Category: Fraud

The stock promotion of Makism 3D Corp (MDDD) had only been going for nine days and still the SEC suspended trading in the stock today prior to the market open. Just as with Life Stem Genetics, SeekingAlpha published a negative article on MDDD by StockRealist the day prior to the suspension.

 

The stock promotion of Guar Global (GGBL) began just last weekend. The SEC suspended trading in the stock today prior to the market open after only four days of promotion.

SEC trading suspension release
SEC trading suspension order

Just like with the suspension of trading of Sovereign Lithium (SLCO), the SEC highlighted potentially manipulative trading in the stock in addition to the standard concerns about adequacy of information about the company:

The Commission temporarily suspended trading in the securities of Guar Global because of
concerns regarding the accuracy and adequacy of information in the marketplace and potentially
manipulative transactions in Guar Global’s common stock.

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 will update this post as I complete translations or synopses of the articles. The original articles are in French.

29 November: Une mère monoparentale se souviendra longtemps de Babikian (A single mother will remember Babikian for a long time)

29 November: Une fraude, selon un expert (A fraud, according to an expert)

27 November: Le mystérieux multimillionnaire Babikian dans la mire de l’AMF (The mysterious multimillionaire Babikian in the sights of the Quebec tax authorities)

For my own part, I can state that the AMF (Quebec tax authority) is very aggressively pursuing leads on the whereabouts and assets of John Babikian. They are putting a lot of time and manpower into this.

Highlights of the oldest article:

Jose Lorrea, the current owner of a condo formerly belonging to John Babikian, was interviewed by Xavier Saint-Pierre and David Gallant for a half hour.

“They wanted to know what I knew about the sale of the condo,” he said. He bought the condo on April 4th, 2013 for C$447,000. John Babikian was never present for the sale of the condo and was represented by his parents, Gérard Babikian and Laudy Khairallah.

Babikian acquired the condo in 2009 in the name of a numbered company for the price of C$348,881. During the sale, Babikian declared that he had never been married or in a civil union. However, this is contradicted by a marriage filing with the Montreal court on July 31, 2010.

The Quebec tax authority recently obtained a judgement against John Babikian for C$1.78 million for taxes owed in 2011. According to the judgement on November 21, Babikian must pay C$1,782,518.55 and daily interest from November 22nd. This is in addition to prior judgments against Babikian for taxes owed for the years 2008 to 2010.

Highlights of the second article:

 The case of Sunpeaks Ventures (SNPK), promoted by websites linked to John Babikian, is clearly a stock fraud, according to a former SEC lawyer, Gary Aguirre.

[The article describes how pump and dumps work — which is unnecessary for my readers]

Mr. Aguirre envisaged that there would be a year to file a class action against Sunpeaks Ventures and Awesomepennystocks, after having received many calls from investors who had been fleeced in the pump and dump. However, he was not able to find the person or persons who ran the scheme.

“These are moving targets — they hide themselves behind offshore entities. It is extremely troubling that neither the SEC nor the FBI have yet acted in this case, because only they can unmask the masterminds of this scheme.”

Highlights of the most recent article:

 The sad history of a single mother from the Chicago area who lost money in an Awesomepennystocks pump and dump can in part explain how John Babikian acquired a huge fortune.

Amy, a 57 year old American, contacted us soon after our first article about John Babikian.

“I don’t know who gave them my address, but I regularly received promotional announcements about certain companies,” she said. In March 2012, she received emails about a company in the business of distributing specialized medicines. The company, Sunpeaks Ventures, was said to be at the point of commercializing their multivitamin product designed for people taking anti-coagulant drugs.

Amy confessed that she had wanted to buy about $35,00 worth of Sunpeaks stock because of her enthousiasm for the product Clotamin. “They said that they were at the point of signing an agreement with Walgreens,” she said.

She ended up investing more and eventually losing over $100,000 on Sunpeaks stock. “I live day to day — $100,000 — that was all my retirement savings. I don’t know how I will get out of this,” she said.

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.

This is hardly news to readers of this blog, but a Washington Post article from last week got some nice quotes from SEC officials giving some details on the pump and dump crackdown:

With a new chairman at its helm, and new chiefs leading the enforcement division, the agency created a 26-person task force in July devoted to rooting out microcap trading abuses. Since then, the agency has opened five or six microcap investigations a month, well above the previous year’s pace, agency officials said. The initiative builds on the efforts of a loosely-knit SEC working group created three years ago.

“For years, we did a number of these cases, but we didn’t attack it with a systematic approach,” said Andrew Ceresney, co-director of the SEC’s enforcement division. “We now have people focused on the area full-time for the first time, and by marshalling their expertise, we think we can make a difference.”

And the SEC has stated that they have purposely become more agressive in suspending trading in pump and dumps:

 

The agency said that going forward it will focus on repeat offenders, who account for a substantial amount of the fraud. It also is aggressively moving to suspend trading when it has reason to suspect misconduct. The agency has issued 90 trading suspensions so far this year, up 35 percent from the same period a year earlier. Most of the suspensions involved microcaps.

 

Full article at Washington Post.

 

Another day, another trading suspension of a big stock promotion. This time the ‘victim’ is Nevada Gold Corporation (NVGC). NVGC has been promoted by illegal spam emails from “StockCastle”. This trading suspension comes just two days after the previous trading suspension of a major active stock promotion, Life Stem Genetics.

Here is a chart of NVGC: 

George Sharp had also found a hard mailer promoting NVGC.

NVGC will reopen for trading on the grey sheets on December 12th.

From the trading suspension release:

The Commission temporarily suspended trading in the securities of NVGC because of questions
regarding the accuracy and adequacy of assertions by NVGC, and by others, to investors in press
releases and promotional material concerning, among other things, the company’s assets,
operations, and financial condition

 

SEC trading suspension release (pdf)
SEC trading suspension order (pdf)

 

Disclaimer: I am short 15,000 shares of NVGC at Interactive Brokers and I am long 10,000 shares at Speedtrader. I intend to exit those positions soon after the stock reopens for trading. I have no position in any other stock mentioned. I have no relationship with any parties mentioned above, other than that I am friendly with the author of the negative SeekingAlpha article on LIFS. 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.

Another day, another trading suspension of a big stock promotion. This time the ‘victim’ is Life Stem Genetics (LIFS). I previously blogged about that promotion on October 30th. This trading suspension comes just one week after the previous trading suspension of a major active stock promotion, Sovereign Lithium.

Here is a chart of LIFS:

 

The SEC’s trading suspension press release gave less detail than most about the reason for the trading suspension. LIFS will reopen for trading on the grey sheets on December 10th.

From the trading suspension release:

The Commission temporarily suspended trading in Life Stem because of questions regarding the
adequacy and accuracy of information about Life Stem, including, among other things, its
business operations.

 

SEC trading suspension release (pdf)
SEC trading suspension order (pdf)

 

Disclaimer: I am short 2153 shares of SLCO at Interactive Brokers that I intend to cover soon after the stock reopens for trading. I have no position in any other stock mentioned. I have no relationship with any parties mentioned above, other than that I am friendly with the author of the negative SeekingAlpha article on LIFS. 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.

Disclosure: I am short SLCO.

The string of suspensions of promoted stocks during the promotion or soon after continues with the SEC suspending trading in Sovereign Lithium Inc. (SLCO) last Friday. Judging by postings on InvestorsHub and Twitter, there was a new mailer promoting SLCO sent by James Rapholz’s Economic Advice. Despite the new ticker and name and mailer pump, the company has been around and was the subject of a mailer pump under the name Great American Energy and ticker SRBL starting back in February 2013.

Here is a chart showing the recent re-pump of SLCO:

And the chart below shows the previous pump as well:

 

While the SEC’s trading suspension press release included the usual language about “concerns regarding the accuracy and adequacy of information in the marketplace” it also highlighted “potentially manipulative transactions in Soverign Lithium’s common stock,” which is something rarely mentioned in these releases. The recent excellent article on TheStreet.com about promoter Awesomepennystocks.com (APS) mentioned that FINRA had sent “fraud surveillance section referral reports” to the SEC on numerous APS pumps. Perhaps after its slowness to act on the APS pumps came to light the SEC has decided to take a much closer look at manipulative trading in penny stock pump and dumps. If that is the case we should see a bunch more suspensions soon, likely including Pan Global Corp (PGLO).

 

From the trading suspension release:

The Commission temporarily suspended trading in the securities of Sovereign Lithium because
of concerns regarding the accuracy and adequacy of information in the marketplace and
potentially manipulative transactions in Sovereign Lithium’s common stock.

 

SEC trading suspension release (pdf)
SEC trading suspension order (pdf)

 

Disclaimer: I am short 2153 shares of SLCO at Interactive Brokers that I intend to cover soon after the stock reopens for trading. 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.

This is another late post on an SEC trading suspension of a promoted stock. My apologies for that. ARX Gold was most recently promoted back in April 2013. Amusingly, penny stock pump and dump shill analyst Ron Goldman gave the company a $0.30 price target back then. For the record in case he removes the report from his website, here is a copy of Goldman’s report (pdf) on DUCP. Goldman was paid $8,000 to write the report on DUCP. The company was promoted by numerous F-list stock promoters back in April besides Goldman.

Unlike with most trading suspensions, the SEC was quite detailed in explaining why it suspended trading in DUCP:

The Commission temporarily suspended trading in the securities of ARX Gold because of questions regarding the authorship of, and accuracy of information contained in, an exhibit, dated June 15, 2012 and entitled “Feasibility Study ARX Springs & ARX Pacific Properties For Mining Project Located in Wide Bay Burnett Region, Queensland, Australia,” to ARX Gold’s Form 10-K filed on September 4, 2013 and an exhibit, dated May 7, 2012 and entitled “Definitive Feasibility Study on the ARX Springs and ARX Pacific Properties located in Wide Bay Burnett Region, Queensland, Australia,” to its Form 8-K filed on May 30, 2012. On October 3, 2013, ARX Gold filed an amended Form 10-K purporting “to delete an exhibit which
was erroneously filed” with the 10-K filed on September 4, 2013 (emphasis added) without explicitly identifying or explaining that the Feasibility Study was the exhibit it sought to delete. ARX Gold has not amended its May 2012 Form 8-K and its October 2013 amendment to the Form 10-K does not disclaim the purported facts described in the earlier Feasibility Study filed with the Commission.

SEC trading suspension release (pdf)
SEC trading suspension order (pdf)

 

Disclaimer: I have no position in any stock mentioned and 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.

This post is over a week late but I thought it important to post for the record. The SEC has continued to suspend trading in pump and dumps much more frequently and earlier in the pump than it has in past years. This is now an unmistakable trend. Crown Alliance Capital (CACL) was suspended on October 22nd, a day after it traded 491,000 shares as it was promoted again (it had been promoted back in July as well).

SEC trading suspension press release (pdf)
SEC trading suspension order (pdf)

The reason for the suspension:

The Commission temporarily suspended trading in the securities of Crown Alliance because of questions regarding the accuracy of assertions in Crown Alliance’s public filings concerning the company’s assets and shareholders and because of potentially manipulative conduct in the trading of Crown Alliance’s shares.

The day of the trading suspension, prior to the suspension, I received this email (pdf) promoting CACL.

Disclaimer: I have no position in any stock mentioned and 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.