“I was overwhelmed with feelings of guilt,” Chan said. “I couldn’t think properly for over a week. I was in a state of total confusion.”

In what is also known as a “pump and dump” scam, fraudsters holding shares of a particular stock find victims to snap up the same stock, driving up its price. As soon as the price peaks, the fraudsters cash out by dumping their shares, leaving their hapless victims to watch the price collapse.

According to the Securities and Futures Commission, such scams account for about 20 per cent of the market manipulation cases it is presently investigating.

It said manipulative stock market activities or transactions may run foul of the Securities and Futures Ordinance, and those found guilty face maximum penalties of 10 years in prison, and a fine of up to HK$10 million.

From January to July this year, police received 175 reports of online investment frauds, a fourfold increase from 43 cases during the same period last year. There were 167 cases in the whole of 2019, involving HK$48.6 million, down from 338 involving about HK$278 million the year before.

Chan did not fall for the scam overnight. In May, someone turned up on her phone, inviting her to join a WhatsApp chat group where she found more than 100 people learning about investing from someone claiming to be an expert.

One of the chat group’s administrators, who introduced herself as “Lena”, then texted Chan privately and struck up a friendship with her over the weeks that followed.

Claiming to be a 32-year-old housewife with a child, Lena urged Chan to join another WhatsApp chat group about investments, led by someone called “Cain Sir”. She said his inside information about stock prices would guarantee high and quick returns.

“Lena spent two months befriending me, chatting online every day about her personal life, ranging from childcare to religion, her charity work, exercise routine, cooking and stocks,” Chan said.

Although she never met Lena, Chan said: “She seemed very sincere and caring and I really treated her as my friend.”

Lena claimed she had made HK$2 million through speculation in stocks, thanks to tips from Cain Sir. Finally, Chan was persuaded to join the chat group in July and began following Cain Sir’s daily market analyses.

She was taken by the dozens of members who heaped praise on Cain Sir for his accurate tips, not realising that this was part of the scam.

To win over wary newcomers, the con man offered tips to earn quick money.

“He gave accurate tips on several stocks, usually new penny stocks. I once followed his advice and bought a stock for HK$25,000 and I earned 6 per cent within just a few days,” she said.

Cain Sir demanded members post screenshots of their transactions to show they followed his advice to buy targeted stocks, threatening those who didn’t with being kicked out.

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The con man convinced Chan to sell her entire stock portfolio, assuring her she would earn much more with his tips.

In mid-July, he told the group about a penny stock, Ritamix Global. He said the company was about to make a big move and if they followed his instructions, they would be guaranteed a net profit of 80 per cent to 150 per cent.

The share was going for about HK$6 when Chan invested HK$500,000 initially. Cain Sir pressed her to put in more, and she eventually invested a total of HK$1.5 million.

On July 30, Cain Sir told everyone to sell their Ritamix Global shares at the same time the next day, saying they should preset a sell order for 3.30pm, half an hour before the stock exchange closed.

On July 31 morning, the share price surged, hitting HK$6.9 at one point. Then, from 3.30pm, the price crashed rapidly to below HK$1.

“I was in a state of shock,” Chan said. “My mind went completely blank. It dawned on me that I was being duped.”

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Chinese students in Australia targeted in ‘virtual kidnapping’ scams, police say

Chinese students in Australia targeted in ‘virtual kidnapping’ scams, police say

She sent frantic messages to Lena, but her friend had vanished and did not reply. Two days later, when the share price rose to HK$1.7, Chan sold her stake, putting her loss at about HK$1.2 million.

She was sleepless for days. “I kept blaming myself and worrying about how I would cope with my living expenses,” Chan said. I was afraid my husband wouldn’t forgive me.”

She and her husband have two daughters aged 28 and 32, and pay rent of HK$18,000 a month. When the stress and anxiety were unbearable, she began taking her older daughter’s antidepressants.

“After a week, I couldn’t stand the pressure and I finally told my husband everything,” she said. “He didn’t blame me, only saying ‘money is external’. He comforted me and said we could solve this together. I felt so relieved.”

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Another victim, who declined to give her real name but asked to be referred to as Nancy Lee, admitted to being driven by greed when she followed Cain Sir’s advice and invested HK$40,000.

“At first I wondered whether this was a scam, but when I saw that there were more than 100 members and they kept praising him, I stayed on,” said the 32-year-old mother of two.

She was impressed when his tips turned out accurate and other members claimed they had made quick money.

In mid-July, Lee fell for the scam just like Chan. She invested HK$50,000 in Ritamix Global, and later obeyed Cain Sir’s order to preset the sale for 3.30pm on July 31.

She was at work when the share price crashed and she realised she had been tricked.

“I was sitting in my office, unable to function. I kept asking myself why I was so stupid,” she said.

She has not told a soul. “I don’t dare tell my husband and I don’t want other people to know,” she said.

Chan and Lee did not make a police report. Chan said: “I have no idea of the identity and the personal details of the fraudster and his accomplices.”

One person who smelled a rat and avoided being burned in the same scam was retiree Grace Wong, 61, who lives with her 61-year-old husband, and 21-year-old daughter.

She was added to the same chat group in July and stayed out of curiosity. Soon she began to feel confident about Cain Sir, and even earned a few thousand dollars one week by following his tips.

When he recommended Ritamix Global, she invested about HK$400,000. But when he ordered everyone to sell at 3.30pm on July 31, she checked with a savvy investor she knew.

“My friend told me that I had definitely fallen for a scam and advised me to sell all my shares immediately,” she said. “My hands were shaking the next morning when I sold my shares.”

She got away with a profit of more than HK$10,000 as she sold when the share price was rising.

When she saw the price plunge after 3.30pm, she knew it was all a trick and was grateful she managed to escape.

“I felt lucky, but I was very angry at the fraudsters and also my own stupidity for trusting them,” she said.

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Now on a mission to prevent others from being tricked, Wong managed to connect with Chan and Lee, and wanted to form an alliance for mutual support.

“I hope to save as many people as I can from these scams,” she said.

The SFC urged the public to be on the alert to fraudsters online, and to be on guard when strangers claiming to be investment advisers appear offering unsolicited investment tips.

Some red flags to look out for were that these fraudsters tend to deal with penny stocks and ask their victims for screenshots of trading transactions.

The regulator advised people to do their own homework about investments or go to licensed advisers. The bottom line, however, was for people to curb their greed and not fall for get-rich-quick scams.

“Greed is one reason that these types of scams are successful,” the commission said. “Remember that there is no such thing as a low-risk investment with high guaranteed returns – a claim frequently used by fraudsters to entice unwary investors by manipulating their fear of missing an opportunity.”