How dumb can investors be?
NEW YORK (Reuters) - A Dutch man pleaded guilty on Monday to duping investors into committing nearly $3 million for nonexistent shares of the Internet search engine company Google through a bogus pre-initial public offering.
Shamoon Rafiq, 30, pleaded guilty in federal court to wire fraud and faces 51 to 63 months in jail. He would have faced 70 to 80 months had he not accepted responsibility, court officials said.
He was charged after an FBI investigation into the fraud scheme that took advantage of publicity surrounding Google Inc.'s announced plans to make a public stock offering.
Rafiq's victims agreed to invest more than $2.8 million and deposited more than $500,000 in various accounts held by Rafiq.
Although no date or price has been set for Google's actual offering, Rafiq told his victims he was able to purchase pre-IPO Google stock, which he said was available to "family and friends" at a discount.
Rafiq falsely presented himself as a limited partner of the venture capital firm backing the Google offering or as an individual involved with the Google IPO. He also falsely claimed he had attended Stanford University with the founders of the Internet business.
Prosecutors described transactions with five of his victims and also detailed a wild spending spree by Rafiq, who spent about $186,000 on restaurants, strip clubs, jewelry and fancy hotels during a three-month period from November 2003.
His lawyer, Michael Rosen, said that after sentencing he would ask that Rafiq, identified in court papers as a business development manager based in New York for the global telecommunications company British Telecom Inc., be allowed to serve his sentence in the Netherlands.
