Category: Fraud

I previously wrote about how the SEC sued Jerry S. Williams aka Monk from Monk’s Den on InvestorsHub. I also wrote about how even if Jerry Williams hadn’t been scalping his followers (selling when he said he was buying) his ‘float lock-down’ schemes were illegal.

Well, the SEC won a judgment (filed February 12th) against Williams to the tune of $2,357,208 in disgorgement of illicit profits, $188,766 in interest, and $2,357,208 in civil penalties. It is nice to see the good guys win once in awhile and with a judgment of twice his illicit profits.

SEC press release

The Securities and Exchange Commission announced today that on February 12, 2014, a Connecticut federal court entered judgments against a former Connecticut-based stock promoter, Jerry S. Williams, and two companies that he controlled, Monk’s Den, LLC and First In Awareness, LLC, who are defendants in a Commission enforcement action filed in 2012 alleging that they operated a fraudulent Internet-based stock touting and scalping scheme. The judgments order the defendants to pay a total of over $9.6 million.

Judgment against Jerry Williams (pdf)

Credit goes to Scion for finding and posting the judgment first.

SEC v. Williams Et Al Doc 70 Filed 12 Feb 14 by scion_scion

Disclaimer: I have no position in any stock mentioned. I have no relationship with any parties mentioned above. 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.

I previously wrote about the Imogo Mobile Technologies (IMTC) spam / hard mailer pump. I wrote the following in that post:

The most recent stock promoted by StockCastle was NVGC and that was suspended by the SEC. NVGC was also promoted via a hard mailer. IMTC is definitely at risk of a trading suspension.

So it is hardly surprising that the SEC suspended trading in IMTC this morning

IMTC suspension press release (pdf)
IMTC suspension order (pdf)

The reasoning given by the SEC is their boilerplate:

The Commission temporarily suspended trading in the securities of IMTC because of
questions that have been raised about the accuracy and adequacy of publicly disseminated
information concerning, among other things, IMTC’s business, revenue, and assets.

 

Disclaimer: I have no position in any stocks mentioned and no relationship with any parties mentioned above. 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.

I apologize for the slowness of this post. Life (and trading) have been quite busy this month. Jean-Francois Cloutier posted a new article about Awesomepennystocks.com / John Babikian on January 7th. Read the article (in French) in the Journal de Montreal. Below is a translation for those who don’t read French. See my prior post about Babikian. I think it is quite clear that Eric Van Nguyen’s portrayal of his involvement is self-serving — he is far from innocent.

 

A former close associate of John Babikian, the mysterious 26 year old Montreal resident who is being targeted by the AMF [Quebec securities commission] and Revenue Quebec (Quebec tax authority), says that he was betrayed by Babikian in the promotion of penny stocks.

Eric Van Nguyen defends himself by saying that he was naive in “lending” his account and name for some tens of thousands of dollars to Babikian so that Babikian coule promote penny stocks.

“At that time, I had no idea that this would become this big — you mustn’t doubt.”

Our investigative bureau succeeded in finding this young Quebec man  who had been accused in 2009 along with Babikian of stealing a list of email addresses.

Van Nguyen says that he sold all his penny stock promotion websites in 2012. He did not want to reveal anything about the buyer of the websites other than that the buyer was outside of North America.

This man, who says that he initiated Babikian into the world of penny stocks, is extremely secretive and he has been invisible on the internet for several years. He has no Facebook account. Numerous acquantinces that he knew from his studies at Concordia University have no news of him. Rumors on the internet suggest that he is even in Singapore.

The luxurious mansion that he lives in in West Island is not in his name.

If he is still in Quebec despite the troubles of his old associate, it is because he was worried about his parents, he said.

“I could travel, sure, but I don’t want to leave my parents to deal with my problems. There are a lot of people who come to their door” since the publication of articles on John Babikian. [One of the addresses used for Golden Dragon Media appears to belong to his parents — that is easy information to find.]

Babikian wanted to hide himself

Eric Van Nguyen says that he met Babikian in 2009. At that time, he was himself already involved in the business of promoting penny stocks. His company, Golden Dragon Media, registered in Quebec, is behind a network of stock promotion websites. These sites send newsletters promoting speculative stocks that cost pennies.

“He wanted to know my techniques,” said Van Nguyen.

According to Van Nguyen, John Babikian paid him to use an account at PR Newswire. He was also able to manage websites affiliated with Golden Dragon Media (including Pennystockslove.com, Loveforstocks.com and Unrealstocks.com).

“Today, because of that, my name is in the garbage. He betrayed me — he ruined my name,” said Van Nguyen.

Why would John Babikian have wanted to use Van Nguyen’s name rather than his own, we asked him.

“He never wanted his own name to appear. The SEC had begun to scrutinize the stock promotion business.”

We were not able to reach John Babikian.

Revenue Quebec and the AMF want to meet him again

According to Van Nguyen, the world of pennystocks is just like a lottery.

“One can easily lose everything if you invest in them. To be frank, this is not an extremely white business. It is not black either but certainly grey,” he says. When promotion involves the use of spam emails “it becomes black” according to him.

Van Nguyen even mentions  the presence of a member of the Montreal Mafia in the world of penny stocks.

Van Nguyen saws that agents from Revenue Quebec met him recently to understand how he became rich. The AMF (securities regulator) also asked him questions, but he refused to respond. Too risky, according to him.

“There is talk of an FBI investigation in the USA. One would also think that the RCMP [Royal Canadian Mounted Police] is also investigating,” he said.

More liens by Revenue Quebec

Revenue Quebec has been granted new liens on $6.6 million worth of John Babikian’s assets. Oddly, none of the properties are in his name. At least one director of a numbered company linked to Babikian, Rawad Adra, appears to be completely fictitious

Three properties adjacent to Babikian’s luxurious mansion on Rue des Anemones (Street of the Anemones) in Laval. 

Value: $2.1 million
Area: 5665 square meters
Official owner: 9264-5076 Quebec Inc
Administrator: Rawad Adra
Shareholder: Tidal East Global
Relief: Robert Kalfayan, Gerard Babikian, Leonnel Iruke [I am unclear what this means in this context]

Sixteen properties in Nominingue, in the Laurentians, around Lake Lafleche

Value: $4.5 million
Total area: 360,478 square meters
Official owner: 9292-2095 Québec inc.
Administrators: Alima Beg, Ehsan Haque
Shareholders: None

 

Disclaimer: I am currently short USTU which is currently being promoted by Pennystocks.com, which up until at least the last stock promotion was run by the same people running Awesomepennystocks.com (presumably John Babikian). I have no relationship with any parties mentioned above. 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.

With more and more mailer pumps getting suspended by the SEC and with AwesomePennyStocks’ mastermind John Babikian on the run, there are fewer big pump and dumps for me to blog about. The most effective remaining stock promoter is one that I have not yet blogged about: StickTips.com. Their last two pumps, AMMG and PGLO, both lasted for weeks and saw lots of volume and price increases upwards of 100% from when the pumps began. But the problem now is that being the best promoter is like painting a bullseye on your chest: that means the SEC Microcap Task Force will be out to get you sooner rather than later. I will address other reasons why I believe the SEC will actively investigate StockTips.com and their promotions after I describe their prior and current promotions.

Past StockTips.com pump and dumps

I only signed up to StockTips.com late in 2012 year so I did not receive any promotional emails from them prior to December 2012. The first promotion I received from them was for Gold and Gemstone Mining (GGSM) and I only received one email about it at 10:59 AM Eastern on December 5th, 2012. The prior day Premiere Consulting (pennystockparlay.com and related websites, formerly affiliated with bestdamnpennystocks.com) had begun the promotion of GGSM and two days later they were done.

StockTips.com disclosure on GGSM:

StockTips.com is operated by Amerada Corp (AC).  Currently AC expects to be compensated $25,000.00 (Twenty-Five Thousand United States Dollars) from Laluna, Inc. for this GGSM advertising and promotion.

 

The second pump that I received from StockTips.com was about PacWest Equities (PWEI), which was promoted by Victory Mark Corp back in autumn 2012 and again by Victory Mark Corp and AwesomePennystocks.com in September 2013. Trading in the stock was quickly suspended due to the SEC crackdown on Awesomepennystocks.com and multiple blatantly false press releases.

While PWEI had been promoted back in the autumn of 2012 by Victory Mark Corp and by some lesser promoters, it received a new wave of promotion in February 2013. The new wave of promotion started February 10th with ImpressivePennyStocks.com / Todaypennystocks.com (paid $100,000 by Perfect Genius Investments, previously paid $100,000 by Green Meadow Enterprises back in 2012). Starting on February 11th, PWEI was promoted by StockExploder.com (paid $25,000 by Flip Ventures LLC). MicroCap Consultants LLC paid a few F-list promoters a few thousand dollars each to promote the stock at that time as well. Capital Financial Media also promoted PWEI and was paid $250,000 by Sancove Holdings Ltd.

I first received pump emails on PWEI at 8:00 PM Eastern on March 24th from StockTips.com. Their last email promoting it came at 11:44 AM on March 27th. Someone who bought PWEI on the first day and sold a week later could have easily lost 50%.

Compensation disclosed: $25,000
Paying party: Laluna Inc

Disclaimer for the PWEI pump below (click to enlarge):

The next StockTips.com pump and dump was AMMG, starting in July. But back in late May AMMG was promoted by a couple ineffective pumpers. I received pump emails after the close on May 21st from OTCPicks.com / PennyTrader news.net (paid $12,000 by Impexco Group). The last email sent by that promoter came on May 29th at 9:56 AM Eastern and then I received no emails promoting AMMG until StockTips.com promoted it.

The AMMG (Amarium Minerals) pump started after the market close on August 18th. It is quite obvious that volume was low (because StockTips.com’s previous pumps had never done well and had lasted only weeks) but then the stock broke out and hit a high of about $0.59 which is up over 100% from the median price on the first pump day of about $0.25. The last pump emails came on September 27th at 2:56 PM eastern.

Compensation disclosed: $25,000
Paying party: Laluna Inc

Here is the disclaimer from those emails (click to enlarge):

The PGLO (Pan Global) pump began after the market close on October 20th. Emails then came every trading day until November 6th, when an email was sent at 8:19 AM Eastern. After that email, no further emails were sent until November 14th at 1:53 PM Eastern. The final pump email was sent at 8:23 AM Eastern on November 19th. From a median price of about $0.35 on the first day to the high of the pump of about $0.96 on November 5th, the stock went up 170%.

Compensation disclosed: $1,100,000
Paying party: Laluna Inc

Below is the disclaimer sent with the emails (click to enlarge):

 

Tiger Oil and Gas (TGRO): The Current Stocktips.com pump & dump

The current stock promotion of StockTips.com is Tiger Oil and Energy, Inc (TGRO). Before describing the current promotion of TGRO I should mention its prior promotion back in January. It was promoted by Blue Lys Capital (WallstreetReport.net among other websites, paid $55,000) after the close on January 16th. Prior to the open the next day it was promoted by Andalusian Holding (FreeOTCPicks.com along with other websites, paid $55,000) and StockMister LLC (paid $15,000 by Cream Consulting). I received no further pump emails on TGRO after 2:20 PM Eastern on January 17th.

The current StockTips.com promotion of TGRO began on December 8th (a Sunday) and emails have come each trading day (or Sunday night). From a price of about $0.42 at 9:45am on the first trading day after the pump began TGRO hit a high of about $0.63 the next day for a potential gain of 50%.

Compensation disclosed: $2,500,000

Paying party: Laluna Services Inc

Below is the disclaimer from the emails promoting TGRO (click to enlarge):

The emails from StockTIps.com link to a video at http://www.stocktips.com/TGRO/ which then takes the viewer to http://www.stocktips.com/special-thank-tgro/ which links to the Invests.com page promoting TGRO.http://invests.com/opportunity-in-tigeroilandenergy-tgro

The disclaimer on that page says:

Invests.com expects to receive $1,250,000.00 for publication of this advertorial by StockTips.com.

PDF copy of Invests.com promotion page.

 

Why the SEC should have its sights set on StockTips.com

I have noticed several things about StockTips.com that make me believe that they are violating the law. These are all relatively small things that by themselves warrant no more than a slap on the wrist but they could indicate far bigger problems. If I worked for the SEC these would definitely make me think of investigating StockTips.com. First, the website discloses in all its emails that it is owned by Amerada Corp. In every email it lists its address as “4000 Aurora Avenue N. Ste. 119   Seattle, Washington 98103  US”. A quick search of corporations in Washington found only Amerada Petroleum Corp (a subsidiary of Hess Corporation, registered in Delaware). A search of Nevada and Delaware corporate registries found no companies with that name that currently exist (in Delaware an Amerada Corp. has been defunct since 1998). It is quite possible that the Amerada Corp that owns Stocktips.com exists in some other state and all this shows is a lack of proper disclosure or registration (using an address in Washington should mean that they have to file as a foreign corporation, in which case they would show up in the search I conducted).

The same question of the existence of Amerada Corp. can be asked of Laluna Inc — searches of the corporation registries of Washington, Nevada, and Delaware showed no potential matches. Furthermore, the name changed from Laluna Inc to Laluna Services Inc for the TGRO pump (all previous pumps listed “Laluna Inc” as the paying party. This makes it seem less likely that the company exists (although it is possible they made a typo but adding a “Services” to a company name is not a common typo). I should point out that while there are some foreign jurisdictions that do use “Inc.” or “Incorporated” that is much less prevalent than “Ltd.” or “Limited”.

Another suspicious fact about StockTips.com is that for every single stock promotion I have seen by them they have been paid by the same company, Laluna Inc (except for TGRO which was paid by Laluna Services Inc). Most promoters, when they do disclose who paid them, list a revolving door of common third-party promoter payers (such as Flip Ventures LLC), other promoters (such as MicroCap Consultants LLC) and entities that appear to be one-off entities created for one stock promotion.

I do have to admit that what I have described above is no more than what has seemed like ordinary stock promoter behavior over the last few years. But times have changed and the SEC’s Microcap Task Force has been kicking ass and taking names. Any prominent stock promoter that does anything even mildly suspicious is going to quickly find itself being investigated by the SEC. And any stock being promoted by such a promoter is at risk of a trading suspension.

[Edit 2013-12-16 3:20 PM]: In addition to what I described above, many of the large shareholders in TGRO have ties to recent pump and dumps such as NHUR and NVGC. See Ivan’s SeekingAlpha article and the Promotion Stock Secrets article on NGRC for details. In fact, TGRO CEO Kenneth B. Liebscher was criminally prosecuted in the past for stock fraud, although he was acquitted on all counts. The history of the CEO and the ties of large shareholders to other major pump and dump companies (including NHUR and NGRC) make it more likely that trading in TGRO be suspended by the SEC. See also the Promotion Stock Secrets blog post about TGRO.

 

 

Disclaimer: [Edit 2013-12-16: 3:20 PM — I am no longer net short TGRO but will soon be net short again] I am short TGRO and I intend to trade around my position (cover / reshort) in the following trading days and I will not update my disclaimer; I have no relationship with any parties mentioned above. 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.