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.

 

Aug 05

Apptigo International $APPG pump and dump

[Edit 18 August 2014: I was forwarded scans of a hard mailer by StockRealist. I have updated the information on the budget with info from the hard mailer. See the full mailer (13-page 13MB PDF). See also the negative reports on APPG by Stockrealist and by Geoinvesting.]

Yesterday Promotion Stock Secrets made public their report on Apptigo International (APPG), including the information that there was a landing page pump at http://mobileappbreakthrough.com/. I had not previously seen promotion of APPG but it is obvious that it has started to be promoted because of the volume. I am a paying subscriber to Promotion Stock Secrets. Yesterday was the first big volume day on APPG so it looks like the promotion is in full swing. I will look to short it soon.

Disclosed budget: $948,363
Promoter:  Flying Under the Radar Stocks
Paying party: Micro Cap Media Ltd.
Shares outstanding: 28,875,000
Previous closing price: $1.61
Market capitalization: $46 million

First page of hard mailer:appg_firstpage

appg_buyprice

Excerpt from disclaimer:

Flying Under the Radar Stocks received an editorial fee of twenty-five thousand dollars from Micro Cap Media Ltd. APPG was chosen to be profiled after Flying Under the Radar Stockscompleted due diligence on APPG. Flying Under the Radar Stocks expects to generate new subscriber revenue, the amount of which is unknown at this time, resulting from the distribution of this online report. Micro Cap Media Ltd. paid twenty-three thousand eight hundred dollars to advertising agencies for the cost of creating and distributing this report online, in an effort to build investor awareness. 

Full disclaimer:

Important Notice and Disclaimer: Flying Under the Radar Stocks is an independent paid circulation newsletter. This online report is a solicitation for subscriptions and a paid promotional advertisement of Apptigo, Inc. (APPG). Flying Under the Radar Stocks received an editorial fee of twenty-five thousand dollars from Micro Cap Media Ltd. APPG was chosen to be profiled after Flying Under the Radar Stockscompleted due diligence on APPG. Flying Under the Radar Stocks expects to generate new subscriber revenue, the amount of which is unknown at this time, resulting from the distribution of this online report. Micro Cap Media Ltd. paid twenty-three thousand eight hundred dollars to advertising agencies for the cost of creating and distributing this report online, in an effort to build investor awareness. This report does not provide an analysis of a company’s financial position, operations or prospects and this is not to be construed as a recommendation by Micro Cap Media Ltd. or an offer to buy or sell any security or investment advice. An offer to buy or sell can only be made with accompanying disclosure documents and only in states and provinces for which they are approved. Do not base any investment decision based solely on information in this report. Although the information contained in this advertisement is believed to be reliable, Micro Cap Media Ltd. makes no warranties as to the accuracy of any of the contents herein and accepts no liability for how readers may choose to utilize the content. Readers should perform their own due diligence, including consulting with a licensed, qualified investment professional. Further, readers are strongly urged to independently verify all statements made in this report. APPG’s financial position and all other information regarding APPG should be verified directly with APPG. Audited financial statements and other relevant information about APPG can be found at the Security and Exchange Commission’s website at www.sec.gov. It is recommended that any investment in any security should be made only after consulting with your investment advisor and only after reviewing all publicly available information, including the financial statements of the company. The information contained herein contains forward-looking information within the meaning of section 27a of the Securities Act of 1933, as amended, and section 21e of the Securities Act of 1934, as amended, including statements regarding growth of APPG. In accordance with the safe harbor provisions of the Private Securities Litigation Reform Act, statements contained herein that look forward in time, which include everything other than historical information, involve risks and uncertainties. All forward-looking statements are based upon current assumptions that are believed to be reasonable. In the event any such assumptions turn out to be incorrect, forward-looking statements based upon those assumptions will not be accurate. Flying Under the Radar Stocks presents information in this online report believed to be reliable, but its accuracy cannot be guaranteed. More information can be found at APPG’s website www.apptigo.com.

appg_chart

PDF copy of pump page

Hard mailer disclaimer:
appg_disclaimer

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 05

Green and Hill Industries $GHIL trading suspended by SEC

Trading in Green and Hill Industries (GHIL) was suspended by the SEC this morning prior to the market open. This is the twelfth suspension of a marijuana-related stock this year. Here is a list of marijuana stocks that have been suspended by the SEC this year: GHIL,SKTOAEGYWBXU,FRTDFSPMPHOT,  CDFTPTOGAVNECBGI, and CANN. This suspension comes just four days after a cease trade order by the British Columbia Securities Commission

I blogged about the promotion of Green and Hill Industries back on June 4th. Trading will resume on GHIL at the market open on Tuesday, August 19th.

 

SEC trading suspension press release (PDF)

SEC trading suspension order (PDF)

The reasoning for the suspension was the standard boilerplate:

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

The Commission acknowledges FINRA’s assistance in this matter.

 

ghil

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.

Jul 31

Stock promoter Randy Hamdan sues SeekingAlpha author Matt Finston for Libel in response to negative article on Creative Edge Nutrition $FITX

Randy Hamdan, a stock promoter currently being sued by the SEC, has sued SeekingAlpha author Matt Finston for libel. See the article on SeekingAlpha that led to this. The case was filed in the Eastern District of Michigan; the case number is 2:14-cv-12949-GAD-MKM. I saved a copy of the complaint and all exhibits (PDF). Finston is asking for support in defending against this suit. Below is an excerpt from the complaint:

8. Just a few examples of Defendant’s false and defamatory statements regarding Plaintiff are as follows: a. That Plaintiff has a “fraudulent past”. (See Exhibit A).
b. That Plaintiff and HH Group, LLC were issued 420 Million shares of stock in Creative Edge Nutrition Inc. (ticker symbol FITX) for $0.001 per share. (See Exhibit B).
c. That “Vgpr didn’t survive Hamden”, implying that Plaintiff caused Vega Biofuels Inc. to fail or go out of business. (See Exhibit C).
d. That “DNAX is another”, implying that Plaintiff caused DNA Brands, Inc. to fail or go out of business. (See Exhibit D).
e. That Plaintiff “dumped” FITX stock “into the promotion three years ago”. (See Exhibit E).
f. That Plaintiff is “a serial pump and dump and he’s been charged by the SEC for it.” (See Exhibit F).
g. That Plaintiff is “a known pump and dump”. (See Exhibit G).
h. That Plaintiff is “an investor relations ponzi”. (See Exhibit H).

j. That Plaintiff is “using more profiles to harass and intimidate and pump”. (See Exhibit J).

Below I examine each of these claims. Do note that I am not a lawyer so my opinion may not be the most informed on whether Hamdan has a good case or not.

a. “That Plaintiff has a “fraudulent past”.

While my lawyers would not like me to use these words if there has not been a criminal fraud conviction, the actions that Randy Hamdan is alleged to have engaged in by the SEC clearly fit the common definition of fraud even if he was not criminally charged with fraud (highlighting mine; excerpted from SEC legal complaint against Hamdan):

Randy A. Hamdan (“Hamdan”) began the scheme by creating a market with manipulative purchases and sales of the securities of CompuSonics in September 2009 through his wholly owned entity, Oracle Consultants, LLC (“Oracle Consultants”), and continued it with a marketing campaign that began in early October 2009 and culminated on October 19, 2009 with the issuance, by an international news distribution service, of a false press release regarding the company’s purported positive business developments

If Finston had used the modifier “allegedly” (because Hamdan has not settled or lost the case yet), his statement would be substantially true. If Hamdan does settle the SEC suit or loses it then he would have no cause for action on the basis of that statement.

b. That Plaintiff and HH Group, LLC were issued 420 Million shares of stock in Creative Edge Nutrition Inc. (ticker symbol FITX) for $0.001 per share. (See Exhibit B).

This is a true fact. Below are excerpts from the 2013 FITX annual report list of share issuances:

Shareholder | Number of shares issued | price
HH Group LLC. 3/4/2013 32,000,000 0.001 conversion Restricted
HH Group LLC. 3/4/2013 28,000,000 0.001 conversion Restricted
HH Group 5/5/2013 36,500,000 0.001 Paid debt Restricted
HH Group 5/8/2013 10,000,000 0.001 services Restricted
HH Group 5/15/2013 72,000,000 0.001 Paid line of credit off Restricted
HH Group LLC. 7/9/2013 52000000 0.001 Paid debt Restricted
HH Group LLC. 7/9/2013 10000000 0.001 Paid debt Restricted
HH Group LLC. 7/9/2013 5000000 0.001 Paid debt Restricted
HH Group LLC. 7/9/2013 20000000 0.001 Paid debt Restricted
Rhamdan 8/21/2013 10204081 0.001 Paid debt Restricted
Rhamdan 8/21/2013 10204081 0.001 Paid debt Restricted
Rhamdan 8/21/2013 20408163 0.001 Paid debt Restricted
Rhamdan 9/6/2013 50000000 0.001 Paid debt Restricted
HH Group, LLC 9/6/2013 10204081 0.001 Paid debt Restricted
HH Group, LLC 9/6/2013 10204081 0.001 Paid debt Restricted
HH Group, LLC 9/6/2013 40816326 0.001 Paid debt Restricted

c. That “Vgpr didn’t survive Hamden”, implying that Plaintiff caused Vega Biofuels Inc. to fail or go out of business. (See Exhibit C).

Vega Biofuels (VGPR) is still in business. However, if Finston meant that the stock price declined as a result of Hamdan, then his statement is correct. Selling by shareholders into paid promotions causes stocks to fall. Hamdan’s company paid for some promotion of VGPR. Example below:

StockRockandRollLLC® has been compensated three thousand cash for one-day coverage on VGPR by HH Group LLC. [excerpt from email received from stockloackandload.com.com on 4/20/2011]

d. That “DNAX is another”, implying that Plaintiff caused DNA Brands, Inc. to fail or go out of business. (See Exhibit D).

As with Vegas Biofuels, it is clear that while the company didn’t go out of business, the stock price dropped substantially, at least partially as a result of shareholders selling into the stock promotion that was at least partly paid for by Hamdan’s company HH Group LLC. See excerpt from a promotional email below:

Market Wrap Media, Inc. accepts compensation from companies for advertising services.
  Market Wrap Media, Inc. has been contracted to receive $2,500 by a third party (HH Group LLC) for 1 day of advertising service for DNAX. [excerpt from email received from pennystocknewspaper.com on 11/30/2011]

e. That Plaintiff “dumped” FITX stock “into the promotion three years ago”. (See Exhibit E).

This is the point of a stock promotion: to enable large shareholders to sell shares. It is a true fact that Hamdan owned (and continues to own) millions of shares and that his company HH Group LLC paid for numerous promotional emails promoting FITX back in 2012. Unless Hamdan and his companies did not sell any shares during the promotions this is a substantially true statement. While 2012 is only two years ago and not three, it is close enough for the statement to be substantially true and thus not libelous. Below is an excerpt from just one of many promotional emails on FITX I received in 2012, paid for by Hamdan’s HH Group LLC:

We expect to be compensated fifteen thousand dollars by a non-affiliate third party, HH Group, LLC, for a one week advertisement of Creative Edge Nutrition, Inc. [excerpt from email received from ExplosiveOTC.com on 110/1/2012]

f. That Plaintiff is “a serial pump and dump and he’s been charged by the SEC for it.” (See Exhibit F).

This is a true fact: Hamdan and his companies have paid for stock promotion on many companies (more than just the three that Finston mentioned). Paying for stock promotion and then selling shares is the very definition of a pump and dump. The SEC sued Hamdan for his role in the pump and dump of Compusonics in 2009:

FACTS Fraudulent Stock Marketing Campaign 8. From September 27, 2009 through October 19, 2009, Hamdan carried out a fraudulent marketing campaign designed to increase the trading price of CompuSonics’ stock. In substance, the fraudulent marketing campaign was to the effect that CompuSonics would soon release information concerning a settlement of a patent infringement matter that would “reward” shareholders. Hamdan caused the dissemination of materially false information concerning CompuSonics by means of stock newsletters, a website, a message board, and a press release. To facilitate the dissemination of the false information and conceal his role in the scheme, Hamdan employed an anonymous email service, a proxy server, and fictitious contact information.

g. That Plaintiff is “a known pump and dump”. (See Exhibit G).

This is a true fact (if you ignore Finston’s abuse of the English language): Hamdan’s companies have paid for multiple stock promotions.

h. That Plaintiff is “an investor relations ponzi”. (See Exhibit H).

This statement is meaningless hyperbole but even if it was libelous it was not made by Finston — he simply linked to a publicly accessible accusation by another individual.

[i. I have removed this complaint from this blog post and have removed my analysis of it. I believe that Finston made this comment to Hamdan and no one else saw it and it is thus not actionable. There is no need for me to further publicize it.]

j. That Plaintiff is “using more profiles to harass and intimidate and pump”. (See Exhibit J).

At least according to one message board poster I trust, Randy Hamdan has sent some nasty private messages to people and it would be reasonable to believe that the purpose of those messages was to intimidate. Oh, and meet “Michael Cheeseman” who appears to be Randy Hamdan.

So after looking at all the claims made by Randy Hamdan I conclude that his case is very weak. I may be wrong about that as I am not an expert.

Disclaimer: I have no position in any stock mentioned although I have traded FITX in the past. I have donated $400 to support Finston’s defense and I am in talks with him to further support his defense. This disclaimer will not be updated unless I update the blog post. 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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