When it comes to recent fraudsters Nicholas Cosmo is up there with the best of them. He may not be Bernie Madoff, but running a Ponzi scheme worth over $380 million that has affected many Long Island families is something we should be cautious of moving ahead. Chris Hansen of Dateline NBC does an excellent job exposing this story and showing the emotion that people go through after finding out their life savings had been rolled into a scam.
I was approached by a well-educated upstanding citizen with a great job at Keyspan to get in with Agape World in January of 2008. The minimum investment was $10,000 offering returns of 14% via 90-day bridge loans funding commercial construction in the NY metro area. I saw the paper work, I looked at the website, I did my due diligence, and I had funny feelings. Why was the rate at a flat 14%? What if I’m not an accredited investor? I politely decline investing as I thought it was too good to be true.
Best regards,
Nicky Papers
Sound off: What would you tell a friend who is advising you to roll your money into something “that’s too good to be true?”
In the video above Timothy Sykes does an excellent job describing how to spot a stock scam from a legitimate investment opportunity. As Timothy explains, there approximately 8500 of these “scam stocks” trading on the OTC Bulletin Board that utilize “pump and dump” strategies to drive the share price of their stock up.
Please note that the marketing tactics of these companies may be overly aggressive, but for the well-informed investor, trading these types of stocks can be lucrative if you know what to look for. As Tim further describes, he has no qualms investing in what he considers horrible companies, but plays the odds when noticing a penny stock jump from 100-200%.
One must always take into consideration that the hot penny stock that was just recommended was most likely aimed at individuals who are susceptible to impulsive buying tendencies based on reading “jazzed up” marketing materials. Those individuals have not done their due diligence and read the fine print contained in the marketing materials. Other times, a chop shop will pump a promoted stock to prospective clients to raise the share price on sparsely traded penny stocks over the telephone.
Always remember that a stock being promoted (by e-mail, message boards, cold calling) is not putting money back into the company, research and development, staff augmentation, mergers and acquisitions, etc. The independent marketing firms pumping these stocks are making out like bandits! Always do your research before moving forward with a “marketed” investment.
“So now you know what’s possible, let me tell you what’s required. You are required to work your fucking ass off at this firm. We want winners here, not pikers. A piker walks at the bell. A piker asks how much vacation time you get in the first year. Vacation time? People come to work at this firm for one reason: to become filthy rich; that’s it. We’re not here to make friends; we’re not saving the fucking manatees here, guys. You want vacation time, go teach third grade at a public school.
First off, I’d like to thank Ben Affleck for playing his role so well in Boiler Room and influencing the actions and attitudes of young brokers, and “brokers to be”. Though Boiler Room is only a movie, it’s a fair representation of firms that utilize aggressive marketing (mostly phone) tactics with the intentions raising new capital. The unsettling part about this is that aggressive marketing tactics are real, used by firms across the US, and could have a substantial financial impact on middle to upper-class Americans who take the bait. (Accredited investors my ass!)
Please review the video above narrated by Jon Landau, Spyker Consulting’s Executive Vice President. Mr. Landau entices young brokers of what’s to come if they are interested in joining the team at Spyker. He’s no Ben Affleck, but gets an “A” for effort when inspiring his office to stay well-groomed and take advantage of 20%-off sales at SIMS. (Vin Diesel stunt double at 00:14)
Exhibit A: Jon Landau
As Spyker’s public relations figurehead, (where’s the CEO?) Jon Landau makes it known what exactly the firm is looking for: “go getter’s who are a little bit arrogant and have that New York attitude”. Is this guy for real? I’m not sure what’s more embarrassing for Spyker, having a spokesperson that looks like “Sonic The Hedgehog” or showing the world that your firm is a complete CHOP SHOP on corporate recruitment video? Jon, it’s time to go back Seaside Heights, NJ where you got that disgusting haircut, drive your leased 3-series BMW to the gym, and fist pump at the club with your boys on the weekends. Your bullion days are over brother. : (
Exhibit B: Aggressive Cold Calling
With so much action going on in Spyker’s office it’s hard to remember what clients have been called/dialed, or in this instance, harassed repeatedly? Maybe it’s the coke? Perhaps it’s the steroids? Or possibly it’s the radiation coming from their tanning beds that’s causing Spyker’s brokers to forget about a little something called COMPLIANCE. Spyker’s video showed everything but their DO NOT CALL box. What gives fella’s?
Exhibit C: Business Information
The Principal of the firm is Edina A. Ferreira according to Manta.com. Who is this person and why is there no information about them anywhere on their website or anywhere else on Google? Additionally, it notes that the firm started in 2008 (what happened to the previous 17 years, as per Jon Landau?) and consists of (2) employees. Also note that they are doing approximately $130,000 in annual sales. Hoovers also confirms this information.
Exhibit D: Top Line Revenue
Being that this company is privately held, it’s not my place to point my finger at their top line revenue unless it was so blatantly obvious that “something funny is going on here”. In the picture above it seems like “Dan” is having a killer month with over 180k in sales. What about the rest of those knuckle heads? I’m sure their doing well too. This firm is most likely doing annual sales in the low 7 figures, a far cry from 130k. Perhaps the $130,000 figure is what Edina Ferrerira tells Uncle Sam she personally makes.
Now why would I take the time to break this firm down? It’s not because Spyker employee haircuts (firm appropriately named!) and Karako suits make me sick, it’s because aggressive and reckless marketing tactics (demonstrated above) have ruined people’s financial lives in many recent instances.
I can’t bash the firm on performance; they may actually make their clients money. I can assure you, Nicky Papers (yours truly!) isn’t affiliated with the SEC or NASD. I’m simply a concerned citizen who’s looking out for your money. If you’ve stumbled upon this article while toying with the idea of sending these clowns a check in the mail (use Google to your advantage!) consider this article the due diligence you may have needed to make a better educated decision.
Sound off: Have you ever been bombarded with phone calls from brokers who just can’t take “NO” for an answer? At what point does the SEC or NASD regulate how a firm goes about seeking new investors?
Who would have thought dialing for dollars could be so much fun? It’s a hell of a lot easier when working with bulk leads from Dunn and Bradstreet. For pennies on the dollar you could buy thousands of leads in select states and set parameters of your choosing.
To make money “chop shop” style you will need the following:
1. A telephone blocking the number on outbound calls.
2. Thick Skin
3. Male Leads (We don’t pitch the bitch.)
4. Puma Jumpsuit.
Welcome to Cold Calling 101. The sample lead above, (rendered the image to protect identity) is a fair representation as to how a boiler room works and the mentality of the brokers behind the high-energy phone calls. Everyday thousands of Americans are harassed at work by money hungry brokers hopped-up on a mix of high testosterone, Red Bull, and Ritalin. For Nicky Papers, (yours truly!) it was a combination of all of the above on typical office afternoon.
So what are the “sharks” looking for exactly?
Currently working with Brokers: A prospect who works with multiple brokers shows that he’s not completely committed to anybody and will cut a check if he likes an idea. (He’s done this before…) Be wary of guys who use online brokerages as they don’t see the need in being told what to do. For prospects that have brokers out of state, (especially in NY) this is a clear indicator that they are receptive to doing business completely over the phone. In our case with the sample lead he has all of the above and even told us who he works with. Good stuff!
Owns Stocks: Prospects that trade common stock are our type of guys! We really could care less about how many houses they have or commercial properties. We are looking for liquidity and a gamblers mentality. At this time, if they made some money on a stock they’ll share the ticker with you. On the sample lead the prospect was kind enough to tell us that (NASDAQ: SLAB) Silicon Laboratories took the prize as he doubled his money on it. At this time, you’d compliment him and make a note of that ticker and the sector that stock is in. Reference something similar on the next call to open the account.
Ballpark Portfolio Size: So, how much are you playing with in the market? We were looking for guys with over 100k in the market. In pursuit of gaining a piece of that portfolio, anything over 100k is a safe number to weed out the piker’s from the players. In this case, our prospect is playing with 900k. “A fucking whale baby!”
Personal Info: After capturing the aforementioned “meat and potatoes”, now it’s time to bullshit a little. So are you still making six-figures? (Of course.) What do you like to do in your spare time? Still chasing the ladies? At this time the victim will lighten up and tell you some tales of adventure and romance. This is their time to do a little bragging. Our prospect (above) enjoys fishing for trout. (How exciting!) It’s not much, but valuable enough to pull out your ass on the next phone call.
This prospect turned into a slippery eel and got away on the follow-up call. The more leads that look just like this, the better chances you have to close. Now don’t think I was the Michael Jordan of cold-calling, but for being 21 years old I was pretty ferocious. With a solid 5% in / 5% out game plan in place, the broker is always on top. And if the stock that was picthed went up, more power to the broker!
Sound off: Can you blame the unsuspecting clients for not doing their due diligence before opening accounts over the phone from a cold call? Was it a combination of greed for all parties (broker/client) that spawned Madoff-esque schemes to acquire new money and accounts?
