list. These payees might include: your utility, phone, water, insurance providers, your daughter's private music instructor, and all others on your monthly billing cycle. Here again, you would be limiting yourself somewhat, in the name of protection against theft. For all the devil's inventiveness it's hard for con men to figure a way around this barrier.
These are just a few of the options you have. We're sure your friendly neighborhood banker would gladly provide more.
An oddity in our financial safety net--a big hole, really--is that credit card holders are liable (once quickly reported, a must) to a maximum of $50 in losses. On debit cards, however, you're on your own. With these, if you keep $30,000 in your account, that's how much you could lose.
The con men, in these days of such wide spread identity theft, are picking the low-hanging fruit. They are finding that these outrightly criminal withdrawals from bank accounts are as easy as stealing cookies from girl scouts.
You can't be the boy in the plastic bubble, insulating yourself from all perceived unpleasant realities, and their consequences Not when the remedy is so obvious. Satisfy yourself with knowledge. Study up on the subject. You don't have to be a victim. Not when it is so relatively effortless to set up your own debit block at your bank.
Posted by Jack Payne at 1:12 AM