19 July 2022

Fraud case study: Close call in Starlink IPO share scam

Image relating to Starlink real life scam story from the FMA

Sarah* got in touch with the FMA earlier this year to tell us about an odd encounter she’d had with a company claiming to help her get shares in Starlink – the global satellite-based internet venture founded by Tesla and SpaceX’s Elon Musk.

“I don’t know much about the sharemarket – but I have a Sharesies kids’ account – I thought Starlink shares would be good, I do follow the market a bit and I do have in interest in what Elon Musk is doing, he’s so clever, imagine having bought Tesla shares!”

“It really caught my eye – we got Starlink installed, and it’s been fantastic. That’s what got me thinking that I’d be good to buy Starlink shares – I was going to buy $10,000 worth of shares for myself.”

Impressed with the success of her new Starlink broadband and the business nouse of Elon Musk, Sarah took to the internet to see how she might be able to invest in Starlink shares.

She Googled “Starlink shares” and up popped an offer for an IPO (initial public offering) of shares in the company

Sarah registered her interest by entering her name, email, phone number, and how much she was looking to invest. (A range of options were offered, with $10,000 the minimum.)

Sarah then got a phone call from one “Mr Daniel Maxwell-Stewart” – a friendly man with a British accent, saying he worked for an Australian-based share broking firm.  The company had a professional-looking website and with authentic business ID numbers.

There wasn’t anything particularly unusual in the phone calls that followed: a request for some formal identification: passport details, credit cards and a bank statement.

It was only when “Mr Maxwell-Stewart” asked Sarah to confirm verbally that she wanted to proceed with the Starlink share purchase that she got nervous. 

“I backed right off then, I said I needed to make a good decision for me and my family, do some more research, because there are scammers,” she said.

Asked why this Australian sharebroker had access to Starlink shares, when local, New Zealand brokers didn’t, Sarah was told that this was because they ‘dealt directly with the underwriter’.“He said that once I had confirmed verbally that I wanted to buy the shares, he would send me a document that I needed to sign and send back.  Once that step was completed, he would call back and I needed to be in front of the computer with him, on the phone when I made the money transaction.”

Her cautious instincts almost certainly saved Sarah from losing a lot of money – she talked to her partner about the plan – and got the reply: “how do you know they are legit?”.

This helped plant the seed of suspicion.  Sarah also checked the FMA site that features public alerts and scam warnings. A similar story of someone else being offered shares by a man with an English accent raised her suspicions further – could it be the same person?

Her accountant was also concerned about how exactly this Australian brokerage had access to Starlink shares before anyone else, adding more weight to Sarah’s misgivings.

And while she thankfully didn’t lose any money, Sarah has needed to cancel and replace her passport, drivers licence and credit cards, and is now left wondering who has her private data and what it might be used for.

Some red flags and tips from Sarah’s story:

  • The contact told Sarah that he had special access to Starlink shares, which no-one else had – a sure red flag.
  • He asked whether Sarah had invested in cryptocurrencies or had bitcoin, since this would “make the transaction easier.” Fraudsters trying to get paid in crypto is a way of getting money without it easily being ‘clawed back’ through the banking system or triggering an alert.
  • Sarah did well to talk to others about her plans, including her partner and accountant. They gave a wider perspective that helped her think clearly about where she might have been misled. After she broke off contact with the scammers, Sarah was then contacted by another phoney share broking company – with a different name, which had all the same information she’d given to ‘Mr Maxwell-Stewart”.
  • The share broking website that she’d first been lured into disappeared. This is common, when an imposter website has been exposed, it will change names to repeat the scam under a new identity.
    If you’ve been scammed once or given information to a scammer, you might be contacted again.
  • Sarah wasn’t subjected to any hard-selling techniques. The man who called her was friendly and professional, never rude or putting her under pressure. A soft sell can be just as successful as being contacted repeatedly or pushed into a corner.
  • Tip: Check out legitimate news sources about IPOs. In the case of Starlink, founder Elon Musk has said he would only list it on a stock exchange “when its cash flow is more predictable”. We don’t know when this might happen, but there is bound to be plenty of news coverage on reputable sites if a Starlink IPO is officially announced.

Be scam safe

  • Read the FMA resources on protecting yourself from investment scams and how to spot one and what to do about it.
  • Before investing, make sure the company isn’t on our Warnings and alerts list
    This list contains the names of businesses or individuals you should be wary of if you are planning to invest. But it’s not exhaustive and there is no guarantee that the business or individual listed has not changed their name. Sarah in our story above checked the page and didn’t see the name of the scammer on it, but was still cautious after reading about the kind of scams that are out there.

*Name changed for privacy reasons


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