Oct 27

Prosecutors close to plea deals with stock promoters Boye and Cusimano

See my most recent post on the case against stock promoters Eric Cusimano, his wife Jessica, and Jamie Boye.

Three days ago the trial against Boye and the Cusimanos was adjourned until December in anticipation of all defendants reaching plea deals:

 

Since the initial appearance, counsel for the government has spoken
extensively with all defense counsel, and anticipate that a pretrial resolution will be reached
in this case for the defendants. In the case of Defendant Eric Cusimano and Defendant
Jessica Cusimano, the parties have discussed the parameters of a potential plea, and have a
nearly finalized plea document. The parties need to clarify a few minor issues, at which
point the plea will be submitted for approval. In the case of Defendant Jamie Boye, the
parties have discussed the parameters of a potential plea, and additional discovery has been
provided to assist in evaluating the plea. For all of the defendants, the pre-indictment plea
process has been lengthy due to the complex issues regarding the plea, including loss
calculations for guidelines purposes, associated tax issues, and the forfeiture of assets that
will accompany the plea. Therefore, the parties are requesting additional time to allow a
change of plea and sentence to occur in the present case.

 

Current docket report:

 

1:14-mj-00069-HKS All Defendants USA v. Cusimano et al
Date filed: 05/19/2014
Date of last filing: 10/24/2014

History

Doc.
No.
Dates Description
24
Filed & Entered:   10/24/2014
Terminated: 10/24/2014
Docket Text Motion to Adjourn
25
Filed & Entered:   10/24/2014
Docket Text Order on Motion to Adjourn
20
Filed & Entered:   09/22/2014
Docket Text Oral Argument
21
Filed & Entered:   09/22/2014
Docket Text Order on Motion for Reconsideration
22
Filed & Entered:   09/22/2014
Docket Text Bond
23
Filed & Entered:   09/22/2014
Docket Text Order Setting Conditions of Release
19
Filed & Entered:   09/16/2014
Docket Text Order on Motion to Adjourn
18
Filed & Entered:   09/15/2014
Terminated: 09/16/2014
Docket Text Motion to Adjourn
17
Filed & Entered:   09/12/2014
Terminated: 09/22/2014
Docket Text Motion for Reconsideration
16
Filed & Entered:   09/11/2014
Docket Text Order on Motion for Leave to Appear
Filed & Entered:   09/10/2014
Docket Text Add and Terminate Attorneys
14
Filed & Entered:   09/05/2014
Docket Text Writ of Habeas Corpus ad Prosequendum Executed
15
Filed & Entered:   09/05/2014
Terminated: 09/11/2014
Docket Text Motion to Appear
13
Filed & Entered:   08/15/2014
Docket Text Order
12
Filed: 08/13/2014
Entered: 08/14/2014
Docket Text Warrant Returned Executed
10
Filed & Entered:   07/24/2014
Docket Text Warrant Returned Executed
11
Filed & Entered:   07/24/2014
Docket Text Warrant Returned Executed
7
Filed: 06/30/2014
Entered: 07/01/2014
Docket Text Order to Continue – Ends of Justice
8
Filed: 06/30/2014
Entered: 07/01/2014
Docket Text Order to Continue – Ends of Justice
9
Filed: 06/30/2014
Entered: 07/01/2014
Docket Text Order to Continue – Ends of Justice
6
Filed & Entered:   06/26/2014
Docket Text Notice of Attorney Appearance – Defendant
Filed & Entered:   06/24/2014
Docket Text Initial Appearance
Filed & Entered:   06/20/2014
Docket Text Initial Appearance
5
Filed & Entered:   06/20/2014
Docket Text Order
Filed: 06/17/2014
Entered: 06/19/2014
Docket Text Writ of Habeas Corpus ad Prosequendum Issued
4
Filed: 06/17/2014
Entered: 06/19/2014
Docket Text Petition and Order for Writ of Habeas Corpus ad Prosequendum
Filed & Entered:   06/16/2014
Docket Text Initial Appearance
Filed & Entered:   06/16/2014
Docket Text Notice of Hearing
2
Filed & Entered:   06/16/2014
Docket Text Rule 5(c)(3) Documents Received
3
Filed: 06/16/2014
Entered: 06/17/2014
Docket Text Order Setting Conditions of Release
1
Filed: 05/19/2014
Entered: 06/12/2014
Docket Text Complaint

 

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.

Oct 20

Falconridge Oil Technologies $FROT landing page pump

This morning at 7:01am I received an email from Marketing@insiderwealthalert.com with an advertisement for Falconridge Oil Technologies (FROT) linking to a website for the pump at http://frotinfo.com/

Given the low budget and the weak state of the market for stock promotions, I think this will likely never get much volume and will slowly fade.

Disclosed budget: $150,000
Promoter:  Charles Moskowitz dba The Moskowitz Report
Paying party: Eclipse Media
Shares outstanding: 49,016,667
Previous closing price: $0.92
Market capitalization: $45 million

frot

 

Excerpt from disclaimer:

The publisher was paid the sum of $7,500 for his contributions. Eclipse Marketing has budgeted $150,000 for the week of October 20th, 2014 for the dissemination of this information to enhance public awareness for FROT

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 FalconRidge Oil Ltd. and its securities through the distribution of this advertisement, Eclipse Media paid all of the costs associated with creating, printing and distribution of this advertisement. The publisher was paid the sum of $7,500 for his contributions. Eclipse Marketing has budgeted $150,000 for the week of October 20th, 2014 for the dissemination of this information to enhance public awareness for FROT 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 FalconRidge Oil Ltd., increased trading volumes, and possibly increased share price of the common stock of FalconRidge Oil Ltd.. The publisher has not undertaken to determine if Eclipse Media is, or intends to be in the future, directly or indirectly, a shareholder of FalconRidge Oil Ltd.. 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 FalconRidge Oil Ltd., 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 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.

 

frot_chart

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.

Oct 15

Crumbs Bake Shop $CRMBQ to liquidate

Despite the huge run up in the shares of Crumbs Bake Shop (CRMBQ) on the news that Crumbs has reopened one of their shuttered stores and will reopen a bunch more soon, Crumbs Bake Shop Inc no longer has anything to do with the Crumbs stores or brand and will not benefit from the store openings. In fact, Crumbs Holding Company (CRMBQ) filed a motion (PDF) on October 1st to change from chapter 11 bankruptcy to chapter 7 (liquidation) and stated in the application that:

The Debtors no longer maintain active business operations and have only operated their businesses for the purpose of maximizing the value of the Debtors’ assets, resolving certain claims and winding down their affairs for the benefit of the Debtors’ creditors. The Debtors’ remaining assets include, among other things, potential causes of action including, among others, avoidance actions under the Bankruptcy Code. The Debtors have determined that the best interest of all creditors will best be served by converting these
Chapter 11 cases to cases under Chapter 7 of the Bankruptcy Code so that a Chapter 7 trustee may investigate and pursue those causes of action to maximize recoveries while reducing the continuing costs of the administration of these estates.

Up to date filings in the bankruptcy case can be found on the trustee’s website.

Unlike the last news spike on the completion of the sale of essentially all of Crumbs’ assets to Lemonis-Fischer Acquisition Company (LFAC), I did not immediately short the spike. I would really love to short CRMBQ now as its price action is toppy but my brokers will not let me short it for some reason that I cannot fathom.

See my previous blog posts on CRMBQ:
Owners of CRMBQ no longer own Crumbs Bakeshop
The end is near for Crumbs Bakeshop

crmbq

Disclosure: I am short CRMUQ and I am a day-trader. I may close my short position or short more at any time. I am actively looking to short CRMBQ. 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.

 

Sep 23

Calculating the value of $BIOF ex-rights

Note: the below post is only relevant for trading of BIOF on 9/24 and does not apply after the stock has gone ex-rights.

Tomorrow BIOF will start trading ex-rights, with each right giving the owner the right to buy 2.25 shares of BIOF at $5 (if the average price of BIOF over the next 10 days is under 6.25 then the $5 strike price is adjusted down to 80% of that 10-day average price — I ignore that in this calculation).

The rights started trading as BIOFR today and tomorrow everyone that owns BIOF today will have 1 share of BIOFR for each share of BIOF they own. Using a little bit of algebra we can determine the correct price of BIOFR for any given price of BIOF today. By my calculations, with BIOF at $9.11 BIOFR should be trading at $2.85 (it is currently $3.10 x $3.18).

BIOFP = BIOF post rights

BIOFR = 2.25 * (BIOFP – 5.00)
BIOF = BIOFR + BIOFP

BIOFP = BIOF – BIOFR
BIOFR = 2.25 * (BIOF – BIOFR -5)

Using Excel’s solver add-in I can then take the current price of BIOF and solve for the price that BIOFR should be trading at.

Of course, if I had just realized early on today that BIOF was not trading ex-rights yet, I could have bought it at about $6.60 or so for easy profits without any algebra.

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.

 

Sep 19

Feds indict a bunch of stock promoters

I am a little slow to post this — these two separate cases were publicized last week. This looks like one more nail in the coffin of the biggest stock promotion scams. I have done little besides collect links to the best stories about the two different cases.

Titan Securities / IPC Corporate Securities / Legacy Global Markets / Robert Bandfield / Andrew Godfrey / Kelvin Leach / Rohn Knowles / Brian de Wit / Cem Can (Jim Can)

DoJ press release
Criminal indictment

SEC press release
SEC complaint
Promotion Stock Secrets case summary
Rise and fall of penny stock Cynk in Feds’ sights

Jay Fung / Eric Van Nguyen / Anthony Thompson / Hanna Schmeider / Kenneth Oxsalida / Joseph Dervali / Luz Rodriguez / Chrospher Balseiro

The first three names above should be familiar to long-time readers of this blog. Fung and Thompson were previously sued by the SEC back in May of 2012. Eric Van Nguyen worked with those two and had not been indicted or sued by the SEC. Eric also worked with John Babikian at least at first with the Awesomepennystocks websites (despite his claims to the contrary).

Manhattan Distract Attorney press release
Bloomberg article

One interesting tidbit from the Bloomberg article:

Many of the eight people whose indictment was announced today had never met each other and their only connection is that they had all worked with Sepe, Fritz said.

That leads me to believe that Sepe informed on the others. It will be interesting to see if that is the case.

Follow this case on New York’s court system website.

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.

Aug 28

Owners of $CRMBQ stock no longer own Crumbs Bakeshop – yet it was still up 100% yesterday

Yesterday the stock of the bankrupt Crumbs Bakeshop (CRMBQ) went up over 100%. This is likely because foolish people who don’t understand bankruptcy heard the news about the purchase and think current shareholders will benefit. They will not.

See the order yesterday:

Order Under 11 U.S.C. § 105(a), 363 and 365 (I) Authorizing and Approving Sale of Substantially all of the Debtors’ Assets Free and Clear of Liens, Claims Encumbrances and Interests, (II) Authorizing and Approving Assumption and Assignment of Certain Unexpired Leases of Non-Residential Real Property in Connection with the Sale and (III) Granting Related Relief (related document:22 Motion re: for an Order Pursuant to 11 U.S.C. Sections 363 and 365 and Fed. R. Bankr. P. 2002, 6004 and 6006: (1) Approving “Stalking Horse” Asset Purchase Agreement for the Sale of Substantially All the Debtors’ Assets; (2) Approving Bidding Procedures and Form, Manner and Sufficiency of Notice; (3) Scheduling (A) an Auction Sale and (B) a Hearing to Consider Approving the Highest and Best Offer; (4) Authorizing the Debtors to Sell Substantially all their Assets Free and Clear of Liens, Claims, Encumbrances, and Interests and to Assume and Assign Certain Related Executory Contracts and Unexpired Leases; and (5) Granting Other Related Relief Filed by Michael D. Sirota on behalf of Crumbs Bake Shop, Inc.) Service of notice of the entry of this order pursuant to Rule 9022 was made on the appropriate parties. See BNC Certificate of Notice. Signed on 8/27/2014. (slf) (Entered: 08/27/2014)

See my post about the news reports of the sale of the assets to Lemonis Fischer Acquisition Corp and my earlier post detailing the stalking-horse bid details.

crmbq

See also the Wall Street Journal article on this from yesterday (excerpted below):

The investor group’s no-cash offer leaves unsecured creditors in the Chapter 11 case with few options for recovery. An attorney for the unsecured creditors said in court filings on Monday that a creditor committee could pursue lawsuits against as-yet-unnamed parties to earn money for the group.

Mr. Sirota said after the hearing that the company will liquidate its remaining holdings but that the bulk of the work is done with the conclusion of the sale.

Disclosure: I am short CRMBQ and CRMUQ and I am a day-trader. I may close my short position or short more at any time. My plan is to keep adding to my short on any spikes and then hold for 50%+ gains. 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.

Aug 21

The End is near for Crumbs Bakeshop $CRMBQ $CRMUQ

The deadline for competing bids for Crumbs Bakeshop (CRMBQ and CRMUQ) has come and gone with no offers besides the stalking horse bid (see my previous post on that).

Per Dow Jones Newswires yesterday:

DJ CNBC’s Lemonis Will Likely Sweep Up Crumbs — Market Talk
13:29 EDT – A possible revival of Crumbs Bake Shop at the hands of CNBC personality Marcus Lemonis and Dippin’ Dots owner Fischer Enterprises is closer to reality after a Tuesday deadline to submit competing offers for the shuttered company came and went with little fanfare. A Crumbs spokeswoman says no bidders emerged to challenge a $6.5M debt-forgiveness offer from Lemonis and Fischer, so the cupcake chain will ask a bankruptcy judge to cancel a scheduled auction. If approved by the court, the sale will likely lead to a new kind of Crumbs store which incorporates the buyers’ other dessert brands. (sara.randazzo@wsj.com; @sara_randazzo)
(END) Dow Jones Newswires

I have started averaging into a final short position in both Crumbs stock (CRMBQ) and Crumbs units (stock plus warrants) as the company should emerge from bankruptcy in a month (and the stock should drop precipitously before then) with shareholders getting completely wiped out and most debt holders suffering large losses.

Disclosure: I am short CRMBQ and CRMUQ and I am a day-trader. I may close my short position or short more at any time. 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.

Aug 06

Stock promoters criminally charged for manipulative trading of marijuana stocks including $HEMP and $PHOT

Yesterday the SEC sued four promoters for manipulative trading in marijuana stocks and the Department of Justice joined the fun with a criminal case against three of the four. First I address the more serious criminal charges (see DoJ press release). The criminal charges relate to only one stock: ISM International (ISML).

 Three men who allegedly manipulated penny stocks, and then laundered the proceeds by purchasing precious metals, were charged today in U.S. District Court in Tacoma with conspiracy to commit securities fraud and conspiracy to launder monetary instruments, announced U.S. Attorney Jenny A. Durkan.  MIKHAIL GALAS, 24, of Vancouver, Washington was arrested in Long Beach, California after he arrived on a flight from Portland, Oregon.  He will make his initial appearance in U.S. District Court in Los Angeles.  CHRISTOPHER MROWCA, 24, was arrested in Bradenton, Florida and will make his initial appearance in Tampa.  ALEXANDER HAWATMEH, 23, of Salem, Oregon is incarcerated in Oregon on an unrelated charge and will appear in federal court at a later date.  In addition to the arrests, searches were conducted in Vancouver, Washington, Bradenton, Florida, Salem, Oregon and Boulder, Colorado.

 

Below is the criminal complaint against those three individuals:

USA v. Mrowca Et Al Doc 1 Filed 01 Aug 14 by Shannon Coleman

Of note: Christopher Mrowca controls Money Runners Group LLC, a scummy and generally ineffective stock promoter. Money Runners has their own InvestorsHub messageboard and website. Alexander Hawatmeh is a former member of Worthmore Investments LLC, the company that runs the StockHaven stock promotion and stock chat website (at least according to statements on the Stockhaven website). The current owner of Worthmore Investments LLC is Kevin Kleinman, who has stated that Hawatmeh has not been a member of Worthmore since late 2012.

The SEC complaint includes five stocks, including PHOT and HEMP from early this year. It also includes a fourth individual, Tovy Pustovit:

Defendant Pustovit, age 20, is a resident of Vancouver, Washington. Pustovit was
5 the registered owner of a stock promotion website called “Explosive Alerts” from August 2012,
6 when the site was created, until August 2013.

 

Excerpt from SEC press release:

The SEC’s complaint filed in federal court in Tacoma, Wash., charges the following individuals:

  • Mikhail Galas, a stock promoter who lives in Vancouver, Wash.
  • Alexander Hawatmeh, a member of Worthmore Investments LLC, which owns a stock promotion website called stockhaven.com.  He formerly lived in Vancouver and currently resides in Lincoln City, Oregon.
  • Christopher Mrowca, a stock promoter who operates Money Runners Group LLC, which has an affiliated stock promotion website called MoneyRunnersGroup.com.  He lives in Bradenton, Fla.
  • Tovy Pustovit, who owns a stock promotion website called Explosive Alerts.  He also lives in Vancouver.

 

See the SEC complaint (PDF).  The most profitable of all the stocks mentioned in the suits is RVDO:

142. On March 5, 2014, there was a promotion of RVDO over the Internet claiming
6 that RVDO would trade at $2 per share. The closing price of RVDO on March 4, 2014 was $.06
7 per share. This claim was misleading because there was no business development at RVDO that
8 would justify such a rise in price.
9 143. A. Hawatmeh had prior knowledge of the RVDO promotion and its timing.
10 144. Between 9:30 AM and 09:52 AM Eastern Time on March 5, 2014, A. Hawatmeh
11 sold approximately 3.23 million shares of RVDO common stock at prices ranging from $.28 per
12 share to $.90 per share.
13 145. A. Hawatmeh’s average selling price per share on March 5, 2014 was
14 approximately $.4375 per share, almost an eightfold increase over his average purchase price per
15 share.
16 146. A. Hawatmeh’s gross profits from trading RVDO between February 7, 2014 and
17 March 5, 2014 were over $1.23 million.

rvdo

Perhaps the most interesting of all the promotions though are HEMP and PHOT, because they were very liquid during the period the accused were actively trading the stock. First, the details of PHOT:

Trading in PHOT
90. From January 9 to January 14, 2014, there was an Internet promotion of PHOT as part of a broader promotion of several marijuana-related stocks.
91. During that promotion, Mrowca and Galas traded approximately 6.4 million shares of PHOT common stock, and during and leading up to the promotion engaged in manipulative trading designed to increase the price and volume of PHOT common stock.
92. From January 2, 2014 through January 14, 2014, Mrowca engaged in wash trades of PHOT common stock and also engaged in matched orders of PHOT common stock with Galas

phot

It is important to note that the defendants bought HEMP after it had already had its first run up to a high of just over $0.08 from under $0.02 at the beginning of 2014 — they started buying on January 23rd when the price was about $0.05. Even if they had not allegedly engaged in manipulative trading they likely would have made a lot of money.

Trading in HEMP
117. A. Hawatmeh, Galas and Mrowca began accumulating HEMP common stock
through market purchases on January 23, 2014. Between January 23, 2014 and February 12,
2014, A. Hawatmeh, Galas, and Mrowca bought and sold approximately 41.7 million shares of
HEMP common stock.
118. During the period from January 24 through February 12, 2014, HEMP was actively promoted on the Internet.
119. For example, on February 6, 2014, one Internet tout claimed that HEMP could reach “a REAL Possible Gain of OVER 2900%.”
120. During the promotion, A. Hawatmeh, Mrowca and Galas engaged in manipulative wash trades and matched orders of HEMP common stock.
121. The total trading volume for HEMP common stock in the A. Hawatmeh, Mrowca,and Galas accounts during this period was approximately 83 million shares.

hemp

 

 

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.

Aug 06

AJ Discala and four others charged criminally for stock fraud

Again this is a late post. This happened on July 14th. This story received a lot of attention because one of the men charged criminally, AJ Discala, is famous. See the Dealbook article about the case.

SEC press release
SEC complaint
Department of Justice press release

A ten-count indictment was unsealed this morning in federal court in Brooklyn, New York, against seven defendants, Abraxas J. Discala, also known as “AJ Discala,” the Chief Executive Officer of OmniView Capital Advisors LLC (“OmniView”); Marc Wexler, the Managing Director of OmniView; Ira Shapiro, the Chief Executive Officer of CodeSmart Holdings, Inc. (“CodeSmart”), a publicly traded company; Matthew Bell, a registered broker and investment adviser representative; Craig Josephberg, a registered broker; Kyleen Cane, an attorney; and Victor Azrak, the Vice President and Director of Excel Corp., a publicly traded company. The charges include securities fraud, wire fraud and conspiracy to commit securities fraud, mail fraud and wire fraud in connection with the fraudulent market manipulation of four publicly traded companies—CodeSmart, trading under the ticker symbol ITEN; Cubed, Inc. (“Cubed”), trading under the ticker symbol CRPT; StarStream Entertainment Inc. (“StarStream”), trading under the ticker symbol SSET; and The Staffing Group, Ltd. (“Staffing Group”), trading under the ticker symbol TSGL. In addition, the government restrained Discala’s residence in Norwalk, Connecticut, worth over $1 million, and seized a dozen bank and brokerage accounts containing criminal proceeds.

As alleged in the indictment and other court filings, between October 2012 and July 2014, the defendants, together with others, agreed to defraud investors and potential investors in four public companies: CodeSmart, Cubed, StarStream and Staffing Group (collectively, the “Manipulated Public Companies”) by artificially controlling the price and volume of traded shares in the Manipulated Public Companies through, among other things: (a) false and misleading press releases; (b) false and misleading SEC filings; (c) fraudulent concealment of the defendants’ and their co-conspirators’ ownership interests; (d) engineering price movements and trading volume in the stocks; and (e) unauthorized purchases of stock in accounts of unwitting investors.

Here is the chart of one of the allegedly manipulated stocks, Codesmart:

iten

See the criminal complaint:

USA v. Discala Et Al Doc 1 Filed 15 Jul 14 by Shannon Coleman

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.

Aug 06

Criminal charges filed against Christopher Nix, Andrew Affa, and three others for conspiracy to manipulate Amogear $AMOG stock

2014 continues to be a banner year not just for the SEC but for criminal prosecutions of stock promoters for market manipulation. This case was filed almost a month ago so I apologize for the delay but wanted to make sure I posted it on this blog. See the SEC’s press release about its lawsuit and as well as the Department of Justice’s press release about the arrests.

Excerpt from DOJ PR:

The criminal cases charged the following individuals with conspiracy to commit securities fraud: Andrew J. Affa, 30, of Huntington Station, N.Y.; Michael A. Affa, 34, of Toms River, N.J.; Mitchell H. Brown, 48, of Long Branch, N.J.; Christopher R. Putnam, 37, of Charleston, S.C.; and Christopher G. Nix, 34, of Charleston, S.C. Andrew Affa, Michael Affa and Brown were also charged with conspiracy to commit wire fraud. The SEC suit, likewise, charges all five individuals with securities fraud.

Andrew Affa, Michael Affa, and Brown are scheduled to appear in federal court in Boston on July 15 and Putnam and Nix are scheduled to appear on July 31.

It is alleged that in January and February 2014, the defendants attempted manipulation of Amogear’s stock was caught in real-time by a federal undercover operation. The SEC suspended trading in the securities of Amogear on Feb. 10, 2014, as the attempted manipulation of its stock was underway. According to the criminal and SEC charges, prior to the suspension of trading in the stock, the defendants planned and implemented a scheme to create a false appearance of an active market in the stock, followed by a false media campaign designed to increase the price of the stock, knowing that Amogear was a shell company without any real operations. The defendants allegedly planned to sell the stock into the market at artificially inflated prices from which they would profit. What the parties did not know was that Amogear was controlled by the FBI and used by the FBI as a vehicle to obtain evidence of their attempt to manipulate the market.

One of the most interesting things about this case is that the FBI’s confidential informant (CI) controlled the stock that was the subject of the alleged conspiracy. From the SEC complaint:

2. Amogear is a Nevada corporation based in Boston, Massachusetts. Amogear’s
stock is quoted under the ticker symbol “AMOG.” Amogear was listed and could trade
nationally on the over-the-counter (“OTC”) securities markets. Amogear was acquired and
controlled by the CI, who then worked in conjunction with the FBI in the undercover
investigation. Amogear only existed as a shell company, which is a company that can serve as a
vehicle for business transactions by other related companies or entities without itself having any
real assets or operations.

Christopher “Gabe” Nix’s Global Marketing Media LLC ran a number of websites and they generally one-day promotions so their pumps were always good to short. See the Promotion Stock Secrets article on Global Marketing Media. Some of the websites of Global Marketing Media LLC:

Pennystockpros.net
Pennystockplayers.net
TheStockScout.com
PennyStockClub.net
PennyStockCircle.com
123StockAlerts.com

Andrew Affa owned Pennypickalerts.com (it has since been sold to another promoter).

amog

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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