Saying that the anthrax scare has caused an increase in bio-hazard-type “investment scams,” the SEC secretly launched a Web site designed to warn investors about stock market scams.
The Website, www.mcwhortle.com, hawking a handheld Biohazard Alert Detector that beeps when it detects the “presence of all known biohazards,” uses the hyperventilating tactics of stock market con artists. McWhortle Enterprises, the purported company manufacturing the device, “is an established and well-known manufacturer of biological defense mechanisms,” the site says. “So confidential,” the site says in the About Us section, “are its products that major corporate customers have asked that McWhortle not reveal their names. Suffice to say that they all involve multi-country operations in areas where security is a must.”
The bogus Website gives the impression of an investment opportunity offering “tremendous” financial gains. And the site offers viewers, Invest Now section which breathlessly describes an “over subscribed” offering. “Estimated share value is approximately $10, which will, upon conclusion of the IPO offering in three (3) months, be worth more than 400 times the initial investment,” the site says. Yet anyone trying to invest receives this warning: “If you responded to an investment idea like this, you could get scammed!”
“It’s a smart idea,” says a Merrill rep. “I didn’t know what the SEC was doing. It’s pretty creative. It’s a way to show investors how easy it is to be swayed into an investment scam over the Internet, and reconfirms the importance of using a broker.”
After launching the scam site, the SEC even issued a spoof press release (www.mcwhortle.com/ipogreenlight.htm) to promote it. The release, which was distributed to hundreds of Internet portals, boasted that the SEC had “pre-approved” the company's IPO (the SEC does not “pre-approve” IPOs) and that an investment would be “worth more than 400 times the initial investment” in just three months. The site received more than 150,000 hits in just three days, according to the SEC.
The site even features an audio interview (www.videonewswire.com/mcwhortle/012502/event.html) with McWhortle Enterprises CEO Thomas J. McWhortle III. SEC staffers provided the voices. The site also features fictitious “testimonials” from a Wall Street securities analyst, a Fortune 100 CEO and a company customer.
The McWhortle site was launched with the assistance and support of the NASD, the Federal Trade Commission, and the North American Securities Administrators Association (NASAA).