Investors are continually looking for ways to increase their profits on investments, especially in periods of economic downturn. Investment opportunities are often pitched to investors through social media posts and investment-related chat groups online.
In December the Federal Bureau of Investigation (FBI) and the Securities and Exchange Commission (SEC) jointly issued an investor alert warning investors of a significant rise in tips, complaints and referrals involving impersonations of investment professionals.1
Recently, an indictment was filed in the U.S. District Court in Chicago, naming seven individuals who allegedly ran a “pump-and-dump” stock scheme which defrauded investors in China Liberal Education Holdings, Ltd., an educational service provider.2
The fraudsters posed as U.S.-based investment advisors on social media and promised significant returns on China Liberal Education Holdings (CLEU), Ltd. stock. A pump-and-dump scheme involves fraudsters promoting a stock to investors, usually via spam emails, social media posts, fake press releases or telemarketing.3
When a large group of people invest in the stock in a short period of time, they increase the demand, price and trading volume of the stock. Once it reaches a significantly inflated point, the fraudsters sell their shares at the higher price causing the stock to plummet and unsuspecting investors to lose their investment.
The CLEU stock dropped dramatically on January 20, 2025, with unsuspecting investors losing nearly all their invested funds. The federal government has seized approximately $214 million of the alleged fraudsters’ proceeds from the scheme. The FBI is currently working to identify potential victims of the NASDAQ: CLEU stock fraud.4
In the CLEU scheme, as with many fraudulent investment crimes, the fraudsters who were actually based in Taiwan and Malaysia, contacted investors through social media and posed as U.S.-based investment advisors. It is common today for fraudsters to use the actual names and other information from investment professionals or firms in their promotions to investors.
They can create fake websites using logos, photos, and even replicas of an investment advisor or firm’s website. They can call you from a spoofed phone number which will appear on your caller identification as the firm they are impersonating. They can “disguise their true identifies by using voice-changing software, messaging services, writing assistance tools, or artificial intelligence (AI) generated content such as cloned voices, altered images and deepfake videos.”5
There are ways to avoid becoming a victim of fraud. They do involve research but the return on the time investment can save investor’s thousands in payouts for fraudulent investment schemes. The FBI/SEC investor alert recommends independently verifying that you are discussing an investment with a registered investment professional or firm by calling them using the phone number listed on their Form CRS (Client Relationship Summary). It is further recommended that you make sure you are looking at a genuine copy of the form CRS by following these steps:6
1. In the “Check Out Your INVESTMENT PROFESSIONAL” search box on Investor.gov 7, select “Firm” from the drop-down options and type in the name of the firm.
2. In the search results, click on the relevant firm and then click on “Get Details.”
3. Click on “Relationship Summary” or “Part 3 Relationship Summary.”
It is also recommended that you independently verify website and contact information and be wary of an investment professional that wants to communicate through an encrypted messaging app such as WhatApp or an email address that appears unrelated to the person’s firm.
If the investment advisor is reluctant to have a phone conversation or video chat the reason may be that they don’t look or talk like the registered representative they are impersonating via email or social media. You should also not put much faith in testimonials or customer reviews about investments as these can be easily faked.
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Take action to protect your investor rights by contacting an experienced securities attorney. If you have questions about investment fraud, financial schemes, broker misconduct, or about how your broker is managing your account, please contact our Securities Law Firm located in Royal Oak.
Our securities attorneys have decades of experience in helping countless individuals regain from undue investment losses. Call for a Free Case Evaluation today.
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1, 5, 6 Beware of Fraudsters Impersonating Investment Professionals and Firms – Investor Alert, 12/11/2024
Link: https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-alerts/beware-fraudsters-impersonating-investment-professionals-and-firms-investor-alert
2 7 Indicted in Chicago in $214M ‘Pump-and-Dump’ Investment Fraud Scheme, 3/21/2025
Link: https://www.fox32chicago.com/news/7-indicted-chicago-214m-pump-and-dump-investment-fraud-scheme
3 Pump and Dump
Link: https://en.wikipedia.org/wiki/Pump_and_dump
4 Seeking Victim Information in “Ramp-and Dump” Investment Fraud Investigation, 2/20/2025
Link: https://www.fbi.gov/how-we-can-help-you/victim-services/seeking-victim-information/seeking-victim-information-in-ramp-and-dump-investment-fraud-investigation
7 U.S. Securities and Exchange Commission
Link: https://www.investor.gov/