The hucksters make their pitch in TV infomercials and on radio. Telemarketers then tell callers that the company already has an FCC license, but needs money to build a transmission tower and sign up subscribers and cable channels. Investors could quadruple their money – minimum investments average $7,000 – in four years, they suggest. What they don’t say is that most of the money will go to commissions for telemarketers, leaving the company short of cash.
So far, law-enforcement officials have been frustrated by companies that move frequently and change their names. But the Securities and Exchange Commission recently sued one alleged operator, Las Vegas-based Parkersburg Wireless. Since January, the SEC says, the company has taken in $10.3 million from investors, but kept more than $6 million for itself and its telemarketers, leaving too little money to run the wireless system. Parkersburg argues that most of its investors are satisfied. The case is pending.
Investors seeking a safer bet on wireless should look – carefully – at publicly traded companies such as CableMaxx and People’s Choice TV. And if you see an infomercial for anything more complex than a blender, change channels.
