Dutchman admits Google share fraud

18th May 2004, Comments 0 comments

18 May 2004, AMSTERDAM — A Dutchman has admitted duping wealthy New Yorkers into paying a total of USD 500,000 (EUR 416,000) to get their hands on Google shares before the leading internet company goes public by way of a "Dutch auction".

18 May 2004

AMSTERDAM — A Dutchman has admitted duping wealthy New Yorkers into paying a total of USD 500,000 (EUR 416,000) to get their hands on Google shares before the leading internet company goes public by way of a "Dutch auction".

Shamoon Rafiq — who worked as an investment manager for British telecoms firm BT in New York — pleaded guilty on Monday to wire fraud at the Federal Court in Brooklyn. He faces up to five years in prison.

His lawyer has asked the court to allow Rafiq to serve his eventual sentence in the Netherlands. But the prosecution has filed an objection to this motion.

Newspaper New York Daily News reported Tuesday that Rafiq told people he was a college friend of Google's founders, Larry Page and Sergey Brin, and that he could buy "preferred stock" for a bargain price of USD 12 a share.

His victims included a chairman of a telecommunications company, an investment banker and a brokerage executive.

Rafiq was paid some USD 500,000 by his victims and preceded to spend USD 350,000 in a few months on strippers, hotel rooms, gong to night clubs and jewellery for his friends.

His spending spree came to light after one of the people he duped got suspicious and went to police. The FBI detained Rafiq in March shortly before he was to fly back to the Netherlands.

In reality, the date of Google's long-awaited Initial Public Offering (IPO) and the price-per-shares has yet to be announced.

The company, which runs the internet search engine of the same name, confirmed in April it is going public and hopes to raise USD 2.7 billion.

Google is offering its shares in a Dutch auction, named after the system developed by flower traders in the Netherlands in the 17th and 18th centuries.

Everybody interested in investing in Google shares has to bid for the number of shares wanted and the price they are willing to pay for each share.

When all the bids are in, Google will allocate shares on a pro rata basis to anyone who has bid at or above the initial IPO price, which is set by a threshold price that Google will accept.

The seller initially sets a very high price and lowers it progressively as sales are made to ensure as much of the share offering as possible is sold.

[Copyright Expatica News 2004]

Subject: Dutch news + Google + Dutch auction

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