Nevada joins in securities crackdown

Nevada joined 28 other states in announcing a crackdown on so-called "boiler room" investment houses that telemarket sales of penny stocks and other questionable investments.

Securities regulators across the county have brought 106 enforcement actions in recent weeks, according to the North American Securities Administrators Association.

The Nevada Secretary of State's Securities Division issued an order July 16 to revoke the license of Duke & Co. of New York. The firm is accused of using high-pressure tactics to sell its securities and has been expelled by the National Association of Securities Dealers.

Susan Eckhardt of the Securities Division said about 100 Nevada investors were involved in the Duke case and losses are estimated at between $300,000 and $400,000. Total losses related to the Division's recent actions total about $1 million, she said.

A phone number for Duke and Co. was not in service today.

On July 14, the Division issued a cease-and-desist order against International Capital Management Inc. of Pompano Beach, Fla., after the firm solicited a Securities Division employee for an investment in the "forex" market. The forex market involves investing in foreign currencies, Eckhardt said.

Dell Gowing, an attorney representing International Capital Management, said he was negotiating with Nevada officials. In other states, he said the company has agreed to send letters to investors offering them their money back. Gowing said International Capital is not like other companies being targeted nationwide.

"They've been very successful," he said. "They're very proud of what they've accomplished and they want to do business in Nevada."

Firms selling these securities are called boiler rooms because they use rooms filled with phone banks with dealers making "cold" calls to sell securities. Often, the potential customers are elderly people who are at home to answer the phone and can be susceptible to high-pressure tactics.

Penny stocks are popular sales pitches. Penny stocks are typically high-return but also high-risk investments. Nationally, 64 actions were taken against 36 firms for penny stocks and 27 actions were taken against 27 firms relating to foreign currency investments.

Much of the activity is fueled by the surging bull market on Wall Street.

"In this bull market, there's been an explosion of boiler rooms -- and many investors are getting burned," Denise Voigt, president of NASAA, told the Associated Press.

In Nevada, the increased focus on securities selling comes only months after an investigation was launched into the Las Vegas-based Sterling Group, also known as Affordable Media. That company faces federal and state fraud complaints. The company sold broadcast advertising units to tout impulse items, promising high returns. Investors failed to realize those returns.

Two people with the company, Ina Bell and Phil Balestrieri, face criminal charges. Eric Stein, who headed the company, remains at large. A San Diego couple, Michael and Denyse Anderson, are in jail on contempt charges for failing to repatriate overseas assets. The Andersons solicited investors for the Sterling Group.

In a news release, Nevada Secretary of State Dean Heller offered tips for investors solicited by phone:

* Never buy anything over the phone from a stranger.

* Ask questions and request materials in writing.

* Avoid investments you don't understand.

* Thoroughly investigate the person and firm selling the security.

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