Holder, Fla. “But when I found out the truth, I couldn’t eat or sleep. I lost 30 pounds.
I still can’t believe I would do anything like that.”
Gulban was the victim of a what law enforcement officials call a “boiler-room
operation,” a ruse that often involves dozens of fast-talking telephone salesmen
crammed into a small room where they call thousands of customers each day. The
companies snare hundreds of millions of dollars each year from unsuspecting
customers, according to a U.S. Senate subcommittee on investigations, which issued
a report on the subject last year.
“They use an impressive Wall Street address, lies and deception to get individuals
to sink their money into various glamorous-sounding schemes,” said Robert Abrams,
the New York State attorney general, who has pursued more than a dozen boiler-
room cases in the past four years. “The victims are sometimes persuaded to invest
the savings of a lifetime.”
Orestes J. Mihaly, the New York assistant attorney general in charge of the bureau
of investor protection and securities, said the companies often operate in three
stages. First, Mihaly said, comes the “opening call,” in which a salesman identifies
himself as representing a company with an impressive-sounding name and address.
He will simply ask the potential customer to receive the company’s literature.
A second call involves a sales pitch, Mihaly said. The salesman first describes
the great profits to be made and then tells the customer that it is no longer possible
to invest. The third call gives the customer a chance to get in on the deal, he said,
and is offered with a great deal of urgency.
“The idea is to dangle a carrot in front of the buyer’s face and then take it away,”
Mihaly said. “The aim is to get someone to want to buy quickly, without thinking
too much about it.” Sometimes, Mihaly said, the salesman will be out of breath on
the third call and will tell the customer that he “just came off the trading floor.”
Such tactics convinced Gulban to part with his life savings. In 1979, a stranger
called him repeatedly and convinced Gulban to wire $1,756 to New York to purchase
silver, Gulban said. After another series of telephone calls the salesman cajoled
Gulban into wiring more than $6,000 for crude oil. He eventually wired an addi-
tional $9,740, but his profits never arrived.
“My heart sank,” Gulban recalled. “I was not greedy. I just hoped I would see
better days.” Gulban never recouped his losses.
FIGURE 7-2
The Scarcity Scam
Note how the scarcity principle was employed during the second and
third phone calls
to cause Mr. Gulban to “buy quickly without thinking too much about
it.” Click, blur.
(PETER KERR, THE NEW YORK TIMES)
A variant of the deadline tactic is much favored by some face-to-face,182 / Influence