Right now, as a Website attorney, I’m seeing three common types of Internet securities fraud con games promising you success as an Internet business owner through investment. They’ve become popular because even newbie marketers are not buying the hype surrounding $2,000 info products and live seminars for 500 to a thousand bucks (plus flight and hotel).
Scam #1 is “Be My Partner.”
The guru spends the money for a private placement memorandum to sell securities in an Internet marketing venture. In plain English, the guru uses legal documents to cover his butt while selling you overpriced stock in a venture. Those who invest do so upon the mistaken belief that they’ll be real ‘partners’ with the guru. The company either has no chance of success or the guru keeps control so the investors have no say in how their money is spent.
Scam #2 is the “Pump and Dump.”
The guru hypes stock in his Internet company, gets a bunch of people excited, goes public with the company and sells shares at a peak. The guru cashes in through the sale and the new investors are stuck with owning stock that has little or no value.
Scam #3 is “Flying by the Seat of Your Pants.”
This guru is too cheap to even pretend to do things legally.
He sells ownership in his company to investors like you without providing a private placement memorandum or meeting the securities law requirements for going public. The prices vary depending upon what he wants or thinks the investor will pay. In some instances, the guru will even sell more than 100% of the company to different investors and pocket the money for personal use.
If it sounds too good to be true, run away. If you have any doubts, talk over the investment opportunity with your Website attorney and your financial advisor before putting any money into the venture.
