A press release reporting that Google acquired ICOA may have been used in a pump-and-dump stock trading scheme.
Monday morning the Associated Press reported that Google purchased Wi-Fi hotspot operator ICOA Inc. for $400 million USD. The Warwick, R.I.-based company manages wireless hotspots in high-traffic locations including airports, hotels and fast-food restaurants in 40 states. The purchase would seemingly help Google better compete with AT&T which provides Wi-Fi hotspots in similar locations scattered throughout the U.S.
Although not sourced, the acquisition report was based on a press release distributed through PRWeb. Unlike the typical press release format, the news didn't include positive, forward-looking statements from either entity, but rather a description of the services ICOA provides. The wording was even a little sketchy coming from a Google news release, and a copy wasn't provided on ICOA's website (which isn't all that unusual).
"ICOA, Inc. is a national provider of wireless and wired broadband Internet networks in high-traffic public locations. ICOA provides design, installation, operation, maintenance and management of WI-FI hot-spot and hot-zone Internet access," the announcement said.
Unfortunately, despite the news that Google could possibly provide Wi-Fi hotspot access in local restaurants and malls, the press release turned out to be fake. ICOA CEO George Strouthopoulos told TechCrunch in an email that his company "never had any discussions with any potential acquirers."
"This is absolutely false!" he wrote, backed up by a separate confirmation by ICOA CFO Erwin Vahlsing. "Someone, I guess a stock promoter with a dubious interest, is disseminating wrong, false and misleading info in the PR circles."
Google also confirmed that the press release was fake, according to AllThingsD. Even more, shares of ICOA, which are traded on the OTC Pink (the open marketplace for a wide spectrum of equity securities), jumped up after the press release was distributed through the news channels. The trading volume of shares also increased.
Because of this, there's some suspicion that the press release was used in an attempt to pump-and-dump a penny stock – to artificially spike the price of a thinly-traded stock and then immediately sell it while most of the news media was focused on Cyber Monday and post-Black Friday spending.
Vahlsing told The Wall Street Journal that his company doesn't use PRWeb to distribute announcements. "I have no idea where this press release came from, what basis it's on, and we do not want any part of it," he said. "I wish I was in conversation with Google, believe me, and I'd take much less than $400 million."
Strouthopoulos added that ICOA will report the incident "to the proper authorities."