Unbelievable Investment Fraud Opportunities
The King of Deals
You hear about a wonderful investment opportunity geared to raise
$4 million, in units of $10,000, so that a partnership can produce
several infomercials for various sure-fire products. The promoters
say that an investment in one of their partnerships is likely to
be so profitable that you will receive an initial 50% return within
three to four months, and thirty days after that initial return
you will receive monthly royalty checks for another three to four
The first partnership will make an infomercial to sell an Elvis
Presley memorabilia package called "Elvis Immortal" that
will include a compact disc featuring a previously unreleased Elvis
Presley song, a coffee table book that includes hundreds of photographs
by Elvis Presley's personal photographer, and a collection of Elvis
If you invest now you will also have the opportunity to produce
other infomercials, including ones to sell a book about Frank Sinatra,
a book about Milton Berle, a yogurt maker, the "Flame Stopper" personal
fire extinguisher, and a product called the "Kid Finder." They
say the big retailers have sold, or have agreed to sell, thousands
of their products, thus demonstrating the likely success of an
investment in the partnerships.
They also say that earlier investors have already received a substantial
return on their investments, such as a two to one return in just
a seven month period based on sales of "Elvis Immortal".
They say they have been involved in the production of successful
infomercials in the past, including infomercials for Vanna White's "Perfect
Smile" Tooth Whitening System, the Ron Popeil Food Dehydrator,
The Health Rider exercise system, and Susan Powter's "Stop
the Insanity" nutrition and weight-loss program.
After sending away your cheque you belatedly discover that in
fact, "Elvis Immortal" does not include a compact disc
featuring a previously unreleased song recorded by Elvis or several
hundred photographs by Elvis Presley's personal photographer; that
an infomercial to market "Elvis Immortal" did not air
on or around August 16, 1997, the twentieth anniversary of Elvis
Presley's death; that Graceland, a division of Elvis Presley Enterprises,
Inc., is not considering making "Elvis Immortal" the
official book of Graceland; and that retailers have not sold or
agreed to sell thousands of their products.
A Sure Bet That You'll Lose
You get a call from someone purporting to be an assistant to a
Vice-president of Marketing at World Interactive. They say they
are not a stockbroker, but are calling from the corporate offices
of World Interactive, which is in the middle of a private offering,
and ask if you would be interested in receiving more information
about owning part of their online casino.
They ask if you can make an investment decision alone, and if
so, whether you are, or can become, "liquid for up to $100,000".
They then ask what you want in an investment.
Even if your answer is "safety" they continue by saying
most people buy several preferred stock units (at $10,000 each)
but that there are very few units left. If you show interest, they
say that a Vice President for Marketing will call shortly.
The next call to you, often that same day, is from their VP of
Marketing. The VP informs you that the company is selling 350 units
of convertible preferred stock in a private placement. Each unit
of stock has 2,000 shares, at $5 per share, for a total cost per
unit of $10,000. According to the VP, most people purchase three
to five units apiece.
He informs you that World Interactive is currently operating its
Internet casino, Golden Chips Casino; that it is not yet taking
live bets, but will be in the near future —typically, two
to three months.
Golden Chips Casino offers blackjack, slots, video poker, roulette,
craps, bingo, keno, Asian games, sports book (soccer, baseball,
football, etc.), world lotto, and other games with progressive
pools. The software offering these various games is described as "top
of the line" and will enable World Interactive to become a
leader in Internet casinos.
According to him, "You are in line to get in on the ground
floor of an investment whose profitability ranks with that of "Microsoft,
Netscape, and Yahoo."
"Why, just consider that the casino industry is a $500
billion industry." He notes that the large Las Vegas
casinos purportedly generate $2-2.5 billion in revenue annually.
He has you take note that the stock prices for casinos are high,
purportedly running from $46 per share for the MGM Grand casino
to $103 per share for Griffin Gaming. He uses all of these facts
to lead you to the conclusion that World Interactive's casino
can be as, if not more, profitable.
He claims that "World Interactive should easily do $100
million revenue in its first year, which is a conservative estimate." He
also asserts that the company expects to make $500,000 in its
first month of operation and should easily double that every
month its first year.
You, as an investor, have three ways of achieving an astronomical
return on your $10,000 investment. First, he expects to take the
company public within one year and, according to "unnamed
Wall Street underwriters," the stock should easily exceed
$40 / share, or $80,000 for each unit you own.
You should hold onto your stock, however, because the second way
for you to make money is through their profit sharing plan. Specifically,
they will pay you a 20% fixed annual dividend, or $2,000 per unit
starting in the first year.
Finally, the third way for you to make money is through a profit
sharing program where they will pay preferred shareholders 25%
of the profits, which would mean a $71,000 return per unit if the
company makes the estimated $100 million in the first year. Thus,
according to the VP, as a holder you can expect to make $150,000
or more in one year from each $10,000 unit you own.
He then asks if you have liquid funds,stressing that time is a
factor in this investment because there are so few units left.
He informs you that until recently he was sending the placement
memorandum out by regular mail but because there are so few units
left, and demand for the investment is high, he is now sending
it out by overnight mail. He sets a time to call back and follows
up thereafter. Anxious to take advantage of gamblers greedy natures
you prudently invest in this surefire digital "Lost Wages".
You become worried when the date of the stock offering to the
public is pushed back time and again. They say this is because
of hurricane damage to the casino, an unexpected software glitch
or advice from their market maker.
Potential investors in cyber-casinos should know that Internet
gambling is not legal in any state and that fraudulent promoters
traditionally overstate the profitability of casinos.