The announcement hit the news wires early Monday morning: A
brief news release claimed that Google (GOOG) had agreed to buy a little-known
Wi-Fi company named ICOA for $400 million -- quite a premium for a company
whose stock was trading for one-hundredth of a penny last week.
Tech blogs and even The Associated Press jumped on the story, announcing
the deal as a sign that Internet giant Google is expanding into the business
of running public wireless hotspots. Shares in the smaller company were soon
trading at four times their previous value.
But the story wasn't true. Within hours, sources at both Google and ICOA
had disavowed the deal. And the public relations firm that distributed the
news release said it had turned the matter over to "the proper authorities"
for investigation.
A spokesman at the Securities and Exchange Commission declined to comment
Monday. But the episode had many hallmarks of a "pump and dump" scheme, in
which someone may have sought to drive up the price of a little-known stock in
order to make a quick profit.
"This was a hoax," George Strouthopoulos, CEO of Rhode Island-based ICOA,
said in an email to this newspaper. "Someone, I guess a stock promoter with a
dubious interest, is disseminating wrong, false and misleading info in the PR
circles."
Strouthopoulos added that it appeared the false news release may have
originated from the Caribbean island of Aruba. He said an editor at PRWeb, the
public relations service that distributed the release, told him the release
was submitted by someone with a phone number in the island's 297 area code and
a generic email address ending in "gmail.com."
A spokesman at the PRWeb service couldn't be reached Monday. But the
service, which is operated by Vocus, a public relations firm based in
Maryland, said in a statement Monday afternoon that it had determined the
release was "fraudulent."
"Vocus reviews all news releases and follows an internal process designed
to maintain the integrity of the releases we send out every day," the agency
said. It added that "identity theft" can occur "even with reasonable
safeguards."
Google declined to comment on the release.
Viewed in hindsight, the two-paragraph statement bore indications of
questionable authenticity: It contained at least two punctuation errors and
some awkward language, while lacking any quoted statement from executives at
either company. And while Google usually announces significant acquisitions on
its corporate blog, there was no mention of the deal on either company's
official website.
A reporter who dialed the Aruba phone number provided by Strouthopoulos
reached a recording that said the number wasn't working. An email sent to the
Gmail address bounced back with a message saying the account doesn't exist.
Gmail is Google's free email service, which anyone can use, but the
company doesn't use the gmail.com domain for official communications.
While reporters who attempted to confirm the announcement quickly learned
it wasn't true, a few news outlets that published it without confirmation
found themselves issuing sheepish corrections later.
Shares in ICOA are traded on an exchange known as the OTC Bulletin Board,
or Pink Sheets. Soon after the announcement was released, the stock rose
briefly from $0.0001 to $0.0004, but it dropped back to $0.0001 after the deal
was denied.
