Online Con Artists Separate the Quick and the Redfaced

  • Share
  • Read Later
Everything is easier on the Internet, including the once-arduous sport of stock market speculation. Unfortunately for two cyber-hucksters who made a quick $370,000 by circulating false rumors of a corporate takeover, technology has also made it easier for law enforcement officials to catch criminals. Wednesday, federal prosecutors charged Arash Aziz-Golshani and Hootan Melamed, both 23, with conspiracy to commit securities fraud, and the two face civil charges from the SEC as well. It was a stunningly simple plan: One Monday morning, investor chat rooms were abuzz with a tip that NEI, a down-and-out commercial printing company, was about to be snapped up by a prosperous suitor. A feeding frenzy ensued, and in a few hours, NEI stock was driven up from 13 cents to more than $15. Meanwhile, back in Westwood, the two recent college grads sat at a UCLA computer cluster, gleefully calculating their take.

Considering they could spend as many as five years in prison for their deception, Aziz-Golshani and Melamed will probably think twice before trying this money-making scheme again. But, as SEC officials and law enforcement agencies know, there are plenty of other opportunists who'd be happy to take their place. In these heady days of prosperity and a ballooning stock market, measured, critical financial reasoning strikes some people as cynical and potentially disastrous. (He who hesitates is lost — and loses out on that IPO.) That pervasive air of recklessness, combined with the infinite information available to investors, renders the Internet spectacularly ripe ground for speculation and securities fraud. And while the SEC is getting better at tracking down cyber-criminals (this case was wrapped up in less than a month), charlatans will probably have free rein over the Internet (and susceptible users) for many years to come.