2012 – Goode Trades

More stock promoter lies: SANP ass-rape edition

Santo Mining Corp (OTCBB: SANP) has been the pump and dump of one of the most successful stock promoters (in terms of bringing buying volume to stocks so that insiders can unload tens of millions of shares) over the last 1.5 years. Their websites (detailed below) promoted LEXG, RAYS, and SEFE. Buyers of SANP from the beginning have done poorly, particularly because this stock started at a higher price and with a higher market capitalization than their previous pumps. But as usual, stock promoters like to lie about why promoted stocks go down. They always blame short sellers. Below is a quote from the November 16th email from stockspecialists.com (bold added by me):

Fellow Penny Stock Investor:

SANP – Santo Mining Corp. Ticker (SANP) Last Trade $0.56 This stock is has been getting ass-raped since reaching it’s high on 1.44 on 11/13. In what could be described as measured steps accentuated by block trades setting lower price points, the stock has been cut severely in the three days of trading. We feel that the stock has become a victim of dubious short sellers pressing the security lower in the past three days of trading. The stock is a relatively new issue, and is thus quite susceptible to such nefarious behavior.

As usual, the stock promoters are half correct: investors in SANP have been getting raped. Of course, short sellers have nothing to do with it. There are two reasons, in order of importance: (1) the large shareholders or insiders who paid for the pump have been unloading millions of shares into the increased volume over the last six days and (2) investors and traders who bought in the first days of the pump were selling into the bounce to get out with smaller losses. SANP still has a $36m market cap and while the stock could easily bounce many times over the next couple months, it remains substantially worthless and will likely drop another 90% in the next couple months, just as their previous pumps SEFE and RAYS have dropped (LEXG has continued to drop but dropped more slowly).

RAYS

SEFE

SANP

The websites of the SANP stock promoter that I am familiar with are as follows:

TheStockDetective.com
StockmAuthority.com
SuperStockHunter.com
PennyStockWizard.com
StocksDigest.com
StockSpecialists.com

Disclaimer: No positions in any stocks mentioned. I have no relationship with any parties named 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.

Lube up! A sexy pump and dump of Empowered Products (EMPO)

Dislosure: I am short EMPO. See the full disclaimer at the bottom of this post for details.

I could write a lot of things about Empowered Products (Pinksheets: EMPO), but I will keep this post short. The company makes sex lubricants (competing with Johnson & Johnson’s KY) and while it has a real product and real sales, it is run by a stock promoter, has poor business prospects due to poor brand recognition and intense competition, and is undergoing a paid stock promotion (see: GrowthStockScreener.com). For future reference (after the stock promotion website is taken down in a few months or a year), I have saved a PDF copy of that web page. The bottom line is that investors in EMPO are going to need its products soon because they are about to get screwed hard.

Empowered Products’ website is geared more to selling stock than to selling sex accessories. The stock promoter Scott Fraser is the CEO and owns 40 million shares. With a recent price of $0.79 and 62.4 million shares outstanding, the company has a market cap of $49 million. The company has sales that have declined in the most recent quarter relative to a year ago and it continues to lose money. With a $3 million annual revenue run rate the company is valued at an absurd multiple of 15x sales.

While Empowered Products has put out press releases about its products being sold to Target.com (where I cannot find them one month later) as well as Walgreens (where they can be found at least online) and CVS (where they can be found online), I did not see their products at the one Walgreens I checked and there were few reviews of their products online (one proxy for popularity). A check on Drugstore.com showed that EMPO’s products were not reviewed a lot relative to other brands and they were not the best reviewed nor were they close to a top seller.

Here is the view of the lubricant section at my local Walgreens. Note the distinct lack of EMPO’s products (click images to enlarge):

Now for the more important picture:

and the disclaimer from the stock promotion website:

The Aggressive Growth-Stock Screener and www.GrowthStockScreener.com contains a featured stock report which is intended to be educational in nature, not an investment recommendation and should be viewed as an advertisement. Alpine View Media is providing a budget of $750,000.00 and this report to Crown Pacifica to coordinate the distribution of this featured report on Empowered Products Inc.

Further destruction is almost guaranteed with this pump and dump. Shareholders better lube up!

Disclaimer: I am short 3078 shares of EMPO and may buy to cover the position or add to it at any time after 11/16/2012. I have no relationship with any parties named 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.

George Sharp wins libel suit agains AbuseofLaw.org / Michael Osborn

This news is over a week old and I retweeted Sharp’s tweet about this just over a week ago, but I thought it worthwhile to post the full order. What Sharp has posted on AbuseofLaw.org is not the actual order although he has presented it in that way.

George Sharp won his libel suit against Michael Osborn et al. involving allegations posted by Osborn on AbuseofLaw.org. The judge ordered:

(1) Defendants Michael Osborn aka Michael Osborn Ison, Illumination Fraud Foundation, and Abuse of Law Org [sic] (hereinafter “Defendants”) are ordered to transfer ownership and control of the domain names and underlying blogs for associated [sic] with victimsofgeorgesharp.com and abuseoflaw.org to Plaintiff; (2) once the transfer of the ownership and control to Plaintiff is completed, the substantive content currently contained on those websites and blogs is to be unpublished by the Plaintiff; (3) the Plaintiff shall not publish any statements about Defendant Michael Osborn on the website abuseoflaw.org; (4) Defendants, and all those acting in concert shall be ordered to remove and not to repost, copy, restate, duplicate, or republish the content, comments or allegations regarding the Plaintiff, including but not limited to republishing the content that was contained on the websites and associated blogs of victimsofgeorgesharp.com and abuseoflaw.com on any other sites or blogs; and (5) if any other website or blogs have already been established by the Defendants those websites and blogs shall be unpublished forthwith.

I have uploaded a copy of the decision (pdf). The decision does not affect Sharp’s website that criticizes Michael Osborn: http://www.michael-osborn.info/ and that website remains up.

George Sharp is known in the penny stock world as a litigious anti-pumper gadfly (and I don’t mean that in a bad way — we need more people to provoke and annoy stock promoters); he has sued companies involved in pump and dumps including Writers Film Group (WRIT) and companies being pumped by spam emails (EMPM, MSTG, IDOI and BRND most recently). I made some money selling short the BRND spam pump. Osborn had accused Sharp of being Leslie Howard and running Pumpsanddumps.com, and it is those accusations that led to Sharp’s libel suit (pdf). I previously blogged about Leslie Howard becoming a stock promoter.

Disclaimer: No relationship with any parties named above (except that I have emailed Sharp previously to obtain his court filings in the spam lawsuit) and no positions in any stocks mentioned. 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.

My new venture: OTC MicroCap Research

While there are plenty of people who write about microcap securities fraud and pump and dump scams, too little of the research reaches the people who need it the most: the small investors who believe in the scams. To help them I have created a new website, OTCMicroCapResearch.com. The only thing on that website will be research reports on companies, mostly pump and dumps. I will take no positions in the stocks I analyze at that website, take no payment for articles (except from content syndication websites) and I will do my best to distribute my analyses so that the investing public can see it and learn to avoid pump and dump scams that way. I do not claim that there is anything particularly new about what I am doing, but it is something worth doing.

See my introductory post on why I created the new website.

My PacWest Equities (Pinksheets: PWEI) report published prior to the market open today (PWEI is now down over 75% from its open, although the Infitialis report had a lot to do with that).

Disclaimer: No positions in any stocks mentioned. The new website is owned by MorningLightMountain LLC, just like this website; I am the managing member of the company. 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.

My four monitor workspace: What I watch during the trading day

Below is a screenshot of my 4-monitor workspace with all the programs I normally use during the trading day. Click the image for a full-size screenshot. My middle two monitors are 22″ and have 1900 x 1200 resolution so this is a huge image. I describe what I have on each monitor going from top left to bottom right

Screenshot

Leftmost monitor: My trades at IB (Interactive Brokers) are at the top left, and to the right of that are a Speedtrader level 2 and time and sales window. Below the IB trades window is a 1m intraday chart of the same stock that is on the level 2 / time and sales. To the right of that is the old version of Tweetdeck.

Middle-left monitor: All these are Speedtrader Pro windows. The only window that might need some explanation is the top middle window, which is what I call the HOD list (high of day list) which shows every stock meeting certain criteria that is making or touching its high of the day.

Middle-right monitor: This has my Interactive Brokers Traders Workstation (TWS) with a large level 1 watchlist, and in the bottom right it has news on stocks I have a position in and the new “market signals” price scanner at IB. In the upper-right, mostly beneath the IB windows, is the free Prodigio RTS platform that I use for backup quotes. I also use this monitor for looking at my trade-tracking spreadsheet and the internet on Chrome or Firefox.

Rightmost monitor: The top left is Profit.ly chat, with a Speedtrader Time and Sales and Level 2 to its right, my email inbox at the far right, and IB’s top % gainers scanner (otcbb and pinksheet only) at the bottom left.

Disclaimer: No relationship with any parties named above (except that I am a user of and an affiliate seller of Profit.ly) and no positions in any stocks or funds mentioned (except for those positions showed on my screens, which I may no longer hold). 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.

Attempting to have some fun with a Craigslist scammer but mostly just wasting my time

If something seems too good to be true, it always is. I was trying to do like the 419 scammer baters, but a lack of time and wit has left me with no response. Please submit a suggestion for my next email in the comments.

Here is how it started, with me replying to a Craigslist ad (I realized only after I already had written the email that it was way too good of a deal to be real).

To whom it may concern:

I am highly interested in the 2004 Mazda6 sedan you posted on Craigslist today. Please send more pictures and any further details you have on the car. Assuming everything looks good I would be able to pay cash within a couple days. If you wouldn’t mind, I would like its VIN so I could run a Carfax report. Also, your contact information and your employer’s name / location would be great so I could see the car in person.

Sincerely,

Michael Goode

Hello,Thank you for your interest in purchased my 2004 Mazda MAZDA6 Sedan, I am selling this vehicle because I am in the military and my unit will be sent back to Afghanistan. I don’t want it get old in my garage. The price is low because I need to sell it before September 24th. The vehicle is in pristine condition, no accident history, clear title, no dents or dings and no scratches. Always adult driven and garaged, never abused or raced. If you are interested, it’s still available for sale and the price, as stated in the ad, is $2330. The vehicle is in Fort Belvoir,VA and in case it gets sold I will take care of delivery. Let me know if you are interested, email back.

Transmission: Automatic
Fuel type: Gasoline
Exterior color: Black

Interior color: Black
Mileage: 61,696 miles
Engine: 4 – Cyl

Thank you !
Corporal Lindsay Walton [ lindsaywalton81@gmail.com ]

Lindsay,I remain interested. Please give me the VIN number so I can run a carfax check and your bank account information so I can wire you money. Considering how great a deal it is I don’t need to see it in person.

Hi again,Right now I’m in a military base. We are training, getting ready for Afghanistan. I am only allowed to check my email twice a day.We have to stick to e-mail for now.Hope you can understand.Like I already said, the delivery process will be managed by me. I think I can have it there at your home address within 2-3 working days. It will come with a clear title and reg. I am a member of the eBay buyer protection program and using this service you will get a 7 days testing period after delivery. During that 7 days testing period I will not be getting any money. I need to know if you are interested so I can ask eBay to send you the details on this deal. If interested please include in your next email your contact info for eBay (full name, shipping address and phone number), so we can get the ball rolling.
Also I made a photo album with the car: http://s1262.photobucket.com/albums/ii615/2004Mazda6sedan/?albumview=slideshow
VIN 1YVFP80CX45N10681

Thank you.
Corporal Lindsay Walton

Lindsay,I am still interested. My full contact information is:
Michael Goode

[address redacted for privacy]

Ok thanks.I asked eBay to send you an invoice regarding the terms and conditions of this transaction.Normally it will take approx 30 minutes until you receive all the payment instructions.Please email me as soon as you receive it.

Thank you!

The fake eBay invoice suggested that I send the money via Western Union to a random guy in Dallas or Houston, Texas (I forget which). I forwarded that email to Western Union’s fraud department.

Did you received the invoice from eBay?They told me they already sent you.Also check your bulk email folder (junk,spam),as a filter may have prevented it from reaching your primary in-box.Please get back to me and let me know if you understood how this transaction works and if you can make the payment today as you probably noticed the price is for a fast sale and I need to know when to proceed with shipping.

Hope to finish this transaction soon.

Lindsay,

Is there any way I could use a bank wire transfer to send the money? My bank is a lot more convenient than the closest Western Union agent.

I had two potential buyers : one didn’t show up and the other mail me,saying he lost the money, so I can’t afford to wait more days, that is why I gave to a shipping company that will ship it to the next owner, so I’m trying to sell it on-line, and beside that I have the transaction under contract with eBay and I have to respect the terms from the contract.Unfortunately for me my I can’t do this transaction personally. I am a member of the eBay buyer protection program and using this service you will get a 7 days testing period after delivery.Thank you so much and I would really appreciate if we could finish this deal today so that the shipping may start sooner.So if you manage to complete the deal today please don’t forget to fax over the Western Union payment receipt to the fax# from the invoice.

Please keep me posted

Disclaimer: No relationship with any parties named above and no positions in any stocks or funds mentioned. 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.

Lying stock promoters: Bullexchange.com & the FINRA short reports

One tactic that many stock promoters use over and over again to explain why their stock promotions are followed by large stock price declines is to blame it on the short sellers. Unfortunately, FINRA abets these lies by publishing without adequate explanation data required by the SEC’s Regulation SHO. This data provides information on every share sold each day. Time and and time again I have seen stock promoters use this data to ‘show’ that the stock they are promoting is getting attacked by short sellers.

See the text of the most recent email I received from the various Bullexchange.com websites (emphasis mine):

Valued Subscribers,
Welcome New Members,
VKMD experienced a fantastic start last Thursday where many of our subscribers secured substantial gains.

However, due to a major short attack, gains were quickly reversed. We believe this was deliberate, the Finra reg sho list http://regsho.finra.org/FORFshvol20120906.txt indicates nearly 11 million shares were shorted last Thursday.

Simply put, VKMD did not end the way we hoped despite great developments we hear may be announced in coming days.

In a recent email, we had mentioned we were under new management. Due to events of the past week, the new management team has been removed and we are back under the same great team that brought you the likes of ECIT and AGRT.

We are hard at work on our next pick, and we will see you some time in October!

Your Dedicated Team at TBX
http://bullexchange.com

Searching the large text file linked above yields the following information for VKMD for the given date (formatted by me to enhance legibility):

Date |Symbol |ShortVolume |ShortExemptVolume |TotalVolume |Market
20120906 |VKMD |10843159 |0 |37378406 |O

This data appears to show that out of 37,378,406 shares traded, 10,843,159 shares were sold short. This is not false, but it doesn’t mean that short sellers or market makers increased their net short position by 10 million shares. Rather, this shows all sales where the shares being sold were not already in the seller’s possession. This includes speculative short sellers, both retail traders and market makers. But far more important are market makers selling large blocks of stock. In those cases, a large shareholder might tell their broker to sell one million shares and then rather enter one big order, the broker will give the order to a market maker such as NITE to slowly sell the shares over the course of a day. The market maker sells the shares short and does not take possession of the shares it is selling until it has completed its share sales. For Reg SHO reporting purposes, these are short sales, but the market maker is not taking a speculative short position — at the end of the day the seller delivers the shares to the market maker who then delivers those shares to the buyers of the stock.

So the next time a stock promoter links to the FINRA Reg SHO short data to show that a stock dropped because of short sellers, you will know that they are lying. In fact, many times the large block sellers whose shares are sold in such a way to make them show up as ‘short sales’ in the FINRA data are the stock promoters or the people who pay for the stock promotion. So the promoters are not innocently wrong — they lie through their teeth even though they know better.

Read more about Bullexchange.com:
Awesomepennystocks.com sues Bullexchange
Awesomepennystocks.com drops lawsuit

How not to become a stock promoter (aka Sell PRHL)

If you have ever tried to contact me, then you probably realized that my contact form isn’t exactly the most friendly — I specifically say that I will ignore most people who contact me. Also, by using the contact form, you grant me “permission to reprint your question and your name on my blog.” (Bold in original). Jack Gregory is the first person whose message to me was worth reprinting. In his message to me yesterday he said:

PRHL is a rapidly growing company in the energy saving business. I would like to explore the opportunity to have you promote this Company. Please send me the terms of engaging you for this purpose. The storyline is hard to believe but this is a Company which has neglected its PR and IR.

This is the first time that I have ever been offered to payment to promote a stock. Oddly enough, most people quickly realize that I am a cynic and short seller and I have no interest in selling out. I thought I would have a little fun so I replied:

Thank you for your offer. I am pleased to offer my stock promotion services for the price of $1,000,000,000 (US). Please confirm your interest and I will then provide you with my bank account details so you can wire me the money. I will the [sic] promote PRHL as the greatest thing since flush toilets (way more important than sliced bread).

Needless to say, Jack did not agree to my compensation and I continue to not be a stock promoter. A quick search of the internet let me know that Jack is the former CEO of PRHL, having been replaced at the very beginning of this year. As of 2010 he and his wife owned over 50% of the shares of the company. Following what appears to be a reverse merger that precipitated his departure, Dr. Gregory retained ownership of 160,000 shares that were subject to a lock-up agreement with PRHL and could not be sold prior to June 15, 2012 (those became 800,000 shares after a February 5-for-1 stock split). Since June the stock has lost almost 90% of its value and I infer that Dr. Gregory must not have sold all his shares yet.

Of course it is quite possible that the person who contacted me wasn’t actually Gregory but was some other large shareholder who wants to unload stock. But the important fact is that PRHL is a shitty company that is getting promoted while insiders and/or large shareholders dump stock.

Prior to April the stock rarely traded so I believe it likely that the stock was promoted around that time. Also, it was promoted today by LevelStock.com, a bottom-tier promoter:

LevelStock.com has been compensated on 08-19-12 ten thousand dollars by a third party for two week advertisement for Premier Holding Corp.

By the way, PRHL has 48 million shares outstanding and a market cap of $6.7m. I consider it overvalued and believe it is worth under 1 cent per share.

Note to other stock promoters or those who pay for promotions: my reputation is worth a hell of a lot more than $10,000. Unless you have at least a few hundred million dollars to give me, I am not interested.

Stock promoter profile: M J Capital LLC / StockRockandRoll.com / Stockbomb.com

It is always interesting to see who is behind various stock promotion websites. One interesting one is MJ Capital Management. It is not a very effective stock promoter (I like to short the stocks it promotes). Below is info on its stock promotion websites and how you can find that information. The inspiration for this post (and much of the research) comes from nodummy on the InvestorsHub DD Support Board and Fraud Research Team message board; he is one of the few non idiots on iHub and that message board is one of the few useful message boards on iHub).

I should point out that the research in this blog post was not hard at all — Jay Isip, the main person running MJ Capital LLC, does not appear to have tried to hide his identity and his companies are not difficult to understand. This is very different from some other stock promoters who use offshore companies and fake addresses or mail forwarding services to hide their identity.

The first part of my research on a stock promotion website starts with signing up to the email list. Then I look at the information disclosed in the disclaimer and below the disclaimer in the emails. The CANSPAM act requires all people sending commercial / promotional emails to disclose their name (business or personal) and a valid mailing address. StockBomb.com makes it easy by listing “MJ Capital, LLC | 110 Main Street | Newark, nj 07102”. This information then leads to a web search of the address and the legal entity. The search of the address gives us no useful information, but searching for MJ Capital LLC yields us the company’s website, www.mjcapitalmanagement.com/, and a Linked In profile page. The Linked In page doesn’t tell us much we don’t already know. The website is a great example of the kind of website that stock promoters have to sell their services to OTCBB/Pinksheets companies and shareholders in those companies.

Next, we can take a look at the WHOIS data on the StockBomb.com and MJCapitalmanagement.com domain names — to find out who registered them. This is often a waste of time because of the availability of private registration (I use that for all my domain names). In this case, registration for both these websites is private and thus not useful. Next we can look at the server where the websites are hosted. Many websites are hosted on servers with thousands of other websites, but sometimes only a handful of websites are hosted on the same server, allowing us to draw connections between those sites. You can use this website to look this info up for free (another website that allows this kind of search is ReverseInternet.com).

This search hits the jackpot for us and yields only a handful of websites:

(click image to embiggen)

This gives us a nice list of potentially-related websites:

ilovetradingpennystocks.com
mjcapitalmanagement.com
packetfusion.com
researchotc.com
stockbomb.com
stockobell.com
stockrockandroll.com
www.mjcapitalmanagement.com
www.stockbomb.com
www.stocklockandload.com
www.stockrockandroll.com

I signed up for the emails on all the stock promotion websites and then I tried looking at the one non-pump website (packetfusion.com) to find any connections between it and the pump websites, which I could not find.

ilovetradingpennystocks.com shows the same content as pennystocklocks.com, so I signed up for that website as well.

The contact email addresses for stockobell.com, researchotc.com, stocklockandload.com, stockrockandrollcom, and stockbomb.com are the same: MJCapitalManagement@gmail.com. StockLockandLoad.com and StockBomb,com both show Jay.StockRockandRoll@Gmail.com as the contact email address for ‘general inquiries’. That is pretty conclusive evidence that all of these stock promotion websites are linked to MJ Capital LLC. Now that we are nearly certain that all the websites are run by the same person or people, we can look at the WHOIS information on all the websites. All but three of the websites were registered privately so we cannot glean any information from those. However, ilovetradingpennystocks.com, pennystocklocks.com, and stockobell.com were not registered privately.

(click images to embiggen)

PennyStockLocks.com is registered to Robert McConnon of New Jersey. ILoveTradingPennyStocks.com and StockoBell.com are registered by Jay Isip of New Jersey. A google search of “Jay Isip” yields a Linkedin profile as one of the top few results. That Linkedin profile shows Jay Isip as the President/CEO of MJ Capital LLC and Stock Rock and Roll LLC and lists the following as company websites: http://www.stocklockandload.com/lp/ http://www.stockbomb.com/ http://www.researchotc.com/.

The next step is to look up MJ Capital LLC and StockRockandRoll LLC (as well as PennyStockLocks LLC that I found in the disclaimer of the pennystocklocks.com website). As a note for foreign readers, the LLC is a type of limited liability company in the USA that allows for less paperwork and potentially simpler taxes than a corporation. Like US-based corporations, LLCs are registered in a state (there is no national registry). Because the email from StockBomb.com listed a New Jersey address and the phone number on the MJ Capital LLC website lists a New Jersey phone number, the obvious next step is to search New Jersey’s business registry. A quick way to find that is search the web for “corporation search New Jersey”. The top four search results all get us to the place we want to go, the New Jersey business records service. Unfortunately the search engine isn’t particularly good, so slight variations result in no results. It took me a dozen searches before I put a space between M and J (M J Capital) and found the company.

Unfortunately the State of New Jersey made me pay $0.10 to get the unofficial certificate of formation (pdf), but I paid and that gave me the valuable information that Jerome Isip formed the company on October 5, 2011. The unofficial certificate of formation (pdf) of StockRockandRoll LLC lists Jerome J. Isip as the person who formed the company (on April 17, 2008) — that leads me to conclude that his middle name is Jay and he is the same person as Jay Isip. Also listed as member/managers (owners/executives) of the LLC are Mike Killian and Nirav Amin. Google searches of those names yielded little info — I will return to them shortly, though. PennyStockLocks LLC (pdf) was formed on May 24th, 2011 as a single-member LLC by Robert McConnon. I tried searching the web for his name and found little other than a previous iHub post by nodummy on StockRockandRoll (I wish I had seen that earlier — it could have saved me some time). Reading that post led me to search for “Mike stockrockandroll” which led me to this Linkedin page of a purported co-founder of StockRockandRoll.com. StockRockandRoll LLC also has a Facebook page.

While I obviously can’t be certain, it would make sense that Mike Killian is the Mike who is a founding partner of StockRockandRoll LLC (and the “M” in MJ Captial — MJ likely stands for Mike & Jay). As to Nirav Amin, I have no clue where he went. Presumably he is no longer with the company.

So, what does this mean? StockRockandRoll LLC was the first company (from 2008); at some point, Nirav Amin likely left and in 2011 Isip started working with McConnon, who started his own website. Since PennyStockLocks.com has been set up and receiving payments for stock promotion, it has disclosed the exact same amount of compensation on every pump as has StockRockandRoll.com. In other ways (such as ilovetradingpennystocks.com, an Isip-registered domain name, showing the pennystocklocks.com content) the two LLCs appear to act as one. I believe that the M J Capital LLC was set up later in 2011 to give the group a more ‘professional’ look so they could more easily sell their services to the people who pay for pumps.

What conclusions can we make from all this information? First, stock promotion can be quite lucrative. The sum of compensation disclosed through 6/19/2012 in 2012 is $1,349,500 (this number could be off by a bit due to my counting error). Obviously there are significant expenses, the largest of which is new subscriber acquisition costs. Second, there is not that much benefit to finding out all this information for most stock promoters: I get pump emails from each of these pump websites at the same time (and I wouldn’t consider buying their pumps anyway because they tend to gap up and then drop). Third, stock promoters like to continually add new websites: ResearchOTC.com was created most recently, in September 2011, while StockRockandRoll.com has been around since 2008.

[Edit 29 August 2012 – It appears that MJ Capital LLC has added a new website, MomentumOTC.com, and that website is advertising with pay per click text ads on Bing. The website was first registered almost a year ago but I had not seen it advertised prior to today. The domain name is privately registered and it is on a server with thousands of other websites, but the CANSPAM-required name and address at the bottom of its emails gives pennystocklocks.com as the owner of the domain.]

Below are charts of recent MJ Capital LLC paid promotions (they do uncompensated pumps from time to time that go up a lot, at least for the first few minutes):

LGBS – Promoted on 8/2/2012 – $25,000 paid for promotion

KALO – Promoted on 7/10/2012 – $20,000 paid for promotion by Equities Awareness Group, LLC

LBGO – Promoted on 6/26/2012 – $25,000 paid for promotion by Winning Media, LLC

Disclaimer: No relationship with any parties named above (except that I trade their pump and dumps) and no positions in any stocks or funds mentioned. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

A stock transfer agent’s tip leads to British Columbia halt of FMNL

Forum National Investments (FMNL), a company that has skyrocketed on a recent stock promotion campaign, received a cease-trade order from the British Columbia Securities Commission (BCSC) five days ago. Of course, such orders do not prevent companies from trading on the OTCBB in the USA, although such orders often result in steep price declines. FMNL was no exception, dropping from a $2.70 close on 7/20/2012 to a close of $1.01 the next trading day, 7/23/2012.

The reason for the cease-trade order was not abnormal: a large promotional campaign along with a number of press releases from the company led to a significant increase in FMNL’s share price; also, the accounts of people associated with FMNL’s president engaged in significant trading in FMNL during the promotion. What is most interesting about the case is that it was the stock’s transfer agent that informed the BCSC of suspicious transactions by the insiders. Much penny stock fraud involves the selling of unregistered shares or the illegitimate issue of new shares. If more transfer agents were as vigilant as FMNL’s transfer agent, penny stock fraud would be significantly less common (or at least less remunerative).

See the BCSC press release. From the cease trade order and notice of hearing (pdf; emphasis mine):

4. Clozza is the President, Chief Executive Officer, and a director of Forum National.

5. Tutschek is the Chief Financial Officer and a director of Forum National.

6. Curtis is a shareholder of Forum National.

…

Unexplained attempts to transfer shares

21. On July 5, 2012, Clozza and Tutschek attended the offices of Forum National’s
transfer agent in Vancouver, British Columbia (Transfer Agent). They carried with
them share certificates representing approximately 2.7 million shares of Forum
National. Among these, were certificates in the names of Curtis and Tutschek.
22. Clozza instructed the Transfer Agent to “overnight” transfer the share certificates into
the name of a Bahamian company (Bahamian Entity), by way of a United States
based brokerage firm (American Brokerage). The Transfer Agent informed the
Commission.
23. On July 10, 2012, the Dealer informed the Commission that some of the accounts
holding Forum National shares had instructed the Dealer to transfer their holdings to
the American Brokerage. Accounts in the names of Bahamian companies, including
the Bahamian Entity, were among those that provided transfer instructions.
24. On July 9 and 12, 2012, the Executive Director obtained freeze orders from the
Commission under section 151 of the Act. Among other things, the freeze orders
blocked attempts to transfer certain share certificates held at the Transfer Agent, and
certain accounts held at the Dealer.
25. On July 16, 2012, Tutschek sent the Transfer Agent a Treasury Direction signed by
Clozza and Tutschek on July 11, 2012, directing it to issue share certificates
representing 137,500 shares in Forum National. The Transfer Agent refused.

Also see David Baines’ article on this case and the Stockhouse article (the first one I saw on this case). Thanks to PromotionStocks for being the first that I saw to mention this case. More info can be found in this iHub post by nodummy.

The $650,000 promotion can be seen here and it was at AmericanInvestingReport.com but is no longer there. See an scanned copy of a physical mailer on it at Promobuyer.net.

Disclaimer: No relationship with any parties named above (except that I trade pump and dumps) and no positions in any stocks or funds mentioned. 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.