If there's one thing penny stock promoters have in plentiful supply, it's imagination. Turquoise Development Co. sounds glamorous and romantic. The Caribbean beaches pictured on the company Web site could have come from a travel brochure ... white sand beaches, swaying palms and, of course, a turquoise Caribbean. Who wouldn't want to invest in a company that seeks "high-yielding investment opportunities" in such a beautiful place?
For investors, it was all an illusion. Federal prosecutors say Turquoise Development was one of more than four dozen "worthless, nonexistent or near bankrupt" companies involved in a $70-million penny stock fraud based in the Tampa Bay area.
Paul Gunter of Odessa and his daughter, Zibiah, of Oldsmar recently were charged with mail, wire and securities fraud and money laundering. She was released last week on a $150,000 bond, while he remains in the Hillsborough County Jail with a detention hearing set for this week. "He's maintaining his complete innocence of any wrongdoing," said Gunter's lawyer, Howard Anderson, assistant federal public defender. Four other alleged conspirators, two of them with Tampa Bay ties, have not been charged.
Investigators say ring members stole the identifying stock numbers (known as CUSIP numbers) of defunct corporations. They'd incorporate a new company under the same name as the old one and then represent the two companies as one and the same. With a little sleight of hand, they could get a new CUSIP number, a new stock symbol and a new name. Then they were off and running.
Investigators say Gunter kept "to-do" lists on his computer. The one for setting up a company included these key ingredients: an escrow account for investor money, a Web site, a Florida business license, a telephone answering service, a FedEx account and someone to serve as company administrator. The list for later on mentioned cleaning hard drives, destroying leftover paperwork and researching Switzerland as a new home for escrow accounts.
A boiler room in Spain called investors in the United Kingdom, giving them the impression there was little to no risk involved and that the value of their shares was almost guaranteed to increase significantly. That should have been a tipoff right there, of course. But apparently many of the victims were sufficiently impressed by the spiel to send their money to Florida.
Yet there is no reason for anyone to lose money in penny stock schemes. Strangers who contact you with investment opportunities have their interests at heart, not yours. Listening to their spiel is a mistake. Just hang up. If they call back, hang up again.