Anatomy of a hoax: how a 17-year-old built a crazy rumour that swept financial media

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Mohammed Islam, a 17-year-old high school senior, faced a camera in the fluorescent-lit offices of his press representatives and told an audience of strangers that his father wasn’t speaking to him: “My dad’s always told me to be truthful and I went against everything he said. I can’t even express how I can’t speak properly to him any more”.

Two years earlier, Islam had told a well-known stock trader that he wanted to break into finance to help his family. Now his family was ashamed of him. He told a reporter, “my dad wanted to disown me. My mom basically said she’d never talk to me. They ... basically wanted to kill me and I haven’t spoken to them since”.

Two days earlier, Islam’s name had gone viral. A New York Magazine profile of him in the magazine’s “Reasons to Love New York” issue presented him as a financial whiz kid, with a BMW he was not yet old enough to drive and a multimillion-dollar apartment his parents wouldn’t let him move to; a search of his name linked to the word “trading” still returns over 100,000 Google results, including articles in publications as diverse as the Latin Post and E! Online. The fame turned to notoriety fast.

When his lies crashed down around him, Islam was sitting with a friend in a black car hired to take them to the Englewood Cliffs, New Jersey headquarters of the financial news network CNBC. Islam and his high school buddy, Damir Tulemaganbetov, were going there to tell the story of how Islam made millions of dollars in the stock market – a story that had already been told in the pages of the Stuyvesant High School Spectator, Business Insider and most importantly, New York Magazine.

When CNBC called, Islam and his friend had been riding high on the adulation that resulted from profiles and dozens of media stories about Islam’s trading prowess; he later said: “we were both excited by the attention given by the media hype”. Islam, the working-class child of immigrants, was getting the respect he had hoped for since he was an insecure 15-year-old looking to break into trading, hoping it would help his family and win him admiration.

But Islam’s story was falling apart – fast. The same reporter from Business Insider who had first featured Islam in the publication’s ’20 under 20’ feature called the kids in the car. She wanted more facts. She hammered Tulemaganbetov with questions: did Islam have proof of his trades? Did he have details on his investments?

None were forthcoming. Tulemaganbetov refused, insisting he was “pretty sure” Islam is “a great trader” and a “genius” who deserved the hype. Tulemaganbetov walked back the claim that Islam had made $72m, but still insisted that his friend earned a fortune. His confidence hid considerable anxiety: the call left Islam and Tulemaganbetov rattled. They were 15 minutes late to CNBC, and by the time they got there, a source says the kids were nervous – so much so, in fact, that another source says they didn’t want to get out of the car.

Eventually a CNBC producer escorted the kids into the building and to the office of CNBC editor-in-chief Nik Deogun, a former top editor at the Wall Street Journal. Deogun started peppering the kids with questions: how much money was involved, the initial strategy, details of the stocks and other trades. Islam described a strategy that ranged from penny stocks to options and the most arcane products on Wall Street: derivatives. Islam, visibly nervous, did most of the talking, according to a source familiar with the conversation.

Deogun asked: “It’s not $72m, is it?” Islam acknowledged it wasn’t and said he didn’t know where the number came from. Deogun then presented an option to the teenagers, according to a source familiar with the conversation, giving the kids a warning to the effect of: “You cannot lie on our air ... eventually, it’s going to come out. We’re going to ask you tough questions and just know you can’t lie”. Then Deogun asked them if they still wanted to go on the show.

Islam and Tulemaganbetov asked for time to confer privately in another office. Islam appeared “terrified”, said a source familiar with the scene. When they returned to speak to Deogun, they decided to back out.

The drama, however, was not over. While they were still in the building, CNBC reporter Scott Wapner came over and quizzed the kids about whether Islam made eight figures, as the rumor had it. Islam admitted to something more in the range of $3m. Wapner reported on air that Islam was backing away from his claims. The same source familiar with conversation said that the visibly distressed Islam gave a strong impression of being in over his head.

The CNBC episode set off a subsequent battery of public questions as skeptics piled up. What came out later revealed that the young man, apparently looking for attention and approval, had been building for years a string of lies about Wall Street prowess.

Islam later said he’d made it all up, agreeing with the New York Observer that his trading gains were “total fiction”. “I pretended to be something I’m not and I’m extremely sorry”, he said in an apology in which he said he had only done simulated trading.

“Seventeen-year-old boys don’t always tell the truth. Is that a mystery to anyone, whether they are a reporter or not?” Ronn Torossian, a spokesman for Islam and Tulemaganbetov, told the Guardian.

The allure of wealth

The accounting of Islam’s embellishments, however, was more extensive than the usual puffery of adolescence. Even before the fake BMW, the nonexistent multimillion-dollar apartment, and the fake bank statements that Islam created for the benefit of New York Magazine, he had a history of making claims that seem fantastical in retrospect.

Islam first burst into the spotlight when he was profiled as a boy-wonder trader by Business Insider and named one of its ‘20 under 20’, an honor for which Islam had been nominated by his peers.

The Business Insider piece led to another, longer profile by the newspaper at Islam’s elite New York City high school, Stuyvesant, a public magnet school, which counts among its alumni four Nobel Prize winners.

In 2013, profiled in the Stuyvesant Spectator with the headline “Golden Boy”, Islam told a classmate-reporter that he started trading penny stocks at 11 under the tutelage of a cousin who worked at Goldman Sachs. (Islam later told New York Magazine that he started trading at 9 years old). He furnished numbers to the Spectator reporter: he made $1,000 to $2,000 every day by trading during lunch breaks and at night, he claimed, and fended off job offers of $9,000 to $12,000 a month.

He invented a chimerical portfolio and trading expertise, which covered three asset classes – from stocks to oil and gold futures – with dollops of jargon about two different strategies. He told the Spectator that he made simulated trades for eight months before jumping into the stock market during middle school “with money he had saved from tutoring,” the paper wrote.

The teenager, if his tale were true, would be accomplishing something few adults could: he seemed to be a one-man hedge fund at the least and possibly a child prodigy, the Mozart of trading. It was a difficult-to-dismiss possibility in the halls of Stuyvesant, where unusually bright teenagers are thick on the ground and kids win national recognition for research alongside adult professionals on mysteries including “erythroid differentiation through a non-autophagic cellular mechanism”.

Perhaps because of this, it appears no one fully checked every one of Islam’s claims. His fibs seemed to grow even faster than his ambitions.

His story included not just wins, but plausible losses. “I once lost $1,400 in a day and I got really scared,” he told The Spectator. “So I spoke to some of my friends and they told me to chill.” The way the story has it, that was the end of his trading with penny stocks and his move into oil and gold futures.

Islam also told the Stuyvesant reporter that his father was out of work, and that his trading helped the family. But later, as his reputation and his story grew, Islam told a professional reporter that he traded stocks and commodities under his father’s account. He spun a tale that his father was an experienced trader who focused on “algorithmic trading” and “believes in mathematical models”.

In his final admission, Islam reversed the story, and said that no one in his family was interested in finance. Islam and his family live in a two-bedroom apartment in Queens, he said.

Islam’s tales, though outlandish in retrospect, by all accounts raised very little suspicion among his classmates and teachers. Islam later fended off reporters with bogus bank statements and other falsehoods; even his public relations man appeared to believe or at least paper over some of his fibs.

Ronn Torossian, a public relations advisor who managed the press for both Islam and Tulemaganbetov, initially wrote to the Guardian that Islam never furnished official documents to New York Magazine, as the publication claimed: “my client maintains that there were never bank statements of any sort shown to any reporter”.

But Islam himself recounted a slightly different tale. Islam told the New York Observer that he had purposely misled New York Magazine with fake bank documents: “I showed them what they wanted to see”.

It’s a thin line” between official bank statements and a “piece of paper,” Torossian later told the Guardian by way of squaring the contradiction between his statement and that of his client.

Tulemaganbetov, who New York Magazine described as the son of a Kazakh oligarch, is the one who helped project the aura of wealth during the boys’ meetings with the New York magazine reporter, paying a combined $600 for the two meals, according to the New York Observer.

Torossian declined multiple requests to make Islam available. The Business Insider reporter did not respond to an emailed request for comment. The New York Magazine reporter referred requests for comment to a spokesperson, who referred the Guardian to a statement saying the magazine was “duped” and added, “our fact-checking process was obviously inadequate; we take full responsibility and we should have known better.”

The fact that Islam’s stories carried so far likely reflect the fervent will to believe of a teenager desperate to improve his circumstances, and who diligently studied trading as a way out and fantasized about a better life – but without enough money to actually start making significant bets. The stories Islam told classmates, friends and reporters seemed to reflect the person he wanted to be in the future but – crucially – was not in the present.

While the Guardian has not been able to confirm the existence of the cousin at Goldman Sachs, who apparently got Islam interested in the stock market, it has tracked Islam’s more open interest in the stock market. The tales that followed traced the anatomy of a story that swept the national media.

The first evidence of Islam’s interest in trading dates to July 2012. It was then that Islam emailed Timothy Sykes, a young investor who trains others, asking Sykes to consider him for one of his courses.

Sykes, who claims to have turned $12,000 of his bar mitzvah money into $1.65m in four years, hand-picks candidates for his “trading challenge” – a course in which he shares his experience with the stock market and has the candidates apply it in real time. There is just one catch: Sykes doesn’t work with people who are dependent on the money they are looking to invest.

“I get emails like this everyday, [people] wanting to learn. There is nothing wrong with wanting to learn, but basically he wanted to learn and in his application to us he said he needs the money to basically live,” Sykes told the Guardian.

Sykes refused to take Islam as a student: “I don’t teach people who have that little money because their mindset isn’t right. They are trying to make $500 to $1,000 so that they can pay the next month’s rent and that’s not how you become a real, successful trader,” explains Sykes.

Islam was persistent. Despite the fact that he wasn’t accepted for Sykes’ trading challenge, Islam continued to request guidance about proper tools and software through Sykes’ website. Sykes says he believes the questions reflected Islam’s inexperience.

“If you have made $72m or even $7.2m or even $720,000, you wouldn’t be asking for that”, Sykes says.

In his application for Sykes’ challenge, seen by the Guardian, Islam wrote that he wanted to improve his financial situation to help take care of his family, that he wanted people to look at him differently.

While Islam’s stories of a fabulous life never held up, there was one thing that he seems to have been telling the truth about all along: he loves the stock market, or at least the idea of what it can do.

The application portrays Islam as someone who “wants to learn, somebody who wants to be a great trader, somebody who wants to do his family proud,” says Sykes.

Islam and Tulemaganbetov maintain a positive outlook, according to their most recent interview with the New York Observer.

“It’s not good, what we did. But we are still inspired. We still want to pursue doing business together as individuals”, Tulemaganbetov told The Observer. “We still want to be successful and make money and make our parents proud. And I think if they were to make a movie about this, it would be about the end, not the beginning”.

Others are not so sure that movie ends well.

“It’s a huge black mark on the internet with his name,” says Sykes. “Everybody in finance, they’ll remember the name Mohammed Islam – and they won’t remember it in a good way.”

On Wall Street, however, several traders argued that an ability to bluff, along with a passion to make money, are the elements of a successful trader, and wouldn’t rule out the possibility that Islam could one day reach his ambitions.

Whatever happens, it’s hard to believe Islam’s future will be boring. He told the Stuyvesant Spectator that his favorite part of trading was the lack of monotony. “My favorite part of this entire institute is risk”, he told his classmate. “Every day is an exciting experience and you never get used to it. It’s an exciting day, every day”.

Powered by Guardian.co.ukThis article was written by Jana Kasperkevic and Heidi Moore, for theguardian.com on Saturday 20th December 2014 13.00 Europe/London

 

guardian.co.uk © Guardian News and Media Limited 2010

 

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