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High Tech Investment Scams
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Creators Syndicate
FIGHT BACK! BY DAVID HOROWITZ
High-Tech Investment Scams
People who promote investment schemes are always quick to
seize on headlines that give their pitches an added touch of
credibility and timeliness. Consider two stories that have gotten a
lot of attention in the press lately: the Information Superhighway and
the Whitewater scandal.
First, the Whitewater pitch. It might go something like this:
"You've heard how Hillary Clinton made a fortune with just a small
investment in the commodities market, haven't you? How did she do it?
She had good advice, and she got into the market at the right time.
She seized the moment! And now I'm prepared to offer you the same kind
of investment opportunity. But you'll have to act quickly before this
once in a lifetime chance is gone forever!"
The promoter then goes on to describe the "opportunity" is
glowing terms --low risk, high return, a chance to get in on the
ground floor for a minimal investment. The pitch conveniently ignores
two key elements of the Hillary Clinton story -- that she could just
as easily lost her entire investment in the highly volatile
commodities market, and that she did not invest more money than she
could afford to lose. Instead, they play up the huge return that has
been so well publicized in the news.
The Information Superhighway is another rich source of
misinformation for would-be investors. True, American
telecommunications is on the verge of a major technological
revolution. But the course of that revolution is still far from clear,
and no one knows yet which technologies will prosper and which will
fail.
That uncertainty provides fertile ground for high-tech
investment scams, all focused on luring investors with promises of
huge profits in an industry on the brink of a major expansion. And
always, there is just enough truth in the pitch to make it seem
credible.
A good example is wireless cable. Wireless cable provides TV
programming in areas that conventional cable services cannot reach.
These companies broadcast cable programming by means of local
transmitters and special antennas at their subscribers' homes. It's a
real system with real growth potential as a supplement to cable
services.
It's also a largely unregulated industry that is ripe for
exploitation. Last month, authorities raided eight investment boiler
rooms in Los Angeles, Orange and San Diego counties in California.
Investors were allegedly promised returns of up to 600 percent over
five years, even though these companies had no wireless cable systems
in actual operation. All some of these promoters had to sell was an
interest in a federal license, which is not the same as a license to
make money. And yet, that's exactly what investors were reportedly led
to believe.
The bottom line here is that high-tech enterprises, like
commodities trading and oil and gas exploration, are extremely risky
investments for those who do not thoroughly understand the business.
It's one thing when a company like AT&T or General Electric invests in
such technology. It's another when small investors risk their savings
and financial futures on the advice of promoters posing as industry
experts. COPYRIGHT 1994 CREATORS SYNDICATE, INC.
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