Crestview Exploration mailing exploits fear of Coronavirus recession
April 30, 2020 – Investment fraudsters are taking advantage of people’s fears of a Coronavirus recession and are using them to manipulate their victims. Aggressive stock promotion is a technique of investment scammers to entice investors to buy their stocks through unsolicited email, social media, or mail. Securities watchdogs warn against the Crestview Exploration mailing as a recent Coronavirus-related investment scam. The stock promotion letter urged recipients to invest in the B.C. gold mining company by making exaggerated claims and predicting huge profits without cause.
Since investors are more vulnerable and scammers are taking advantage of the crisis, the warning bells are ringing from regulators, law enforcement agencies, and consumer organizations regarding investment scams that try to get a hold on investor’s hard-earned money. Investors are being warned of fraudulent investment opportunities related to the Coronavirus and are advised to be cautious when investing.
A recent Coronavirus-related investment scam apparently is the Crestview Exploration mailer. The British Columbia Securities Commission (BCSC), the Alberta Securities Commission (ASC), the Saskatchewan’s Financial and Consumer Affairs Authority (FCAA), and Québec’s Autorité des marchés financiers (AMF) sent out investor warnings against the Crestview Exploration mailing.
The aggressive stock promotion urges recipients to invest in the B.C gold mining company by making exaggerated claims and predicting extraordinary gains. But the rule applies, if something seems too good to be true, it probably is. The reality is that the stock projections in the stock promotion letter are completely unfounded, according to the regulators.
The Crestview Exploration Mailing
Investment scammers use aggressive-stock promotion techniques through unsolicited email, social media, or mail to entice investors to buy their promoted stocks. They build an urgency to invest in order to create a fear of missing out, they promise investors extraordinary gains when the stock projections are really baseless, and they fake legitimacy as well as unique opportunities to persuade investors.
A recent Coronavirus-related stock promotion letter that enticed investors to buy shares of Crestview Exploration Inc. checked all these boxes of an investment scam. The letter was sent out to residents of British Columbia, Alberta, Manitoba, Saskatchewan, Québec, and Ontario in the last weeks in an envelope without a return address that reads ‘CORONAVIRUS AFFECTING MARKETS: READ NOW.’
The mailing urged recipients to invest in the B.C. gold mining company. However, the company itself stated that it was not responsible for the promotion and that the letter contained ‘unfounded forward-looking statements.’
Let’s have a closer look at the letter and the projections to unmask the scammer’s techniques.
The Trigger: the problem and its exclusive solution
The letter appears very basic and of simple structure. The bogus author initiated the letter with a trigger ‘Coronavirus is sending us to a recession’ in bold red letters. Thus, the fraudster draws on breaking news and creates a relatable threat scenario in the beginning. As the letter continues, this scenario is further developed with predictions as the recession will be ‘worse than the last one’ and that ‘your portfolio will probably suffer’.
On the other side, while building this threat scenario, the letter instantly provides a solution to the recipient, which also creates a ‘them and us’ feeling – the winners and the losers of the recession. ‘But this Canadian stock is poised to soar’ states the second line and gives hope to the reader and suggests with ‘there are always ways to mitigate that. You just need to know where to look’ that there is an opportunity and that the reader has the chance to be on the winning side of this pandemic-initiated recession.
Fake legitimacy and building trust
The letter claims to be from the ‘stock analyst and geologist’ James Campbell. However, it seems to be a fake name since a quick google search results in no fitting hits. ‘He’ claims to be a geologist who graduated from Stanford as well as an MBA graduate of Harvard Business School. These are two degrees from prestigious universities, unique in their combination that are supposed to establish legitimacy and authority in ‘his field’. Nevertheless, the letter says ‘Harvard’s Business School’ which is a spelling that would not be expected of any Harvard graduate.
Furthermore, the fraudster tries to create trust by offering to tell the reader about himself. He also justifies his ‘unique analyses’ with his presentable work experience by claiming that he had worked for ‘some of the biggest companies in the world.’
Additionally, he claims that he had success in the past with statements such as ‘investors who bought the mining stocks I recommended made profits of more than 1,000%’ and ‘I identified 3 such mining stocks at the beginning of 2019, all of which turned out to be winners’ – which seems like an easy task in retrospect.
Lastly, the letter refers to a website called ‘www.researchreport.ca’. Using the word ‘research’ and ‘report’ is supposed to contribute to the verification and legitimacy of the given information about the stock and its presented target price. In reality, the website seems to be just a landing page where the fraudster tries to gather email addresses from the interested recipients who want to sign up ‘for more alerts about Crestview Exploration’ as advertised in the letter, which is probably a phishing attempt.
A unique and time-sensitive opportunity for a safe investment with extraordinary gains
The bogus letter makes exaggerated claims about the Crestview stock and predicts that it ‘will soar as the recession hits’. At the same time, the fraudster suggests that Crestview is a safe investment opportunity since ‘gold has been the No1 safe haven throughout human history.’
Not only claims the letter that Crestview shares are a safe investment, but it also predicts extraordinary gains: ‘The short-term upside potential for investors buying shares of Crestview Exploration today is around 500% while long-term shareholders (12+ months) could see gains exceeding 2,400%.’ Who does not want to earn so much money during these uncertain times and stand on the winning side of events?
However, in reality, these predictions are rated as unfounded by various provincial regulators as well as the company itself. In order to compensate these outside evaluations, the fraudster creates a sense of urgency around the ‘unique’ opportunity in his letter: ‘what is unique is being able to identify them at the right time and buy shares at the right time.’ By doing that he is creating a fear of missing out and deprive the potential investor of taking the time to think the investment through – ‘it won’t stay this low for much longer.’
The British Columbia Securities Commission (BCSC) and the Alberta Securities Commission (ASC) reminded investors to ‘exercise caution when considering aggressive promotions as a basis for investment decisions, as these promotions may make false claims of large profits and baseless stock price projections’ in connection with the Crestview mailing.
Reportedly, Crestview Exploration, which was only listed on the Canadian Security Exchange (CSE) in September 2019, was already out of money at the beginning of 2020. Furthermore, recently, insiders are allegedly selling off their positions in the mining company.
Read more: Investment scams in the COVID-19 era
The ASC recommends anyone who is considering buying or selling an investment ‘to do research or talk to their registered investment adviser to ensure it is an appropriate decision.’
Marina Burghard writes for Canadian Fraud News about fraud-related cases, whistleblower, jurisdiction, identity theft, consumer protection, etc. – essentially about scams and how to protect yourself against this kind of fraudulent criminal behavior. She holds a Master’s degree in Political Science where her interest in criminology grew. Besides fraud, Marina’s scientific interest lies in terrorism, extremism and how to deal with it as a society.