MIT Technology Review

Monday, November 26, 2012

Fake Google Announcement Was Likely a Stock Pump-and-Dump Scheme

Phony press release claims that search giant paid $400 million for a $1 million wireless company.

You are what you link to.

Several news organizations earlier today repeated information from a phony press release that circulated after 10 a.m., claiming Google was acquiring a tiny Rhode Island firm, ICOA, that installs public Wi-Fi nodes. The release first circulated on PRWeb, a free service operated by a public relations company called Vocus.

The release had a few telltale signs of fraud, with no contact information or canned quotes. It would have been stunning news about ICOA—a $400 million acquisition of a penny-stock company with a total market cap of less than $1 million—and the result can be seen in its stock price, which soared from 1/100th of a penny to 1/20th of a penny (a fivefold increase) before plunging back to where it started by noon.

ICOA CEO George Strouthopoulos wrote me this explanation: "Earlier today, I spoke with Megan from the PRWeb editor’s desk . . . inquiring who the heck gave them the [press release]. She told me it came from icoamail@gmail.co and the phone number was 297-555-2951. This email is fake, because it is not an ICOA email and the number is not from U.S. The 297 area code is from Aruba." Also, note that the phone number starts with 555, which, as we all know from years of watching television dramas, is never an actual phone number.

OK. So score one for a pump-and-dump operation; that is, a fraud scheme in which someone spreads phony positive information about a company in order to inflate a stock price and create a selling opportunity.

Too bad it wasn't true. It would have been almost as astonishing as Google deciding to parachute into a Midwestern city to install the fastest Internet connections in the nation (see "Google's Internet Service Might Actually Bring the U.S. Up to Speed").