Category: Fraud

Monday at the open PremiumStockReport.com (affiliated with Aweseomepennystocks.com) promoted Press Ventures Inc (PVEN). About 30 minutes later Pennystocks.com (also affiliated with APS) joined the promotion. Subscribers of PremiumStockReport.com were quickly met with 50%+ losses as the stock dropped hard, but Pennystocks.com subscribers didn’t receive the pump emails until after the initial dump. PVEN had been rumored for months to be the next APS pump and it had numerous ties to other APS pumps. This is now the third Awesomepennystocks pump in a row that has had trading suspended by the SEC not long after the pump began. Most recently PCWT was suspended and PWEI was suspended prior to that.

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

The reason for the trading suspension:

The Commission temporarily suspended trading in the securities of PVEN because of concerns
regarding potentially manipulative transactions in PVEN’s common stock.

Related articles:

The End of Awesomepennystocks.com: John Babikian flees Canada
Has stock promoter Awesomepennystocks.com retired?

I traded it horribly but ended up making over $7,000 in profits by shorting PVEN at Interactive Brokers and Centerpoint Securities. I covered my last shorts yesterday unfortunately.

Below are the charts of PWEI and PCWT before and after their trading suspensions. PVEN will very likely gap down in excess of 80% when it reopens in two weeks just as PWEI and PCWT did.

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.

 

A year ago, when Infitialis wrote an article on PRTN on SeekingAlpha, they listed five people as being likely to be behind Awesomepennystocks.com (APS) and its related stock promotion websites. SeekingAlpha was threatened with a libel lawsuit (pdf) so that article was revised and the names were removed. I found a copy of the earlier version of that article still online here. One of the people mentioned as likely to be behind APS was John Babikian.

Babikian was just featured in two articles in the Journal de Montreal (in French):
Les Américains s’intéressent aussi au mystérieux millionnaire – 2013-10-22 (free version)
Le fisc veut sa Bugatti Veyron – 2013-10-20 (English version at the Toronto Sun)

These articles discuss his enormous wealth and the taxes he has not paid. A source told me that there will be more articles to follow and that they will link Babikian to Awesomepennystocks and detail where exactly his money came from.

See my article from yesterday on Awesomepennystocks.com retiring.

Here is an excerpt from the English version of the first article:

MONTREAL – Financial authorities in Canada and the U.S. are searching for John Babikian, a mysterious Montreal playboy who amassed a $100-million fortune in a few short years before moving to Monaco.

The 26-year-old entrepreneur left behind luxury items including a $2-million mansion north of Montreal, a 2008 Bugatti Veyron and 2010 Bentley Continental, QMI Agency has learned.

Revenue Quebec is now chasing the millionaire for back taxes.

Tax authorities allege $11.5 million in income was hidden from the government between 2008 and 2010. Babikian reported $47,677 in income in 2008, documents say.

Quebec’s AMF financial watchdog and its American counterpart, the Securities and Exchange Commission (SEC ), also want to know how Babikian earned his keep.

Here is a full translation (by me) of the second article:

The origin of the mysterious fortune of Montreal resident John Babikian, estimated at C$100 million, attracted not only the attention of the Quebec tax authorities but also of the American authorities.

The spokesperson for the AMF (l’Autorité des marchés financiers), Sylvain Theberge, indicated to our research bureau that his American counterpart, the SEC, had contacted the AMF about Babikian in 2011.

“The SEC was investigating this gentleman  and they asked us to help them identify him,” he said.

For its part, the SEC refused to confirm the existence of an investigation. “When we take action against someone it becomes public then,” said a spokesperson for the the SEC in New York.

Acorrding to documents prepared by a lawyer of the Bank of Montreal, John Babikian launched his business at the age of 19. He created a company specializing in internet marketing, J.B. Marketing.

Babikian became a specialist in spam. At the time the he opened a business account at the Bank of Montreal in 2006 he disclosed that he earned $24,000 per year, according to documents.

However, his company J.B. Marketing rapidly sent hundreds of thousands of dollars into his bank account. These sums came from nebulous and hard to trace sources.

In March 2010 the Bank of Montreal closed his bank accounts because Babikian, according to the bank, did not furnish satisfactory explanations of where the money was coming from.

[Edit 2013-10-30]: The wife of John Babikian (who just last month filed for divorce in Quebec), sued him in California for fraud for his actions to sell their properties in California while depriving her of her rightful share of the proceeds. See her legal complaint. Credit for finding that lawsuit goes to Infitialis.

The two properties that are discussed in that lawsuit are 1401 Londonderry Place, Los Angeles, CA and 642 North Laurel Avenue Los Angeles, CA (links are to Zillow). The Londonderry house was purchased in March 2012 for $6 million and is currently estimated to be worth $10.5 million by Zillow. The Laurel Avenue house was purchased in December 2010 for $2.2 million and is now estimated by Zillow to be worth $2.7 million. Babikian’s wife alleges that he fraudulently transferred the title of the Laurel Avenue house to Middlebay Trade Ltd., a Republic of Seychelles entity that he secretly controls. The transfer to Middlebay Trade Ltd. is shown by property records.

I also credit Infitialis with finding Babikian’s wife’s divorce suit in Quebec, even though the complaint has been sealed. After posting the lawsuit here I received a request from the lawyer representing Babikian’s wife requesting that I redact her client’s name. Because she asked nicely and admitted that the I was not prohibited by the law from disseminating the lawsuit (because US privacy laws are much looser than Canadian ones), and because her client’s divorce suit will likely help to send Babikian and his colleagues to prison, I have complied with her request and thus have the redacted copy of the lawsuit here (pdf). That redacted copy of the suit is at Promotion Stock Secrets’ website (see their excellent post on Babikian and Awesomepennystocks.com).

[Edit 2013-10-25] A third article has been posted on the Journal de Montreal: Une Fortune Cachee dans les Paradis Fiscaux. Below is my translation:

Passports from four countries, bank accounts in ten tax havens and an encrypted Blackberry destroyed each week, John Babikian, the mysterious 26 year old Montreal multimillionaire , took extreme measures to protect his money.

New information obtained by our research bureau shows that the the multitalented former student of La Dauversiere in the north of Montreal has built a veritable offshore empire. This portfolio has had repercussions in the United States with an investigation by the SEC.

The famous Bugatti Veyron worth $1.5m appeared in the Grand Prix of Montreal in June and is only the tip of the iceberg of an immense fortune for this businessman, according to the allegations in court documents that we consulted.

A wine collection worth $1m and two sculptures by New York sculptor Arturo di Modica worth $600,000 are among the belongings that Babikian has removed from Quebec over the last few months.

Babikian also owns nine condos win the Bahamas of which seven are owned in the name of a shell company according to our sources. He also bought a Pagani Huara in Italy, a luxury car that costs $1.1m.

No less than twenty bussinesses and so-called charities, most of which are completely empty shells in tax havens, help to hide other riches according to the documents we have consulted.

John Babikian has taken extreme measures to evade the watchful eyes of investigators.

“He runs his affairs solely with specially encrypted Blackberrys that he uses for a few days or weeks before he destroys and replaces them,” court documents allege.

After destroying each smartphone and breaking it into multiple pieces that he tosses into different garbage cans “so that it is absolutely impossible … to access the information that they hold”, according to those court documents.

John Babikian also has a special portable device from HSBC Bank in Hong Kong that lets him make international wire transfers from anywhere in the world.

From the infographic at the top of the article detailing some of Babikians holdings:

John Babikian travels in a private Gulfstream jet owned by NetJets. His account with NetJets is in the name of the shell charity “Vertical International Relief Fund”

Hong Kong – Babikian has bank accounts

Seychelles – Multiple shell companies (Middlebay Trade Ltd., Liner Investments Ltd., Intelligent Alliance Corp., Auorora Intour Ltd., Monolith Ventures)

Lebanon – Babikian is a citizen

Malta – Babikian has bank accounts

Monaco – Babikian has two bank acocunts

St. Kitts and Nevis – Babikian is a citizen, has shell companies, and owns real estate

Panama – Shell companies (Montblue Commerce, Nothingham Group, Normandia Capital)

British Virgin Islands – Shell companies (Arrow Import & Export Corporation, Antica Ventures)

Bahamas – Nine condos (seven of which are in the name of a shell company, John Jack Ventures), bank account, company (Kenora Overseas)

Quebec – Numbered companies (9264-5076 Quebec Inc, Bargainoo Est), charity (Tidal East Global Relief)

United States – Two houses in California worth $8.2m, a shell company (Oriwa Villas Ltd), shares of companies, charity organization

Belize – Bank accounts, companies (Antica Ventures Ltd., Mediasky Holdings Ltd., Beddington Marketing)

Guatemala – Diplomatic passport, had taken steps to start a private bank, shell company (One Berger Circle)

 

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.

If you go to Awesomepennystocks.com (APS) you are greeted with the message that they are retiring:

It is my belief (based on no evidence other than the above message and the fact that trading in their last two pumps, PWEI and PCWT, was suspended quickly by the SEC) that the SEC will soon announce an enforcement action against a few of the people and websites that have been involved in APS pumps. I also think it likely that a large number of people involved in APS will not be named in the enforcement action and that APS will continue to promote stocks using its other websites that have not displayed a retirement message:

InsidersLab.com
PremiumStockReport.com
PennyStocks.com
PennyStocks.de
EarningForecast.com
Pennystocksinsiders.com

I also think it likely that any future promotions by the above websites will be shorter-lived to minimize the risk of a trading suspension while the pump is still ongoing.

 

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.

Less than a month ago the SEC suspended trading in PacWest Equities (PWEI). I speculated at length about the reason for the trading suspension. PWEI was suspended  by the SEC after only three days of promotion by Awesomepennystocks.com although the stock had previously been promoted a year earlier by Victory Mark Corp. PWEI gapped down 90% when it reopened for trading on the grey sheets and since then it has dropped a further 90%.

Only a day after the SEC suspension of PWEI, Awesomepennystocks promoted Pacific Clean Water Technologies (PCWT). Awesomepennystocks.com stopped promoting PCWT after October 8th and after that PCWT dropped and then bounced strongly Friday. After the close Friday the SEC announced a trading suspension.

Trading suspension release (pdf)
Trading suspension order (pdf)

To my knowledge he SEC has not previously suspended trading in stocks after the close — normally that happens before the market open. But with Monday being a bank and government holiday (but not a stock market holiday) it makes sense for the SEC to issue the suspension after the market close rather than wait until Tuesday morning. The end of the stock promotion, the huge drop in the stock, and PCWT hiring a securities law firm to investigate trading in its stock (announced Friday at the market open) indicate that insiders and promoters likely believed that an SEC enforcement action was coming.

With two consecutive SEC trading suspensions on penny stocks promoted by Awesomepennystocks.com it appears increasingly likely that the SEC is not just investigating Awesomepennystocks.com but is getting close to acting suing it.

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.

When I first wrote about PacWest Equities (PWEI) I thought it highly likely that the SEC would suspend trading in the stock. I was wrong. I then stopped following the company because it was no longer being promoted by high-profile stock promoters (Victory Mark Corp). Yet three days after a new promotion of the company by Awesomepennystocks.com and Victory Mark Corp, the SEC suspended trading in Pacwest Equities’ stock. The SEC suspension, likely in reaction to recent press releases, led me to look back at what I had written about the company and what the company has done since then. I was surprised by how contradictory a number of the company’s press releases were.

My main problems with PacWest Equities were with its press releases about  deals with K. Hill Livestock and its press releases about its acquisition of PurGro Electronics LLC. First, I recap my research on K. Hill Livestock and then I show the blatant lies about PurGro Electronics.

K. Hill Livestock, about which PacWest Equities put out multiple press releases last year with regards to a purchase order and distribution agreement, does not appear to exist. I looked through phone listings, business registration listings, and did numerous web searches. No similarly named company exists with “Livestock” in its name. The only similar name that I could find was Kevin Hill Horseshoeing run (obviously) by Kevin Hill (I attached the Hawaii business record of that enterprise). There is only one Kevin Hill on the big island of Hawaii and a quick search of his name turned up a court filing made this summer indicating that he has almost no assets and no job and thus couldn’t have a meaningful business relationship with PacWest Equities’ subsidiary World Eco Source.

While K. Hill Livestock may exist, I doubt it, and no press releases or filings by Pac West Equities since last November have provided further evidence of a business relationship with K. Hill Livestock. There have been no revenues for the company over the last year from any source.

PacWest Equities, Inc. to Team With K. Hill Livestock for Distribution Rights for Hawaii in a Deal Worth up to $12 Million US in Annual Sales Marketwired (Mon, Nov 12)

World Eco Source Foods Corp. Unit of PacWest Equities, Inc. Announces Initial Purchase Order for up to 5 MobileFeed(R) Trailers in a Deal Worth Almost $1 Million USD Marketwired (Fri, Oct 19)

PacWest Equities, Inc. Announces Its Entry Into the $50 Billion a Year Organic Food Production Market Through Its Wholly Owned Subsidiary, World Eco Source Corp. Marketwired (Thu, Oct 11)

Even more damning than the likely lack of existence of a major customer/partner is the company’s contradictory filings and press releases about its acquisition of PurGro Electronics LLC of Georgia in October 2012. PacWest Equities put out three press releases about PurGro Electronics:

PacWest Equities, Inc. Announces 430% Increase in 3rd Quarter Sales Over 2011 Results for Wholly Owned Subsidiary, PurGro Electronics Marketwired (Mon, Nov 5)

PacWest Equities, Inc. Completes Acquisition of PurGro Electronics, LLC Including Approximately US$15 Million in Annual Sales and 11 Potential Revolutionary US Patents Marketwired (Mon, Oct 15)

PacWest Equities, Inc. Announces Letter of Intent to Acquire PurGro Electronics, LLC for Cash and Stock Valued at US$15M Marketwired (Wed, Oct 10)

Many statements in the press releases are false. The first press release describes a “Letter of Intent to purchase PurGro Electronics, LLC in exchange for cash and stock, in a deal valued at US$15M.” As of June 30, 2012 (per the company’s quarterly report filed with OTCMarkets.com) the company showed $0 in current assets so the acquisition could not have included a cash component.

More importantly, in its October 15, 2012 press release PacWest Equities stated, “through its wholly owned subsidiary, World EcoSource Corp., it has completed the acquisition of PurGro Electronics, LLC in exchange for cash and stock.” And in the November 5th press release PacWest Equities described PurGro Electronics as its “wholly owned subsidiary”. Yet no sales from PurGro ever showed up on PacWest Equities’ income statement and no shares were ever issued to pay for the acquisition; in fact, PurGro was never mentioned in any filings with OTCMarkets.com and was never mentioned in a press release after November 5th. At the time of those press releases I contacted the member/manager of PurGro Electronics, Greg Richter, using the email address listed in the LLC’s registration documents and sought comment on the acquisition. He neither confirmed nor denied the acquisition.

Recent Press Releases

It is possible that the SEC took a look at PacWest Equities’ older press releases after the stock promotion began in earnest again on September 12, but I think it more likely that the suspension was due to the company’s two recent press releases prior to the suspension (a third press release came just after trading in the stock was suspended):

PacWest Equities, Inc. Announces Partnership With Two of Brazil’s Energy Companies, Itambe Energy and 3CO Energy Marketwired (Fri, Sep 13)

LAS VEGAS, NV–(Marketwired – Sep 13, 2013) – PacWest Equities, Inc. (PINKSHEETS: PWEI) today announced details of the recent partnership agreements with two of Brazil’s energy companies, Itambe Energy and 3CO Energy, both located in the Capital of Parana, Curitiba, Brazil. The partnerships would give PacWest Equities an immediate foothold in the region to quickly deploy its Solar Manufacturing Line and help accelerate its plans to capture a large share of the estimated $US89 Billion Solar Market in South America by 2017.

The Solar Manufacturing Line, which costs over $100 Million to develop, with $67 Million going to Research and Development, $12 Million to build the prototype line, and $27 Million going to the actual production line now in physical possession of PacWest Equities, Inc., addresses the construction market’s need to replace typical tinted window panes in high-rise buildings with Solar Glass Panels that generate electricity at the same time as functioning as a window, a skylight, or any other type of building cover. This technology is designed to integrate with other technologies in the building market, but at the same time opening up huge surface areas for Solar Generation that previously were tinted, coated, and usually curtained to attempt to stop the transfer of heat and energy drain.

The above press release can be seen as misleading in that it describes the amount of money spent by Daystar (DSTI) to develop the (money-losing) product line that PacWest Equities bought, which is rather irrelevant, but I do not think it is blatant enough to warrant a trading suspension.

PacWest Equities, Inc. Secures 50 Million USD Financing Commitment From Euro Brazil Investments, SA in Exchange for a Minority Interest in PacWest Equities, Inc. Marketwired (Thu, Sep 12)

 

LAS VEGAS, NV–(Marketwired – Sep 12, 2013) – PacWest Equities, Inc. (PINKSHEETS: PWEI) announced today that it had secured a commitment for 50 Million USD in financing from Euro Brazil Investments, SA of Luxembourg City, Luxembourg. Euro Brazil Investments, registered through the Brazilian Central Bank, will receive a minority interest in exchange for its investment in PacWest Equities, Inc., which plans to bring its recently acquired Solar Line of CIGS Manufacturing Technology and its proprietary Intellectual Property to Brazil.

The technology, which cost over $100 Million to develop, with $67 Million going to Research and Development, $12 Million to build the prototype line, and $27 Million going to the actual production line now in physical possession of PacWest Equities, Inc., addresses the construction market’s need to replace typical tinted window panes in high-rise buildings with Solar Glass Panels that generate electricity at the same time as functioning as a window, a skylight, or any other type of building cover. This technology is designed to integrate with other technologies in the building market, but at the same time opening up huge surface areas for Solar Generation that previously were tinted, coated, and usually curtained in an attempt to stop the transfer of heat and energy drain.

The above press release is likely the reason for the trading suspension. A $50 million financing commitment for a pinksheet stock with less than $13,000 in tangible assets as of June 30th is ludicrous. I did check the Luxembourg corporate registry and EuroBrazil Investments does exist. Eurobrazil Investments was founded in January 2012, but the corporate records don’t give any other useful details. See its public filings. It is possible that this financing commitment is in the form of discounted shares that can be immediately sold; if that is the case, not stating it would be misleading enough to warrant a trading suspension. Of course it is also possible that the financing commitment is a complete lie.

[Edit 2013-11-11]: Lucio Lopez, purporting to be the President of Euro Brazil Investments SA, contacted me to state that his company had never even been contacted by PacWest Equities and had no relationship whatsoever with them. I encouraged him to file a complaint with the SEC and assured him that I would update this blog post.

My articles on PacWest Equities on OTCMicrocapResearch.com:

Coverage initiated on PacWest Equities: Strong sell
Is PacWest Equities a bona fide company or is it being run for the purpose of selling shares?
More contempt for the investing public from PacWest Equities
Another K Hill press release from PacWest Equities

Other articles on PacWest Equities:

PacWest Equities’ connections to VLNX (PromotionStockSecrets.com)
PacWest Equities: the $330 million pink sheet with no cash and 155 illegally issued shares (SeekingAlpha)

 

Disclaimer: I have no position in any stock mentioned. I have no relationship with any parties mentioned above. Some of the information in this post was submitted to the SEC Enforcement Division. 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 breaking news as the SEC suspended trading in PacWest Equities (PWEI) yesterday morning, but I thought I would immortalize the trading suspension here and give a few thoughts on it.

Trading suspension release (pdf)
Trading suspension order (pdf)

Excerpt from the press release:

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

PacWest is interesting because it is the first time any Awesomepennystocks pump was had trading suspended during the pump (actually quite early). PWEI was first promoted by APS on September 12th and was suspended in premarket yesterday after a few hundred thousand shares traded hands. However, PWEI had previously been promoted almost a year earlier by Victory Mark Corp, widely believed to be run by the same people as Awesomepennystocks (they both promoted PWEI and are currently promoting Pacific Clean Water Technologies, PCWT). Also, PWEI has the dubious distinction of being one of the more blatantly scammy pump companies. Eleven months ago Infitialis asserted convincingly on SeekingAlpha that most of PWEI’s shares were illegally free trading. In an article a month later I pointed out numerous red flags with the company that suggested the possibility of fraud. I believe it highly likely that the SEC will end up suing people involved with PWEI, although that could take another year.

I provided further red flags in follow-up posts on OTCMicropcapResearch.com. See:

Another K. Hill PR from PacWest — 12 November 2012
More contempt for the investing public from PacWest Equities — 7 November 2012
Is PacWest Equities a bona fide company? Or is it being run for the purpose of selling shares? — 5 November 2012 (this is the article my SeekingAlpha was based on but some of the best stuff was cut to placate SA editors)
Coverage initiated on PacWest Equities — 16 October 2012

Previous articles on SEC trading suspensions of pump and dumps:

Hutech21 (CLGZF)
Norstra Energy (NORX)
Biozoom (BIZM)
iTrackr Systems (IRYS)
Polar Petroleum (POLR)
Face Up Entertainment (FUEG)

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.