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Boiler Room Tactics Alive and Well: Seniors Suffer Most
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In spite of negative publicity about penny stocks, spammers, and some hedge funds, people still invest in these entities in hopes of getting rich. Sadly, many who place their hard earned cash and trust in them are burned.
“We allege that [Mr.] Sizer and [Mr.] Mesa fraudulently touted Sanomedics and Fun Cool Free stocks as profitable investments, while in fact only [Mr.] Sizer and [Mr.] Mesa and the sales agents were profiting at the expense of investors, many of whom were seniors…''
—Eric Bustillo, director of the Security and Exchange Commission (SEC) Miami Regional Office
In spite of negative publicity about penny stocks, spammers, and some hedge funds, people still invest in these entities in hopes of getting rich. Sadly, many who place their hard earned cash and trust in them are burned.
One such case is the seniors and others who invested in the penny stock companies the two men charged above, Mr. Sizer and Mesa, were touting. These included Sanomedics and Fun Cool Free, LLC (yes, really its name). The former was a medical device company that sold non-contact infrared thermometers. The latter peddled games for the iPhone or iPad which included Make the Shake, Backyard Pilot Race, Quick Hit Slots—The Best Slot Machine Game and Amen Jesus Flap. In other words, there was something for nearly everyone.
The fraudsters ran their business from an office in Florida, a state where retirees flock. Many of those who were approached were seniors, in part because of the concentration in that state. Some may have suffered decision making deficits found in old age that made them particularly susceptible to the “get rich” lingo of the swindlers.
All the while, Sizer and Mesa were putting the money invested, about $20 million, into their own pockets. The remarkable part of this whole story is that the potential downside of such activity to the perpetrators is apparently small compared to the financial and no doubt mental stress to the investors. Though the financial penalty to the pair has not been definitively decided, their only punishment to date is this:
“Sizer and Mesa have agreed to partial settlements of the SEC’s charges without admitting or denying the allegations. They both agreed to be barred from future penny stock offerings, and Sizer agreed to be barred from serving as an officer or director of a public company,” a news release said.
Perhaps the real story here is that what used to be the door-to-door salesman is now the cold caller. Though we all think we are not susceptible, clearly some of us are or cold calling would cease. It hasn’t, and in my experience, is only increasing. The message: Buyer beware and especially of the motives of cold callers.
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