By Felicity Ussher, 14 August 1998 00:25
NEWS The new media industry has been revealed as a breeding ground for investment scams. A partnership between the US Federal Trade Commission (FTC) and the Securities Exchange Commission has charged 40 fraudsters in the last six months. Dean Graybill, VP of the FTC's Bureau of Consumer Protection, said: "There are a lot of Internet frauds out there. Con men tend to phone people at home and persuade them to invest money in online casinos, infomercials and cable movies. Because the Internet industry is booming, people think the stocks are hot." The founders of World Interactive Gambling are a case in point. They raised money from retired people for a bogus online casino called Golden Chips. Each investor handed over at least $10,000 following claims that the casino would return profits equalling Microsoft and Netscape. Other Internet frauds include online stock sales to finance a film, Diamonte, and a micro brewery. "Fraudsters tend to store money off-shore and pay off early investors with the money from newcomers. After a certain point, they just leave town," said Graybill. He said Internet investment frauds have been growing steadily for the last two years.
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