Scammers push victims to buy low-priced stocks in emerging companies, promising high returns and even vowing to cover losses.
There has been a surge of criminals targeting stock investors in the United States in a “ramp-and-dump” stock manipulation scheme via messaging apps and social media platforms, the FBI said in a July 3 alert.
In the scheme, “investment clubs” are promoted among potential targets. These clubs are often bots or fake accounts, and the promotional messaging directs victims to secure messaging apps where the group operates. Scammers impersonate legitimate brokerage firms or well-known stock analysts to appear credible.
“They secretly control a large volume of a low-priced stock and coordinate efforts to inflate its price (‘ramp up’) by encouraging investment club members to purchase shares over a period of several weeks or months,” said the alert.
“Once the price is artificially elevated, the criminals sell off (‘dump’) their shares at a profit, leaving unsuspecting investors with significant losses as the stock value collapses.”
According to the FBI, there has been at least a 300 percent annual jump in victims complaining about ramp-and-dump stock fraud so far this year.
The agency asked investors who suspect they’ve been duped in investment fraud to report the incident to the FBI Internet Crime Complaint Center (IC3) website.
The FBI’s Chicago Division released a statement earlier this year seeking victim information on a ramp-and-dump investment scheme.
In January, some individuals allegedly impersonated U.S. investment advisors, making “false representations and instructed investors to purchase shares of CLEU stock, promising significant returns on their investment.” CLEU refers to China Liberal Education Holdings Limited.
“However, when the value of CLEU stock dropped dramatically on January 30, many investors lost nearly all of the funds invested in these shares,” the FBI statement said.
Warning Signs of Fraud
In the FBI alert, the agency detailed some of the red flags to watch out for to identify whether an investment proposal is part of a ramp-and-dump scheme.
For instance, people targeted by scammers could receive unsolicited investment tips via “accidental” messages with links to online investment clubs.
