Penny Stock Fraud Info
Friday, October 24, 2008
Updates and court docs on PrimeTV, Gatelinx, Gatelinx Global, GTX Global or GTXC VSTC.pk
Lots of info and court filings at this blog:
VSTC or Vision Technology Corporation… by any name, the gang that can’t shoot straight
A look, from the inside, at the stock scam that is (under various names and iterations) PrimeTV, Gatelinx, Gatelinx Global, GTX Global or GTXC. Now known as Vision Technology Corpporation (OTCBB symbol:VSTC.pk) with a relationship/alliance/ownership stake in SQL Minds. Whatever the name, THIS IS STILL A SCAM
A reader submitted this link about David Hagen and the GTX Global fraud, thanks!
Wednesday, September 17, 2008
Attorney Phillip W. Offill (Consolidated Sports Media Group) license suspension
State Bar suspends lawyer Phillip W. Offill Jr.
Dallas attorney Phillip W. Offill Jr.’s law license has been suspended for conduct involving destruction or concealment of client files and concealing conflicts of interest.
Offill, 49, is prohibited from practicing law in Texas for three years, beginning May 1, and will be on probated suspension for two additional years. At the time of the conduct giving rise to the disbarment proceedings, Offill was a partner at Godwin Gruber LLP.
The Commission for Lawyer Discipline determined that Offill had violated rules of professional conduct by sending away a client’s original documents to eventually arrive at a trash dumpster, instead of giving the documents to the client as requested. The panel also found Offill had actual and potential conflicts of interest, which he misrepresented or failed to acknowledge.
Offill had been hired by Consolidated Sports Media Group to assist in raising capital and provide services to commence public trading of shares of Consolidated stock, which he had recommended as part of a general plan for fundraising.
A “blast fax” touting the company’s stock investment potential was published by one of Offill’s other clients and resulted in a lawsuit against Consolidated. The company terminated Offill in April of 2005 and demanded the return of all Consolidated files and corporate documents. Other demands for complete corporate records followed.
On the same day the lawsuit was filed in August 2005, Offill directed that certain original corporate documents belonging to Consolidated be sent to a friend and non-lawyer business associate of Offill’s in Kemp, Texas, where they were later discovered in a trash dumpster. The files found in the dumpster contained previously undisclosed, back-dated original documents that had served as the purported legal basis for unrestricted trading of Consolidated stock. The panel found that Offill either intended that the documents be concealed or destroyed, according to The State Bar of Texas.
Offill also has been ordered to pay to the State Bar of Texas $87,300 in attorney fees and expenses involved in the prosecution of the case.
Too little, too late.
It’s become rather obvious that the SEC doesn’t just ignore penny stock fraud, but failed on ALL levels. Is there any department in the US governments that’s not corrupt?
It’ll be up to you to design and implement a better system with a true democracy after America hit bottom. You might want to sign up for the Common Good Bank as future depositor or investor. You won’t get rich overnight, but you also won’t get ripped off.
Saturday, January 05, 2008
8 indicted in ‘pump & dump’ securities fraud scheme—WHICH companies?
It sure would be very helpful to know which companies they “secretly acquired.”
8 indicted in ‘pump & dump’ securities fraud scheme
Associated Press - December 5, 2007 9:35 PM ET
SEATTLE (AP) - A federal grand jury in Seattle has indicted eight people in Washington, Utah and Florida in a securities fraud scheme that allegedly brought in $1.2 million.
The indictment says the defendants sold stock in companies they had secretly acquired. They sent out press releases and “junk faxes” to pump up interest in the stock before they sold it. It’s called a “pump & dump” scheme.
1 of the defendants, 63-year-old Beverlee Kamerling, of Bellevue, has a history of stock fraud. In 1999, she was barred by a U.S. District Court judge from ever serving as an officer or director in a public company and she was ordered to pay back $1.5 million from another scheme. This time, Kamerling is accused of hiding her involvement by listing her mother, son and boyfriend as officers.
The indictment includes 21 counts, including mail fraud, international money laundering and obstruction of justice. Kamerling and her 22-year-old son, Nicholas Alexander, were arrested today.
A Bellevue lawyer who assisted them pleaded guilty in federal court last week.
The others charged are 32-year-old Joel Ramsden, of Delray Beach, Florida; 37-year-old John Johansen, of Plantation, Florida; 66-year-old John Worthen, of Salt Lake City; 65-year-old Donald Goldstein, of Highland Beach, Florida, and his son, 35-year-old Jamie Goldstein, of Boca Raton., Florida; and 36-year-old Seth Quinto, of Miami.
Securities fraud and mail fraud carry maximum penalties of up to 20 years in federal prison and fines of up to $250,000.
Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
If you have any info on the companies involved, please contact me.
Friday, June 15, 2007
Former SEC lawyer Offill sued for pump and dump fraud
Ex-SEC lawyer accused of stock scam
Federal regulators say Dallas attorney helped set up pump-and-dump deal
12:00 AM CDT on Friday, June 15, 2007
By MICHAEL GRABELL / The Dallas Morning News
Dallas lawyer Phillip Offill spent 15 years with the U.S. Securities and Exchange Commission, going after stock scammers who were defrauding unsuspecting investors. Now the SEC alleges that Mr. Offill is one of those stock scammers.
The commission filed a lawsuit Thursday against Mr. Offill, the two principals of a Michigan company, and an Arizona securities lawyer, seeking to put them out of the penny stock business and get them to turn over their profit.
The investigators accuse Mr. Offill and the other lawyer of devising a scheme to pump up the stock price of a defunct company, sell the shares to unsuspecting investors and funnel profit back to company executives through a series of bogus investment firms. Investors who bought in lost hundreds of thousands of dollars, the SEC said.
Mr. Offill, who recently left the downtown law firm Godwin Pappas Ronquillo, could not be reached for comment. He has denied wrongdoing in lawsuits involving other stocks.
“The purpose of one of these pump-and-dump scams is to let the insider of the company dump their stock. So they need someone like these lawyers to come up with a subterfuge so they can secretly dump their shares,” said Marc Fagel, head of enforcement for the SEC’s San Francisco regional office, which conducted the investigation.
Thursday’s action names only one penny stock, but a much larger SEC investigation into a Dallas-based investment network – reported by The Dallas Morning News in March – has requested trading records on dozens of companies in which Mr. Offill was either an officer or corporate counsel or helped set up an investment firm.
Mr. Offill was also involved with several companies whose trading was suspended in an SEC crackdown on e-mail stock promotions called Operation Spamalot.
Thursday’s announcement represents the first government action against Mr. Offill.
“If true, that’s a horrible indictment, because Mr. Offill used to work for the SEC,” said Randy Johnston, an attorney representing an Addison businessman suing Mr. Offill. “I just hate the idea of anyone learning all about the system and then leaving government service to go out and exploit it.”
According to the SEC lawsuit announced Thursday, Peter Fisher and his son, Tyler Fisher, of Canada incorporated AVL Global Inc. in April 2004 to make a GPS tracking device for companies that repossess automobiles.
Usually, companies that want to sell stock to the public must register with the SEC and disclose financial information. But the Fishers used a legal shortcut that allows a company to make a limited offering to certain investors.
Those shares usually are labeled “restricted,” meaning they cannot be immediately resold to the public and have to be held as a long-term investment. But Arizona securities lawyer David Stocker drafted a legal opinion that asserted the stock wasn’t restricted, giving the investment firms millions of free-trading shares.
The SEC says that legal opinion was false and a scheme to get around securities laws.
Mr. Stocker didn’t return a call for comment to his law office.
“Full and accurate public disclosure of AVL Global’s business operations in 2004 would have revealed that the company was failing and a poor investment opportunity,” the SEC said in its lawsuit.
Mr. Stocker and Mr. Offill then set up two investment firms in Dallas – Lake Tahoe Ski Rental Inc. and Collective Thought Holdings Inc. The companies pretended to be longtime investors, promising in contracts that they had no intention to sell the shares, according to the lawsuit.
Days after buying millions of shares, the companies transferred them to other investors who transferred them back to the Fishers, their companies and their friends and business associates, the lawsuit alleges.
In June or July 2004, after AVL Global’s stock went public, the Fishers traveled to Orlando, Fla., to meet with a stock promoter. There they devised a plan to send millions of unsolicited faxes and press releases that the SEC says contained false and misleading statements, the lawsuit says.
In a news release distributed in December 2004, AVL Global said its GPS devices were being tested by the Botswana Department of Defense and could result in an order of 3,000 to 5,000 units.
But months before, the company’s distributor had realized that Botswana didn’t have the satellite coverage to support the GPS devices and sent the test units back to AVL Global, the SEC says.
In a press release in February 2005, AVL Global reported “a dramatic increase for its tracking devices since the beginning of the new year.” But by then, the SEC says, business was so bad that AVL Global had closed it manufacturing plant, moved into a 100-square-foot office in a strip mall and had only one employee – Tyler Fisher.
As the stock rose, his father, Peter Fisher, dumped his shares and netted $160,000, according to the lawsuit, and the Florida stock promoter dumped his shares for a profit of about $419,000.
Without admitting or denying wrongdoing, Tyler Fisher has settled the SEC’s charges against him by paying a $25,000 civil fine and agreeing not to serve as an officer or director of a penny stock company for five years.
The allegations made by the SEC against Mr. Offill and the others are similar to those made by an Addison video producer, Consolidated Sports Media Group Inc.
The company – which made Girls Gone Wild-style videos at NASCAR races – accused Mr. Offill in an August 2005 lawsuit of using a legal loophole that gave business associates and legal clients millions of freely tradable shares, arranging for a junk fax touting the stock and then selling the shares.
That lawsuit recently settled for confidential terms.
Another person named in the Consolidated Sports lawsuit, Colleyville investor Doyle Mark White, wasn’t named in Thursday’s SEC action, but Texas Secretary of State records list him as the sole director for Lake Tahoe Ski Rental.
Mr. White, a former Irving stockbroker who was barred from the U.S. securities industry last year, didn’t return calls for comment Thursday. In a deposition in the Consolidated Sports lawsuit, Mr. White said he didn’t know why he was listed as an officer of Lake Tahoe Ski Rental.
An SEC press release in January said its investigation into the Dallas-based investment network was progressing.
It must be very tempting to see for 15 years how easy it is to make millions.
Monday, June 11, 2007
Guangzhou Global Telecom—GZGT - Forbes and Business Week
Davis Freeberg’s outstanding research of Guangzhou Global Telecom (GZGT) and the graphics showing the relationship between Avalon, Global Telcom Holding Ltd, Godels, Solomon, Barber & Co., International Tea Company, Technology Resources Inc., WES Consulting, Contracted Services, Inc, MCG Diversified Inc., Electro Energy, Ivecon, Diane Harrison and Randall Drake:
GZGT: Golden Dragon or Sleeping Snake?
As so often, a group of people will continually manipulate markets and the SEC does nothing.
And while Davis started his investigation due to email spam, even the “reputable” media is in on it:
… So far, the only mainstream media outlet to pick up on GZGT’s innovative marketing attempts, has been Kiplingers. When the company was first approached, they knew something didn’t look right and took steps to warn their readers. Unfortunately, other business publications seem to be more than willing to sellout. Business Week and Forbes have both agreed to run the ads, regardless of how questionable this might be ethically. I would encourage both publications to take a closer look at GZGT, instead of their advertising revenue, before putting the company in front of their readers. ...
Anything for a buck.
Thursday, March 29, 2007
Reader mail: scammed at hotstockmarket.com - large loss on Nord Oil—NDOL (now NWOG)
This is a typical example of how unsophisticated investors get scammed on the web. The investment sites are continually bombarded by crooks and also people who pump shares just because they are extremely DUMB and don’t realize that the press releases and spam are nothing but lies. And then there are the people who got ripped off themselves and pump what they own in hopes of lowering their losses.
In short, don’t believe ANYTHING, verify everything.
I wanted to inform people about a scam stock website and a particular company that ruined my life, probably forever. The website is “www.hotstockmarket.com” and the company is Northwest Oil Group.
I am a 29 year old college student who lost my job of 8 years in February 2006. I was severely depressed as I was beginning my University career and had just lost over $20,000 in yearly income.
I kept getting spam emails about these penny stocks that were projected with 100s of percent growth. Normally I would’ve deleted them immediately, but I was desperate to replace my income. I did much research and found hotstockmarket.com and opened an etrade account with a home equity line of credit. I first invested in large, well known companies and was slightly successful, and then I decided after reading some of the posts on hotstockmarket.com, I’d try penny stocks.
At this time, the gas prices had gone from $2.25/gallon to $3.89/gallon within 1.5 months, and I was driving 240 miles round trip to school 3 times a week because of the high cost of housing. So, I thought I could make up some of the gas hike in oil stocks.
I found a Russian Oil company called Nord Oil (NDOL) and the people on hotstockmarket.com were raving about it. It had increased 300% in a few months with a buyout pending. I put a few thousand dollars into it and the stock went up. The company then released a news statement saying that another oil company “Northwest oil Group” was going to “buy out” NDOL for $2.17/share when the current price was around $.68/share.
The day after this press release, the stock skyrocketed to over $1.30/share before market close on Friday and I made a pretty good profit, but I wasn’t home to sell the stocks. I thought that was OK, because the press release said $2.17 and everyone on the website said the stock was a bargain at less than $1.50/share.
Then Monday came and the first thing, NDOL made another press release changing the “buyout” to a “reverse merger” this made the stock plummet to less than .70/stock. But after a couple of hours, the price was back to over $1.00 due to investors thinking that the “merger” would eventually result in the $2.17 value. This was because the second press release stated that the $2.17 was still the projected value.
For a couple of days, the stock fluctuated between $.90 and $1.10, and then it started a steady decline. Since then, the company has changed symbol to NWOG and released many Press releases and supposed financial statements. Along with people on hotstockmarket.com persisting that this company is a great oil producer and will be worth well over $2.00 within a year.
Well, I was paralyzed as a new investor when the prices began to drop, and by that time, I had somehow invested over $17,000 into the stock to try to average down. The price slowly went down and I was in shock, I kept reading posts saying that the stock would go up, and the company would go to a higher stock exchange, so I never sold, fearing that I would miss out on recouping my losses.
The result was more losses.
I finally sold my last bit of NWOG in March 2007, almost a year after I initially purchased NDOL, I sold the stock at $.05/share and have $419 left out of $17,500 initial investment. That’s a $17,000 loss in less than a year.
We have since refinanced our house to cover the loss, but the scar of that decision I made based on hotstockmarket.com and NDOL information in my desperation has psychologically ruined me. I’ve gained over 80lbs, and I really have no happiness because I feel so much guilt over my decision.
I have contacted attorneys, but have had no success in finding one who handles penny stock cases. These websites like hotstockmarket.com and companies like NWOG are no different than any other gambling or fraud organization. They realize that there are vulnerable people on the internet and are ready and capable of taking full advantage of these people. I feel that this is just as much of a crime as going into a bank and robbing it, or breaking into a house. Except these people are worse because they steal with the guise of legitimacy. This should be considered a crime in this country.
Anyone who reads this, I hope will never invest in any penny stocks, no matter what they hear or read. I hope my downfall can at least help others not to make the same mistake.
Sincerely,
...
I can only agree with the advice and thanks for sharing!
And DO look for news regarding SEC investigations a few times a year. I know it’s not pleasant to be reminded of this ordeal, but occasionally investors may be able to recoup at least some of the losses. Chances aren’t great, but better than winning the lottery.
I’ve had several requests from reporters for contact info of investors who suffered losses due to penny stock spam / junk faxes / scams for interviews, this is one person willing to talk. Please contact me by email for more info.
Sunday, March 25, 2007
SEC investigates lawyers, accountants, brokers and consultants orchestrating pump and dumps
I’ve gotten those faxes and I sure hope they get those crooks, think I named Artec in my 2005 junk fax suit.
Exclusive: SEC investigating possible ‘pump-and-dump’ scam
Inquiry looks into whether network victimized stock buyers
03:16 AM CDT on Sunday, March 25, 2007
By BRENDAN M. CASE and MICHAEL GRABELL / The Dallas Morning News
;The stock tips hit millions of fax machines and e-mail accounts.
“Get filthy rich as the recovery begins,” said one message after Hurricane Katrina. “Double profit opportunities from America’s energy crisis,” said another.
At first, the shares soared on the penny stock market, a loosely regulated bazaar of small-time companies where some investors seek to buy a piece of the next big thing.
Then, after sell-offs by some lucky or well-informed investors, the stocks plunged, taking millions from the pockets of recent buyers.
The losers in such cases often blame bad fortune. But the U.S. Securities and Exchange Commission is investigating whether they were victims of fax and e-mail stock scams orchestrated by a group of lawyers, accountants, brokers and consultants – many in the Dallas area.
The group “may have manipulated or attempted to manipulate the share price of certain companies by making false or misleading statements to the public,” said SEC enforcement lawyer Kevin Muhlendorf, in an affidavit filed in federal court in Washington, D.C.
The SEC won’t discuss particulars of its investigation, but such classic “pump-and-dump” scams are a high priority for the agency because e-mail spam and instant online stock trading make small investors more vulnerable than ever.
“With the Internet technology, there is so much more ability to get to the retail investors through their computers,” said Kit Addleman, associate director of enforcement for the SEC’s regional office in Fort Worth.
SEC inquiry
The two-year investigation into what officials call the “shell creation group” is being handled from SEC headquarters in Washington, D.C.
SEC subpoenas, obtained by The Dallas Morning News, list more than 100 people and companies, and corporate records show that many of those companies tie back to a common group of Dallas-area business people. One person who comes up again and again is a former SEC attorney who used to enforce the nation’s securities laws.
SEC officials cautioned that inquiries don’t always lead to legal proceedings and that subpoenas don’t mean that the people named in them have broken the law. The SEC hasn’t publicly said which individuals may be under scrutiny, or identified everyone who profited from the stock trades.
But two civil lawsuits filed in Dallas allege that specific people profited from manipulating stock in companies that are part of the SEC investigation.
National Storm Management Inc., the roofing firm whose stock soared and plunged after Katrina, makes such allegations against David Gordon, a Tulsa, Okla., securities lawyer. He was once sued unsuccessfully by his brother, accused of orchestrating a stock fraud on the family jewelry business in Conroe, Texas.
The company with the racetrack video, Consolidated Sports Media Group Inc., sued Dallas lawyer Phillip Offill. He spent 15 years in the SEC’s Fort Worth office and until recently was a partner in the law firm Godwin Pappas Langley Ronquillo LLP.
Mr. Gordon and Mr. Offill deny any wrongdoing. They say they are the victims of the companies’ own mismanagement and misdeeds. And the business people accused of stock manipulation in the civil lawsuits contend that they lost money as company managers profited.
“This is a big, huge investigation the SEC is doing that involves well over 100 companies,” said Jules Slim, an Irving lawyer representing people accused of stock fraud in both lawsuits. “We’re not really sure who they’re going after. The plaintiffs are simply capitalizing on the fact that those people have been subpoenaed.”
So far, the SEC investigation has resulted in only one penalty.
On Jan. 17, the SEC announced an agreement with John Shrewder, an Oklahoma stock promoter accused of sending out 87 million faxes in 2004 and 2005 to manipulate the stock price of Artec Inc., the business with the anti-cancer drug, and other companies.
Mr. Shrewder did not admit or deny wrongdoing, but he acknowledged liability for $1,031,000 in improper trading profits and interest. But he will have to pay back only $150,000 to the U.S. government under a settlement with the SEC that considered his financial condition.
And this month, as part of a crackdown on e-mail stock fraud called Operation Spamalot, the SEC suspended trading in four companies that listed Mr. Offill as corporate counsel in disclosure reports. He also had ties to four others, including one that listed a company he controlled, Supreme City Holdings, as a major shareholder.
Mr. Offill denied ownership interest in the Spamalot companies and said he formed Supreme City Holdings on behalf of a client, whom he wouldn’t identify. When asked about another company in which a firm he controlled owned stock, Mr. Offill said he couldn’t discuss client matters.
Two of the Spamalot companies also showed up on SEC subpoenas related to the investigation into the shell creation group.
Taking a risk
Why would anyone send out 87 million faxes, or tens of millions of e-mails?
Because, experts say, in some cases, they’re a good way to separate investors from their money.
Researchers at Purdue University and Oxford University recently found that electronically pumped stocks show “a significantly positive return” at first and then tend to collapse, leaving unsuspecting investors with big losses that they often attribute to the gamble of the stock market.
“What are you going to do? It was a risk and I took it,” said Jon Browar, a Consolidated Sports shareholder who owns a screen-printing business outside Kansas City. “My kids aren’t going to go without because of this, but in the same respect, there’s a lot more I can do with $3,000.”
Federal and state laws prohibit the distribution of unsolicited faxes to hype a stock. Both junk faxes and spam e-mails may violate securities laws if they contain falsehoods about a company or if promoters don’t disclose that they have been paid to tout a stock.
For example, the SEC alleged that the Artec faxes understated Artec’s debt and the number of shares available to make each share appear more valuable.
Moreover, while Mr. Shrewder’s faxes urged other investors to buy shares, he was selling them.
“Shrewder was actively selling Artec shares for less than $.50 while he was recommending that others buy them until the price reaches between $2 and $4,” the SEC said in its complaint.
Mr. Shrewder said in a court filing that he was unaware of any misrepresentations in the faxes. He also said he had disclosed in the faxes that he might trade in the shares. In an interview, he said his faxes only went to people who asked to receive them.
Expanded inquiry
The SEC opened its Artec investigation in December 2004 after officials noticed suspicious trading and price movements. By June 2005, the investigation had expanded to reflect interest in the larger circle of people who appeared to be involved in what the SEC came to call the “shell creation group.”
After Katrina, e-mails and faxes enticed investors to buy shares in National Storm and in Deep Rock Oil & Gas Inc., an Oklahoma energy company. National Storm’s stock price rose from 51 cents to $2.41. Deep Rock’s price increased tenfold, to $1.11. Within months, both fell to less than a quarter a share.
Phone records of a Florida investor – who the SEC alleges played a role in producing and disseminating the faxes – showed several calls to numbers associated with the Dallas-based shell group, the SEC said.
Some of those phone calls, listed in SEC court documents, trace back to Mr. Gordon, the Tulsa lawyer for Deep Rock who also helped take National Storm public.
National Storm has sued Mr. Gordon, accusing him of masterminding stock manipulation schemes.
“The Shell Creation Group’s activities frequently prove ruinous to the legitimate private companies they deceive,” National Storm said in court documents.
Mr. Slim, who is representing Mr. Gordon and others in the lawsuit, said the company’s counterclaim is a distraction from the original complaint. The lawsuit was filed against National Storm by Trucolor Inc., which is partly owned by Mr. Gordon.
Trucolor alleged in the lawsuit that National Storm cheated it by breaching a loan that had been induced through fraud.
In an interview, Mr. Gordon said that he had followed all securities laws and that he believed the information released by Deep Rock and National Storm was accurate. He said he didn’t know who distributed the blast faxes.
“Believe me, I do not do pump-and-dumps,” he said.
Consolidated Sports
The Consolidated Sports lawsuit alleges Mr. Offill and others made millions of dollars by perpetrating a pump-and-dump scam on the company’s stock.
The company says Mr. Offill arranged for a merger with an inactive corporation to use a legal loophole that gave investors millions of freely tradable shares that didn’t have to be registered with the SEC. Mr. Offill brought investors into Consolidated Sports, including companies that he controlled, the lawsuit says.
In November 2004, a junk fax went out touting the stock. Consolidated Sports lawyers say the fax was approved by Mr. Offill and drafted by one of his associates.
“The specific intent behind the blast fax was to cause the price of the stock in CSMG to spike upward, after which Offill’s friends, clients and business associates, and entities controlled by Offill, would sell their stock, leaving the other shareholders and the innocent purchasers to bear the losses,” Consolidated Sports’ lawsuit says.
Mr. Offill, who has also been a lawyer for Artec, declined to be interviewed, referring questions to his lawyer, Richard Sayles. In January, Mr. Offill left Godwin Pappas to pursue his own practice, Mr. Sayles said. Mr. Offill said in a deposition that he didn’t know about the blast fax until after it was sent.
“A fax of this nature – that appears oriented towards providing investor awareness on a public basis – is something that an issuer should never send,” he said.
A trial in the Consolidated Sports lawsuit is expected this year.
A WEB OF LAWSUITS AND SUBPOENAS
Corporate records and lawsuits indicate the following people have ties to the Securities and Exchange Commission’s investigation of the “shell creation group.” SEC inquiries do not necessarily lead to legal proceedings or indicate that people named in subpoenas have broken any law.DAVID GORDON
A Tulsa, Okla., securities lawyer, Mr. Gordon, 45, has been accused of stock fraud in several lawsuits, including one from Consolidated Sports Media Group Inc. and another brought unsuccessfully by his brother. He was the lawyer for Deep Rock Oil & Gas Inc. and helped take National Storm Management Inc. public. In a lawsuit, National Storm called him a mastermind of pump-and-dump schemes. More than a half-dozen companies on a subpoena issued to a Dallas brokerage have ties to him. He and his associates have denied wrongdoing.PHILLIP OFFILL
A former SEC enforcement attorney in Fort Worth, Mr. Offill, 48, was a partner until recently at Godwin Pappas Langley Ronquillo LLP in Dallas. He was a corporate lawyer for Artec and Consolidated Sports. Consolidated Sports says that he helped orchestrate a pump-and-dump scheme on its stock using a junk fax and that two companies he controlled profited. He says he never saw the blast fax before it went out. Some three dozen companies mentioned in the SEC subpoenas list him as an officer, corporate counsel, or in some other capacity. In other cases, one of his companies is listed as a major shareholder. He denies any wrongdoing.MARK LINDBERG
An amateur golfer, Mr. Lindberg, 39, of Coppell, helped take Consolidated Sports and National Storm public, according to Consolidated Sports court documents and National Storm annual reports. Consolidated Sports said in its lawsuit that Mr. Lindberg paid investor Doyle Mark White for arranging a junk fax touting its stock. Nearly 20 companies on the SEC subpoenas list Mr. Lindberg as an officer or consultant, or one of his companies as a major shareholder. And he received several calls from a Florida investor the SEC says played a role in the junk faxes after Hurricane Katrina. Mr. Lindberg declined an interview but denied the allegations in court documents. In a deposition, he said that he’s never been involved in a pump-and-dump scheme and that he transferred the money to Mr. White’s firm on behalf of another company.DOYLE MARK WHITE
Consolidated Sports said in its lawsuit that Mr. White, 49, of Colleyville, sent a junk fax touting its stock behind the company’s back. Mr. White, a former Irving stockbroker, was barred from the U.S. securities industry last year, accused of manipulating a separate penny stock. In the settlement, he did not admit or deny wrongdoing. Mr. White did not respond to requests for an interview. In a deposition, he said he sent the fax to a distribution service after Consolidated Sports approved it. The company denies that.GARY ZINN
Described as an international businessman with ties to Bulgaria, Mr. Zinn, of Rancho Cucamonga, Calif., was sued by the SEC for not answering a subpoena related to the stocks of National Storm and Deep Rock, which were allegedly manipulated after Katrina. A judge ordered him to comply, and the case was dismissed. The SEC said in court documents that Mr. Zinn has ties to two companies managed in London, High Charm Ltd. and Putnam International Consulting, which each made more than $50,000 trading in the stocks. Putnam had paid a marketing company to distribute the junk faxes, according to a disclaimer on the faxes. High Charm and Putnam were also top shareholders in Consolidated Sports. Mr. Zinn and his lawyer did not return phone calls seeking comment.JOSHUA LANKFORD
An entrepreneur who once sold neckties in downtown skyscrapers, Mr. Lankford, 33, became one of the most successful stockbrokers at Dallas brokerage Barron Moore Inc., even becoming part owner before leaving. In its lawsuit, Consolidated Sports says he participated in a pump-and-dump on its stock. He denied the allegations in a deposition, saying he warned company executives that he couldn’t raise money for them until they had revenue.CHASITY THOMPSON AND JASON FREEMAN
As a business consultant, Ms. Thompson, 28, helped incorporate Artec, Consolidated Sports and National Storm. Plano-based Routh Stock Transfer Inc., which she ran with Mr. Freeman, 31, served as a transfer agent for National Storm, Deep Rock and about 10 other companies listed on SEC subpoenas. Ms. Thompson and Mr. Freeman were consultants for several other companies on the subpoenas. Consolidated Sports alleges that Ms. Thompson falsified corporate records to help commit fraud on its stock. Her attorney said she has done nothing wrong. Earlier this month, Mr. Freeman filed a shareholder lawsuit against Consolidated Sports, saying the company fraudulently funneled money to a consultant who used it to repay investors in past failed ventures. Consolidated Sports lawyers said that hundreds of hours of video footage show the money was spent legitimately.
I still have my faxes from 2004 and 2005, too bad I’m so busy. And it’s probably a good idea to wait to see whether they’ll file for bankruptcy.
Monday, February 05, 2007
Court order - claim info: Bio-Heal Laboratories BHLL.PK, Bela Enterprises and Gibson Island
UNITED STATES DISTRICT COURT SOUTHEN DISTRICT OF FLORIDA Case No. 05-21116-Civ-Seitz
COURT-ORDERED LEGAL NOTICE
IF YOU BOUGHT BIO-HEAL LABORATORIES, INC. SECURITIES (BHLL.PK) BETWEEN FEBRUARY 15, 2005 AND APRIL 7, 2005 YOU MAY BE ENTITLED TO RECEIVE A PAYMENT FROM FUNDS RECOVERED
On December 11, 2006, the Court approved a Distribution Plan to distribute disgorgement amounts received from Bio-Heal Laboratories, Inc. ("Bio-Heal"), Bela Enterprises, LLC ("Bela"), and Gibson Island Enterprises, LLC ("Gibson") to proper claimants. If you bought Bio- Heal securities between February 15, 2005 and April 7, 2005, you may be eligible to receive benefits from the Bio-Heal Fund. If you qualify, you may send in a Proof of Claim Form to obtain benefits. HOW WAS THE BIO-HEAL FUND CREATED? The Bio-Heal Fund was created as a result of the Securities and Exchange Commission’s successful enforcement action against Bio-Heal, and certain relief defendants including Bela and Gibson. The Commission’s action asserted that Bio-Heal improperly issued 12 million shares of its stock to relief defendants. The Complaint further alleged that relief defendants Bela and Gibson generated ill gotten gains by dumping Bio-Heal shares while the stock was being touted to investors over the internet. The Commission sought to and did recover proceeds of the illegally issued shares. The amounts recovered including interest have been deposited into the Bio-Heal Fund and the Fund proceeds will be distributed to Eligible Claimants pursuant to the Distribution Plan.
WHO IS ELIGIBLE FOR A RECOVERY FROM THE BIO-HEAL FUND?
The Potentially Eligible Claimants include all persons or entities that purchased shares of Bio-Heal (BHLL.PK) during the period from February 15, 2005 through April 7, 2005 (inclusive) and held the shares after the close of business April 7, 2005. You are not entitled to a recovery from the Fund with respect to any Bio-Heal shares that you acquired prior to February 15, 2005. In addition, to be eligible, you must have incurred an aggregate net loss from your combined purchases or sales of all Bio-Heal shares purchased from February 15, 2005 through April 7, 2005.
HOW DO YOU SUBMIT A CLAIM?
The Proof of Claim form package contains all of the information you need. You will find copies of the Proof of Claim form package and additional information about the Bio-Heal Fund on the website http://www.BioHealFund.com. You may also obtain information regarding the claim process from the Bio-Heal Fund’s hotline at 800-648-0755 or you may submit questions by mail to Bio-Heal Fund c/o Global Risk Solutions, Inc. P.O. Box 310130 Miami, FL 33231-0130 or to the Distribution Agent, Melanie Damian, Damian & Valori LLP, 1000 Brickell Avenue, Suite 1020, Miami, FL 33131.
Sunday, January 21, 2007
Scientific paper on stock tout spam, subsequent investor losses and spammer profits
From Spam Works: Evidence from Stock Touts and Corresponding Market Activity
Abstract:
We assess the impact of spam that touts stocks upon the trading activity of those stocks and sketch how profitable such spamming might be for spammers and how harmful it is to those who heed advice in stock-touting e-mails. We suggest that the effectiveness of spammed stock touting calls into question prevailing models of securities regulation that rely principally on the proper labeling of information and disclosure of conflicts of interest to protect consumers, and we propose several regulatory and industry interventions.Based on a large sample of touted stocks listed on the Pink Sheets quotation system, we find that stocks experience a significantly positive return on days prior to heavy touting via spam. Volume of trading responds positively and significantly to heavy touting. For a stock that is touted at some point during our sample period, the probability of it being the most actively traded stock in our sample jumps from 4% on a day when there is no touting activity to 70% on a day when there is touting activity. Returns in the days following touting are significantly negative.
The evidence accords with a hypothesis that spammers “buy low and spam high,” purchasing penny stocks with comparatively low liquidity, then touting them - perhaps immediately after an independently occurring upward tick in price, or after having caused the uptick themselves by engaging in preparatory purchasing - in order to increase or maintain trading activity and price enough to unload their positions at a profit. Selling by the spammer then results in negative returns following touting. Before brokerage fees, the average investor who buys a stock on the day it is most heavily touted and sells it 2 days after the touting ends will lose approximately 5.5%. For the top half of most thoroughly touted stocks, a spammer who buys at the ask price on the day before unleashing touts and sells at the bid price on the day his or her touting is the heaviest will, on average, earn 5.79%.
It’s pretty simple, buy BEFORE the stocks are touted.
Saturday, February 11, 2006
SEC sues ArTec, Inc.—ATKJ and Sequoia Interest Corporation—SQNC illegal promotions
I think ArTec is named in my complaint, but I never served them.
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U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19555 / February 6, 2006
Securities and Exchange Commission v. John R. Shrewder, The Franklin Group, Inc., Ashley Miron Leshem, and Ananda Capital Partners, Inc., Civil Action No. 06-80126 (S.D. Fla. February 6, 2006)
SEC Names Tulsa Man in Fax Blasting Securities Fraud Case
SEC Charges that Boca Raton Consultant Violated his SEC Penny Stock Bar
The Commission filed an action today in United States District Court against John R. “Jay” Shrewder, 46, and The Franklin Group, Inc., a company that Shrewder founded, alleging securities fraud and illegal touting, and also against Ashley Miron Leshem, 39, of Boca Raton, Florida, alleging violations of an SEC penny stock bar. The complaint alleges that Shrewder and The Franklin Group improperly manipulated the market for at least two securities and inundated the public with millions of faxes that contained materially false information. The two securities are ArTec, Inc. and Sequoia Interest Corporation (whose securities trade on the over-the-counter market under the symbols ATKJ and SQNC). According to the complaint, these activities resulted in several hundred thousand dollars in unlawful profits by Shrewder.
The Commission’s complaint alleges that after defendant Leshem hired them on behalf of ArTec in the fall of 2004, defendants Shrewder and The Franklin Group sent out “fax blasts” that contained false and misleading statements regarding: the volume of ArTec’s public float; the amount and type of Shrewder’s compensation; the origin of the information and analysis in the faxes; the amount of research Shrewder did about the company; and the claim that Shrewder’s analysis of the stock was independent. The SEC also alleges that Shrewder claimed in the faxes that a “third party” had retained him when, in fact, Leshem (an ArTec consultant) informed him that ArTec’s management was setting his compensation. According to the complaint, Shrewder illegally profited by selling or “scalping” ArTec stock, which he had received as compensation for his promotional activities, into the rising market generated in whole or in part by his own faxes. Finally, the SEC alleges that by acting as a consultant to ArTec and by, among other things, hiring Shrewder on behalf of ArTec, Leshem violated a 1999 SEC penny stock bar.
The Commission charges that Shrewder and The Franklin Group violated Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder and Sections 17(a) and 17(b) of the Securities Act of 1933 and seeks a permanent injunction, disgorgement, prejudgment interest and civil penalties against Shrewder and TFG, as well as a penny stock bar against Shrewder.
The Commission charges that Leshem violated Section 15(b)(6)(B)(i) of the Exchange Act by violating a 1999 SEC penny stock bar and seeks a judicially imposed penny stock bar, a permanent injunction, disgorgement, prejudgment interest and civil penalties. A company affiliated with Leshem, Ananda Capital Partners, Inc. is named as a relief defendant.
On April 8, 2005, the Commission filed a subpoena enforcement proceeding against Shrewder. See Litigation Release No. 19180 (April 12, 2005). On December 23, 2004, the Commission suspended trading in ArTec, Inc. securities. See Exchange Act Release No. 34-50923 (December 23, 2004).
The Commission has issued an Investor Alert concerning investment related faxes. This alert is available on the Commission’s website at the following location: http://www.sec.gov/investor/pubs/junkfax.htm.
The Commission’s investigation concerning ArTec, Inc. and other entities organized by a shell-creation group is continuing. The staff wishes to thank the NASD for its assistance in this investigation.
Friday, January 07, 2005
SF Chronicle: “The Internet opens up a new avenue for penny stock fraud”
This article is from 7/8/04 and since then the stock spam I receive has increased at least 10 times.
The Internet opens up a new avenue for penny stock fraud
“… Some companies use false press releases. According to the SEC, Penny King Holdings Inc. owner Gabor S. Acs deceived investors with misleading releases and Web sites in 2002. The government also said he failed to acknowledge payments from two penny stock companies in exchange for his promotional services. In May, the SEC ordered Acs to make payments totaling nearly $643,000.
Acs could not be reached for comment; no phone number could be located for him.
Ives, who is serving a prison term on criminal charges related to the SEC’s civil case against his company, also could not be immediately reached for comment. Ives had two co-defendants in the civil case, James Kosta and Michael Harrison. Christopher Bruno, a lawyer for Kosta, whose case is still pending, said his client denied the charges against him, “and looks forward to having the matter resolved.”
Harrison, in a consent agreement, was ordered to pay nearly $9,500 in penalties. A phone call to his home was answered by a woman who said she doubted Harrison would want to comment.
While some brokers still operate out of 1920s-style “boiler rooms,” where false information is given out over the telephone, the Internet is the cheapest, fastest, and most anonymous way to pressure and mislead investors about penny stocks.
“As a vehicle for securities fraud, it’s really got to be up there with pornography,” Edmunds said.
Of the approximately 1,300 e-mails the SEC receives daily complaining about securities fraud, as much as 70 percent relates to spam mail, said John Reed Stark, chief of the SEC Office of Internet Enforcement.
But the trading trail is more pronounced when done electronically, Stark said, making online securities fraud easier to track.
“It’s certainly easier and cheaper to send out bulk e-mails than ever before,” he said. “But it’s also easier and easier to catch when it comes to securities fraud.”
Yet securities fraud has always been, and will probably continue to be, an issue for penny stocks.
“The SEC can’t change the fact that people are greedy, and that people can be untrustworthy,” Bob Robotti, president of Robotti & Co. Inc., said. ...”
The SEC certainly could step up enforcement. What are they doing about all the complaints they receive?
Why is AHFI still trading? Why are so few of these criminals sent to prison?
Tuesday, January 04, 2005
Ameritrade review - are they as good as people claim?
Ameritrade reviews and recommendations
It almost sounds too good to be true.
Taking your company public
Today I got spam on how to go public:
That explains a lot!
“9. Publicity
Public companies are more likely to receive the attention of major newspapers, magazines and periodicals than a private enterprise. The proper use of press releases, interviews or news stories can increase investor awareness, shareholder value and demand for the stock. A strong ad campaign coupled with media initiatives can potentially increase sales and revenue. ...”
They should have made this #1.
I wonder how much it costs to take a company public.
Sunday, January 02, 2005
How to be a winner in the penny stock market?
I have never owned a share of anything. In the early 90s, I was very broke and looked at the Ken Roberts options manuals. I realized that paper trading has little to do with real trading and I probably saved a lot of money putting the manuals in storage.
In the late 90s I had money to invest and I wanted to get into GOLD. I researched metals on the web and found that individual investors have a huge disadvantage. Not wanting to spend a lot of time researching and learning, I decided to enjoy camping and traveling rather than having to worry about my investments.
Since I sued numerous junk faxersa few months ago and thanks to Steve Kirsch’s incredible research Anatomy of a stock fraud I am now fascinated by the penny stock market, the scammers, spammers and investors.
I began to wonder if ALL Pink Sheets and OTCBB traded companies are scams. But then I remembered that I’ve been paying for XM radio for years and Sirius is a real company too.
Why did people buy stock in AHFI and CONTINUE to purchase even after the SEC had suspended trading?
The market is loaded with suckers.
Rather than go to the casino, thousands act on those “hot tips” faxed or spammed or distributed on the many websites and forums.
Based on what I learned so far, there are two ways to become a winner:
- You follow the promoters with a track record for pumping a stock *successfully*, buying before they start the promotions and selling while the stock is still high. Or shorting when the price is inflated. It’s pretty simple, theoretically.
Of course I recommend SELLING shares of companies engaging in illegal promotions, but that doesn’t mean they won’t be a winning stock.
- You invest in real companies after thorough research.
There are of course numerous penny stocks experts offering fee based recommendations and they proudly display their track records.
The only problem is that I have no way to verify whether it’s true.
I don’t believe what I can’t verify.
This is contrary to the mentality of most investors. They will only believe that a company is bad investment when they have proof of fraud.
I would want to have proof that the company is a real business and owns the assets it claims to own.
How can the market be manipulated?
From a public forum:
“Thu 30 Dec’04 - 15:00 - 17 of 26
good luck selling i have been trying all day”
I don’t know why some people can sell and others can’t. I have no understanding of the mechanics of the market. Almost a million AHFI shares sold that day, the price went up. Why couldn’t he sell?
Are major shareholders running a Ponzi scheme?
If I had money to blow, I’d buy a few shares just to see how it works. Since I don’t, I’ll appreciate some insights from people willing to share their knowledge and experiences.
I’ll follow at least some of the spammers and junk faxers here. I’m curious to see what happens and documenting those activities might come in handy if/when the SEC and lawyers take a look at them.
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