Most of the faxes were handwritten to appear as though they were misdirected confidential notes from a stockbroker to a client, the complaint says. Some recipients of the faxes bought shares in the four touted companies, driving up prices. The shares traded on the "Pink Sheets" and OTC Bulletin Board markets, so relatively small buys and sells have an exaggerated impact on prices.
Messrs. Pickens and Yafa then sold their shares and made hundreds of thousands of dollars in illegal gains, according to the criminal complaints. The two men each face as long as 20 years in prison.
The fax didn't state that Mr. Yafa was being paid to promote the stock. Failing to disclose that a broker is being paid to promote a stock is illegal. When the stock traded higher, Mr. Yafa sold his shares for a $300,000 profit, the SEC says.Unfortunately for them, one of recipients of the fax was the Justice Department's U.S. Attorney's office for the Southern District of New York.
"I have been trying to get you for 2 hours," said the handwritten letter to a "Dr. Mitchel," which was addressed from "Chris." "I have a stock for you that will tripple [sic] in price just like the last stock I gave you 'SIRI' did. I can't get you on either phone. Either call me, or call Linda to place the new trade. We need to buy 'AVLL' now."
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I read a book a couple of years ago written by someone who'd studied the culture of con men back in the 1920s from the inside. The author went at length into the operations of con men of the time. While the details of scams change over the years, they still appeal to the common desire to get something for nothing. In fact, the motto of a con man is best summed up as "You can't scam an honest person".
To that, I'd add that you can't scam a U.S. Attorney.
Remember - If it seems too good to be true, it probably is.
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