In our first post in this series, we explained “sucker lists” - a way scammers re-target previous victims of investment fraud. Today we’re exploring another method of revictimization – recovery room/reload scams.
Recovery room schemes involve contacting investors who may have lost money in an investment (such as a boiler room scam) with an offer to buy their shares at an inflated price or exchange them for shares in a different company. Sometimes, the scam artist will pretend to be from a government or policing agency who can help them get their lost money back. Once investors agree to the deal, the operators of the scheme ask the investor to first pay a fee for the transaction, or taxes, or state that there is a cost to exchange shares. The operators keep the fee, but do not repurchase the shares, issue the promised replacement shares, or get back the initial investment, thereby victimizing the investors a second time.
Red flags of recovery room schemes include:
- promises of unrealistically high returns;
- the need to send money offshore;
- the need to have money paid up front;
- pressure to act quickly;
- someone contacting you claiming to be from a government agency/other authority offering to help you recover lost money; and
- spelling/grammar errors in the documents related to the offer.
Anyone who has been contacted with an offer to buy or exchange shares that are losing money, or to recover money lost in a scam should contact the ASC’s Public Inquiries office toll-free: (877) 355-4488 or via firstname.lastname@example.org.
Ask the Right Questions
Reporting Suspicious Investments
Recognizing and Avoiding Investment Fraud