Over the course of Monday, the tech world got duped by a phony press release that claimed Google had acquired ICOA, a wireless Internet company, for $400 million. Both Google and ICOA have since denied the acquisition, with ICOA's CEO George Strouthopoulos suggesting to Buzzfeed's John Herrman that the press release was a hoax intended to increase the stock's value so an insider, as-yet-unrevealed but apparently from Aruba, could make himself a lot of money.
This was a Hoax. We are investigating the source, so far it originated from Aruba
This is NOT TRUE!! Never had any discussions with any potential acquirers!! This is absolutely false!
Someone, I guess a stock promoter with a dubious interest, is disseminating wrong, false and misleading info in the PR circles.
ICOA will report this to the proper authorities.
The journalists who first reported the press release as a not-hoax have since updated their posts. But the act of misreporting the news has already done its damage. The penny stock spiked to five cents, likely leading to a profit in the hundres of millions of dollars range for the lone scammer, notes Herrman. In order to prevent this from happening again (it's happened before), let's take a look at some of the tell-tale signs we should have seen from the press release that might have indicated its fakery — and fended off an unfair stock-market bump.
For reference, here's the release in question (no longer on the Internet):
ICOA Has Been Acquired by Google for $400 Million
Warwick, RI (PRWEB) November 26, 2012
Google has announced its acquisition of ICOA Inc. A provider of Wi-Fi to high traffic public locations. ICOA is a leading vertically integrated, neutral-host broadband wireless Internet network provider. Their suite of services and solutions power the unique requirements of high-traffic public locations such as airports, marinas, restaurants and more, while also providing back office solutions for hotspot operators and wireless service providers. Google looks to further diversify it's already impressive portfolio of companies.
ICOA, Inc. is a national provider of wireless and wired broadband Internet networks in high-traffic public locations. ICOA provides design, installation, operation, maintenance and management of WI-FI hot-spot and hot-zone Internet access. Based in Warwick, Rhode Island, ICOA owns or operates broadband access installations in high-traffic locations across 40 states, located in airports, quick-service restaurants, hotels and motels, travel plazas, marinas etc. ICOA networks are compatible with widely-used 802.11x technology and with virtually all Internet service providers. Further information is at http://www.icoacorp.com.
1. No Quotations
Nowhere in there does a spokesperson, CEO, president, CFO or the like from Google or ICOA gush about the new company. While those quotes aren't generally controversial and therefore not very useful to reporters, a press release without one should look suspect, as AllThingsD's Arik Hasseldahl notes.
2. No Contact Information
Usually, at the bottom of these press releases, reporters have a contact email or phone number (or both) to get more information. This press release just gave a website with a generic URL: http://www.icoacorp.com, which doesn't lead to any real information.
3. Came from PRWeb
Google didn't write about it on one of their blogs, nor did it come via email to reports. The press release made its way to TechCrunch and others from PRWeb, a press-release hub. Apparently, it doesn't take much to put a statement up on that site, according to the Hot Stock Market tweet.
@jwherrman Re your ICOA piece. PRweb will publish anything if you just pay the fee. Source: I see promoters do it all the time— HotStockMarket (@HotStockMarket) November 26, 2012
Hesseldahl also makes this good point about PRWeb: "The release was posted on PRWeb, a free service operated by the PR firm Vocus, which, it just so happens, is publicly held on the Nasdaq."
4. A Lot of Money for That Company
The release had Google paying $400 million for a company with a market capitalization of less than $850,000.
ICOA has reported the matter to the Securities and Exchange Commission, reports The Hill's Brendan Sasso. Putting out a fake release like this is illegal. One 23-year-old who scammed business and news wires was sentenced to 44 months in prison and forced to pay $350,000.