Jun 27

Windstream Technologies $WSTI: Who needs a test installation when you have Photoshop?

I highly recommend following @AuspexResearch on Twitter if you trade Windstream Technologies (WSTI). Here is one of his tweets:

 

I looked and what do you know, the photo on page 20 of WSTI’s most recent 10-K the photo of their product installed on a highway is in fact a Photoshopped photo from a random website from an old man who likes to walk around Sydney and take pictures of his walks.

[Edit 28 June 2014: I just wanted to clarify that @AuspexResearch is the one who found the use of Photoshop and pointed me to the website that the image came from -- I am just bringing more attention and a longer explanation to what he pointed out on Twitter.]

First we have his photo:

artarmon-freeway-path-n

Then WSTI’s photo:

0001493152-14-001106_IMAGE_012

It is hard to tell that the photos are identical at first because of the vastly different sizes and the poor quality of the WSTI photo, but look at the cars: they are all the same.

While WSTI doesn’t explicityly state that the photo above is an actual installation, it doesn’t state that it is an artist’s rendition either, and an investor could be easily confused and think that the photo is an actual test installation:

WindStream will deploy its highway version of the TurboMill ® technology in parallel with its current marketing focus of Municipalities and light industry. In doing so, the Company has secured pilot test sites that will benefit from the installation of the TurboMill ® system. (see appendix) These pilot installations will enable WindStream to collect valuable data that will be used to drive additional sales and installations of this new energy platform.

Once this pilot has been undertaken and if successful, the Company will target other States, Countries, Utilities and Government institutions to market this new energy harvesting system and expand its reach and use cases. Just as vehicle draft on highways can drive TurboMills ® so can vehicles in tunnels (the Chunnel-26 miles in length), subway systems, trains, and rail systems.

See my previous blog post on the WSTI promotion. Also see The Deal article about it.

[Edit 2014-7-2]: I highly recommend reading the GeoInvesting blog post on WSTI today and how they blatantly photoshopped their product onto an Ikea store:

ikea

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.

Jun 24

Virtus Oil $VOIL Stock promotion

This morning prior to the market open I received an email from Marketing@insiderwealthalert.com linking to http://virtusoilandgas-news.com/index1.html

See the Promotion Stock Secrets report on VOIL.

 

Disclosed budget: Not disclosed
Promoter:  Charles Moskowitz
Paying party: YXIME Partners Ltd.
Shares outstanding: 48,300,000
Previous closing price: $0.92
Market capitalization: $44 million

buy-now-l

voil

 

Excerpt from disclaimer:

IMPORTANT NOTICE AND DISCLAIMER: This stock profile should be viewed as a paid advertisement. The publisher, Charles Moskowitz dba The Moskowitz Report, understands that in an effort to enhance public awareness of Virtus Oil & Gas Corp. and its securities through the distribution of this advertisement, YXIME Partners Ltd. paid all of the costs associated with creating, printing and distribution of this advertisement. The publisher was paid the sum of $5000 for his contributions.

Full disclaimer:

IMPORTANT NOTICE AND DISCLAIMER: This stock profile should be viewed as a paid advertisement. The publisher, Charles Moskowitz dba The Moskowitz Report, understands that in an effort to enhance public awareness of Virtus Oil & Gas Corp. and its securities through the distribution of this advertisement, YXIME Partners Ltd. paid all of the costs associated with creating, printing and distribution of this advertisement. The publisher was paid the sum of $5000 for his contributions. If successful, this advertisement will increase investor and market awareness, which may result in increased numbers of shareholders owning and trading the common stock of Virtus Oil & Gas Corp., increased trading volumes, and possibly increased share price of the common stock of Virtus Oil & Gas Corp.. The publisher has not undertaken to determine if YXIME Partners Ltd. is, or intends to be in the future, directly or indirectly, a shareholder of Virtus Oil & Gas Corp.. The publisher may receive revenue, the amount of which cannot be determined to any degree of certainty, as a result of this advertising effort and the accompanying subscription offer. This publication is not, and should not be construed to be, an offer to sell or a solicitation of an offer to buy any security. This publication, its publisher, and its editor do not purport to provide a complete analysis of any company’s financial position. The publisher and editor are not, and do not purport to be, broker-dealers or registered investment advisors. Any investment should be made only after consulting a professional investment advisor and only after reviewing the financial statements and other pertinent corporate information about the company. Further, readers are advised to read and carefully consider the Risk Factors identified and discussed in the advertised company’s SEC filings. Investing in securities, particularly micro cap securities such as Virtus Oil & Gas Corp., is speculative and carries a high degree of risk. Past performance does not guarantee future results. This publication is based exclusively on information generally available to the public and does not contain any material, non-public information. The information on which it is based is believed to be reliable. Nevertheless, the publisher cannot guarantee the accuracy or completeness of the information. This publication contains forward-looking statements, including statements regarding expected continual growth of the featured company and/or industry. The publisher notes that statements contained herein that look forward in time, which include everything other than historical information, involve risks and uncertainties that may affect the company’s actual results of operations. Factors that could cause actual results to differ include the size and growth of the market for the company’s products and services, the ultimate degree of success in the company’s drilling excursions, the company’s ability to fund its capital requirements in the near term and long term, pricing pressures, etc. The Moskowitz Report is a trademark of Charles Moskowitz. All other trademarks used in this publication are the property of their respective trademark holders. The Moskowitz Report and Charles Moskowitz are not affiliated, connected, or associated with, and are not sponsored, approved, or originated by, the trademark holders unless otherwise stated. No claim is made by The Moskowitz Report or Charles Moskowitz to any rights in any third-party trademarks. – !

PDF copy of pump page

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

Jun 23

Windstream Technologies $WSTI gets a Wall Street Revelator pump

Starting last Friday people on Twitter started reporting receiving hard mailers promoting Windstream Technologies (WSTI). So far there has been no email or online promotion of the stock that I am aware of. I posted on Twitter a few times about the promotion; Tim Sykes blogged about it earlier today. Considering the high stock price and large market cap and relatively high volume I think it very likely that this pump will dump big within the next week.

Disclosed budget: $900,000
Promoter:  Mandarin Media / Wall Street Revelator / Andrew Carpenter
Paying party: ???
Shares outstanding: 84,972,578
Previous closing price: $1.45
Market capitalization: $123 million

wsti

 

 

wsti

 

 

Excerpt from disclaimer:

Mandarin Media Limited paid nine hundred thousand dollars to marketing vendors to pay for all the costs of creating and distributing this Advertisement, including printing and postage, in an effort to build investor and market awareness.

Mandarin Media Limited was paid by non-affiliate shareholders who fully intend to sell their shares without notice

Full disclaimer:

wsti_disclaimer wsti-2-copy-576x1024

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.

Jun 17

Update on USA v. Cusimano & Boye

Financial affidavits were filed by the Eric and Jessica Cusimano yesterday in the stock fraud / money laundering trial of Eric Cusimano, Jamie Boye, and Jessica Cusimano (charged only with money laundering).

June 16th affidavits (PDF)

Docket report (PDF)

Cusimano (on page 33) declared $250,000 in monthly income from Premier Consulting Inc (Panama) which is the company he has used to promote stocks. He declared $10,000 per month in rent expense (in Panama) and $2,000 per month in food expenses and $1 million in bank accounts. Both Eric and Jessica declared that they owned no real estate or stocks.

Jamie Boye is scheduled to appear on June 24th. Oddly he is not listed in the bureau of prisons database despite the indictment mentioning that he was already in custody on an unrelated manner.

NOTICE OF HEARING as to Jamie Boye: Initial Appearance set for 6/24/2014 at
11:30 AM before the Hon. H. Kenneth Schroeder Jr. (LMG) (Entered: 06/16/2014)

See my previous posts about this case:
Promoters Eric Cusimano and Jamie Boye Indicted
Full text of Cusimano / Boyde indictment

Here are a couple local news stories on the arrests:
Lakewood trio charged in securities fraud scheme
Feds say ‘Wolf of Wall Street’ scheme operated in Lakewood

 

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.

Jun 12

Full text of the Bestdamnpennystocks.com Cusimano/Boye indictment

The sealed indictment from May 19th of Jamie Boye, Eric Cusimano, and Jessica Cusimano was unsealed today. Thanks to Promotion Stock Secrets for uploading it (PDF). See my post yesterday about the indictment. I ran the PDF file through an online OCR and the full text (with some errors most likely) is below:

Case 1:14-mj-00069-HKS Document 1 Filed 05/19/14 Page 1 of 21
AO 91 (Rev. 02/09) Criminal Complaint

 

 
United States District Court
for the

Western District of New York

 

 

United States of America

v.
Case No. 14-M- tog
ERIC CUSIMANO,

JAMIE BOYE, and C•i, • – •• -• ,:,, ,:-..
. e,0 – ,…—– – . 7-1-7″^.•.,. ‘… ‘ ‘•
JESSICA CUSIMANO Aj”’,:fs” * ‘f .- • ”’`..,,,, ‘.. .4\
Defendant (-) f nlett, 19, ,,,L 0/4/

,.

 

CRIMINAL COMPLAINT

 

I, the complainant in this case, state that the following is true to the best of my knowledge and belief.

 
(1) From on or about September 19, 2008, to on or about November 21, 2011, in the Western District of

New York, and elsewhere, ERIC CUSIMANO and JAMIE BOYE, the defendants, willfully and

knowingly, directly and indirectly, by use of the means and instrumentalities of interstate commerce, the

mails and the facilities of national securities exchanges, in connection with the purchase and sale of

securities, did use and employ, and cause to be used and employed, and did aid and abet the use and

employment of, manipulative and deceptive devices and contrivances, in violation of Title 17, Code of

Federal Regulations, Sections 240.10b-5, by: (a) employing devices, schemes, and artifices to defraud;

(b) making untrue statements of material fact and omitting to state material facts necessary in order to

make the statements made, in the light of the circumstances under which they were made, not

misleading; and (c) engaging in acts, practices and courses of business which operated and would

operate as a fraud and deceit upon persons, to wit, ERIC CUSIMANO and JAMIE BOYE, the

defendants, participated in pump and dump schemes by touting various penny stock securities;

 
all in violation of Title 15, United States Code, Sections 78j(b) and 78ff; Title 17, Code of Federal

Regulations, Sections 240.10b-5 and 240.10b5-2; and Title 18, United States Code, Section 2.

 
(2) On or about July 2, 2011, in the Western District of New York, ERIC CUSIMANO and JESSICA

CUSIMANO, and on or about November 16, 2009, in the Western District of New York, JAMIE

BOYE, knowingly engaged and attempted to engage in monetary transactions by, through, and to

financial institutions, affecting interstate and foreign commerce, in criminally derived property of a value

greater than $10,000, that is, deposits, withdrawals, transfers, and exchanges described below of United

States currency, funds, and monetary instruments in the amounts specified below, such property having

been derived from a specified unlawful activity, that is, securities fraud in violation of Title 15, United

States Code, Sections 78j(b) and 78ff, Title 17, Code of Federal Regulations, Sections 240.10b-5 and

240.10b5-2, and Title 18, United States Code, Section 2; wire fraud in violation of Title 18, United

Case 1:14-mj-00069-HKS Document 1 Filed 05/19/14 Page 2 of 21

States Code, Sections 1343 and 2; and conspiracy to commit securities fraud and wire fraud in violation
of Title 18, United States Code, Section 371;
all in violation of Title 18, United States Code, Section 1957 and 2.

 

This Criminal Complaint is based on these facts:

El Continued on the attached sheet.

 

 

Complainant’s signature

Michael K. Klimczak, Special Agent, IRS-CI
Printed name and title

Sworn to before me and signed in my presence.

Date: May / 2014 ( Judge’s signa ire

H. KENNETH SCHROEDER, JR.
City and State: Buffalo, New York United States Magistrate Judge
Printed name and title

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2

Case 1:14-mj-00069-HKS Document 1 Filed 05/19/14 Page 3 of 21

AFFIDAVIT IN SUPPORT OF CRIMINAL COMPLAINT
I, Michael K. Klimczak, being duly sworn, depose and say:

1. I am a Special Agent with Internal Revenue Service, Criminal Investigation
(IRS-CI) and have been so employed for approximately 12 1/2 years. I am currently assigned
to the New York Field Office, Buffalo Post of Duty to investigate crimes within the Western
District of New York. As part of my official duties, I investigation allegations of violations
of Federal criminal law, including statues that prohibit fraud and money laundering.

2. I make this affidavit in support of the annexed criminal complaint charging
ERIC CUSIMANO (“CUSIMANO”) and JAMIE BOYE (“BOYE”) with securities fraud,
in violation of Title 15, United States Code, Sections 78j(b) and 78ff; Title 17, Code of
Federal Regulations, Sections 240.10b-5 and 240.10b5-2; and Title 18, United States Code,
Section 2. This affidavit is also made in support of the annexed criminal complaint charging
CUSIMANO, JESSICA CUSIMANO, and BOYE with money laundering by knowingly
engaging in monetary transactions in criminally derived property of a value greater than
$10,000, such property having been derived from a specified unlawful activity in violation of
Title 18, United States Code, Section 1957 and 2.

3. The statements made in this affidavit are based upon my investigation,
information obtained from the Financial Industry Regulatory Authority (“FINRA”), which
is the largest independent securities regulator in the U.S., as well as my training and
experience as a Special Agent with IRS-CI. Because this affidavit is submitted for the

Case 1:14-mj-00069-HKS Document 1 Filed 05/19/14 Page 4 of 21

purpose of a criminal complaint, I have not included each and every fact known to me
concerning this investigation. I have set forth only the facts that I believe are necessary to
establish probable cause to believe that CUSIMANO, BOYE, and JESSICA CUSIMANO
have violated securities fraud and money laundering statutes.

4. This investigation involves a scheme generally referred to as a “pump and
dump” stock fraud scheme. A pump-and-dump stock fraud scheme is a scheme designed to
fraudulently inflate the prices of publically traded stocks of companies, generally stocks of
companies with low stock prices (known as “penny stocks”), through a variety of fraudulent
and misleading statements and practices that are intended to deceive investors into believing
that prices at which they purchased and sold the penny stocks were determined by the
natural interplay of supply and demand, not rigged by manipulators. The time frame by
which a stock is pumped and then dumped is known as a campaign.

5. The investigation has focused on the operation of a stock fraud scam
involving CUSIMANO and BOYE, who touted publicly traded penny stocks by issuing and
publishing newsletters associated with various websites they controlled, including
www.bestdamnpennystocks.com and www.trypennystocks.com. CUSIMANO owned and
operated PREMIRE CONSULTING, INC., which was a privately held corporation
organized under the laws of the State of Nevada, and BOYE owned and operated
IMMACULATE-SEO, LLC, which was a limited liability company organized under the
laws of the State of Nevada.

2

Case 1:14-mj-00069-HKS Document 1 Filed 05/19/14 Page 5 of 21

 

6. Roles associated with pump-and-dump schemes are as follows:

a. One role is that of a promoter (“Promoter”), who is primarily
responsible for coordinating a given scheme to manipulate the price of
a targeted penny stock in exchange for compensation from company
management or another owner of the targeted stock who stood to
benefit from the manipulation. Once a targeted stock is identified and
funding acquired, a Promoter will coordinate efforts to pump up the
price of the stock in order to enable insiders in the scheme to sell at
maximum profit before the efforts to artificially inflate the price of the
stock collapsed.

b. Another role is that of a touter (“Touter”) who disseminates false or
misleading positive information to the marketplace through postings
on websites, message boards, “Twitter” accounts, and other online and
social media, among other means, in a coordinated manner to induce
recipients of the communications to buy the shares of targeted stocks.
Touts are coordinated at the direction of a Promoter (or at the Touter’s
own direction in those cases where a Promoter also served as a
Touter).

c. Another role is that of an account holder (“Account Holder”), who
opens up brokerage accounts and use, or allows the accounts to be
used by the co-conspirators, to buy and sell targeted stocks in large
volume, as well as to receive shares or cash as compensation to be
ultimately routed through their accounts to other participants in the
scheme. The use of multiple accounts to generate volume in targeted
stocks, and to receive and transfer proceeds of the scheme, enables the
participants in the scheme to minimize the risk of regulatory or law
enforcement suspicion falling upon them as a result of their ownership
of large amounts of shares of targeted stock, their high trading volume
in the targeted stock, and other indicia of participation in the scheme.
7. In general, a pump-and-dump worked as follows:

a. One or more Promoters will receive compensation from a client to run
a pump-and-dump scheme concerning a penny stock. Once the stock
is identified, a Promoter will recruit several Touters from a network
maintained by the Promoter to create mass communications that
would tout the targeted stock in a manner that appears coincidental,
but is actually timed to achieve the goals of the pump-and-dump
scheme by creating the illusion that independent analysts of penny
stock are coming to the same positive conclusion about the advisability
of purchasing targeted stock.
3

Case 1:14-mj-00069-HKS Document 1 Filed 05/19/14 Page 6 of 21

 

b. A Promoter will also generate trading volume in a targeted stock by
recruiting several Account Holders from a network maintained by the
Promoter, by Touters, or by others, to, among other things, generate
volume in the targeted stock that will pump up the share price of the
stock by creating the illusion of broad public interest in the stock, and
by creating the false impression of competition in the marketplace for
shares of the targeted stock. Participants in the scheme can employ
trading methods that would inject misleading information into the
marketplace about the demand for, and price of, the targeted stock.

c. Often, particularly when company insiders are benefitting from the
scheme, the targeted company itself will issue a press release or other
public announcement of a purported positive development during the
period that the targeted stock is being pumped. These efforts will be
coordinated with the efforts of Touters such that the investing public
will be left with the false impression that there is genuine interest from
both the investing public and from independent analysts of penny
stocks, and that there is a legitimate reason for the targeted company’s
stock to rise.

d. This combination of activities, in whole or in part, is intended to trick
unsuspecting investors into trading on the basis of the fraudulent and
misleading information that participants in the scheme had injected
into the marketplace, thereby increasing the upward momentum of the
stock. Particularly where all of the means and methods described
above were employed effectively and in coordination, this inflow of
money from the unsuspecting investing public would sufficiently pump
up the price of the shares of the targeted stock to permit those funding
the scheme to achieve their profit objectives. At that point, the
Promoter(s) responsible for the scheme with respect to that stock
would notify insiders that it was time to sell, or “dump,” the targeted
stock. Insiders—Promoters, Touters, and Account Holders among
them—would then, among other things, sell their shares and stop
trading in the stock, placing downward pressure on share prices and
causing trading volume to plummet, and Touters would often cease
continuing to promote the targeted stock. This combination of events
would tend to cause the price of a targeted stock whose price had been
successfully manipulated upwards by the scheme to decline, exposing
unsuspecting investors to significant losses.

 

8. A further mechanism used in a pump-and-dump scheme is to engage in

selective touting, whereby certain positive information regarding a targeted stock was
4

Case 1:14-mj-00069-HKS Document 1 Filed 05/19/14 Page 7 of 21

initially sent to one group of investors, and then after a delay in time, generally one or two
days, that same positive information regarding the targeted stock was sent to subsequent
groups of investors at different times. This practice of selective touting is used to manipulate
the length and intensity of a pump-and-dump scheme in that with each subsequent release of
positive information regarding the targeted stock, new unsuspecting investors were brought
into the scheme. The subsequent groups of investors were never told that the positive
information they were being provided had in fact been supplied to other investors days
earlier, and often were the investors that sustained the most losses when the price of the
targeted stock plummeted.

SECURITIES FRAUD
9. On or about February 2, 2008, CUSIMANO registered the website
www.bestdamnpennystocks.com through GoDaddy.com, shopper number 13786933.
According to their website, GoDaddy.com is a privately held company that is primarily an
internet domain registrar and web hosting company. An email account associated with this
website is staff@bestdamnpennystocks.com.

10. On or about October 22, 2008, BOYE registered the website
www.trypennystocks.com through GoDaddy.com, shopper number 21506413. An email
account associated with this website is staff@trypennystocks.com.

11. According to records obtained from the Nevada Department of State and
Nevada Corporate Headquarters, Inc., a company that assists individuals with
5

Case 1:14-mj-00069-HKS Document 1 Filed 05/19/14 Page 8 of 21

incorporating businesses in the state of Nevada, CUSIMANO incorporated PREMIRE
CONSULTING, INC., 30 Lakeview Drive, Apt. 9, Lakewood, NY 14750 on or about July
17, 2008. CUSIMANO lists his email address as staff@bestdamnpennystocks.com.

12. According to records obtained from the Nevada Department of State and GG
International, a company that assists individuals with incorporating businesses in the state
of Nevada, BOYE registered IMMACULATE-SEO, LLC, on or about January 28, 2009.
BOYE is listed as the sole member, with an address of 20 Lakeview Drive, Apt. 9,
Lakewood, NY 14750.

13. According to their website, iContact Corporation is an international online
service provider of email marketing and social media marketing to small, mid-sized, and
premier businesses. Records obtained from iContact Corporation indicated that account
number 323895 was created on or about September 09, 2008. The email address associated
with this account is staff@bestdamnpennystocks.com.

14. Based on an interview of BOYE, he and CUSIMANO worked together by
doing advertising for small cap companies. They obtained clients, also known as
subscribers, through advertising on internet websites such as Google. CUSIMANO and
BOYE conducted search engine optimization for the websites he registered so that his
websites would be more likely to be listed when an internet user conducted a search for
penny stocks. Interested subscribers could sign up to obtain stock alerts from
www.bestdamnpennystocks.com or www.trypennystocks.com. When a subscriber signed
6

Case 1:14-mj-00069-HKS Document 1 Filed 05/19/14 Page 9 of 21

up with CUSIMANO or BOYE’s website, they were added to a list of subscriber contacts
maintained through CUSIMANO and BOYE’s iContact Corporation account.

15. Included with the records received from iContact Corporation were emails
sent to thousands of CUSIMANO’s subscribers between September 2008 and November
2011 touting at least twenty seven (27) stocks. Records received from GoDaddy for the
staff@bestdamnpennystocks.com email indicate that CUSIMANO was a subscriber of the
www.trypennystocks.com website, and that BOYE, using the email
staff@trypennystocks.com was also touting some of the stocks as CUSIMANO during the
same time periods. One of those stocks touted was Cardiac Network Inc. (ticker symbol
CNWI), which occurred while CUSIMANO and BOYE resided in the Western District of
New York.

16. Information was obtained by a cooperating witness (herein after known as
CW1) regarding pump and dump campaign utilizing stock CNWI. According to CW1, the
scam was facilitated by William Goldstein and David Levy (Promoters), Peter Veugler
(account holder), and Donna Levy and CUSIMANO. CW1 met with these individuals in
New York City in approximately the summer of 2009 to set up the CNWI campaign. At
the meeting, CUSIMANO explained his stock touting operation.

17. CW1 explained that CUSIMANO had approximately 60,000 to 70,000
subscribers to his website, www.bestdamnpennystocks.com. CUSIMANO painted a picture
to his subscribers by putting out news that would help the stock increase in value. For
7

Case 1:14-mj-00069-HKS Document 1 Filed 05/19/14 Page 10 of 21

CNWI, CUSIMANO explained what kind of news he needed from Goldstein, David Levy,
and Donna Levy in order to get his subscribers to act on his email notifications. According
to CW1, the news CUSIMANO used for the campaign was “manufactured for the pump
and dump.”

18. CW1 told agents that the manner in which CUSIMANO put out his email
blasts was intended solely to pump the value of the stock. CUSIMANO explained how this
worked at the meeting in New York City. Once a campaign started, CUSIMANO would
send out three separate email blasts to three separate lists of subscribers over approximately
three days. The purpose of this was to drive up the price of the stock. According to CW1,
the subscribers included in the first email blast sent by CUSIMANO would start purchasing
the stock CUSIMANO was touting immediately. All of that buying would increase the
value of the stock. The subscribers that received CUSIMANO’s second email blast a day or
two later would purchase the stack at an inflated price due to the previous buying of the
stock. The subscribers that received CUSIMANO’s third email blast a day or two after the
second group were buying the stock at a highly inflated prices, prices those investors could
never recoup their money from. After the third email blast, CUSIMANO stopped sending
email blasts because the campaign ended causing the value of the stock to plummet leaving
investors who hadn’t sold their stock with huge losses.

19. According to the iContact records, the complete CNWI campaign ran from
September 2, 2009 to September 22, 2009. This included the primer email notifying
subscribers that a new recommended stock will be named soon (and variations of that same
8

Case 1:14-mj-00069-HKS Document 1 Filed 05/19/14 Page 11 of 21
primer), an email naming the new stock, distribution of news through press releases to get
subscribers to act on the stock, closing notifications each day reflecting the jump in stock
price for that day, and email primers for the next stock to be touted. The following chart
summarizes CUSIMANO’s newsletter distributions from www.bestdamnpennystocks.com
for CNWI:
Day One
Date Time Contents Recipients
09/02/200913:12:12Primer 28,800 Group A
09/02/200919:09:07CNWI Named Group A
09/02/200922:59:09Press Release 1 Group A
Day Two
Date Time Contents Recipients
09/03/200914:20:43Primer (v2) —2,528 Group B
09/03/200918:40:04CNWI Named (v2) Group B
09/03/200919:07:18CNWI Close Notification Group A
Da Three
Date Time Contents Recipients
09/04/200911:12:50Press Release 1 Group B
Day Four
Date Time Contents Recipients
09/07/200921:43:33Primer (v3) —436 Group C
09/07/200923:08:44Still CNWI Group A
09/07/200923:26:46Still CNWI (v2) Group B
Day Five
Date Time Contents Recipients
09/08/2009 9:04:51CNWI Named (v3) Group C
Day Six
Date Time Contents Recipients
09/09/2009 5:59:07Press Release 2 (KP) Group A
09/09/200923:47:31Close notification Group A
09/09/200923:59:40Close notification (v2) Group C
Day Seven
Date Time Contents Recipients
09/11/2009 3:27:35Close notification Group A
09/11/200911:24:46100% Buy Rating Group A
09/11/200911:52:17100% Buy Rating (v2) Group C
Day Eight

9

Case 1:14-mj-00069-HKS Document 1 Filed 05/19/14 Page 12 of 21

 

 

 
Date Time Contents Recipients

09/12/2009 2:02:51Congrats and Primer Group A

09/12/2009 2:13:58Congrats and Primer (v2) Group C

09/12/200916:23:36Pick Still CNWI Group A

09/12/200916:54:52Primer (v4) 2,500 Group D

Day Nine

Date Time Contents Recipients

09/13/2009 8:53:30CNWI Named (v4) Group D

09/13/200918:37: 7100% Buy Rating (v3) Group D

Day Ten

Date Time Contents Recipients

09/14/200923:33:31Healthy Pull Back Group A

Day Eleven

Date Time Contents Recipients

09/15/200920:53:52Solid Base still 100% Group A

Day Twelve

Date Time Contents Recipients

09/21/200917:16:59CNWI Congrats and Primer Group A
(EMGE)

Day Thirteen

Date Time Contents Recipients

09/22/200914:29:34CNWI Apology and Primer Group D
(EMGE)

 

 

 

 

20. Based on Daily Closing Prices and Share Volume comparisons for CNWI

 

received from FINRA, the share price on September 1, 2009, was approximately $.14 with

 

very little volume traded. On September 2, 2009, the day CUSIMANO named CNWI as

 

his new recommended stock to Group A (1st list of subscribers receiving email notifications),

 

the volume of stock traded increased slightly and the share price increases to $.17. By

 

September 3, 2009, the day CUSIMANO named CNWI to Group B (2′d list of subscribers

 

receiving email notifications), the stock volume traded increased significantly with the share

 

price increasing to $.26. By the time the third email is sent to Group C (3rd list of subscribers

 

receiving email notifications) on September 8, 2009, share price was at approximately $.30.

 

10

Case 1:14-mj-00069-HKS Document 1 Filed 05/19/14 Page 13 of 21

The stock price peaked at almost $.80 per share on or about September 12, 2009, and
thereafter plummeted to $.35 by September 17, 2009 and $.21 by September 23, 2009.

21. According to GoDaddy records, BOYE participated in the pump and dump
of CNWI by issuing email blasts using staff@trypennystocks.com to his own subscribers.
BOYE’s first email was sent on September 3, 2009, at which he issued a primer email that
named the stock. Thereafter, from September 4, 2009 to September 15, 2009, BOYE issued
approximately 12 emails to subscribers touting the CNWI stock.

22. CW1 recalled watching Veugler and Goldstein trading their shares of CNWI
stock (the dump) and realized what they were doing was a fraud.

23. According to the disclaimer on the bottom of the email notifications
CUSIMANO sent to his subscribers, CUSIMANO was compensated $150,000 cash from a
non-controlling third party to tout CNWI. The disclaimer on the bottom of the email
notifications BOYE sent to his subscribers indicated that he was compensated $75,000 cash
from an unlisted source to tout CNWI.
24. Responses from CUSIMANO’s subscribers to the
staff@bestdamnpennystocks.com stock notifications contain complaints from various
subscribers regarding being defrauded by CUSIMANO due to losing money based on
recommendations made by CUSIMANO.

11

Case 1:14-mj-00069-HKS Document 1 Filed 05/19/14 Page 14 of 21

 

25. I reviewed iContact records and email notifications sent by CUSIMANO to

subscribers using staff@bestdamnpennystocks.com, and Daily Closing Prices and Share
Volume comparisons received from FINRA. The following stocks touted by CUSIMANO

have the same characteristics as CNWI:

Date Range Company Ticker Symbol
September 19, 2008 to Zippi Networks, Inc. ZIPI
October 01, 2008
October 06, 2008 to Toro Ventures, Inc. TORO
October 07, 2008
October 10, 2008 to Russell Industries, Inc. RUSL
October 13, 2008
October 17, 2008 to Permanent Technologies, Inc. PERT
October 19, 2008
October 22, 2008 to Titan Resources International TNRI
October 24, 2008 Corporation
October 30, 2008 to Zippi Networks, Inc. ZIPI
November 06, 2008
November 07, 2008 to Healthy Coffee International, HCFI
November 14, 2008 Inc.
November 19, 2008 to Greencheck Technology, Inc. GCHK
November 20, 2008
December 21, 2008 to IDGlobal Corporation IDGC
January 10, 2009
January 30, 2009 to Banneker Inc. BANI
February 11, 2009
April 06, 2009 to United Treatment Centers, Inc.UTRM
April 13, 2009
June 17, 2009 to Enhance Skin Product, Inc. EHSK
June 18, 2009
September 21, 2009 to Emergent Health Corp. EMGE
September 25, 2009

 

12

Case 1:14-mj-00069-HKS Document 1 Filed 05/19/14 Page 15 of 21

 

October 13, 2009 to Alternative Energy ADEC
October 14, 2009 Development Corp.
October 27, 2009 to Total Nutraceutical Solutions, TNUS
November 02, 2009 Inc.
December 01, 2009 to SMC Entertainment, Inc. SMCE
December 16, 2009
January 05, 2010 to Eco Building Products, Inc. ECOB
January 11, 2010
March 03, 2010 to MedCareers Group, Inc. MCGI
March 07, 2010
March 23, 2010 to SMC Entertainment, Inc. SMCE
March 24, 2010
April 05, 2010 to Emerging World Pharma, Inc. EWPI
April 13, 2010
January 11, 2011 to Crosswind Renewable Energy CWNR
January 28, 2011 Corporation
February 09, 2011 to Raptor Technology Group, RAPT
February 17, 2011 Inc.
May 23, 2011 to High Plains Gas, Inc. HPGS
June 14, 2011
September 13, 2011 to Greenway Design Group, Inc. GDGI
September 15, 2011
October 19, 2011 to High Plains Gas, Inc. HPGS
October 20, 2011
November 17, 2011 to Greenway Design Group, Inc. GDGI
November 21, 2011
In addition, I have reviewed email notifications sent by BOYE to subscribers using

staff@trypennystocks.com, which has revealed that of the twenty-six (26) stocks listed

above, BOYE simultaneously touted the following fifteen (15) stocks promoted by

CUSIMANO, which indicates a targeted and joint pump and dump scheme to affect the

volume and price of shares traded:
13

Case 1:14-mj-00069-HKS Document 1 Filed 05/19/14 Page 16 of 21

 
Date Range Company Ticker Symbol
January 30, 2009 to Banneker Inc. BANI
February 7, 2009
April 02, 2009 to United Treatment Centers, Inc. UTRM
April 15, 2009
June 17, 2009 to Enhance Skin Product, Inc. EHSK
June 18, 2009
September 21, 2009 to Emergent Health Corp. EMGE
September 23, 2009
October 12, 2009 to Alternative Energy ADEC
October 19, 2009 Development Corp.
October 29, 2009 to Total Nutraceutical Solutions, TNUS
November 02, 2009 Inc.
December 08, 2009 to SMC Entertainment, Inc. SMCE
December 15, 2009
January 06, 2010 to Eco Building Products, Inc. ECOB
January 11, 2010
March 02, 2010 to MedCareers Group, Inc. MCGI
March 10, 2010
March 23, 2010 to SMC Entertainment, Inc. SMCE
March 25, 2010
April 05, 2010 to Emerging World Pharma, Inc. EWPI
April 08, 2010
January 07, 2011 to Crosswind Renewable Energy CWNR
January 20, 2011 Corporation
February 08, 2011 to Raptor Technology Group, RAPT
February 13, 2011 Inc.
May 23, 2011 to High Plains Gas, Inc. HPGS
June 15, 2011
September 08, 2011 to Greenway Design Group, Inc. GDGI
September 15, 2011

 

 

14

Case 1:14-mj-00069-HKS Document 1 Filed 05/19/14 Page 17 of 21

26. According to the disclaimer on the bottom of the email notifications
CUSIMANO sent to his subscribers, CUSIMANO was compensated approximately
$4,268,000 to tout the above named twenty-six (26) stocks. In his disclaimers, CUSIMANO
typically referred to the entities that were compensating him as “third parties.” According
to the disclaimer on the bottom of the email notification BOYE sent to his subscribers,
BOYE was compensated approximately $980,000 to tout the above named fifteen (15)
stocks.

27. Another cooperating witness that worked for CUSIMANO and BOYE
(herein after referred to as CW2) provided information on CUSIMANO and BOYE’s stock
touting operation. According to CW2, BOYE stated that he was working for CUSIMANO
“designing websites.” After CW2 got to know them, CUSIMANO and BOYE referred to
their business as a “pump and dump” instead of “stock speculating.”

28. CW2 specifically told the agents about a campaign involving the stock BANI
that started in approximately February 2009. According to CW2, this was done out of
CUSIMANO’s apartment at the Fairmont Hills Apartments located in Lakeview, NY.
CW2 said that there was a significant amount of manipulation in the BANI campaign so
that CUSIMANO and Donna Levy could sell the shares of BANI stock they owned prior to
CUSIMANO’s subscribers. According to CW2, CUSIMANO and Levy made millions of
the BANI campaign.
15

Case 1:14-mj-00069-HKS Document 1 Filed 05/19/14 Page 18 of 21

29. CUSIMANO maintains bank accounts for PREMIRE CONSULTING INC.
at Wells Fargo Bank. CUSIMANO opened account number 9092478149 in the name
PREMIRE CONSULTING INC. on July 25, 2008. He is the sole signor on the account.
Analysis of the account reflects a total of $1,831,985 was deposited into the account, mostly
through wire transfers received by third parties. On or about May 26, 2009, CUSIMANO
ceased using this account and transferred the $793,888 balance to Wells Fargo account
number 8174859929.

30. CUSIMANO opened account number 8174859929 in the name PREMIRE
CONSULTING INC. on May 26, 2009. He is the sole signor on the account. Analysis of
the account reflects that, between May 26, 2009, and January 27, 2012, a total of $6,089,722
was deposited into the account, mostly through wire transfers received by third parties.

31. According to BOYE, he was paid $20,000 to $30,000 to advertise companies
to his subscribers’ lists. His business bank account is located at M&T Bank. BOYE opened
account number 9849203931 in the name of IMMACULATE SEO LLC on July 15, 2008 at
a branch located in Orchard Park, NY. He is the sole signor on the account. Analysis of
the account reflects a total of $1,376,163.01 was deposited into the account, mostly through
wire transfers received by third parties. The deposits included five wire transfers totaling
$27,750 from PREMIRE CONSULTING, INC.

 

16

Case 1:14-mj-00069-HKS Document 1 Filed 05/19/14 Page 19 of 21

MONEY LAUNDERING
32. On or about the dates discussed below, in the Western District of New York,
and elsewhere, CUSIMANO utilizing the business he incorporated, PREMIRE
CONSULTING, INC., BOYE utilizing the business he incorporated, IMMACULATE-
SEO, LLC, and JESSICA CUSIMANO, knowingly engaged in monetary transactions by,
through, and to financial institutions, affecting interstate and foreign commerce, in
criminally derived property of a value greater than $10,000, that is, deposits, withdrawals,
transfers, and exchanges described below of United States currency, funds, and monetary
instruments in the amounts specified below, such property having been derived from a
specified unlawful activity, that is, securities fraud in violation of Title 15, United States
Code, Sections 78j(b) and 78ff; Title 17, Code of Federal Regulations, Sections 240.10b-5
and 240.10b5-2; and Title 18, United States Code, Section 2.

33. While visiting the Western District of New York, specifically Lakewood,
New York, from their residence in Texas during the summer of 2011, CUSIMANO and
JESSICA CUSIMANO purchased a 2011 Bennington pontoon boat from Snug Harbor
Marina for $48,564.63. In addition to an $8,000 cash deposit made on the day of the sale,
CUSIMANO paid the remaining balance of $40,564.63 utilizing check no. 1074 drawn on
Wells Fargo Bank, N.A. account no. 8174859929 dated 07/02/2011. This account is in the
name of PREMIRE CONSULTING INC. and CUSIMANO. At the time CUSIMANO
wrote the check, his sole source of income was the pump and dump stock fraud scheme
detailed above.

17

Case 1:14-mj-00069-HKS Document 1 Filed 05/19/14 Page 20 of 21

34. In furtherance of the money laundering scheme, the 2011 Bennington
pontoon boat was registered in JESSICA CUSIMANO’s name, using a recently obtained
New York State driver’s license listing her current residence as 169 Front Street, Lakewood,
NY 14750, which was the address of the lakeside cabin they rented while visiting from
Texas.

35. JESSICA CUSIMANO obtained insurance for the 2011 Bennington Pontoon
boat from Progressive Direct Insurance Company on 07/02/2011, policy number 18884772-
0. On the application for the insurance, JESSICA CUSIMANO listed her maiden name,
JESSICA LOPEZ, and listed her current residence as 169 Front Street, Lakewood, NY
14750, and listed her marital status as “single.”

36. On or about November 16, 2009, BOYE wrote a check in the amount of
$49,154.31 drawn on M&T Bank account 9847916138 (Jaime Boye) payable to Robert Basil
Chevrolet as payment for a 2007 Cadillac Escalade. At the time BOYE wrote the check, his
sole source of income was the pump and dump stock fraud scheme detailed above.

 

 

 

18

Case 1:14-mj-00069-HKS Document 1 Filed 05/19/14 Page 21 of 21

 
37. Based upon the foregoing, your affiant respectfully submits that there is

probable cause to believe that ERIC CUSIMANO and JAMIE BOYE have committed

securities fraud in violation of Title 15, United States Code, Sections 78j(b) and 78ff; Title

17, Code of Federal Regulations, Sections 240.10b-5 and 240.10b5-2; and Title 18, United

States Code, Section 2; and that ERIC CUSIMANO, JESSICA CUSIMANO, and JAMIE

BOYE violated Title 18, United States Code, Section 1957 and 2.

 

 

Michael K. Klimczak, Specie 1 Agent
IRS-CI
Sworn to and subscribed to before me this
19′ day of May 2014.

 
HC7N. H. KENNETH SCHROEDER, JR.
UNITED STATES MAGISTRATE JUDGE

 

 

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.

Jun 11

Promoters Eric Cusimano & Jamie Boye indicted

Promoters Eric Cusimano & Jamie Boye (of Bestdamnpennystocks.com and related websites) were indicted by a grand jury in the western district of the USA circuit court in New York. They  are scheduled to be arraigned shortly. Below are the case details. Per George Sharp Cusimano was just arrested in Panama on Monday and was brought to Buffalo yesterday. The case is 1:14-mj-00069-HKS-1 USA v. Cusimano et al.

See Promotion Stock Secrets for a good summary of how Cusimano and Boye worked together to promote stocks.

Donna and David Levy were the shell insiders who paid Boye and Cusimano to promote many of the companies they controlled in years past. They were found guilty of stock fraud in 2013 and had not worked with Cusimano since prior to their indictment in late 2011 (pdf).

Case Summary

1:14-mj-00069-HKS All Defendants USA v. Cusimano et al
Date filed: 05/19/2014
 

Eric Cusimano (1)
Office: Buffalo Filed: 05/19/2014
County: Erie Terminated:  Reopened:
Other Court Case: None
Defendant Custody Status:

 

Defendant: Eric Cusimano
Plaintiff: USA  represented by Aaron J. Mango(Designation government attorney)
Phone: 716-843-5882
Fax: 716-551-3146
Email: aaron.mango@usdoj.gov
Jamie Boye (2)
Office: Buffalo Filed: 05/19/2014
County: Erie Terminated:  Reopened:
Other Court Case: None
Defendant Custody Status:

 

Defendant: Jamie Boye
Plaintiff: USA  represented by Aaron J. Mango(Designation government attorney)
Phone: 716-843-5882
Fax: 716-551-3146
Email: aaron.mango@usdoj.gov

 

Jessica Cusimano (3)
Office: Buffalo Filed: 05/19/2014
County: Erie Terminated:  Reopened:
Other Court Case: None
Defendant Custody Status:

 

Defendant: Jessica Cusimano
Plaintiff: USA  represented by Aaron J. Mango(Designation government attorney)
Phone: 716-843-5882
Fax: 716-551-3146
Email: aaron.mango@usdoj.gov

 

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.

Jun 09

Fortitude Group’s Fake buyout cancelled as I predicted $FRTD

I previously blogged about Fortitude Group’s (FRTD) SEC trading suspension (that I predicted) and its quarterly financial statements that were so badly faked as to make me think that the company’s CEO had experienced a major brain injury. Today the stock resumed trading after the SEC trading suspension (currently trading at $0.004, down 80%) and the company put out a press release announcing the cancellation of the buyout agreement (with that news buried a few paragraphs in). Here is the highlight:

On May 18, 2014, the company had entered into an LOI with a fully reporting OTCQB company, to be acquired in its entirety through a share-for-share acquisition. Unfortunately, with the recent trading suspension by the SEC, the LOI was rescinded until such time as Fortitude completes an updated 15c211.

Fortitude Group also announced an asset sale to another non-SEC reporting Pinksheet company in exchange for stock. The idiocy of CEO Thomas Parilla (and anyone who would pay attention to him) is mind-boggling.

 

Disclaimer: I have no position in any stock mentioned. I have no relationship with any parties mentioned above. I have bought and sold FRTD stock numerous times today and profited over $800. 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.

Jun 09

Accounting troubles at Baristas Coffee Company $BCCI attract more attention

I previously wrote about the ‘audited’ quarterly financial statements published by Baristas Coffee Company (BCCI) last week. To recap, my main problems with the ‘audited’ statements is that the company has not filed an audited financial statement in over two years and there was no auditor letter. The company’s accounting issues look even worse now, after I read the CEO’s comments in the Seattle Times. The article focuses on Q1 2013 and compares the new ‘audited’ financials with the previously reported numbers for that quarter and the differences are huge.

None of the key numbers match: Previously reported sales of $433,858 morphed into $366,673, a 15 percent drop. Personnel costs rose to $152,254 from $114,415. General and administration expenses, previously shown as $54,510, in fact amounted to $200,078, the audited report says.

It just beggars belief that the company’s SG&A expenses were over 3 times higher than previously reported. How dumb are the executives that they didn’t think they needed to include stock-based compensation? But even crazier is to have sales drop by 15% after the audit. Here is how CEO Barry Henthorn explained the differences (emphasis mine):

Asked about the stark difference between the audited and unaudited books, CEO Barry Henthorn said sales in the audited report were lower because they omitted amounts that were not backed up by daily sales records. Also, general and administrative expenses rose to reflect stock-based compensation in 2013 that was not previously recognized.

If the previous sales numbers were not backed up by daily sales records then how was the company arriving at those numbers? Did it really receive 15% more in cash receipts than what was rung up at the register? Where did this cash come from? Normally the problem is receiving less cash than sales receipts show due to theft. I find it unlikely that the customers were getting shortchanged by 15% when paying cash. I cannot think of any reasonable explanation for sales receipts to be 15% lower than cash receipts. This is a sign of very, very poor management: nightly reconciliation between cash receipts and sales records is standard in retail and it just boggles my mind that they would not do this or that they would mess it up so badly.

According to the press release last Friday BCCI will file audited financials for 2012 and 2013 this week. I will wait with baited breath for these (and an auditor letter for Q1 2014) to be filed.

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.

Jun 06

FusionPharm: Oh, by the way, we got raided by the Feds $FSPM

Trading in FusionPharm (FSPM) was suspended by the SEC back on May 16th. It reopened for trading on the Grey Market on June 2nd. In a press release prior to the market open that day FSPM announced that the stock would begin trading again and added this nice tidbit in the second paragraph:

On May 16, 2014, a search and seizure warrant was executed at the Company’s offices located in
Commerce City, Colorado as part of an ongoing investigation of potential securities law
violations. In executing the warrant, federal authorities seized company records, computers and
approximately $200,000 in funds from one of the Company’s bank accounts.

I shorted FSPM multiple times at Centerpoint Securities over the next couple days and made some money but I was impatient because of the $0.013 per share daily borrow fee so I covered before the drop below $0.90. The stock is currently at $0.70 and is quite illiquid. My thesis was simple: the seizure of records and money is a huge negative (it is exceedingly rare for a company to be investigated for criminal stock fraud and many times executives go to prison in these cases) and the legal risk to the executives means that they likely won’t be putting out any more press releases.

Here are two of my trades on FSPM:


$460profitFSPMShort Stock
Centerpoint batch import through June 5th

Posted by MichaelGoode /
http://profit.ly/1MozMS

 


$198profitFSPMShort Stock
Centerpoint batch import through June 5th

Posted by MichaelGoode /
http://profit.ly/1MozMT

 

Of course, there are plenty of people who disagree with me, and I am glad that they do so that someone will buy the shares I sell short. For example:

fspm
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.

Jun 06

SEC Suspends trading in marijuana stocks SK3 Group $SKTO and Alternative Energy Inc $AEGY

This morning prior to the market open the SEC suspended trading in SK3 Group (SKTO) and Alternative Energy Inc. (AEGY). I first wrote about SKTO fifteen months ago, saying I thought it was at risk for a trading suspension. I was premature to say the least. But when both companies became marijuana companies earlier this year the odds of them getting suspended increased greatly and finally the SEC obliged. These suspensions are the ninth and tenth suspensions of marijuana-related stocks this year by the SEC (the prior suspension was yesterday’s suspension of WBXU). The two stocks will reopen for trading at the market open on June 20th. Here is a list of marijuana stocks that have been suspended by the SEC this year: SKTO, AEGY, WBXU, FRTDFSPMPHOT,  CDFTPTOGAVNE, and CANN.

 

SEC suspension press release (PDF)
SEC suspension order (PDF)

 

From the SEC press release:

The Commission temporarily suspended trading in the securities of AEGY and SKTO because of
a lack of current and accurate information about the companies. There are questions regarding
the accuracy and adequacy of publicly available information about the business activities, the
control of the companies, and trading in the securities of both companies

 

skto aegy

 

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

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