Your investment helps boost the value of a stock—at which point the scam artist sells their shares, devaluing your shares.
These scams are often run out of a boiler room. You’ll receive an email or phone call promoting an incredible once-in-a-lifetime deal on a stock. The scammer promoting the stock also owns a large amount of it. As they sell to more and more investors, the value skyrockets. Once the price hits a peak, the scam artist sells their shares and the value of the stock plummets. They make money and you’re left holding worthless shares.