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    Our Mailing Address:
    Rainbow Investigations
    513-18th Avenue SW
    Calgary, Alberta
    T2S 0C6

    Better Business Bureau of Southern Alberta

    The Rainbow Scam Report

    Consumer and Financial Fraud

    (403) 245-0533 / (403) 651-9049

    Consumer financial fruad is a broad term for a for fraud involving investments in venture companies, public offerings for companies listed or going to be listed on stock exchanges, foreign exchange investments and other investment fraud..

    We have covered other types of financial fraud such as advance fee scams, credit card fraud, and fraud involving misrepresented financial representatives, and mortgage fraud elsewhere on the Rainbow Scam Report.

    Telemarketing / Boiler Room Techniques

    Boiler room is a jargon term used in the financial fraud investigation area. Boiler room operators are high-pressure sales people who sit in an office making cold calls to potential investors. The investments being touted are worthless, and are often penny or microcap stocks, foreign exchange investments, risky initial public offerings or house stocks. Almost always, boiler room operators target individuals with money such as retirees, business people, or professionals.

    Microcap Stocks or Penny Stocks

    Microcap stocks in the U.S. refer to companies with low or "micro" capitalization's [low total value of company stock]. These companies do not have to file financial reports with the Securities and Exchange Commission. In Canada, these stocks are simply known as penny stocks, which loosely means, stocks whose stock price is less than $1.00. In Canada, penny stocks do not have to file financial statements.

    Foreign Exchange Investments

    Operators try to solicit money for fictitious investments in exchange instruments traded in foreign markets. Often the foreign market just happens to be going through a financial crisis, and the promoter sells the investment on the basis that it's a good buy, because the investment is undervalued, due to the financial crisis. Often the money invested doesn't even make it to the proper foreign destination.

    Risky Initial Public Offerings (IPO's)

    Companies that are initially becoming publicly traded companies usually do an initial public offering to raise money. Many times the boiler room operator will try to sell IPO's that are underwritten by the investment firm to whom they are working for. In these cases, the telemarketing firm either has been hired as an agent to find buyers for the initial offering, or has purchased some of the initial offering itself, and is now trying to resell it to investors at a profit.

    House Stocks

    House stocks are stocks that an investment firm has purchased themselves to resell at a profit. Brokers of these house stocks will try to manipulate the market by buying stock of seldom-traded companies. By doing this they artificially pump these stocks prices up higher, and then sell them to investors at a profit. The buying investors find no other buyers for their stocks. Without buyers, the stock price falls, leaving the investor with worthless stock.

    Common Illegal Practices Of Boiler Room Operators

    Some boiler room operators run afoul of the security laws and regulations by engaging in abusive selling practices or by not being properly registered. Some of the common problems include:

    • Boiler room operators making unauthorized trades in the names of investors. Once the investor discovers what the boiler room operator did, the boiler room operator advises the investor to hold onto the stock (often worthless).
    • Boiler room operators often do not properly register as a broker-dealer. All stockbrokers and the firms that employ them are required to register in the state or province in which they do business.
    • Boiler room operators have misled investors about their firm, the firm's reputation and expertise. Operators have been known to falsify records, particularly relating to unauthorized sales.
    • Operators at times have not disclosed to investors that the stocks were house stocks, or that their firm was underwriting the stock.
    • Boiler room operators have unrealistic unsupported predictions of a stock's value. Boiler room operators often pressure investors to make hasty investment decisions.
    • Boiler room operators not executing orders to sell a stock; often the operator doesn't want to create downward pressure on the stock price.

    How To Avoid Being A Victim Of A Boiler Room Operator

    • Don't cave in to high-pressure tactics.
    • Don't make immediate investment decisions. Do some research on the potential value and risks of the investment. Make sure you understand the investment you are being offered, with its terms being clear.
    • Confirm that the broker [operator], and the brokerage firm are registered with the security regulators. Research the enforcement archives of the security regulatory agency to see if there have been previous enforcement orders on the broker and the firm.
    • Do not share personal information, particularly personal financial information, with the caller.
    • Know your own tolerance for risk. Many times it is just better to say no to risky companies. There are many blue-chip companies that offer growth without great risk

    From the Canadian Federal perspective here is some information from the Financial Consumer Agency of Canada which is now overseeing this area.

    Where To Complain regarding the above described financial fraud


    Competition Bureau
    Financial Consumer Agency of Canada

    the government stock market regulatory agency
    eg. Alberta Stock Exchange

    United States

    Federal Trade Commssion

    Rainbow Investigations
    Consumer and Financial Fraud Stories

    Huge Calgary Based Ponzi Scam Busted

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    Fraudcast Now On The Air

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    May 24, 2009

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    March 17, 2005

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    March 10, 2005

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    November 03, 2004

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    November 03, 2004

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    September 06, 2004

    FTC Busts Montreal Based Telemarketing Scam

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    July 24, 2004

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    July 18, 2004

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    June 15, 2004

    U.S. Securities Fraud in the Billions Busted

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    June 14, 2004

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    September 07, 2003

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    July 20, 2003

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    May 21, 2003

    Finance Scams Target the Church of Latter Day Saints in Utah

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    January 19, 2003

    Real Estate Agency Charged In $80 Million Dollar Fraud

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    January 15, 2003

    Deceptive Jewellery Promotions Cutailed

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    December 20, 2002

    Teeth Whitening Scam Nets 6 Year Jail Sentence

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    November 30, 2002

    Teeth Whitening Scam Busted In Toronto

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    November 17, 2002

    Joint US/Canada Effort Shuts Down Canadian Office Supply Telemarkers

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    November 17, 2002

    U.S. Officials After Canadians For A Money Transfer Fraud

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    November 17, 2002

    Competition Bureau Shuts Down First Capital

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    October 28, 2002

    Fake Bank Scam Hits U.K.

    A scam involving a fake on-line bank hits the U.K.
    October 08, 2002

    Montreal Telemarketer Sued By Missouri

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    October 06, 2002

    Alleged Edmonton $10 Million Fraud Goes To Jury

    A trial involving an Edmonton man, using pay telephone services, from a few years back now goes to the jury.
    October 06, 2002

    Edmonton Bank of Montreal Manager Pleads Not Guilty to Fraud

    The latest on the Edmonton Bank of Montreal fraud case...
    August 23, 2002

    Bank Manager Charged In Edmonton Fraud

    This is the story about an Edmonton Bank of Montreal bank manager being charged with a multi-million dollar fraud...
    August 21, 2002

    B of Montreal Statement of Claim Details Alleged Fraud

    Documents from Bank of Montreal's Statement of Claim, filed in Edmonton Law Courts, detail the alleged bank fraud...
    August 21, 2002

    MultiMillion Dollar U.S. Immigration Case Busted

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    July 25, 2002

    Canadian Lottery Scam Proprietors Charged

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    July 20, 2002

    Saskatchewan Livestock Ex-Employee Charged In Million Dollar Case

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    July 19, 2002

    Montreal Telemarketing and Direct Mail Operation Convicted

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    June 27, 2002

    Another Montreal Telemarketing Operation Convicted

    This Montreal telemarketing operation was selling business directories in a misleading manner...
    June 27, 2002

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    June 02, 2002

    Bogus Internet Directory Promotion in Canada Leads To Conviction

    The Competition Bureau In Canada Convicts a bogus Internet directory scheme...
    June 02, 2002

    Alberta Company Found To Contravene Competition Act Via Bogus Fuel Saving Device

    A supposed gas saving device is found to be bogus...
    June 02, 2002

    Four New Jersey Based Indian Nationals Charged in $600 Million Dollar Fraud

    Huge Story Out of Los Angeles - Banks defrauded huge money.
    May 17, 2002

    Two Montreal City Councillors Among Four Charged With Government Corruption and Fraud

    More Montreal Fraud...
    May 17, 2002

    Urgent – Major Credit Card Promotion Scam in Toronto

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    May 17, 2002

    Foreign Students Attending School in U.S. Charged With Getting Impostors to Write English Exams

    An interesting story about foreign students getting people to write English proficiency tests...
    May 09, 2002

    Montreal Telemarketers To Pay Back $111,000 to U.S. Citizens

    Another Montreal based telemarketing firm in trouble...
    May 03, 2002

    Maine Residents Lose Money To Montreal Area Lottery Scam

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    March 17, 2002

    FTC Charges Bogus Cell Phone Protection Patches

    The FTC has charged two companies marketing patches claiming to protect from cell phone radiation...
    February 22, 2002

    Late Night Psychic’s Crystal Ball Not So Rosy!

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    February 17, 2002

    Sweepstakes Winnings Fraud Originating Out Of Toronto

    Consumers throughout the U.S. are receiving notices they receive by mail announcing they have won substantial sums of money…
    August 23, 2001

    To Top of Page

    Rainbow Investigations - The Investigative News
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    Monday, April 23, 2018

    On-Line Scam Awareness

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    Sunday, September 03, 2017

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    Monday, January 30, 2017

    Concrete Equities Exec Convicted

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    Saturday, October 01, 2016

    Calgary's Professional and Effective Court Agent

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    Friday, January 22, 2016


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