Michael Goode – Page 26

Attempting to have some fun with a Craigslist scammer but mostly just wasting my time

If something seems too good to be true, it always is. I was trying to do like the 419 scammer baters, but a lack of time and wit has left me with no response. Please submit a suggestion for my next email in the comments.

Here is how it started, with me replying to a Craigslist ad (I realized only after I already had written the email that it was way too good of a deal to be real).

To whom it may concern:

I am highly interested in the 2004 Mazda6 sedan you posted on Craigslist today. Please send more pictures and any further details you have on the car. Assuming everything looks good I would be able to pay cash within a couple days. If you wouldn’t mind, I would like its VIN so I could run a Carfax report. Also, your contact information and your employer’s name / location would be great so I could see the car in person.

Sincerely,

Michael Goode

Hello,Thank you for your interest in purchased my 2004 Mazda MAZDA6 Sedan, I am selling this vehicle because I am in the military and my unit will be sent back to Afghanistan. I don’t want it get old in my garage. The price is low because I need to sell it before September 24th. The vehicle is in pristine condition, no accident history, clear title, no dents or dings and no scratches. Always adult driven and garaged, never abused or raced. If you are interested, it’s still available for sale and the price, as stated in the ad, is $2330. The vehicle is in Fort Belvoir,VA and in case it gets sold I will take care of delivery. Let me know if you are interested, email back.

Transmission: Automatic
Fuel type: Gasoline
Exterior color: Black

Interior color: Black
Mileage: 61,696 miles
Engine: 4 – Cyl

Thank you !
Corporal Lindsay Walton [ lindsaywalton81@gmail.com ]

Lindsay,I remain interested. Please give me the VIN number so I can run a carfax check and your bank account information so I can wire you money. Considering how great a deal it is I don’t need to see it in person.

Hi again,Right now I’m in a military base. We are training, getting ready for Afghanistan. I am only allowed to check my email twice a day.We have to stick to e-mail for now.Hope you can understand.Like I already said, the delivery process will be managed by me. I think I can have it there at your home address within 2-3 working days. It will come with a clear title and reg. I am a member of the eBay buyer protection program and using this service you will get a 7 days testing period after delivery. During that 7 days testing period I will not be getting any money. I need to know if you are interested so I can ask eBay to send you the details on this deal. If interested please include in your next email your contact info for eBay (full name, shipping address and phone number), so we can get the ball rolling.
Also I made a photo album with the car: http://s1262.photobucket.com/albums/ii615/2004Mazda6sedan/?albumview=slideshow
VIN 1YVFP80CX45N10681

Thank you.
Corporal Lindsay Walton

Lindsay,I am still interested. My full contact information is:
Michael Goode

[address redacted for privacy]

Ok thanks.I asked eBay to send you an invoice regarding the terms and conditions of this transaction.Normally it will take approx 30 minutes until you receive all the payment instructions.Please email me as soon as you receive it.

Thank you!

The fake eBay invoice suggested that I send the money via Western Union to a random guy in Dallas or Houston, Texas (I forget which). I forwarded that email to Western Union’s fraud department.

Did you received the invoice from eBay?They told me they already sent you.Also check your bulk email folder (junk,spam),as a filter may have prevented it from reaching your primary in-box.Please get back to me and let me know if you understood how this transaction works and if you can make the payment today as you probably noticed the price is for a fast sale and I need to know when to proceed with shipping.

Hope to finish this transaction soon.

Lindsay,

Is there any way I could use a bank wire transfer to send the money? My bank is a lot more convenient than the closest Western Union agent.

I had two potential buyers : one didn’t show up and the other mail me,saying he lost the money, so I can’t afford to wait more days, that is why I gave to a shipping company that will ship it to the next owner, so I’m trying to sell it on-line, and beside that I have the transaction under contract with eBay and I have to respect the terms from the contract.Unfortunately for me my I can’t do this transaction personally. I am a member of the eBay buyer protection program and using this service you will get a 7 days testing period after delivery.Thank you so much and I would really appreciate if we could finish this deal today so that the shipping may start sooner.So if you manage to complete the deal today please don’t forget to fax over the Western Union payment receipt to the fax# from the invoice.

Please keep me posted

Disclaimer: No relationship with any parties named above and no positions in any stocks or funds mentioned. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

Lying stock promoters: Bullexchange.com & the FINRA short reports

One tactic that many stock promoters use over and over again to explain why their stock promotions are followed by large stock price declines is to blame it on the short sellers. Unfortunately, FINRA abets these lies by publishing without adequate explanation data required by the SEC’s Regulation SHO. This data provides information on every share sold each day. Time and and time again I have seen stock promoters use this data to ‘show’ that the stock they are promoting is getting attacked by short sellers.

See the text of the most recent email I received from the various Bullexchange.com websites (emphasis mine):

Valued Subscribers,
Welcome New Members,
VKMD experienced a fantastic start last Thursday where many of our subscribers secured substantial gains.

However, due to a major short attack, gains were quickly reversed. We believe this was deliberate, the Finra reg sho list http://regsho.finra.org/FORFshvol20120906.txt indicates nearly 11 million shares were shorted last Thursday.

Simply put, VKMD did not end the way we hoped despite great developments we hear may be announced in coming days.

In a recent email, we had mentioned we were under new management. Due to events of the past week, the new management team has been removed and we are back under the same great team that brought you the likes of ECIT and AGRT.

We are hard at work on our next pick, and we will see you some time in October!

Your Dedicated Team at TBX
http://bullexchange.com

Searching the large text file linked above yields the following information for VKMD for the given date (formatted by me to enhance legibility):

Date |Symbol |ShortVolume |ShortExemptVolume |TotalVolume |Market
20120906 |VKMD |10843159 |0 |37378406 |O

This data appears to show that out of 37,378,406 shares traded, 10,843,159 shares were sold short. This is not false, but it doesn’t mean that short sellers or market makers increased their net short position by 10 million shares. Rather, this shows all sales where the shares being sold were not already in the seller’s possession. This includes speculative short sellers, both retail traders and market makers. But far more important are market makers selling large blocks of stock. In those cases, a large shareholder might tell their broker to sell one million shares and then rather enter one big order, the broker will give the order to a market maker such as NITE to slowly sell the shares over the course of a day. The market maker sells the shares short and does not take possession of the shares it is selling until it has completed its share sales. For Reg SHO reporting purposes, these are short sales, but the market maker is not taking a speculative short position — at the end of the day the seller delivers the shares to the market maker who then delivers those shares to the buyers of the stock.

So the next time a stock promoter links to the FINRA Reg SHO short data to show that a stock dropped because of short sellers, you will know that they are lying. In fact, many times the large block sellers whose shares are sold in such a way to make them show up as ‘short sales’ in the FINRA data are the stock promoters or the people who pay for the stock promotion. So the promoters are not innocently wrong — they lie through their teeth even though they know better.

Read more about Bullexchange.com:
Awesomepennystocks.com sues Bullexchange
Awesomepennystocks.com drops lawsuit

How not to become a stock promoter (aka Sell PRHL)

If you have ever tried to contact me, then you probably realized that my contact form isn’t exactly the most friendly — I specifically say that I will ignore most people who contact me. Also, by using the contact form, you grant me “permission to reprint your question and your name on my blog.” (Bold in original). Jack Gregory is the first person whose message to me was worth reprinting. In his message to me yesterday he said:

PRHL is a rapidly growing company in the energy saving business. I would like to explore the opportunity to have you promote this Company. Please send me the terms of engaging you for this purpose. The storyline is hard to believe but this is a Company which has neglected its PR and IR.

This is the first time that I have ever been offered to payment to promote a stock. Oddly enough, most people quickly realize that I am a cynic and short seller and I have no interest in selling out. I thought I would have a little fun so I replied:

Thank you for your offer. I am pleased to offer my stock promotion services for the price of $1,000,000,000 (US). Please confirm your interest and I will then provide you with my bank account details so you can wire me the money. I will the [sic] promote PRHL as the greatest thing since flush toilets (way more important than sliced bread).

Needless to say, Jack did not agree to my compensation and I continue to not be a stock promoter. A quick search of the internet let me know that Jack is the former CEO of PRHL, having been replaced at the very beginning of this year. As of 2010 he and his wife owned over 50% of the shares of the company. Following what appears to be a reverse merger that precipitated his departure, Dr. Gregory retained ownership of 160,000 shares that were subject to a lock-up agreement with PRHL and could not be sold prior to June 15, 2012 (those became 800,000 shares after a February 5-for-1 stock split). Since June the stock has lost almost 90% of its value and I infer that Dr. Gregory must not have sold all his shares yet.

Of course it is quite possible that the person who contacted me wasn’t actually Gregory but was some other large shareholder who wants to unload stock. But the important fact is that PRHL is a shitty company that is getting promoted while insiders and/or large shareholders dump stock.

Prior to April the stock rarely traded so I believe it likely that the stock was promoted around that time. Also, it was promoted today by LevelStock.com, a bottom-tier promoter:

LevelStock.com has been compensated on 08-19-12 ten thousand dollars by a third party for two week advertisement for Premier Holding Corp.

By the way, PRHL has 48 million shares outstanding and a market cap of $6.7m. I consider it overvalued and believe it is worth under 1 cent per share.

Note to other stock promoters or those who pay for promotions: my reputation is worth a hell of a lot more than $10,000. Unless you have at least a few hundred million dollars to give me, I am not interested.

Stock promoter profile: M J Capital LLC / StockRockandRoll.com / Stockbomb.com

It is always interesting to see who is behind various stock promotion websites. One interesting one is MJ Capital Management. It is not a very effective stock promoter (I like to short the stocks it promotes). Below is info on its stock promotion websites and how you can find that information. The inspiration for this post (and much of the research) comes from nodummy on the InvestorsHub DD Support Board and Fraud Research Team message board; he is one of the few non idiots on iHub and that message board is one of the few useful message boards on iHub).

I should point out that the research in this blog post was not hard at all — Jay Isip, the main person running MJ Capital LLC, does not appear to have tried to hide his identity and his companies are not difficult to understand. This is very different from some other stock promoters who use offshore companies and fake addresses or mail forwarding services to hide their identity.

The first part of my research on a stock promotion website starts with signing up to the email list. Then I look at the information disclosed in the disclaimer and below the disclaimer in the emails. The CANSPAM act requires all people sending commercial / promotional emails to disclose their name (business or personal) and a valid mailing address. StockBomb.com makes it easy by listing “MJ Capital, LLC | 110 Main Street | Newark, nj 07102”. This information then leads to a web search of the address and the legal entity. The search of the address gives us no useful information, but searching for MJ Capital LLC yields us the company’s website, www.mjcapitalmanagement.com/, and a Linked In profile page. The Linked In page doesn’t tell us much we don’t already know. The website is a great example of the kind of website that stock promoters have to sell their services to OTCBB/Pinksheets companies and shareholders in those companies.

Next, we can take a look at the WHOIS data on the StockBomb.com and MJCapitalmanagement.com domain names — to find out who registered them. This is often a waste of time because of the availability of private registration (I use that for all my domain names). In this case, registration for both these websites is private and thus not useful. Next we can look at the server where the websites are hosted. Many websites are hosted on servers with thousands of other websites, but sometimes only a handful of websites are hosted on the same server, allowing us to draw connections between those sites. You can use this website to look this info up for free (another website that allows this kind of search is ReverseInternet.com).

This search hits the jackpot for us and yields only a handful of websites:

(click image to embiggen)

This gives us a nice list of potentially-related websites:

ilovetradingpennystocks.com
mjcapitalmanagement.com
packetfusion.com
researchotc.com
stockbomb.com
stockobell.com
stockrockandroll.com
www.mjcapitalmanagement.com
www.stockbomb.com
www.stocklockandload.com
www.stockrockandroll.com

I signed up for the emails on all the stock promotion websites and then I tried looking at the one non-pump website (packetfusion.com) to find any connections between it and the pump websites, which I could not find.

ilovetradingpennystocks.com shows the same content as pennystocklocks.com, so I signed up for that website as well.

The contact email addresses for stockobell.com, researchotc.com, stocklockandload.com, stockrockandrollcom, and stockbomb.com are the same: MJCapitalManagement@gmail.com. StockLockandLoad.com and StockBomb,com both show Jay.StockRockandRoll@Gmail.com as the contact email address for ‘general inquiries’. That is pretty conclusive evidence that all of these stock promotion websites are linked to MJ Capital LLC. Now that we are nearly certain that all the websites are run by the same person or people, we can look at the WHOIS information on all the websites. All but three of the websites were registered privately so we cannot glean any information from those. However, ilovetradingpennystocks.com, pennystocklocks.com, and stockobell.com were not registered privately.

(click images to embiggen)

PennyStockLocks.com is registered to Robert McConnon of New Jersey. ILoveTradingPennyStocks.com and StockoBell.com are registered by Jay Isip of New Jersey. A google search of “Jay Isip” yields a Linkedin profile as one of the top few results. That Linkedin profile shows Jay Isip as the President/CEO of MJ Capital LLC and Stock Rock and Roll LLC and lists the following as company websites: http://www.stocklockandload.com/lp/ http://www.stockbomb.com/ http://www.researchotc.com/.

The next step is to look up MJ Capital LLC and StockRockandRoll LLC (as well as PennyStockLocks LLC that I found in the disclaimer of the pennystocklocks.com website). As a note for foreign readers, the LLC is a type of limited liability company in the USA that allows for less paperwork and potentially simpler taxes than a corporation. Like US-based corporations, LLCs are registered in a state (there is no national registry). Because the email from StockBomb.com listed a New Jersey address and the phone number on the MJ Capital LLC website lists a New Jersey phone number, the obvious next step is to search New Jersey’s business registry. A quick way to find that is search the web for “corporation search New Jersey”. The top four search results all get us to the place we want to go, the New Jersey business records service. Unfortunately the search engine isn’t particularly good, so slight variations result in no results. It took me a dozen searches before I put a space between M and J (M J Capital) and found the company.

Unfortunately the State of New Jersey made me pay $0.10 to get the unofficial certificate of formation (pdf), but I paid and that gave me the valuable information that Jerome Isip formed the company on October 5, 2011. The unofficial certificate of formation (pdf) of StockRockandRoll LLC lists Jerome J. Isip as the person who formed the company (on April 17, 2008) — that leads me to conclude that his middle name is Jay and he is the same person as Jay Isip. Also listed as member/managers (owners/executives) of the LLC are Mike Killian and Nirav Amin. Google searches of those names yielded little info — I will return to them shortly, though. PennyStockLocks LLC (pdf) was formed on May 24th, 2011 as a single-member LLC by Robert McConnon. I tried searching the web for his name and found little other than a previous iHub post by nodummy on StockRockandRoll (I wish I had seen that earlier — it could have saved me some time). Reading that post led me to search for “Mike stockrockandroll” which led me to this Linkedin page of a purported co-founder of StockRockandRoll.com. StockRockandRoll LLC also has a Facebook page.

While I obviously can’t be certain, it would make sense that Mike Killian is the Mike who is a founding partner of StockRockandRoll LLC (and the “M” in MJ Captial — MJ likely stands for Mike & Jay). As to Nirav Amin, I have no clue where he went. Presumably he is no longer with the company.

So, what does this mean? StockRockandRoll LLC was the first company (from 2008); at some point, Nirav Amin likely left and in 2011 Isip started working with McConnon, who started his own website. Since PennyStockLocks.com has been set up and receiving payments for stock promotion, it has disclosed the exact same amount of compensation on every pump as has StockRockandRoll.com. In other ways (such as ilovetradingpennystocks.com, an Isip-registered domain name, showing the pennystocklocks.com content) the two LLCs appear to act as one. I believe that the M J Capital LLC was set up later in 2011 to give the group a more ‘professional’ look so they could more easily sell their services to the people who pay for pumps.

What conclusions can we make from all this information? First, stock promotion can be quite lucrative. The sum of compensation disclosed through 6/19/2012 in 2012 is $1,349,500 (this number could be off by a bit due to my counting error). Obviously there are significant expenses, the largest of which is new subscriber acquisition costs. Second, there is not that much benefit to finding out all this information for most stock promoters: I get pump emails from each of these pump websites at the same time (and I wouldn’t consider buying their pumps anyway because they tend to gap up and then drop). Third, stock promoters like to continually add new websites: ResearchOTC.com was created most recently, in September 2011, while StockRockandRoll.com has been around since 2008.

[Edit 29 August 2012 – It appears that MJ Capital LLC has added a new website, MomentumOTC.com, and that website is advertising with pay per click text ads on Bing. The website was first registered almost a year ago but I had not seen it advertised prior to today. The domain name is privately registered and it is on a server with thousands of other websites, but the CANSPAM-required name and address at the bottom of its emails gives pennystocklocks.com as the owner of the domain.]

Below are charts of recent MJ Capital LLC paid promotions (they do uncompensated pumps from time to time that go up a lot, at least for the first few minutes):

LGBS – Promoted on 8/2/2012 – $25,000 paid for promotion

KALO – Promoted on 7/10/2012 – $20,000 paid for promotion by Equities Awareness Group, LLC

LBGO – Promoted on 6/26/2012 – $25,000 paid for promotion by Winning Media, LLC

Disclaimer: No relationship with any parties named above (except that I trade their pump and dumps) and no positions in any stocks or funds mentioned. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

A stock transfer agent’s tip leads to British Columbia halt of FMNL

Forum National Investments (FMNL), a company that has skyrocketed on a recent stock promotion campaign, received a cease-trade order from the British Columbia Securities Commission (BCSC) five days ago. Of course, such orders do not prevent companies from trading on the OTCBB in the USA, although such orders often result in steep price declines. FMNL was no exception, dropping from a $2.70 close on 7/20/2012 to a close of $1.01 the next trading day, 7/23/2012.

The reason for the cease-trade order was not abnormal: a large promotional campaign along with a number of press releases from the company led to a significant increase in FMNL’s share price; also, the accounts of people associated with FMNL’s president engaged in significant trading in FMNL during the promotion. What is most interesting about the case is that it was the stock’s transfer agent that informed the BCSC of suspicious transactions by the insiders. Much penny stock fraud involves the selling of unregistered shares or the illegitimate issue of new shares. If more transfer agents were as vigilant as FMNL’s transfer agent, penny stock fraud would be significantly less common (or at least less remunerative).

See the BCSC press release. From the cease trade order and notice of hearing (pdf; emphasis mine):

4. Clozza is the President, Chief Executive Officer, and a director of Forum National.

5. Tutschek is the Chief Financial Officer and a director of Forum National.

6. Curtis is a shareholder of Forum National.

…

Unexplained attempts to transfer shares

21. On July 5, 2012, Clozza and Tutschek attended the offices of Forum National’s
transfer agent in Vancouver, British Columbia (Transfer Agent). They carried with
them share certificates representing approximately 2.7 million shares of Forum
National. Among these, were certificates in the names of Curtis and Tutschek.
22. Clozza instructed the Transfer Agent to “overnight” transfer the share certificates into
the name of a Bahamian company (Bahamian Entity), by way of a United States
based brokerage firm (American Brokerage). The Transfer Agent informed the
Commission.
23. On July 10, 2012, the Dealer informed the Commission that some of the accounts
holding Forum National shares had instructed the Dealer to transfer their holdings to
the American Brokerage. Accounts in the names of Bahamian companies, including
the Bahamian Entity, were among those that provided transfer instructions.
24. On July 9 and 12, 2012, the Executive Director obtained freeze orders from the
Commission under section 151 of the Act. Among other things, the freeze orders
blocked attempts to transfer certain share certificates held at the Transfer Agent, and
certain accounts held at the Dealer.
25. On July 16, 2012, Tutschek sent the Transfer Agent a Treasury Direction signed by
Clozza and Tutschek on July 11, 2012, directing it to issue share certificates
representing 137,500 shares in Forum National. The Transfer Agent refused.

Also see David Baines’ article on this case and the Stockhouse article (the first one I saw on this case). Thanks to PromotionStocks for being the first that I saw to mention this case. More info can be found in this iHub post by nodummy.

The $650,000 promotion can be seen here and it was at AmericanInvestingReport.com but is no longer there. See an scanned copy of a physical mailer on it at Promobuyer.net.

Disclaimer: No relationship with any parties named above (except that I trade pump and dumps) and no positions in any stocks or funds mentioned. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

SEC suit against Harbinger indicates they view float lockdowns and other manipulation to create short squeezes as illegal

One thing that surprised me at first about the SEC lawsuit against Jerry S. Williams (aka “Monk”) is that they did not charge him with market manipulation for his float lock-down schemes. It seemed to be an obvious case of market manipulation — attempting to buy every share in the float so that the traders in the group could squeeze market makers who ended up short. After some consideration, I now think Williams’ alleged lies and scalping of his followers prevented the float lockdown from ever having a chance at success, and if his intent was to scalp his followers then it would be hard to win a market manipulation case against him. At the very least, scalping is clearly illegal and easy to prove, making a market manipulation charge superfluous.

Despite this, I am certain that the SEC views float lock downs as market manipulation. This is shown by the suit the SEC filed a month ago against Philip Falcone and his hedge fund Harbinger Capital Partners LLC (and related entities). See the litigation release about that case. Below is an excerpt from that litigation release (emphasis mine):

Market Manipulation / Illegal Short Squeeze

In a separate civil action, the SEC alleges that from 2006 through early 2008 Falcone and two Harbinger investment management entities manipulated the market in a series of distressed high-yield bonds issued by MAAX Holdings Inc. In this fraudulent scheme, Falcone and the Harbinger entities allegedly orchestrated an illegal “short squeeze” – a market manipulation scheme in which an investor constricts the supply of a security, through large purchases or other means, with the intent of forcing settlement from short sellers at arbitrary and inflated prices.

The SEC’s complaint alleges that at Falcone’s direction, Harbinger purchased a large position in the MAAX bonds during April and June of 2006. After hearing rumors that a Wall Street financial services firm was shorting the MAAX bonds and also encouraging its customers to do the same, Falcone decided to seek revenge. In September 2006, Falcone directed the Harbinger-managed funds to buy every available bond in the market, often purchasing the bonds from short sellers. Ultimately, Falcone raised the funds’ stake to approximately 13 percent more than the available supply of the MAAX bonds.

At one point, Harbinger had purchased 22 million more bonds than MAAX had ever issued. Contemporaneously with these purchases, Falcone locked up the MAAX bonds the Harbinger funds had purchased in a custodial account at a bank in Georgia to prevent his brokers from lending out the bonds to sellers seeking to deliver the bonds to purchasers after short sales.

Having seized control of the supply of the MAAX bonds, Falcone then demanded that the Wall Street firm and its customers settle their outstanding MAAX short sales, not disclosing that it would be virtually impossible to find bonds available for delivery. The Wall Street firm bid daily for the bonds, which quickly doubled in price. Then, Falcone engaged in a series of transactions with certain short sellers at arbitrary, inflated prices, while at the same time valuing the funds’ holdings on his books at a small fraction of the prices he charged the covering short sellers.

The full complaint on the market manipulation charge against Harbinger and Falcone is here (pdf). While there are more details to the story than stated above it seems clear to me that the SEC has taken the position that buying up more than all the shares (or in this case, bonds) outstanding to then create a short squeeze and force shorts to cover at artificially high prices is illegal. Below are a few more details from the complaint:

19. By engaging in the conduct described herein, Defendants Falcone, HCP Offshore
Manager, and HCP Special Situations GP illegally manipulated the market for MAAX zips and
thereby violated Section 17(a) ofthe Securities Act of 1933 (“Securities Act”) [15 U.S.C. §5i ;. i77q(a)] and Section IO(b) ofthe Securities Exchange Act of 1934 (“Exchange Act”) [15 US.C. §
78j(b)] and Rules lOb-5 thereunder [17 C.F.R. § 240.10b-5].

…

102. As described above, Defendants Falcone, HCP Offshore Manager, and HCP
Special Situations GP, acting knowingly, illegally manipulated the market for the MAAX zips
bonds by taking a series of steps intended to disrupt the normal functioning of the market. The
Defendants acquired more than 100 percent of the outstanding issue of such bonds at a time
when they knew or were reckless in not knowing that market participants held significant short
positions in the bonds. The Defendants at various times withheld from the market the
information about their holdings of the bonds. The Defendants prevented their holdings in the
bonds from being used to cover the short positions, and Defendants demanded that holders of
the short positions cover those positions at highly inflated prices demanded by Defendants,
knowing that the market participants had no other source from which to obtain the bonds. The
Defendants took these actions for the purpose of, and which had the effect of, disrupting or
manipulating the market.

Much thanks to Thomas Gorman of the SEC Actions blog (a must-read for anyone who follows stock fraud) for pointing out the relationship between the Falcone case and the float lockdown scheme. Unlike me, Mr. Gorman is a securities lawyer.

The spam stock promoter of IDOI: Not what it seems

Stock spam Take a look at the following screenshots from two emails received last night:

They are two emails from different domain names (domain names that have no content on them: Likeact.com and Onlinemid.com) and purport to be the same “StockCastle” online newsletter. Also notice that they were sent to the same email address. Keep that email address in mind. They both have the exact same disclaimer displayed as an image, hosted at Tinypic.com):

The key disclosure:

Stockcastle.com, a wholly-owned subsidiary of Fidelity Ltd, Mall Tower, Wickhams Cay 1, Road Town, British Virgin Islands, has received a total of eight hundred thousand dollars to date from Jemsta Enterprises LTD, who was paid by shareholders of the profiled company for the sending of this email/newsletter

I have never subscribed that email address to StockCastle.com In fact, the email address that received those emails (and others like it) was never used to sign up for more than a few stock promotion websites. For example, take the email address jan[xxxx]1152011@goodevalue.com. The numbers in the email address refer to the date the address was created (January 15, 2011, although I actually created it the day before). I only ever used that email address to sign up to pump websites connected to BestDamnPennyStocks.com (including XtremePennyStocks.com which I have never determined if it is truly connected to BDPS), which I did on January 14, 2011. After that date I did not use the email to sign up for any other websites and I certainly didn’t use it to subscribe to StockCastle.com. Yet magically on March 3, 2011 I received an email promoting ATTD from up@StockCastle.com (and I have continued to receive pump emails from them on various stocks). Then on May 9th, 2011 I received an email from WallStreetAdvisors@xraybot.com promoting MDFI (the same stock promoted by the BDPS-related websites that day). Below is a quote from the disclaimer:

Wall Street Penny Stock Advisors located at EMPRT Group Ltd St James House 13 Kensington Square London, W2 5LO United Kingdom makes no representations as to such facts’ reliability, accuracy or completeness. Endorser is not responsible for errors or omissions. Endorser does not claim any special expertise or knowledge regarding the medical sector . Endorser is neither acting as an investment advisor nor providing individual investment advice. Wall Street Penny Stock Advisors OWN NO SHARES, OPTIONS, WARRANTS in Medefile International Inc (MDFI).

Then on May 17th, 2011 I received my first email to this email address from report@ObscureStocks.com promoting SHOM.

This is a paid advertisement Stand Online LTD located P.O. Box 428 Road Town, Tortola, VG 2110 British Virgin Islands was paid fifteen million shares for the design, composition, and distribution of this email.

Below is the chart of SHOM from that period. Surprisingly, SHOM peaked four days after the pump email I received. [double check for other pump emails earlier]. The next new email sender that sent me a stock promotion spam to this email address was “WallsTreet”, note@wallstreetpennystockadvisors.com, on January 28th, 2012. Below is their disclaimer:The key part:

wallstreetpennystockadvisors.com located at EMPRT Group Ltd St James House 13 Kensington Square London, W2 5LO United Kingdom … wallstreetpennystockadvisors.com has received one hundred thousand dollars for sending this newsletter of Mustang Alliances Inc Corp from Jemsta Enterprises Ltd, who was paid by shareholders of the profiled company for sending of this email/newsletter

A few days later on February 1st, 2012 I received another pump email on MSTG from another new pump email address, hps@extrapicks.net. Below is an image of the disclaimer: The important text:

… HottestPennyStocks.net a wholly owned subsidiary of Flaster Knol LTD Baixada del Moli, 21 Andorra la Vella Andorra … HottestPennyStocks.net has been compensated one hundred thousand dollars for sending this newsletter of Mustance Alliances Inc from Jemsta Enterprises Ltd, who was paid by shareholders of the profiled company for the sending of this email/newsletter

Three days later I received another pump email on MSTG from a new pump email address, nstk@hotlivepicks.net. The disclaimer is below:

NewsStocks.net is a wholly owned subsidiary of Oevnak LTD of 3 St. Thomas St. Belize City Belize. Oevnak LTD has received one hundred thousand dollars from Jemsta Enterprises Tld, who was paid by shareholders of the profiled company for the sending of this email/newsletter

On March 2nd, the emails from extrapicks.net changed their name and disclaimer to be “Ult Stocks” ultm@extrapicks.net and the disclaimer is below:

UltimatePennyStock.com is a fully owned subsidiary of Promo Dombo LTD located 111 South Service Road Vritish Virgin Islands (VBI) … UltimatePennyStock.com has been compensated and has received a total of three hundred thousand dollars to date from Jemsta Enterprises Ltd who was paid by shareholders of the profiled company for the sending of this email/newsletter

The same day I also received the first email to this email address from “MagicPennyStocks6” magicpenny@ancientupdate.com, and that email promoted MSTG. The ancientupdate.com website is no longer online so I cannot obtain the disclaimer. I also received the first email from “M P S” magic@stockero.com on March 2nd. The disclaimer image is below:

The important parts of the disclaimer:

MagicPennyStocks.com is a wholly owned subsidiary of Natti Reach LTD Nerine chambers, POB 905, Road Town, BVI … The owner of MagicPennyStocks.com has has [sic] received a total of three hundred thousand dollars to date from Jemsta Enterprises Ltd, who was paid by shareholders of the profiled company for the sending of this email/newsletter.

Two days later on March 4th I received an email from “UpK Stocks” coming@st0ck10.com promoting MSTG. Below is their disclaimer image and an excerpt showing the important details:

UpcomingPennyStocks.com has received a total of three hundred thousand dollars to date from Jemsta Enterprises Ltd, who was paid by shareholders of the profiled company for the sending of this email/newsletter … UpcomingPennyStocks.com is owned by : Hindla LTD located at Avda. Joan Marti 74, AD200 Encamp, Andorra.

The next day (March 5th) my email from “MagicPennyStocks” came from MagicPennyStocks@newschrist.com (that website is no longer online so I cannot post the disclaimer). The following day on March 6th the pump email I received from “Ultimate-Stock” came from ultim@smartnewslive.com (the disclaimer was the same as the above disclaimer mentioning Promo Kombo. On March 7th the MSTG pump email I received from “MagicPennystocks” came from MagicPennyStocks@factsupdate.com. The same day the email I received from “Ultimate Penny” came from ult@stock-intelligence.com. On March 8th the email I received from “Ultimate” came from penny@easystocksonline.com. Since the MSTG pump I have continued to receive pump emails from these various sources.

There was the EMPM pump on Saturday March 24th, (with the email from “MagicPennyStocks” coming from MagicPennyStocks@fluxupdate.com). The first trading day after the pump began was March 26th and after that day the stock quickly plunged.

One email from “Penny-Stocks” came from penny@mayupdate.com on March 27th. Its disclaimer is below:

UltimatePennyStock.com is a fully owned subsidiary of Promo Kombo LTD located 111 South Service Road British Virgin Islands (BVI) … UltimatePennyStock.com has been compensated and has received a total of seven hundred and fifty thousand dollars to date from Entersa Ltd, who was paid by shareholders of the profiled company …

Another pump email I received two days later on March 29th came from “NewsStock” news@muteup.com. Below is the disclaimer and an excerpt with the compensation:

NewsStocks.net is a wholly owned subsidiary of Oevnak LTD of 3 St. Thomas St. Belize City Belize. Oevnak LTD has received a total of seven hundred and fifty thousand dollars to date from Entersa Ltd, who was paid by shareholders of the profiled company for the sending of this email/newsletter.

After EMPM, these newsletters promoted MSTG again, followed by the promotion (only by the Stock Castle branded newsletters, still coming from many different email addresses) of Nasdaq-listed AMBT on May 29th.

Stockcastle.com, a wholly-owned subsidiary of Fidelity Ltd, Mall Tower, Wickhams Cay 1, Road Town, British Virgin Islands, has received a total of two hundred and fity thousand dollars to date from Jemsta Enterprises Ltd, who was paid by shareholders of the profiled company for the sending of this email/newsletter

AMBT traded very low volume but hit its peak on the second trading day after the stock promotion began. The price action prior to when I received the first pump emails is quite interesting — the company had no news or SEC filings immediately preceding or during the four days prior to the email when the stock ran from $4.40 to $8.00.

The next pump after AMBT was on IDOI, started on the evening of July 18th. Below is the chart after two days of stock promotion:

See the disclaimers from the various newsletters below:

Disclaimer. No position in any stocks mentioned and I have no relationship with anyone mentioned in this post. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

Jerry Williams aka “Monk” and Monk’s Den LLC sued by SEC in stock scalping scheme

Jerry Williams has been well known among the penny stock community for over two years. He was the driving force in what were described as ‘float lock-down’ schemes that purported to create massive short squeezes. Today the SEC sued him for ‘scalping’ his followers, in other words, selling into the buying of his followers without disclosing those trades.

From the SEC litigation release:

The Commission charged Williams with running a scalping scheme from which he made over $2.4 million. Scalping is a type of fraud in which the owner of shares of a security recommends that security for investment and then immediately sells it at a profit upon the rise in market price which follows the recommendation.

…

In particular, the Complaint alleges that Williams told potential investors that by buying up the outstanding shares, or float, of these companies, they could collectively trigger a “short squeeze” that would allow them to sell their stock to “market makers” that had shorted the stock. The Commission’s Complaint alleges that Williams falsely stated that he had previously used this strategy to make himself and others enormous profits. The Complaint alleges that in fact, unknown to potential investors, Williams had been hired by Cascadia and Green Oasis to promote their stock and had been compensated with millions of free and discounted shares of these stocks. According to the Complaint, Williams secretly sold millions of Cascadia and Green Oasis shares at the same time he was encouraging potential investors to buy, hold and accumulate these stocks.

This is a clear case and should be easy for the SEC to prove. I expect Williams to settle quickly. The case is Securities and Exchange Commission v. Jerry S. Williams, Monk’s Den, LLC, and First In Awareness, LLC, 3:12-cv-01068 (District of Connecticut, Complaint filed July 20, 2012).

Read the full SEC complaint (pdf).

Not mentioned in the lawsuit is the most recent of the float lock-down plays that I am aware of, 8000 Inc. (EIGH). The “Internet Forum” mentioned in the complaint is InvestorsHub (the cesspool of online investing).

Perhaps the thing that is hardest for a cynical trader such as myself to understand is how many people not only believed Williams but paid him to learn his ‘float lock-down’ method. From the complaint:

From December 2009 through October 2010, Williams held approximately 18 Monkinars in cities across the United States, including Los Angeles, Richmond, Phoenix, Atlanta, Indianapolis, Chicago, Portland, Pittsburgh, Grand Junction, Groton, and Boston. Williams also held Monkinars in Japan, Germany and Barbados. By October 2010, Williams charged $1,500 per person for a “Basic” Monkinar held in Boston, Massachusetts, which drew approximately 90 people.

I have believed all along that the whole ‘float lockdown’ scheme is illegal market manipulation; while the SEC did not pursue that course against Williams, Thomas Gorman at the SEC Actions blog points out that the SEC did argue that in the recent lawsuit against Philip Falcone (SEC v. Falcone, 12 Civ 5027 (S.D.N.Y. Filed June 27, 2012)). See my post on the Harbinger short squeeze case.

Websites related to stock promoter AwsomePennyStocks.com

Below is the list of Awesomepennystocks.com (APS) related websites as of July 10th. Since then most of the websites formerly owned by Free Penny Alerts LLC now forward to VictoryStocks.com and all the websites formerly associated with HotOTC.com now forward to HotOTC.com.

Read this recent post to learn more of the email problems that APS has had recently.

Update on the Marketing Integrale stolen email list lawsuit

See my earlier post on this lawsuit for background on this lawsuit. Since that post there have been four documents filed with the court. In reverse chronological order:

July 7, 2012: Plaintiff’s notice of dismissal (pdf)
June 28, 2012 Amended complaint (pdf)
June 27, 2012 Plaintiff’s response to defendant’s motion to dismiss (pdf)
June 26, 2012 Order on scheduling conference (pdf)

The order on the scheduling conference is unimportant — it just sets a date for the scheduling conference wherein the parties decide on the schedule for the trial; that was set for August 27th.

The plaintiff’s response to the motion to dismiss is simply the plaintiff’s argument for why the case should not be dismissed, in which they argue that they have alleged the wrongdoing with enough specificity and that they have done enough to connect defendant Mesa Marketing (the only respondent among the defendants) to the wrongdoing. This is an expected response to defendant Mesa Marketing’s motion to dismiss.

The amended complaint appears to add some details to the previously submitted initial complaint and amended complaint.

The plaintiff’s notice of dismissal is confusing to me. I really do not understand why they would dismiss the case now. From the notice:

8. This dismissal is without prejudice to re-filing as to Plaintiff’s claims against Defendants for misappropriation of Plaintiff’s trade secrets, and violations of the Stored Wire and Electronic Communications Act, 18 U.S.C. §§ 2701-2710, and the Computer Fraud and Abuse Act, 18 U.S.C. § 1030, and for any other claim that Plaintiff has, known or unknown, against Defendants.

Disclaimer: No relationship with any parties in the suit. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well..