The Washington State Department of Financial Institutions (DFI), Securities Division has received a complaint about a WhatsApp group operating a potential pump and dump scheme while impersonating a legitimate investment adviser, Adams Financial Concepts, LLC (“Adams Financial Concepts”) and the Vice President of Adams Financial Concepts, Albert Souza (“Souza”).
The investor learned about the WhatsApp group through an advertisement on Facebook. The WhatsApp group name was “US Stock Investment Group 121.” The individual falsely represented themselves as Souza and used the WhatsApp number 1-202-270-8204. The investor also communicated with an individual named Jessica Brown (“Brown”), who claimed to be Souza’s assistant. Brown used the WhatsApp number 1-314-267-5182.
The impersonators described their trading as “VIP Value Investment Trading Strategy”. The impersonators advised the group on stock to purchase, when to purchase, and when to sell. After joining the WhatsApp group, the impersonators directed the investor to purchase stock of a Chinese company, China Liberal Education Holdings Limited (“CLEU”), at $7.78 a share. The impersonator claimed that members would make a 160% to 380% return if they purchased and held the CLEU stock for 6 trading days.
After purchasing the stock, within a couple of days, the price of CLEU fell to less than $0.50 a share. When the investor expressed concern over the shares dropping in price, the impersonators claimed that there were “malicious investors” within the group who leaked trading information which led to the short selling of CLEU. The impersonators told the investor to sell the CLEU stock and they would compensate the investor for any losses incurred. However, the impersonators later encouraged the investor to participate in their next project called “Lightening 7,” claiming that this was the fastest way the investor would be able to recoup their losses. The impersonators stated that the project would adopt “a highly confidential short-term trading strategy. . . with the goal of achieving a 150% return within 5 trading days.” The investor never recouped their losses or received any compensation from the impersonators and lost approximately $1,900. These allegations have not been verified by DFI.
DFI cautions consumers to beware of persons previously unknown to them offering investment advice, even if they purport to be legitimately licensed investment professionals. Scammers can impersonate investment professionals and offer advice that benefits scammers and is harmful to consumers.
DFI urges consumers to exercise extreme caution before responding to any solicitation offering investment or financial services. Investment professionals need to be licensed with DFI to offer investments to Washington residents. In addition, most investment products sold need to be registered with DFI.
To check the licensing status and to find out if there are any complaints against an investment professional or investment product, please visit FINRA Brokercheck or contact the Washington State Department of Financial Institutions, Securities Division at (360) 902-8760. If you live outside of Washington State, contact your state securities regulator.
If a consumer believes a person or company has violated state law or acted improperly regarding an investment product or service, they may file a formal complaint with the Securities Division.
Additional Resources
Social Media and Investment Fraud – Investor Alert
Information regarding Pump & Dump schemes and how to protect yourself