U.S. SEC Warns Investors of Scams as Covid-19 Cases Surge
These American scammers now dealing with charges for false claims as they cynically seek to profit over the crisis.
A resurgence in coronavirus cases this week coincided with the warning to investors from the U.S. Securities and Exchange Commission to beware of scammers seeking to profit from the crisis. Some investors in penny stocks Praxsyn, Turbo Global, and Applied Biosciences may have experienced such scams first-hand in recent months.
The stocks benefiting from the coronavirus have been developers of a cure or a testing kit, as well as the sellers of surgical masks. But a number of companies falsely claimed they scored related deals they never had. Thus, Florida-based Praxsyn Corp. (OTC: PXYN) issued statements in February and March, which it later retracted, stating that the company was "negotiating the sales of millions of surgical masks" and had "a large number of N95 masks, capable of protecting wearers from inhaling viruses, including the COVID-19 Coronavirus available for order."
Another Florida company, Turbo Global Partners, Inc. (OTC: TRBO), also allegedly used the Covid-19 crisis to its benefit. According to the SEC, Turbo Global stated in its press releases that it had technology that could identify early signs of the coronavirus with 99.99% accuracy and landed a "multi-national public-private-partnership" to sell the equipment.
Meanwhile, Applied BioSciences Corp. (OTC: APPB), which develops synthetic cannabinoid therapeutics, claimed in late March that it began shipping coronavirus test kits in the U.S. that "are CE certified, accurate, affordable and reliable results in under 15 minutes." The press release went as far as to say that a similar test "has been widely used by the Chinese Government." Applied BioSciences later said it terminated the agreement to sell its test kits.
All three companies, and another twenty, are now dealing with charges filed by the SEC.
"We are actively monitoring the markets to detect potential fraudsters who seek to use the COVID-19 crisis as a basis for investment scams," Stephanie Avakian, Co-Director of the SEC's Division of Enforcement, said in a statement last month.
This week, the Commission reiterated its concerns in an interview with MarketWatch. Steven Peikin, co-director of the SEC's Division of Enforcement, said crises have frequently led to scammers trying to take advantage of the public.
Peikin said, "We saw it with SARS, with Ebola, with Hurricane Katrina and after 9/11. A lot of individuals want to take advantage of investor concern and interest, and we've seen that in spades in connection with this crisis," as cited by MarketWatch.
This weekend, the world broke the 10-million mark on Covid-19 infections after many countries have eased quarantine. Some states in the U.S. saw record daily cases, including Florida and Texas. The two were forced to shut down some venues after reopening.