I came across the following information when investigating my favorite penny stock, Continental Fuels (OTC BB: CFUL). Continental Fuels hired Crosscheck Capital 7 months ago to pump up its stock. It appears that Crosscheck Capital is associated with George Mahfouz Jr., who was previously fined $230,000 by the SEC back in 2000.
I should note that George Mahfouz Jr. is not listed as a member of Crosscheck Capital, but a trust with the name Mahfouz and a Paula Mahfouz are listed as members. Furthermore, there is a Paula Mahfouz who is a member of Crosscheck and who is related to George Mahfouz Jr. (probably his wife, although I am not sure). How do I know she is related? On a shareholder list of Pantheon Technologies back in 2000, the two are listed as shareholders and have the same address (search the 10sb12g form for ‘Paula Mahfouz’ to find this). Considering how few Mahfouz there are in Arizona (23 total according to phone records), and considering the base rate probability of <.001% of any one person being a penny stock promoter, I can conclude beyond a reasonable doubt (but not with certainty) that the Paula Mahfouz of Crosscheck is related to George Mahfouz Jr. and therefore that George Mahfouz Jr. is thus associated (if not directly involved with) Crosscheck Capital.
I should also mention that if Mr. Mahfouz has been actively involved with Crosscheck Capital from its inception in 2004, then he violated his agreement with the SEC that prohibited him from touting microcaps for five years after September 2000. If he has not been actively involved with the business then he has has not violated his agreement or any law. That being said, sending out fliers to hundreds of thousands of unsophisticated investors touting worthless companies and only disclosing a conflict of interest in the fine print is immoral, even though it is legal.
Disclosure: I hate stock pumpers, whether their activities are legal or illegal. I would also like to express my displeasure with the Arizona state agency that deals with businesses: they had no record of Mr. Mahfouz’s previous business, despite an SEC litigation release that stated it was an LLC formed in Arizona. I have no position in CFUL.