Pump and Dump

First, there’s the glowing press release about a company, usually on its financial health or some new product or innovation.

Then, newsletters that purport to offer unbiased recommendations may suddenly tout the company as the latest "hot" stock. Messages in chat rooms and bulletin board postings may urge you to buy the stock quickly or to sell before the price goes down. Or you may even hear the company mentioned by a radio or TV analyst.

Unsuspecting investors then purchase the stock in droves, pumping up the price. But when the fraudsters behind the scheme sell their shares at the peak and stop hyping the stock, the price plummets, and innocent investors lose their money.

Fraudsters frequently use this ploy with small, thinly traded companies because it's easier to manipulate a stock when there's little or no information available about the company. To steer clear of potential scams, always investigate before you invest.

Steps You Can Take

- Don't believe the hype
- Find out where the stock trades
- Independently verify claims
- Research the opportunity
- Watch out for high-pressure pitches
- Always be skeptical

Learn more about "pump and dump" schemes at The Securities and Exchange Commission.

Deliquent Contractors Under Scrutiny

President Obama took some basic steps last week to hammer government contractors that are delinquent in paying their taxes.

In a memo the president signed on the 20th, Obama directed the Office of Management and Budget, the Treasury Department and other federal agencies to find ways to keep companies that have not paid taxes from receiving new government contracts. He expects recommendations on how the government can do that in three months.

One way to do that is better data-sharing. The president wants a plan to make contractors' certifications on their taxes available in a government-wide database, similar to the data exchanges already being done with other information on companies. Other information like balance sheets, credit reports, and investor reviews.

“All across this country, there are people who meet their obligations each and every day,” Obama said in a speech today before signing the memo. “And yet, somehow, it’s become standard practice in Washington to give contracts to companies that don’t even pay their taxes.”

The president is also directing the IRS to conduct a review of the overall accuracy of companies’ claims about tax delinquency.

“We need to be sure that when a company says it’s paying taxes, that company is in fact paying taxes,” he said.

A regulatory change to the Federal Acquisition Regulation in 2008 requires contractors to certify whether they had delinquent taxes, had failed to pay taxes or had received notice of a tax lien against them. In addition, an agency could suspend or debar the company from government work if a contractor told the government it had had problems with taxes during the previous three years.

In his speech, Obama asked Congress to approve legislation to allow data sharing between the IRS and contracting officials at agencies.

“So the steps I’m directing today and the steps I’m calling on Congress to take are just basic common-sense steps,” Obama said. “They’re not going to eliminate all the waste or all the abuse in government contracting in one fell swoop.”

This post contains excerpts from Matthew Mweigelt's article, President orders clampdown on tax delinquent contractors, for the Federal Computer Week, January 20th, 2010.

For more insight on how the administration intends to incorporate deeper financial reviews of its contractor pool, visit The Federal Computer Week.

Haitian Earthquake Relief Fraud Alert

Disasters bring out the best in people during tragic events. Many people volunteer to assist victims and others are willing to make contributions to charities. Disasters also bring out the worst in people, particularity those who desire to benefit from the charity of others. The FBI reminds the public they should apply a critical eye and do their due diligence before giving contributions to anyone soliciting on behalf the Haitian victims. Solicitations can originate from e-mails, Internet Websites, door-to-door collections, mailings, telephone calls, and other similar methods.

Therefore, before making a donation of any kind, consumers should adhere to following guidelines:

• Do not respond to unsolicited (spam) incoming e-mails, including clicking links contained within those messages.
• Be skeptical of individuals representing themselves as surviving victims or officials asking for donations via e-mail, in person or social networking sites.
• Beware of organizations with copy-cat names that are similar to those of reputable charities, but are not exactly the same.
• Verify the legitimacy of nonprofit organizations by utilizing various Internet-based resources that may assist in confirming the group's existence and its nonprofit status rather than following a purported link to the site.
• Be cautious of e-mails that claim to show pictures of the disaster areas in attached files because the files may contain viruses. Only open attachments from known senders.
• Make contributions directly to known organizations rather than relying on others to make the donation on your behalf to ensure contributions are received and used for intended purposes.
• Do not be pressured into giving contributions. Legitimate organizations do not use these methods.
• Do not give your personal or financial information to anyone who solicits contributions: providing such information may compromise your identity and make you vulnerable to identity theft.
• Avoid cash donations if possible. Pay by a credit card or write a check to the charity.
• Do not write checks to individuals.

If you believe you have been a victim of fraud from someone or an organization who was soliciting on behalf Haitian victims, contact the National Center for Disaster Fraud at:
(866) 720-5721, fax
(225) 334-4707 or e-mail disaster@leo.gov.

Anyone who has received an e-mail soliciting donations or is aware of fraudulent charity websites claiming to be collecting for Haitian victims, please notify the IC3 via www.ic3.gov.

This alert was released from the FBI National Press Office.

Future USS Independence

The Navy officially accepted delivery of the future USS Independence (LCS 2) during a short ceremony in Mobile, Ala. Independence is the second littoral combat ship delivered to the Navy, and the first LCS of the General Dynamics variant. LCS is a new breed of U.S. Navy warship with versatile warfighting capabilities, capable of open-ocean operation, but optimized for littoral, or coastal, missions.

"Today marks a critical milestone in the life of the LCS 2," said Rear Adm. James Murdoch, the LCS program manager in the Navy's Program Executive Office (PEO) Ships. "The Navy and our industry partners have worked diligently to deliver a much-needed capability."

Prior to delivery, the Navy's Board of Inspection and Survey (INSURV) conducted Acceptance Trials aboard LCS 2 on Nov. 13-19, and found the ship's propulsion plant, sea-keeping and self-defense performance to be "commendable," and recommended that the chief of naval operations authorize delivery of the ship following the correction or waiver of cited material deficiencies.

Between now and sail away in February 2010, the contractor will correct most of the trial cards received during trials. Any remaining cards will be corrected during scheduled post-delivery maintenance availabilities including the post-shakedown availability scheduled for completion in 2011.

Delivery is the last shipbuilding milestone before commissioning, scheduled for Jan. 16 in Mobile, Ala.

For more, visit Navy News.