They can use persuasive sales pitches that might weave together facts and half-truths for added credibility. Today an estimated 325 penny stock firms have set up main offices in 29 states, employing several thousand brokers at more than 1,000 branch offices that now reach into America's smallest communities. One of the most notorious penny stock firms of the 1980's was First Jersey Securities. The SEC charged that the firm created an artificial demand for the securities of six companies because First Jersey was orchestrating both the buying and selling of the securities. The federal court judge noted that the proven scheme was probably only the tip of the iceberg, as First Jersey had over 500,000 customer accounts and a sales force of 1,200 brokers during its heydey in the mid 1980's.
Indium is a soft metal found in zinc and copper ores, and is captured during the refining process.
It has a variety of industrial uses, such as in fiber-optic communications systems, digital watches and as a transparent glaze on some energy efficient windows. A few weeks later, the con artist would call the victim again and report a spectacular rise in indium prices. Since indium wasn't traded on the commodities exchanges or anywhere else, there was no way for the victim to check the price. Then the con artist would abruptly disappear leaving the victim to eventually find there was no way to sell the indium at the price he paid. And, because the con artist actually delivered the metal to the victim, they could dodge the charge of creating a phony security, or a futures contract.