Bureau of Securities Orders Investment Scam Companies Defrauding LinkedIn Users to Cease and Desist, Urges NJ Residents to Beware of Investment Scams on Social Networking and Dating Sites
Emergency Action Comes as Reports of Romance Scams and Other Online Investment Fraud Surge During the COVID-19 Emergency
NEWARK – As cybercriminals continue to find new ways to cash in on increased online traffic during the COVID-19 pandemic, the Bureau of Securities (“the Bureau”) within the Division of Consumer Affairs took emergency action today to stop an online investment scheme targeting users of the professional networking site LinkedIn. The Bureau urges New Jersey residents to beware of “investment opportunities” being offered on social networking and dating websites.
In a Cease and Desist Order issued today and effective immediately, the Bureau revealed that online entities VertexTrade Options (“Vertex”), Zolarex Ltd. (“Zolarex”), and IBPC Corp. (“IBPC”) are violating New Jersey securities law by using fake social media profiles to entice unsuspecting residents to invest in fraudulent financial products.
Websites for the companies, which purportedly offer trading on a variety of stocks from worldwide exchanges, lure in prospective investors with phony testimonials and other fraudulent and misleading statements.
The IBPC Website, for example, states that its Chief Executive Officer is “Arnold P. Hensen” and contains a picture of his supposed signature, which is easily recognizable as the signature of deceased professional golfer Arnold Palmer. The Vertex Website identifies Zolarex as the actual company with which investors are entering into an agreement and provides a company address in “Golf Shores” Alabama that does not exist.
“Hiding behind fake social media profiles, the actors in this scheme gain the trust of their victims by masquerading as legitimate online trading platforms, then steer them into sham investment opportunities,” said Attorney General Gurbir S. Grewal. “Today we’re shutting down their phony enterprise and urging New Jersey residents to be wary of unsolicited investment offers. Many sites allow users to hide their identity behind aliases and you never know who you’re dealing with.”
One New Jersey resident lost money in the Vertex Scheme after being lured in by a woman who contacted him on the professional networking site LinkedIn. The woman, who identified herself as Sarah Wong, said she was an “account manager” with Vertex and encouraged the man to invest with the company. Wong guaranteed the New Jersey investor a 60% to 70% profit.
After several weeks of correspondence, Wong coerced the resident into investing with Vertex and guided him through the account setup on the company website. After the investor put hundreds of dollars into the account, Wong claimed to have started trading the investor’s funds, with the account purportedly growing to approximately $20,000.
When the investor sought to withdraw his funds, Vertex notified him that he was required to pay taxes of 10% on the profits in the account. The investor sent approximately $1,970 to Vertex for the purported taxes but did not receive his funds. Vertex next advised the investor that to withdraw his funds he also needed to obtain an “International Business Permit Certificate” (“IBPC Certificate”) and pay a certificate fee of $1,340 to IBPC.
After the investor paid the IBPC “certificate fee” and an additional $450 “rescheduling fee,” Vertex still did not release the investor’s money, telling him he also needed to open an account at a Vertex affiliated bank called “Invest World Finance.” At this point, the investor ceased engaging Vertex or Wong to withdraw his money and reported Vertex, Wong, and IBPC to regulators.
“This case illustrates the risks of taking investment advice from strangers on the internet,” said Paul R. Rodríguez, Acting Director of the Division of Consumer Affairs. “Social media sites are a great place to exchange ideas and connect with loved ones and acquaintances, but they’re also fertile hunting ground for financial predators. Our Bureau of Securities works diligently to protect New Jersey investors by identifying and shutting down these online scams. However, the best protection against fraud is an educated investor. With cybercrime surging during the COVID-19 pandemic, it’s more important than ever to approach online investment offers with caution and to do your homework before handing over any money.”
Since the COVID-19 state-of-emergency was declared in early March, the Bureau of Securities has seen an uptick in reports of investment scams targeting users of social media and other online sites.
As people increasingly turn to online sites to cope with isolation as they observe social distancing, the Bureau has become particularly concerned by reports of “romance scams,” in which dating site users are being lured into fraudulent investments by their purported love interests.
“Even the savviest of investors can have a hard time recognizing fraud when it’s being perpetrated by someone for whom they have a romantic interest,” said Christopher W. Gerold, Chief of the Bureau of Securities. “This makes online dating sites particularly appealing to investment scammers. They know if they are able to make a romantic connection, their odds of making money increase dramatically. To protect New Jersey investors, we’re raising public awareness of these schemes and educating investors on how to avoid them.”
For tips on how to spot and avoid
romance investment schemes and other
COVID-19 investment scams, or to learn more about being an informed investor, visit the Bureau’s Investor Education webpage at
The Bureau's action was handled by Deputy Bureau Chief Amy Kopleton and Investigator Maureen McLeer Morin.
The Bureau is charged with protecting investors from investment fraud and regulating the securities industry in New Jersey. It is critical that investors "Check Before You Invest." Investors can obtain information, including the registration status and disciplinary history, of any financial professional doing business to or from New Jersey, by contacting the Bureau toll-free within New Jersey at 1-866-I-INVEST (1-866-446-8378) or from outside New Jersey at (973) 504-3600, or by visiting the Bureau's website at www.NJSecurities.gov. Investors can also contact the Bureau for assistance or to raise issues or complaints about New Jersey-based financial professionals or investments