Joan Longhurst, along with three of her best friends, started her own ranching operation in Hawaii. The business began with two bulls and 20 heifers. After their first year, the partners were turning profits, and everything seemed to be going well. The heifers were bred each year by using a patented new technique, and the steer population grew to 100 in two years. Most heifers would produce twins, and 90 percent were male. This allowed for future breeding of the remaining 10 percent.
New investment was needed, so limited partners were invited to join the partnership with an initial investment of $20,000 each. The partnership interests were advertised as “hot in the hands” and “very exclusive.” In interviews, Joan described the investments as a “double-your-money, sure thing.” She stated that the best way to get in was to act within 10 days of the initial offering of the investment. The annual report of the company showed enormous growth, with the pro forma statements predicting phenomenal success. Because of the exorbitant food prices in Hawaii, Joan says she can demand a premium for all cattle sold. Based on this scenario, what symptoms of fraud exist?