I learned that an acquaintance of mine invested a few tens of thousands a few months ago in a medical-device company called ROMTech, and my sense is that he’s never going to get any of it back. I believe that ROMTech is a real company with a real product (which appears to be a stationary bike with a tablet attached to it), but from the bit of looking into this investment I’ve done, my belief is that their product is not of much value in the healthcare market and so they have decided to use it as a means to dupe gullible healthcare professionals into investing in a private placement that promises them big returns once the company IPOs or is bought out by a large corporation. And of course hopeful things are always on the horizon—just had promising results in a new trial, just signed a new partnership with some healthcare provider, etc. But it looks like they’ve been doing this for years and years, and my suspicion is that the investment money goes toward keeping the product afloat just enough to perpetuate the scam, paying their board, and paying the commissions of the callers in the boiler room who persuade rubes to invest in this great opportunity. I think if their product had a legit chance of success, they would have gotten all the funding they would need from venture capital or an IPO or a buyout from Medtronic or Stryker or GE years ago. My contention is that the NASDAQ has occasional frauds, the OTC market has lots of frauds, and illiquid private placements that solicit money from individuals are pretty much all frauds.
So anyway, after telling my acquaintance this, he’s coming around to my perspective. I anticipate soon I will be asked to advise him how to get his money OUT of this likely scam. But I really don’t know what the procedure is in these private placements for trying to get your investment out. Obviously they’re set up to make it extremely difficult to do so, but if anyone has any thoughts on how to proceed from here, I would really appreciate it.
