Anyone Can Be Anyone On The Internet: How To Guard Against Impostors
The Texas State Securities Board is warning investors against a growing number of online investing programs in which bad actors pose as registered and licensed companies. These identity theft schemes are becoming more and more sophisticated as crooks more effectively exploit technology to defraud the public. Investors should be aware of – and beware of – these schemes.
Earlier today, for example, Securities Commissioner Travis J. Iles an emergency cease and desist order against Oscar Hill, accusing him of having set up an impersonation scheme. According to the order, Hill registered a website for Prestige Assets Mgnt, LLC – an unlicensed broker with a similar name to Prestige Asset Management, LLC, a registered investment adviser. The bogus website used a domain name that was substantially similar to the domain name of the real website operated by the registered company – an unfortunately common attempt to trick the public into dealing with an impostor.
“These impostors not only threaten our Texas investors, but also damage the reputation of our registered community,” said Commissioner Iles. “Investors should always be vigilant when considering potential investments through electronic devices.”
The bogus website looked legitimate, according to the order. He even appropriated regulatory identifying information – the central registration filing number or CRD number – for the genuine Prestige Asset Management, LLC, and a card from his office.
“The internet provides a multitude of tools for crooks,” said Law Enforcement Director Joe Rotunda. “The crooks take advantage of these tools. They use all the tricks in the book to appear legitimate – even pretending to be regulated firms and registered brokers. “
Tactics generally vary from case to case and from scheme to scheme. For example, in some cases, scammers may pose as a popular financial professional or issuer. Commissioner Iles highlighted this problem last month when he tabled an emergency cease and desist order against Keye Midas Wealth Management Worldwide. This action accused a party of carrying out a bait and trade scheme by claiming to be affiliated with ARK Invest and ARK Innovation ETF. The shares issued by ARK Innovation ETF are listed on the NASDAQ and have recently attracted great interest from individuals.
Commissioner Iles brought other cases, such as an action against Raymond Hill and Mark Diaz for promoting an advance fee system by masquerading as a federally registered investment advisor – using a bogus website and social media, forged documents and alleged affiliations with the Internal Revenue Service. In another recent case, Commissioner Iles accused Amage Trades and an affiliate adopt pseudonyms essentially similar to the names of registered parties; and publish online photographs purported to represent registered parties. This order alleged that the parties had even registered an Internet domain name that was surprisingly similar to the Internet domain name of a registered party – differing only by one of 24 characters.
The Texas State Securities Board recommends that investors consider the following information when dealing with allegedly registered parties through online platforms:
- Anyone can be anyone on the internet, and investors should remember that scammers use fake social media accounts to hide their identities. Texans should take steps to identify fake accounts by closely examining content, analyzing creation dates, and considering quality of engagement. The Better Business Bureau has published additional tips for spotting these fake accounts.
- Scammers try to deceive investors by registering domain names for scam websites which are very similar to domain names for real websites. Investors should always pay special attention to domain names for websites.
- Texans should independently seek registration of investment firms. They must not use hyperlinks provided by the parties and instead contact the Texas State Securities Board directly or search for FINRA brokerage check Platform.
- Registered parties are required to honestly disclose all material facts and they must disclose the risks associated with each product. On the other hand, bad actors will often downplay or cover up risks and instead use hyperbole to tout profits and payouts. Investors should pay attention to these details, as they can provide clues to the potential illegitimacy of a scam.
- Bad actors can impersonate licensed parties by using bogus websites that place viruses or malware on victim’s computers. Investors must continue to embrace cybersecurity.
Please contact our enforcement program if you believe you have been the victim of an identity theft scheme or any other fraudulent securities scheme. We are available by phone at 512-305-8392 or by email at [email protected].