Reconsidering George Sharp: An Enigmatic penny stock crusader

Motivation is everything. In the penny stock world, most participants’ motivation is plain: greed. The stock manipulators and promoters do what they do so they can get rich quickly. For the most part, their choices are risky and unethical but smart: only some of them pay the ultimate price of going to prison. Many end up paying settlements on only a portion of their fraudulent activity and still end up with a nice profit and a retirement in some sunny locale. On the other hand, the buyers of penny stocks are stupid and greedy: the vast majority will lose most of their money. A few will make nice profits but only those who are cynical, smart, and a little lucky. There are also the regulators: they are motivated by a combination of trying to achieve justice and trying to make themselves look good and advance their careers.

But there is another group involved in penny stocks that many ignore. These are the amateur sleuths, the gadflies, the crusaders against fraud. Some of them are traders, although they are motivated not just by profits — they put effort into research and whistleblower tips to the SEC even when they have no position. But some of the most prolific anti-fraud crusaders don’t even trade penny stocks. There are just a handful of whom I’m aware although I am sure there are others who submit whistleblower complaints to the SEC and never mention things publicly. The most famous is Yolanda Holtzee, who has been doing this for over a decade and seemingly knows every single SEC enforcement agent of note as well as FBI agents and US Attorneys. Janice Shell is also quite well known and she has been posting on investorsHub (primarily on the DD Support Board and Fraud Research Team) for longer than I can remember. The WSJ wrote about her in 2000. Another researcher, known only as ‘nodummy’, has posted on InvestorsHub and then when he saw his research on pump and dumps being used by others to profit from trading those stocks, started a service offering his research (Promotion Stock Secrets, now known as Pennystocks.buzz). I have repeatedly linked to his research, particularly on AwesomePennystocks.

But writing about penny stock frauds and informing regulators about them is one thing. It would be quite another thing to actually do something to directly impede the fraud. That brings me to the most enigmatic penny stock crusader I’ve encountered: George Sharp. The reason to bring him up now is that I just recently came across the news from last June 13th that he had been retained by OTCMarkets.com as a consultant. Before getting into that, I should review what I have previously written about Sharp.

I first became aware of George Sharp (or at least his actions) back in 2011 because of his legal battle with Michael Osborn, a convicted felon at the time who was later convicted of another felony and lost a libel suit brought by Sharp. Also, on May 17th, 2011 George Sharp filed a lawsuit against Writers Film Group (WRIT), an AwesomePennyStocks promotion. This wasn’t even his first lawsuit against a public company. It appears that his first lawsuit was on September 24th, 2010 against Yasheng Eco-Trade Corporation (that suit was filed on 10/19/2009 as 37-2009-00100574-CU-MC-CTL in the Superior Court of California, County of San Diego ). He also acquired some attention by suing Arena Pharmaceuticals (a real biotech; not just a pure pump & dump scam).

If you search for Sharp, George on the Superior Court of California, County of San Diego case locator (in San Diego city only to exclude a few cases that involve a different George Sharp), you can see just how litigious Sharp has been (while I am sure that most of the suits below were filed by Sharp, I have not examined every one and it is possible that one or two of them were filed by a different George Sharp). In chronological order, the public companies that Sharp sued were Yasheng Eco-Trade Corporation (10/19/2009), Arena Pharmaceuticals (ARNA; 9/27/2010), Cuba Beverage Company (CUBV; 4/22/2011), Forex International Trading Corp (FXIT and FXITE; 6/13/2011), IDO Security Inc (IDOI; 7/23/2012), Citadel EFT Inc (CDFT; 2/13/2013), USA Graphite Inc (USGT; 2/20/2013), Xumanii Inc (XUII; 5/13/2013), 3D Eye Solutions Inc (TDEY; 6/24/2013), Clean Enviro Tech Corp (CETC; 6/26/2013), Avis Rent a Car System Inc (this was just a consumer complaint in small claims court; 4/22/2014), America Exploration Resources Inc (AREN; 8/20/2015), and Writ Media Group Inc (WRIT; 7/27/2016). In addition to these lawsuits against public companies (all but Avis and Arena Pharmaceuticals traded over the counter and were allegedly pump and dump scams), Sharp sued LKP Global Law LLP (2/10/2015), which had represented penny stock companies, and Stocktips.com (3/11/2015), a stock promoter. This list is not even exhaustive because Sharp filed other lawsuits in other jurisdictions, including a lawsuit against Writers’ Film Group (WRIT) filed on 9/4/2011 (Los Angeles County Division of California Superior Court Case No. BC461550).

Details on a few of the lawsuits

Note: Most of all of these suits were filed with numerous John Doe defendants whose names were added to the lawsuit once their names became known to Sharp. Rather than show only the names listed in the original complaint for each of the lawsuits I have shown every name listed as a defendant on the list of parties to the lawsuits. In parentheses after each company that was a public company I have included its ticker at the time of the lawsuit.

George Sharp v. Writers’ Film Group (WRIT), Armada International Inc, Christina Kueber, John Diaz, Front Row Networks Inc, Ariella Kapelner, Tal Kapelner, Michael Sullivan, Philip Kueber 

Writers’ Film Group (WRIT) was promoted by Crazypennystocks.com and related websites (a predecessor to AwesomePennyStocks) back in 2011. This is the first lawsuit of Sharp’s I remember seeing. Sharp filed his lawsuit against the company on 9/4/2011 (Los Angeles County Division of California Superior Court Case No. BC461550) and put out a press release about the lawsuit. Defendants Philip Kueber, Christina Kueber, Michael Sullivan, and Armada International were all added as Doe defendants after the suit was filed. Sharp filed for dismissal against defendants Tal Kapelner, Ariella Kapelner, and John Diaz on 2/8/2012. A press release by Writers’ Film Group in 2013 referring to the Kapelners and Diaz states “the settlement stated that they did not engage in any wrongdoing.” Sharp filed for the case against Writers’ Film Group and the remaining defendants to be dismissed on 2/24/2012. In both cases the dismissals were with prejudice (meaning that Sharp could not re-file the suit later). This is one of the most common endings for civil suits and is usually indicative of a settlement of some kind. Unfortunately for bystanders like us, there is no way to know details of such a settlement most of the time — a settlement could be big or small and could favor either side. Sharp litigated the whole case in propria persona (without an attorney). Among Sharp’s suits, this was one of the shortest (lasting about six months).

(Note: the register of parties incorrectly spells the last names of Christina and Philip Kueber as ‘Keuber’. Philip Kueber is best known for pleading guilty to conspiracy to commit stock fraud in the case of Cynk Technology).


However, the settlement was actually made public in George Sharp’s subsequent lawsuit against WRIT Media Group (slightly different name, same corporate shell, same ticker). From that complaint:

On or about February 16, 2012, the remaining parties in the 2011 case
entered into a Settlement Agreement whereby SHARP was to receive $10,000 in cash and ten million free-trading shares of WRIT stock. SHARP received the settlement payment and stock as agreed, thus making SHARP a shareholder of WRIT and entitling him to all the rights and protections afford any shareholder. SHARP remains a shareholder of WRIT to this day.

Perhaps most notable about that settlement is that Sharp did not ever sell those shares. Obviously Sharp is not an idiot and knows how penny stocks work — if he were only in this for the money then the obvious thing to do would be to sell the shares right away. Even for someone who is not just in it for the money, the smart thing to do is sell. But for some reason Sharp did not sell those shares and he was eventually diluted to almost nothing. That brings me to his follow-up suit against the successor company to Writers’ Film Group.

George Sharp v. Writ Media Group (WRIT), Inc & Eric Mitchell

On 7/27/2016 George Sharp filed suit against Writ Media Group, Inc and Eric Mitchell (President & CEO of the company). The case is 37-2016-00025434-CU-FR-CTL in the Superior Court of California, County of San Diego. See the original complaint. Here are a couple excerpts from the complaint (emphasis added by me):

7. On or about May 16, 2011, the Plaintiff filed litigation (“the 2011
case”) against Defendant WRIT and other defendants for Fraud, Negligent Misrepresentation, Violation of California Corporations Code Section 25400 et seq; Violation of California Unfair Business Practices Act – Business & Professions Code Section 17200; and Violation of California Unfair Business Practices Act – Business & Professions Code Section 17500 (LA Superior Court Case No. BC461550).
8. On or about February 16, 2012, the remaining parties in the 2011 case entered into a Settlement Agreement whereby SHARP was to receive $10,000 in cash and ten million free-trading shares of WRIT stock. SHARP received the settlement payment and stock as agreed, thus making SHARP a shareholder of WRIT and entitling him to all the rights and protections afford any shareholder. SHARP remains a shareholder of WRIT to this day.

14. On February 4, 2014 the Defendants executed a one for one thousand reverse split of stock reducing the number of shares outstanding in WRIT from at approximately 5.7 billion shares to approximately 5.7 million shares, effectively wiping out the holdings of small shareholders.
15. From February 4, 2014 to July 24, 2015, the Defendants issued
approximately 455.5 million shares of WRIT.
16. From June 11, 2014 to June 13, 2014 WRIT stock was promoted by various known stock touts who specialize in creating hype for intrinsically worthless penny stocks in order to enable certain insiders to divest themselves of shares. The promotion created an increase in share price and trading volume of WRIT stock. The stock touts usually included a disclaimer within their emails identifying their compensation for services rendered.
17. On July 24, 2015 the Defendants executed a one for five hundred
reverse split of stock reducing the number of shares outstanding in WRIT from at approximately 461.2 million shares to 2,306,061 shares, once again effectively wiping out the holdings of small shareholders

Of the causes of action listed in the complaint, the most interesting to me is the third cause of action, “breach of fiduciary duty”. That cause of action was only asserted because Sharp was a shareholder at the time of the suit. If he had sold his shares after the earlier settlement he would not have been able to assert this cause of action.

On February 28, 2017, Mitchell and Writ Media Group offered to accept judgments of $10,000 each payable to Sharp, with each party paying their own legal costs. These offers were accepted by George Sharp. Those two judgments were quickly paid.

George Sharp v. IDO Security Inc (IDOI), Benchmark Email, Blue House Works Inc, Peter Dunn, Eco-Trade Corporation (BOPT), Emailvision Inc, Empire Post Media Inc (EMPM), EMPRT Group Ltd, Fidelity Ltd, Flaster Knol Ltd, Michael Goldberg, Internacional Publizierende Gruppe Limitada, Lyris Inc, Mendel Mochkin, Mustang Alliances Inc (MSTG), Natti Reach Ltd, Premier Brands Inc (BRND), Promo Kombo Ltd, Irit Pnina Reiner, Henry Shabat, Stand Online Ltd, Leonard Sternheim, Wild Craze Inc (WILD), & Zegal & Ross Capital LLC

This is one of the more interesting and complicated of the suits filed by Sharp. It was also briefly mentioned in a Wall Street Journal article in 2015. This was against a large number of defendants, many of which likely never existed (they were made up companies), promoted by, employed by the promoted companies, or connected to the spam stock promoter that was known most commonly as StockCastle (though they had many names with at least dozens of different websites). See my blog post on some of their pumps. On July 24th, 2012 George Sharp filed a press release about the lawsuit he had just filed. See the complaint. The case lasted for just under two years (until April 8th, 2014 when Sharp requested dismissal). The case was 37-2012-00101057-CU-NP-CTL in the Superior Court of California, County of San Diego. You can find the court documents by searching that case number here. With 377 actions recorded in the case I will not attempt to reproduce the full list here. Below is the list of defendants:

The two causes of action listed in the complaint were “Violations of California Restrictions on Unsolicited Commercial E-mail Advertisers (Cal. Bus. & Prof. Code § 17529.5)”, which is a law prohibiting spam email, and “Violations of Consumers Legal Remedies Act (Cal. Civ. Code§ 1750 et seq.)”. The Consumers Legal Remedies Act (CLRA) “applies to deceptive acts intended to result in the sale or lease of goods or services as well as acts that actually result in the sale or lease of goods or services”.

On January 17th, 2013, Sharp filed a press release announcing that he had subpoenaed Luke Zouvas, an attorney who had “contacted him [Sharp] on behalf of a client, in order to settle in advance any future claims that Mr. Sharp may have against that client.” (Luke Zouvas was sued on April 26, 2016 by the SEC for an unrelated “pump and dump scheme”). Unfortunately, I found no mention of Zouvas in the court documents from around January 17, 2013 or in any of the other court documents I read.

Of all the parties named in the suit, most of the presumed promoters (the various names they used in their spam emails) were dismissed from the case presumably because they did not actually exist. IDO Security and Mustang Alliances Inc litigated the case and Sharp did not win judgments against them (he likely settled with them — he filed to have both dismissed from the case with prejudice and the dismissal minute order states “Attorney David Harter notifies the Court, case has settled except as to defaulted defendants“).

Empire Post Media litigated and lost. Premier Brands Inc and Wild Craze Inc did not litigate and Sharp won default judgements against them. George Sharp apparently reached a settlement with defendant Blue House Works Inc (see Blue House Works’ earlier first amended answer to the complaint). Blue House Works Inc “provided the MyNewsletterBuilder email marketing service platform from which Plaintiff alleges that he received unsolicited emails.”

On April 8th, 2014 Sharp was awarded a judgment for $30,000 against Empire Post Media (EMPM, one of the promoted companies).

On April 11th, 2014 Sharp was awarded a judgment for $36,080 against Premier Brands Inc (BRND) and $11,300 against Wild Craze Inc (WILD; both companies promoted by the spammers).

Both of these were judgments by default:

Perhaps the most interesting thing I found in all the filings from this case is the following declaration of David J. Harter, George Sharp’s attorney, from a motion to compel IDO Security to produce a PMK (primary most knowledgeable person) to depose. That link also contains the full deposition of Michael Goldberg of IDO Security.

In January 2000, I formed the Law Offices of David J. Harter, APC. My standard hourly rate for litigation cases is between $400.00 and $450.00 per hour depending on the nature of the case. I am billing
Mr. Sharp based on my lowest standard hourly rate for my services in connection with this action.

Hence, the total legal time expended with respect to this motion to compel the deposition totals 10 hours. Based on my lowest standard
hourly rate the reasonable attorney’s fees incurred total $4,000.00.

That is certainly a reasonable rate for an experienced litigator. The point is, with that kind of work required by his lawyer, a not insignificant portion of the settlements Sharp received and judgments he was awarded and able to collect on must have gone to his lawyer. In this case, while Sharp “filed this action in propria persona, he substituted in counsel [David J. Harter] on December 30, 2013 ” (that is from this minute order).

George Sharp filed on 3/24/2014 for dismissal with prejudice of the lawsuit against IDO Security et al (and his attorney notified the court that the case had settled except for the defendants that defaulted). On 4/3/2104 Sharp was awarded a judgment by stipulation in the amount of $30,000 ($25,000 in damages plus $5,000 in attorney fees) against Empire Post Media, Inc (EMPM). The case was dismissed without prejudice.

George Sharp v. LKP Global Law LLP, Ahmad Ashari, Deelaw Ashari, Waleed Ashari, Albert T Liou, and Luan K Phan

George Sharp filed a suit against LKP Global Law LLP and some of the lawyers there on 2/10/2015. Below is the list of parties in the suit:

Unlike some of his other suits, Sharp did not file this pro se / in propria persona but was represented by his long-time lawyer David Harter. The case was 37-2015-00004673-CU-NP-CTL in the Superior Court of California, County of San Diego. At the end of 2016 the case was transferred from San Diego to Los Angeles. See the original complaint (pdf). This lawsuit was a complaint for “1) MALICIOUS PROSECUTION 2) ABUSE OF PROCESS” against the law firm representing pump and dump Xumanii (XUII), which had sued Sharp for exposing Xumanii. To quote from Sharp’s complaint:

9. This action arises out of the Ashari Class Action wherein Ashari, LKP, Phan and Liou filed a frivolous class action complaint against Plaintiff alleging that Plaintiff engaged in market manipulation and fraud concerning the stock of Xumanii, Inc. (“XUII”) in violation of
Corporations Code sections 25400(d) and 25500. The class action was filed in retaliation, among other things, for SHARP’s exposure of the XUII stock manipulation and for his own action against XUII alleging violations of California’s anti-SPAM email statute.
10. In response to the Ashari Class Action, Plaintiff filed a motion to strike the complaint pursuant to Code of Civil Procedure section 425.16, known as the Anti-SLAPP Statute. The Court granted the Anti-SLAPP motion and dismissed the Ashari Class Action with prejudice finding, among other things, that Ashari and his attorneys had failed to present evidence to establish any element of Ashari’s one and only cause of action. The Court also awarded Plaintiff his fees and costs in the Ashari Class Action in excess of $33,000. True and correct copies of the Notice of Ruling granting the Anti-SLAPP motion and the Notice of Entry of Judgment are attached hereto respectively as Exhibits A & B. The Ashari Class Action was frivolous and filed without probable cause because Ashari and his attorneys had failed to present evidence to establish any element of Ashari’s one and only cause of action and because LPK, Phan and Liou admitted to the Court that they had no evidence to establish any element of Ashari’s one and only cause of action.

Prior to that lawsuit against Sharp, LKP had litigated another lawsuit by a penny stock company against Sharp. That suit was:

known as  Forex International Trading Corp. v. George Sharp, San Diego Superior Court Case No. 37-2011-00092840 (the “Forex Action”). That suit was also dismissed as frivolous pursuant to Plaintiff’s Anti-SLAPP motion. The Court also awarded Plaintiff his fees and costs in the Forex Action in excess of $12,000.

The quote above is again from the complaint against LKP Global Law LLP.

See the San Diego register of actions (click to enlarge):

The case in the Superior Court of California, Los Angeles County, is Case Number: BC583586 GEORGE SHARP VS LKP GLOBAL LAW LLP ET AL. Filing Date: 06/02/2015. See the summary here by searching the case number. The case was dismissed on 6/15/2017. See Sharp’s motions to compel from 4/22/2016, 4/26/2016, and 4/26/2016. There was a settlement conference scheduled for May 10, 2017 and with the case having not gone to trial and being dismissed with prejudice I believe the parties settled (although there is no way for me to know what any settlement entailed).

Below is the register of actions:

06/15/2017 Request and Entry of Dismissal (W/PREJUDICE AND AS TO THE ENTIRE ACTION OF ALL PARTIES AND ALL CAUSES OF ACTION )
Filed by Attorney for Plaintiff/Petitioner

05/22/2017 Notice of Change of Address
Filed by Attorney for Plaintiff/Petitioner

02/21/2017 Notice-Change of Address
Filed by Attorney for Plaintiff/Petitioner

01/19/2017 Stipulation and Order (STIPULATION AND ORDER CONTINUING TRIAL AND RELATED DATES: MSC c.f. 5-10-17 to 9-12-17; FSC c.f. 5-19-17 to 9-21-17; J.T. c.f. 5-30-17 to 10-2-17 )
Filed by Attorney for Deft/Respnt

12/19/2016 Notice of Continuance
Filed by Clerk

11/23/2016 Notice (OF DISASSOCIATION OF COUNSEL )
Filed by Attorney for Pltf/Petnr

10/21/2016 Declaration (SUPPLEMENTAL DECLARATION OF JODY BORRELLI IN SUPPORT OF DEF MOTION TO COMPEL )
Filed by Attorney for Deft/Respnt

10/19/2016 Opposition Document (TO MOTION TO COMPEL FURTHER RESPONSES TO FORM INTERR HRG: 11/1/16 )
Filed by Attorney for Deft/Respnt

10/19/2016 Statement of Facts (SEPARATE STATEMENT IN SUPPORT OF OPPO TO MTN TO COMPEL FURTHER )
Filed by Attorney for Deft/Respnt

10/18/2016 Opposition Document (TO MOTION TO COMPEL FURTHER HRG: 10/31/16 )
Filed by Attorney for Deft/Respnt

10/18/2016 Statement of Facts (SEPARATE STATEMENT IN SUPPORT OF OPPOSITION TO MOTION TO COMPEL HRG: 10/31/16 )
Filed by Attorney for Deft/Respnt

10/17/2016 Reply/Response
Filed by Attorney for Pltf/Petnr

10/13/2016 Opposition Document (CORRECTED OPPOSITION TO PLTF MOTION TO COMPEL FURTHER RESPON TO REQUEST FOR PROD OF DOCU/ DECL OF JODY BRRELLI )
Filed by Attorney for Deft/Respnt

10/13/2016 Opposition Document (NOTICE OF ERRATA RE: OPPOSTION TO PLT’S MOTION TO COMPEL FURTHER RESPONSES/SEPARATE STATEMENT )
Filed by Attorney for Deft/Respnt

10/13/2016 Statement of Facts (CORRECTED SEPARATE STATEMENT IN SUPPORT OF OPPO TO PLTF MTN TO COMPEL FURTHER HRG: 10/24/16 )
Filed by Attorney for Deft/Respnt

10/11/2016 Opposition Document (TO PLAINTIFF MOTION TO COMPEL FURTHER RES TO PROD OF DOC )
Filed by Attorney for Deft/Respnt

10/11/2016 Opposition Document (TO MTN TO COMPEL FURTHER RESP TO REQ FOR PRODU DECL OF J. BORRELLI/SEP STATE IN OPPO )
Filed by Attorney for Deft/Respnt

09/27/2016 Notice of Association of Attorneys
Filed by Attorney for Pltf/Petnr

09/26/2016 Stipulation and Order (STIPULATION AND ORDER CONTINUING MANDATORY SETTLEMENT CONFERENCE FROM 4-13-17 TO 4-20-17; [NOTE: MSC WAS CONTINUED PREVIOUSLY FROM 10-5-16 TO 4-13-17 PER STIP. AND ORDER OF 6-23-16])
Filed by Attorney for Pltf/Petnr

06/23/2016 Stipulation and Order (STIPULATION AND ORDER CONTINUING TRIAL AND FINAL STATUS CONFERENCE FROM 11-14-16 AND 11-4-16, RESPEC- TIVELY, TO 5-30-17 AND 5-19-17, RESPECTIVELY; MSC SET FOR 4-13-17; DISCOVERY/MOT. CUT-OFFS EXTENDED)
Filed by Attorney for Pltf/Petnr

06/10/2016 Response (TO DEFEF’S NOTICE OF RELATED CASES )
Filed by Attorney for Pltf/Petnr

06/03/2016 Notice-Related Cases
Filed by Attorney for Deft/Respnt

04/26/2016 Motion to Compel (FURTHER RESPONSES HRG 10/31/16 )
Filed by Attorney for Pltf/Petnr

04/26/2016 Statement of Facts (SEPARATE STATEMENT OF ITEMS IN DISPUTE RE: FORM INTERROGATORIES )
Filed by Attorney for Pltf/Petnr

04/26/2016 Motion to Compel (FURTHER RESPONSES HRG: 11/1/16 )
Filed by Attorney for Pltf/Petnr

04/26/2016 Statement of Facts (SEPARATE STATEMENT OF ITEMS IN DISPUTE RE REQUESTS FRO ADMISIONS, SET ONE, )
Filed by Attorney for Pltf/Petnr

04/22/2016 Motion to Compel (FURTHER RESPONSES )
Filed by Attorney for Pltf/Petnr

04/22/2016 Statement of Facts (separate statement in dispute )
Filed by Attorney for Pltf/Petnr

04/22/2016 Motion to Compel (FURTHER RESPONSES HRG: 10/24/16 )
Filed by Attorney for Pltf/Petnr

04/18/2016 Notice (OF WITHDRAWAL OF MOTION TO COMPEL )
Filed by Attorney for Deft/Respnt

04/18/2016 Declaration (NOTICE OF TERMNATION OR MODIFICATION OF STAY )
Filed by Attorney for Pltf/Petnr

04/18/2016 Request to Enter Default (IS REJECTED AS ASHARI #28. )
Filed by Attorney for Pltf/Petnr

04/13/2016 Opposition Document (TO MOTION TO COMPEL RESPONSES )
Filed by Attorney for Pltf/Petnr

04/13/2016 Statement of Facts (SEPARATE STATEMENT IN SUPPORT OF OPPOSITION TO MOTION TO COMPEL )
Filed by Attorney for Pltf/Petnr

04/04/2016 Statement-Case Management (HRG: 3/29/16 )
Filed by Attorney for Pltf/Petnr

03/21/2016 Statement-Case Management
Filed by Attorney for Defendant/Respondent

03/15/2016 Statement-Case Management
Filed by Attorney for Deft/Respnt

01/26/2016 Statement of Facts (SEPARATE STATEMENT IN SUPPORT OF MOTION TO COMPEL HRG: 4/22/16 )
Filed by Attorney for Deft/Respnt

01/26/2016 Motion to Compel (FURTHER RESPONSES TO REQUEST FOR ADMISSIONS )
Filed by Attorney for Deft/Respnt

01/12/2016 Statement-Case Management
Filed by Attorney for Pltf/Petnr

01/08/2016 Statement-Case Management
Filed by Attorney for Deft/Respnt

01/04/2016 Statement-Case Management
Filed by Attorney for Deft/Respnt

10/09/2015 Notice (OF ERRATA RE NTC OF CMC )
Filed by Attorney for Pltf/Petnr

10/09/2015 Statement-Case Management
Filed by Attorney for Pltf/Petnr

10/09/2015 Proof-Service/Summons
Filed by Attorney for Pltf/Petnr

09/14/2015 Statement-Case Management
Filed by Attorney for Deft/Respnt

09/08/2015 Notice (TAKING MOTION TO QUASH OFF CALENDAR 2/8/16 )
Filed by Attorney for Pltf/Petnr

09/08/2015 Notice (OF WITHDRAWAL OF MOTION TO STAY AND QUASH DEPOSTITION SUBPOENA FOR THE PRODUCTION OF BUSINESS RECORDS )
Filed by Attorney for Deft/Respnt

09/04/2015 Answer to Complaint
Filed by Attorney for Deft/Respnt

09/03/2015 Answer to Complaint
Filed by Attorney for Deft/Respnt

07/27/2015 Joinder (TO NONPARY TO MOTION TO STAY )
Filed by Attorney for Pltf/Petnr

07/24/2015 Statement of Facts (for pumpsanddumps. com )
Filed by Attorney for Real Pty in Interest

07/24/2015 Motion to Quash
Filed by Attorney for Real Pty in Int

07/21/2015 Motion to Quash (DEPOSITION )
Filed by Attorney for Pltf/Petnr

07/21/2015 Statement of Facts
Filed by Attorney for Pltf/Petnr

07/20/2015 Objection Document (TO DEPOSITION SUBPOENA (ISSUED TO SCOTTRADE, INC.) )
Filed by Attorney for Pltf/Petnr

07/20/2015 Objection Document (TO DEPOSITION SUBPOENA )
Filed by Attorney for Pltf/Petnr

07/20/2015 Objection Document (TO DEPOSITION SUBPOENA/ (ISSUE TO FMR, LLC) )
Filed by Attorney for Pltf/Petnr

07/20/2015 Objection Document (TO DEPOSITION/ ISSUED TO TRADEKING GROUP, )
Filed by Attorney for Pltf/Petnr

07/20/2015 Objection Document (TO DEPOSITION SUBPOENA (ISSUED TO THE CHARLES SCHWAB CORP.) )
Filed by Attorney for Pltf/Petnr

07/20/2015 Objection Document (TO DEPOSITION SUBPOENA (ISSUED TO OMGEO, LLC) )
Filed by Attorney for Pltf/Petnr

07/20/2015 Objection Document (TO DEPOSITION SUBPOENA (ISSUED TO THE DEPOSITORY TRUST & CLEARING CORP.) )
Filed by Attorney for Pltf/Petnr

07/20/2015 Objection Document (TO DEPOSITION SUBPOENA (ISSUED TO PROFESSIONAL TRADING SOLUTIONS, INC.) )
Filed by Attorney for Pltf/Petnr

07/20/2015 Objection Document (TO DEPOSITION SUBPOENA (ISSUED TO SCOTTSDALE CAPITAL ADVISORS CORP) )
Filed by Attorney for Pltf/Petnr

07/20/2015 Objection Document (TO DEPOSITION SUBPOENA (ISSUED TO TD AMERITRADE, INC. )
Filed by Attorney for Pltf/Petnr

07/20/2015 Objection Document (TO DEPOSITION SUBPOENA (ISSUED TO TRADE STATION GROUP, INC.) )
Filed by Attorney for Pltf/Petnr

07/06/2015 Amendment to Complaint (DOE 1, 2,3,4,5,6,7,8,9 )
Filed by Attorney for Pltf/Petnr

06/30/2015 Substitution of Attorney
Filed by Attorney for Deft/Respnt

06/23/2015 Notice
Filed by Attorney for Pltf/Petnr

06/18/2015 Notice (of cmc )
Filed by Attorney for Pltf/Petnr

06/12/2015 Notice-Case Management Conference
Filed by Clerk

06/09/2015 Notice-Case Management Conference
Filed by Court Attendant

06/08/2015 Affidavit of Prejudice–Peremptory (DEFT LUAN K PHAN’S MTN FOR PEREMPTORY CHALLENGE AND DECL OF JANET LY IN SUPP THEREOF )
Filed by Attorney for Defendant/Respondent

06/02/2015 Complaint

06/02/2015 Summons Filed
Filed by Attorney for Plaintiff/Petitioner

06/02/2015 Notice-Stay (AUTMOATIC STAY CAUSED BY A FILING IN ANOTHER COURT FILED 4/7/15 )
Filed by Attorney for Plaintiff/Petitioner

06/02/2015 Proof of Service
Filed by Attorney for Plaintiff/Petitioner

06/02/2015 Notice of Incoming Case Transfer
Filed by Clerk

Proceedings Held (Proceeding dates listed in descending order)

06/15/2017 at 09:45 am in Department 74, Joseph R. Kalin, Presiding
Court Order – Case Dismissed/Disposed

05/01/2017 at 08:30 am in Department 74, Teresa Sanchez-Gordon, Presiding
Order Re: Related Cases – Completed

10/24/2016 at 09:00 am in Department 74, Kevin C. Brazile, Presiding
Motion to Compel – Motion Denied

10/05/2016 at 09:30 am in Department 74, Teresa Sanchez-Gordon, Presiding
Mandatory Settlement Conference ([c.t. 4-13-17 per stip. and orderof 6-23-16]) – Matter continued

04/22/2016 at 09:00 am in Department 74, Teresa Sanchez-Gordon, Presiding
Motion to Compel – Off Calendar

03/29/2016 at 01:30 pm in Department 74, Teresa Sanchez-Gordon, Presiding
Conference-Case Management ((c.f. 1-14-16)) – Trial Date Set

01/14/2016 at 09:00 am in Department 74, Teresa Sanchez-Gordon, Presiding
Conference-Case Management ((c.f. 9-29-15)) – Matter continued

09/29/2015 at 01:30 pm in Department 74, Teresa Sanchez-Gordon, Presiding
Conference-Case Management – Matter continued

06/11/2015 at 08:30 am in Department 34, Michael P. Linfield, Presiding
Affidavit of Prejudice – Granted

 

The Other Side: Leslie Howard & First Microcap Report

Back in early 2012 I started noticing ads on Pumpsanddumps.com for FirstMicrocapReport.com which was run by Leslie Howard. The service started out free and purported to identify stocks that were likely to undergo promotion. I wasn’t a huge fan of the service because by its very nature trying to identify and buy stocks pre-pump will lead to trading illiquid stocks and if the pump doesn’t happen then the stock can drop big. (That being said, I did trade a number of the picks, buying quickly and selling to slower traders for over $1500 in total profits.) FirstMicrocapReport acquired a bit of a following and then in late May 2012 Leslie Howard released a paid stock promotion of the Biostem US Corporation (ticker:HAIR and unrelated to current ticker HAIR, Restoration Robotics). For this promotion, Leslie disclosed payment of $15,000 and ownership of the stock. After this stock promotion was over, Leslie Howard continued to release uncompensated picks and did not promote any other stocks for money.

Here is the disclaimer from the first email I received (May 24, 2012) promoting Biostem US Corporation (HAIR):

After this I gave little thought to ‘Leslie Howard’. It wasn’t until October 2013 that I came across a lawsuit George Sharp had filed against Biostem US Corporation (HAIR). It became clear reading the lawsuit that Leslie Howard was the alter ego of George Sharp. I was a bit puzzled about the lawsuit and why Sharp had promoted a company like Biostem US Corp but I really didn’t give it any further thought. I finally have reason to revisit this case (as I will get into below) so I looked back into it and it still doesn’t make a lot of sense to me.

See the first complaint by George Sharp (and his company Market Broadcast, LLC) against Biostem et al. Below are a series of allegations from Sharp’s third amended complaint (emphasis added by me):

32. On or about May 9, 2012, Defendants ELCO, LONDON and MAZUR, with the consent and participation of BIOSTEM entered into a contract with the Plaintiff MARKET,
entitled “Engagement Agreement for Marketing Services” (“AGREEMENT”). A true and correct copy of that agreement is attached hereto as Exhibit “A,” and incorporated herein by
reference. The AGREEMENT required the Plaintiff MARKET to be provided 300,000 freetrading shares at the time that the investor awareness program began. The AGREEMENT
further provided that Defendants to disclose all known material facts to the Plaintiff MARKET regarding BIOSTEM. The AGREEMENT required Plaintiff MARKET to be kept informed of key developments regarding BIOSTEM.

34. On or about May 24, 2012, Defendants breached the AGREEMENT by failing to provide the stock when required under the AGREEMENT.
35. Defendants further breached the AGREEMENT by failing to inform the Plaintiff of all known facts and failing to keep Plaintiff informed of key developments as required under the AGREEMENT, including but not limited to failing to inform Plaintiff that the equity financing agreement between Defendants BIOSTEM and ELCO that was announced on May 24, had not been consummated and would not be consummated

41. In that April 12, 2012 meeting Defendants MAZUR and Ari Kaplan made the following false statements to Plaintiffs: (1) that BIOSTEM was a reputable and viable business in the hair restoration industry, (2) that BIOSTEM had reached and consummated an equity financing agreement for $5,000,000 with Defendant ELCO, (3) that BIOSTEM had entered into
a medical affiliate agreement with Pizarro Hair Restoration Clinics, and (4) that there was an increasing market demand for BIOSTEM shares.

45. The facts were that BIOSTEM was a sham business and it had no equity financing agreement for $5,000,000 or any other amount and had no medical affiliate agreement with Pizarro Hair Restoration Clinics which was in fact an actual reputable company in the hair restoration industry.

71. As a further result of this fraud, most subscribers to the newsletters retained by MARKET to bring investor awareness to BIOSTEM and who purchased the common stock of
BIOSTEM, lost a significant portion, if not all of their investment, and MARKET has since been unable to retain additional paying clients for investor awareness programs.
72. SHARP was further damaged in reliance on these false statements in that he was induced to purchase additional shares of BIOSTEM stock on the open market. Sharp made 23 separate purchases of BIOSTEM stock during the relevant period all to his damage in an amount to be proven at the time of trial

73. As a further result of this fraud, the reputation of SHARP as a forthright and credible source of information and as a crusader against stock fraud was compromised, causing damages in an amount to be proven at the time of trial

A few things from the above allegations strike me as odd. First, it seems odd that a stock promoter would specify in his contract that his client “disclose all known material facts” about the company and “be kept informed of key developments.” The typical promoter just parrots whatever the pump and dump mastermind wants him to say or makes up his own puffery. He does his sales job and doesn’t worry about the details of the company. Second, Sharp made 23 open market purchases of Biostem stock — again I have only rarely heard of a stock promoter buying stock in the open market in an ongoing paid pump & dump scheme. Also odd was that Sharp filed the suit seven months after the arrest of most of the participants in the pump and dump scheme — obviously he wouldn’t have a chance of collecting any damages from any of the defendants except maybe Crocs (yes, that Crocs — the executives of Biostem had come from Crocs), and Crocs as a defendant seems to me a very long-shot.

Sharp and his company dropped the suit on October 1st, 2014 after filing a notice on September 22nd, 2014 stating that the case had been settled. Crocs had filed a demurrer that was then sustained by the court on August 7th, 2014 so it was not part of the settlement. The order sustaining the demurrer essentially stated that Sharp had failed to prove that Crocs was sufficiently involved in the alleged conspiracy.

Even among promoted stocks, Biostem US Corp was a total disaster — in early 2013 the FBI arrested fourteen people for market manipulation in Biostem and four other companies. The case was USA v. Sherman Mazur et al and is Case 2:13-cr-00062-SVW in the US District Court, Central District of California, Western Division. Read the indictment. I have not had time to read through everything in the case but it looks like the FBI messed up in a very big way. See the transcript of the proceedings in the application by Sherman Mazur’s lawyer for review/reconsideration of order setting conditions of release/detention (docket 460 from 4/16/2014). The charges against Mazur and the other defendants were dropped in late March, 2014 “because of problems with a wiretap application”.

What does this all mean? Was it just a coincidence that the first (and only) stock George Sharp promoted later resulted in a number of arrests and criminal prosecutions (criminal prosecutions of pump and dump schemes are rare). Did he get involved to try to assist the already ongoing investigation? I really don’t know but that wouldn’t surprise me.

George Sharp, helping to put promoter scum in prison?

Sharp took partial credit for the indictment of Jamie Boye and Eric Cusimano. See update on Cusimano’s guilty plea. Presumably that is because he obtained information relevant to the prosecution and sent it to the authorities, but of course there is no way to confirm or disprove this with access only to public records.

George Sharp working for OTC Markets

For the following few years George Sharp continued to periodically sue penny stock companies and promoters. Other than that, I paid him little thought. I figured that he had just gotten greedy and that in his lawsuits he was looking for quick settlements. In the case of a promoted stock, many of which have management in on the scam, it is good business to settle quickly to get someone like Sharp to go away rather than risk going to discovery and having the whole scheme revealed. Despite that logic, many of Sharp’s lawsuits were long and drawn-out affairs.

I did not reconsider any of this until I saw the news this summer that Sharp had been hired by OTCMarkets.com as a consultant. Below is the full text of the press release:

OTC Markets Group Inc. (OTCQX: OTCM), operator of financial markets for 10,000 U.S. and global securities, today announced it has retained well known, market analyst George Sharp, as a consultant. Mr. Sharp will assist OTC Markets as we develop compliance processes to bring more timely and actionable data to the OTC market.

“George’s expertise in tracking small and microcap market activity makes him a valuable asset as we improve market transparency.” said Matthew Fuchs, Executive Vice President of Market Data and Strategy at OTC Markets Group. “Our goal is to use data to bring greater transparency to the market, arming investors, issuers and market participants with information they need to make informed decisions and identify unusual activity.”

“I am pleased to work with OTC Markets Group as they take a proactive approach to improve the small and microcap market by providing more information to investors,” stated George Sharp. “Information availability and investor education are key elements of a trusted, efficient markets.”

Obviously I had to reconsider my earlier opinion that Sharp was mostly in it for the money. I can’t imagine that OTC Markets Group pays fabulously well and if Cromwell Coulson considered Sharp to be just a pro-se ambulance chaser and stock promoter then he would not have hired Sharp. I do believe that Coulson is a man of good faith and has worked to reduce the prevalence of scams that trade on OTC Markets (although I don’t think he has done nearly enough). At the end of the day, of course Sharp likes the money he wins in his lawsuits. But he is suing many bad people (although I’m sure at least some of the CEOs of promoted companies in his suits were not involved in any promotion) and I no longer doubt that he does consider himself a crusader against penny stock fraud. Maybe he uses his lawsuits to gather useful information (during discovery) about penny stock companies that he then uses in other ways. I can’t know for sure. Two things are certain: George Sharp will keep suing people and the world is a better place as a result of his lawsuits. I can only hope that his anti-scam fervor spreads throughout the OTC Markets organization and that he really does as much behind the scenes to inform regulators as he has claimed (such as in his tweets about Cusimano).

 

 

 

Appendix: George Sharp’s lawsuits against other penny stock companies

In the near future I aim to add a brief description of all the lawsuits mentioned above including the outcome of each suit. This post is being published before this is complete because frankly this is an exhausting task. I may never get around to posting all the lawsuits.

George Sharp v. Stocktips.com, Alkame Holdings Inc (ALKM), Amerada Corp, Aweber Communications, Aweber Systems Inc, Robert Bandfield, Coastal Integrated Services Inc (COLV), Ecrypt Technologies Inc (ECRY), Empire Stock Transfer Inc, Harold Gewerter, Laluna Services Inc, Quicksilver Stock Transfer LLC, Telupay International Inc, Adrian Herman Thomas, Tiger Oil and Energy Inc (TGRO), & Well Power Inc (WPWR)

George Sharp filed case 37-2015-00008210-CU-NP-CTL in the Superior Court of California, County of San Diego on 3/11/2015 and dismissed on August 15, 2017. (Read the first amended complaint filed May 27, 2016.) I cannot find any evidence of the case being settled and Sharp requested dismissal of the case a few days before a hearing on an order to show cause (OSC).

Following are some of the documents from the case:

37-2015-00008210-CU-NP-CTL_ROA-110_08-05-16_Minute_Order_1509378411802
37-2015-00008210-CU-NP-CTL_ROA-137_10-07-16_Minute_Order_1509378411880
37-2015-00008210-CU-NP-CTL_ROA-142_10-06-16_Request_for_Dismissal_with_Prejudice_Party_1509378411974
37-2015-00008210-CU-NP-CTL_ROA-147_10-27-16_Request_for_Dismissal_with_Prejudice_Party_1509378412083
37-2015-00008210-CU-NP-CTL_ROA-162_11-04-16_Minute_Order_1509378412161
37-2015-00008210-CU-NP-CTL_ROA-169_12-02-16_Minute_Order_1509378412224
37-2015-00008210-CU-NP-CTL_ROA-180_08-04-17_Notice_of_Hearing_SD_1509405496917
37-2015-00008210-CU-NP-CTL_ROA-181_08-15-17_Request_for_Dismissal_with_Prejudice_Entire_Acti_1509378412333
37-2015-00008210-CU-NP-CTL_ROA-179_08-04-17_Minute_Order_1509405496839 37-2015-00008210-CU-NP-CTL_ROA-44_01-08-16_Minute_Order_1509378410708 37-2015-00008210-CU-NP-CTL_ROA-45_01-19-16_Order_to_Show_Cause_Sanctions_SD_1509378410817 37-2015-00008210-CU-NP-CTL_ROA-53_01-29-16_Minute_Order_1509378410911
37-2015-00008210-CU-NP-CTL_ROA-55_01-29-16_Minute_Order_1509378410989
37-2015-00008210-CU-NP-CTL_ROA-65_03-26-16_Order_Other_1509378411098
37-2015-00008210-CU-NP-CTL_ROA-91_05-27-16_Amended_Complaint_1509378411208
37-2015-00008210-CU-NP-CTL_ROA-92_05-20-16_Amendment_to_Complaint_Cross_Complaint_naming_Doe_1509378411333

37-2015-00008210-CU-NP-CTL_ROA-99_06-20-16_General_Denial_1509378411458
37-2015-00008210-CU-NP-CTL_ROA-101_06-20-16_General_Denial_1509378411552
37-2015-00008210-CU-NP-CTL_ROA-106_08-09-16_Demurrer_1509378411630
37-2015-00008210-CU-NP-CTL ROA -89 05-25-16 Motion to Compel Discovery from COLV
37-2015-00008210-CU-NP-CTL — Subpoena to Aweber (dated 8-31-2015)

George Sharp v Xumanii (XUII), African Copper Corporation (ACCS), Amwest Imaging Inc (AMWI), John Babikian, De Groupa Tenner Morales Media Corp, Goff Corporation (GOFF), Harbor Island Development Corp (HIDC), Intertech Solutions Inc (ITEC), Pacific Clean Water Technologies Inc (PCWT), Pacwest Equities Inc (PWEI), Pharmagen Inc (PHRX), Pub Crawl Holdings Inc (PBCW), Red Giant Ventures Inc (REDG), Swing Plane Ventures Inc (SWVI), Taglikeme Corp (TAGG), Victory Mark Corp Ltd, Vumee Inc (VUME), & World Moto Inc (FARE)

George Sharp filed suit against Xumanii and other companies promoted by Awesomepennystocks and Victory Mark Corp on 5/13/2013. The case is 37-2013-00048310-CU-MC-CTL, in the Superior Court of California, County of San Diego.

See the judgment won by Sharp. All the judgments in this case were default judgments. I know at least in the case of his judgment against Goff the judgment has not been collected.

Default judgment is entered in favor of Plaintiff George Sharp and against Defendants Vumee, Inc., Intertech Solutions, Inc. fka Amwest Imaging, Inc , Goff Corporation, and Excelsis Investments, Inc..
Plaintiff George Sharp to recover from Defendant Vumee, Inc. the total amount of$19,700, consisting of statutory damages in the amount of $18,000 and attorney’s fees in the amount of $1,700.
Plaintiff George Sharp to recover from Defendant Intertech Solutions, Inc. fka Amwest Imaging, Inc. the total amount of $43,220, consisting of statutory damages in the amount of$41,000 and attorney’s fees in the amount of $2,220.
Plaintiff George Sharp to recover from Goff Corporation the total amount of $57,450, consisting of statutory damages in the amount of $55,000 and attorney’s fees in the amount of $2,450.
Plaintiff George Sharp to recover from Defendant Excelsis Investments, Inc. the total amount of $19,700, consisting of statutory damages in the amount of $18,000 and attorney’s fees in the amount of $1,700.

George Sharp v America Exploration Resources Inc (AREN), Agrieuro Corp (EURI), Aweber Systems, & iContact LLC

George Sharp filed suit against America Exploration Resources on 8/20/2015. The case is 37-2015-00028270-CU-BT-CTL in the Superior Court of California, County of San Diego. Sharp posted the original complaint to Scribd. See his subpoena to iContact from 8/31/2015.

George Sharp v. Citadel EFT (CDFT), Buzzbahn LLC, Diane Dalmy, Gary Deroos, & Nancy Figueiredo

See George Sharp’s press release about his lawsuit against Citadel EFT. The case (37-2013-00034768-CU-FR-CTL) was filed on February 13, 2013 in the Superior Court of California, County of San Diego.

Appendix 2: Further Info

George Sharp’s Scribd profile
George Sharp’s blog

Disclaimer: No position in any stocks mentioned and other than being a subscriber to Pennystocks.buzz and having interacted with all of the anti-fraud crusaders mentioned above I have no business or close relationship with anyone mentioned in this 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.

George Sharp, failed stock promoter

[For a much more in-depth look at George Sharp and why my opinion of him has changed recently, see my new post Reconsidering George Sharp: An Enigmatic penny stock crusader]

In early 2012 a pre-promotion stock trading service called First Microcap Report, run by Leslie Howard, advertised on PumpsandDumps.com. Howard achieved some traction although his research wasn’t particularly good and while I followed him and he did sometimes have useful insights, I certainly didn’t go about recommending him. I suppose he didn’t find enough people interested in his pre-promotion trading service or he didn’t make enough money trading his alerts, because in late May 2012 he took money to promote Biostem Corp (HAIR). He continued to promote HAIR for months.

Below is a screenshot from my welcome email upon signing up to FirstMicroCapReport.com:
leslie

Around the same time, Michael Osborne, a convicted felon and frequent target of litigious penny stock gadfly George Sharp, posted on the AbuseofLaw.org website allegations that Sharp not only ran Pumpsanddumps.com but was also Leslie Howard. I did not post those allegations on my blog for a couple reasons: Sharp was only a minor figure in the penny stock world after suing a couple penny stock companies, and the evidence was circumstantial only. I was not surprised when Sharp won a libel lawsuit against Osborne and that appeared to vindicate my earlier decision.

Yesterday a poster on Investorshub pointed out a lawsuit filed in August by Market Broadcast LLC and George Sharp against HAIR and its executives (and others). This proved the earlier accusations that Osborne had made (although I do remember that he made a bunch of other allegations as well and those may have been false). I looked at the court docket and downloaded the initial complaint myself.

Sharp v. Hair initial complaint (pdf)

From the complaint:

1. At all times mentioned herein, Plaintiff Market Broadcast, LLC (“MARKET”)
was a Nevada Limited Liability Corporation with offices in Ft. Lauderdale, Florida and La Jolla,
California. The Plaintiff is in the business of bringing investor awareness to public companies.

2. At all times mentioned, Plaintiff George Sharp (“SHARP”) was the managing
member of Plaintiff MARKET, and SHARP has become recognized internationally as a crusader
against penny stock fraud and has been loudly applauded for his efforts.

Later in the complaint, Sharp discloses the payment he agreed to receive for promoting HAIR; a copy of that stock promotion agreement is attached to the end of the complaint linked above.

The AGREEMENT required the Plaintiff SHARP to be paid 300,000 free-trading
shares at the time that the investor awareness program began. The shares issued to the plaintiff
did not become free-trading until July 10, 2012, when the shares were already trading at a 42%
discount from the high share price achieved during the investor awareness campaign.

Related to this lawsuit, some Biostem insiders and financiers were arrested by the FBI in February for conspiring to manipulate Biostem and other stocks. Sharp was not sued by the SEC nor was he arrested. I really don’t understand why he filed the lawsuit at all — his chance of recovering any money has to be very low with the Feds involved.

One of the more interesting things about this lawsuit is that First MicroCap Report LLC was always disclosed as the owner / publisher of FirstMicroCapReport.com, not Market Broadcast LLC. Yet the promotion contract with HAIR was with Market Broadcast LLC, not First Microcap Report LLC. I can think of no legitimate reason why Sharp used two different LLCs for his stock promotion business.

What should we conclude from this? Simple: don’t trust anyone, especially not in the penny stock world. Does this mean that Sharp’s lawsuits against various promoters and penny stocks will no longer affect the prices of those stocks? No. Does this make him much less likely to win his various lawsuits? Probably not. But anyone who held Sharp in high regard will be much less likely to do so now.

 

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.

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.

Rainmaker Worldwide (RAKR): Low volume landing page stock promotion

Is anyone thirsty for another stock promotion? The new stock promotion website AmericanWaterBaron.com (first registered 16 August 2017) is promoting Rainmaker Worldwide (RAKR). As is usual with promoted companies, Rainmaker Worldwide has a large market cap ($100 million) and very little in the way of assets. In fact, its most recent quarterly report (to OTCMarkets.com — it is not an SEC filer) shows exactly zero in assets.

Unfortunately for the shareholders who paid for the pump and are dumping shares into it (and also unfortunately for short sellers like myself), RAKR is very illiquid, averaging maybe 100,000 shares a day since it first started trading with volume back on September 25th.

Kudos to OTCMarkets.com for tagging RAKR with the skull and crossbones (caveat emptor designation) back on October 11th, presumably because of the stock promotion.

Below is a screenshot of the top of the AmericanWaterBaron.com promotion website:

Disclosed budget: $500,000
Promoter: American Water Baron (Public Ventures Of America Corp)
Paying party: Timmer a.s.
Shares outstanding: 81,320,379
Previous closing price: $1.23
Market capitalization: $100.0 million

Make sure to check out George Sharp’s excellent investigation into the people controlling RAKR and likely dumping shares into the promotion.

Excerpt from disclaimer:

American Water Baron has been hired by a third party, Timmer a.s., for a period beginning on September 25th 2017 and is scheduled to end on November 30th 2017 to publicly disseminate information about (RAKR) via website and email. We expect to be paid five hundred thousand dollars via a series of bank wire transfers over this period. We will update any changes to our compensation. We own zero shares of (RAKR). Third Parties paying us to market the Profiled Issuer intend to sell their shares they hold while we tell investors to purchase during the Campaign.

Another excerpt from the disclaimer (quite honest!):

Rainmaker Worldwide Inc. is a penny stock that was illiquid (little to no trading volume) prior to our Campaign, and therefore these securities are subject to wide fluctuations in trading price and volume. During the Campaign the trading volume and price of the securities of each Profile Issuer will likely increase significantly because of the media exposure. When the Campaign ends, the volume and price of the Profiled Issuer will likely decrease dramatically. As a result, investors who purchase during the Campaign and hold shares of the Profiled Issuer when the Campaign ends will probably lose most, if not all, of their investment. The Information we publish in the Campaign is only a snapshot that provides only positive information about the Profiled Issuers. The Information consists of only positive content. We do not and will not publish any negative information about the Profiled Issuers; accordingly, investors should consider the Information to be one-sided and not balanced, complete, accurate, truthful and / or reliable.

Disclaimer:

This is a paid advertisement and all individuals should verify all claims and perform their own due diligence on RAKR (and / or any other mentioned companies and / or securities), and read this disclaimer in its entirety. American Water Baron profiles are not a solicitation or recommendation to buy, sell or hold securities. American Water Baron is a paid advertiser and is not offering securities for sale. Neither American Water Baron nor its owners, operators, affiliates or anyone disseminating information on its behalf is registered as an Investment Advisor under any federal or state law and none of the information provided by American Water Baron, its owners, operators, affiliates or anyone disseminating information on its behalf should be construed as investment advice or investment recommendations. American Water Baron does not recommend that the securities profiled should be purchased, sold or held and is not liable for any investment decisions by its readers or subscribers. Information presented by American Water Baron may contain “forward-looking statements ” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, goals, assumptions, or future events or performance, are not statements of historical fact and may be “forward-looking statements.” Forward-looking statements are based on expectations, estimates and projections at the time the statements are made that involve a number of risks and uncertainties which could cause actual results or events to differ materially from those presently anticipated. Forward-looking statements may be identified through the use of words such as “expects, ” “will, ” “anticipates,” “estimates,” “believes,” “may,” or by statements indicating that certain actions “may,” “could,” or “might” occur. 

THIS SITE IS PROVIDED BY AMERICAN WATER BARON ON AN “AS IS” AND “AS AVAILABLE” BASIS. AMERICAN WATER BARON MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, AS TO THE OPERATION OF THIS SITE OR THE INFORMATION, CONTENT, MATERIALS, OR PRODUCTS INCLUDED ON THIS SITE. YOU EXPRESSLY AGREE THAT YOUR USE OF THIS SITE IS AT YOUR SOLE RISK. TO THE FULL EXTENT PERMISSIBLE BY APPLICABLE LAW, AMERICAN WATER BARON DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. AMERICAN WATER BARON DOES NOT WARRANT THAT THIS SITE, IT’S SERVERS, OR E-MAIL SENT FROM AMERICAN WATER BARON ARE FREE OF VIRUSES OR OTHER HARMFUL COMPONENTS. AMERICAN WATER BARON, ITS MEMBERS, MANAGERS, OWNERS, AGENTS, AND EMPLOYEES WILL NOT BE LIABLE FOR ANY DAMAGES OF ANY KIND ARISING FROM THE USE OF THIS SITE, INCLUDING, BUT NOT LIMITED TO DIRECT, INDIRECT, INCIDENTAL, PUNITIVE, AND CONSEQUENTIAL DAMAGES. CERTAIN STATE LAWS DO NOT ALLOW LIMITATIONS ON IMPLIED WARRANTIES OR THE EXCLUSION OR LIMITATION OF CERTAIN DAMAGES. IF THESE LAWS APPLY TO YOU, SOME OR ALL OF THE ABOVE DISCLAIMERS, EXCLUSIONS, OR LIMITATIONS MAY NOT APPLY TO YOU, AND YOU MIGHT HAVE ADDITIONAL RIGHTS. 

By using American Water Baron, you agree, without limitation or qualification, to be bound by, and to comply with, these Terms of Use and any other posted guidelines or rules applicable. The website contains links to other related World Wide Web Internet sites and resources. American Water Baron is not responsible for the availability of these outside resources, or their contents, nor does American Water Baron endorse nor is American Water Baron responsible for any of the contents, advertising, products or other materials on such sites. Under no circumstances shall American Water Baron be held responsible or liable, directly or indirectly, for any loss or damages caused or alleged to have been caused by use of or reliance on any content, goods or services available on such sites. Any concerns regarding any external link should be directed to its respective site administrator or webmaster. You agree to indemnify and hold American Water Baron, its officers, directors, owners, agents and employees, harmless from any claim or demand, including reasonable attorneys fees, made by any third party due to or arising out of your use of the website, the violation of these Terms of Use by you, or the infringement by you, or other user of the website using your computer, of any intellectual property or other right of any person or entity. We reserve the right, at our own expense, to assume the exclusive defense and control of any matter otherwise subject to indemnification. 

American Water Baron is owned and operated by Public Ventures Of America Corp. We are paid advertisers, also known as stock touts or stock promoters, who disseminate favorable information (the “Information”) about publicly traded companies (the “Profiled Issuers”). We publish the Information on our website, americanwaterbaron.com and in newsletters, text message alerts, audio services, live interviews, featured “research” reports, on message boards and in email communications for specific time periods that are agreed upon between us and the Profiled Issuer and / or third party paying us. Our publication of the Information is known as a “Campaign”. This information may be sent to potential investors at different times that are minutes, hours, days or even weeks apart. Typically, the trading volume and price of a Profiled Issuer’s securities increases after the information is provided to the first group of investors. Therefore, the later an investor receives the Information, the more likely it is that he will suffer trading losses if they purchase the securities of a Profiled Issuer late in a Campaign. We are paid to advertise the Profiled Issuers Rainmaker Worldwide Inc. American Water Baron has been hired by a third party, Timmer a.s., for a period beginning on September 25th 2017 and is scheduled to end on November 30th 2017 to publicly disseminate information about (RAKR) via website and email. We expect to be paid five hundred thousand dollars via a series of bank wire transfers over this period. We will update any changes to our compensation. We own zero shares of (RAKR). Third Parties paying us to market the Profiled Issuer intend to sell their shares they hold while we tell investors to purchase during the Campaign. 

Rainmaker Worldwide Inc. is a penny stock that was illiquid (little to no trading volume) prior to our Campaign, and therefore these securities are subject to wide fluctuations in trading price and volume. During the Campaign the trading volume and price of the securities of each Profile Issuer will likely increase significantly because of the media exposure. When the Campaign ends, the volume and price of the Profiled Issuer will likely decrease dramatically. As a result, investors who purchase during the Campaign and hold shares of the Profiled Issuer when the Campaign ends will probably lose most, if not all, of their investment. The Information we publish in the Campaign is only a snapshot that provides only positive information about the Profiled Issuers. The Information consists of only positive content. We do not and will not publish any negative information about the Profiled Issuers; accordingly, investors should consider the Information to be one-sided and not balanced, complete, accurate, truthful and / or reliable. We do not verify or confirm any portion of the Information. We do not conduct any due diligence, nor do we research any aspect of the Information including the completeness, accuracy, truthfulness and / or reliability of the Information. We do not review the Profiled Issuers’ financial condition, operations, business model, management or risks involved in the Profiled Issuer’s business or an investment in a Profiled Issuer’s securities. All information in our Campaign is publically available information from 3rd party sources and / or the Profiled Issuers and/or the 3rd parties that hire us. We may also obtain the Information from publicly available sources such as the OTC Markets, Google, NASDAQ, NYSE, Yahoo, Bing, the Securities and Exchange Commission’s Edgar database or other available public sources. We select the stocks we profile and / or pick as we are compensated to advertise them. If an investor relies solely on the Information in making an investment decision it is highly probable that the investor will lose most, if not all, of his or her investment. Investors should not rely on the Information to make an investment decision. The source of our compensation varies depending upon the particular circumstances of the Campaign. In certain cases, we are compensated by the Profiled Issuers, third party shareholders, and / or other parties related to the Profiled Issuers such as officers and/or directors who will derive a financial or other benefit from an increase in the trading price and/or volume of a Profiled Issuer’s securities. 

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There are numerous risks associated with each Profiled Issuer and investors should undertake a full review of each Profiled Issuer with the assistance of their financial, legal, and tax advisers prior to purchasing the securities of any Profiled Issuer. We are not objective or independent and have multiple conflicts of interest. The Profiled Issuers and parties hiring us have conflicts of interest. Third parties that have hired us and own shares will sell these shares while we tell investors to purchase, and this selling of the Profiled Issuer’s securities will likely cause investors to suffer losses. Our publication of the Information involves actual and material conflicts of interest including but not limited to the fact that we receive monetary compensation in exchange for publishing the (favorable) Information about the Profiled Issuers; and we do not publish any negative information, whatsoever, about the Profiled Issuers; in addition to the fact that while we do not own the Profiled Issuer’s securities, the third parties that hired us do, and intend to sell all of these securities during the Campaign while we publish favorable information that instructs investors to purchase, and this selling of the Profiled Issuer’s securities will likely cause investors to suffer losses. We are not responsible or liable for any person’s use of the Information or any success or failure that is directly or indirectly related to such person’s use of the Information because we have specifically stated that the information is not reliable and should not be relied upon for any purpose. We are not responsible for omissions and / or errors in the Information and we are not responsible for actions taken by any person who relies upon the Information. We urge Investors to conduct their own in-depth investigation of the Profiled Issuers with the assistance of their legal, tax and / or investment adviser(s). An investor’s review of the Information should include but not be limited to the Profiled Issuer’s financial condition, operations, management, products and / or services, trends in the industry and risks that may be material to the profiled Issuer’s business and other information he and his advisers deem material to an investment decision. An investor’s review should include, but not be limited to a review of available public sources and information received directly from the Profiled Issuers or from websites such as Google, Yahoo, Bing, OTC Markets, NASDAQ, NYSE, www.sec.gov or other available public sources. We are providing you with this disclaimer because we are publishing advertisements about penny stocks. Because we are paid to disseminate the Information to the public about securities, we are required by the securities laws including Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 thereunder, and Section 17(b) of the Securities Act of 1933, as amended (the “Securities Act”), to specifically disclose my compensation as well as other important information, This information includes that we may hold, as well as purchase and sell, the securities of a Profiled Issuer before, during and after we publish favorable Information about the Profiled Issuer. We may urge investors to purchase the securities of a Profiled Issuer while we sell my own shares. The anti-fraud provisions of federal and state securities laws require us to inform you that we may engage in buying and selling of Profiled Issuer’s securities before, during and after the Campaigns. Any investment in the Profiled Issuers involves a high degree of risk and uncertainty. 

The securities may be subject to extreme volume and price volatility, especially during the Campaigns. Favorable past performance of a Profiled Issuer does not guarantee future results. If you purchase the securities of the Profiled Issuers, you should be prepared to lose your entire investment. Some of the risks involved in purchasing securities of the Profiled Issuers include, but are not limited to the risks stated below. We do not endorse, independently verify or assert the truthfulness, completeness, accuracy or reliability of the Information. We conduct no due diligence or investigation whatsoever of the Information or the Profiled Issuers and we do not receive any verification from the Profiled Issuer regarding the Information we disseminate. If we publish any percentage gain of a Profiled Issuer from the previous day close in the Information, it is not and should not be construed as an indication that the future stock price or future operational results will reflect gains or otherwise prove to be advantageous to your investment. The Information may contain statements asserting that a Profiled Issuer’s stock price has increased over a certain period of time which may reflect an arbitrary period of time, and is not predictive or of any analytical quality; as such, you should not rely upon the (favorable) Information in your analysis of the present or future potential of a Profiled Issuer or its securities. The Information should not be interpreted in any way, shape, form or manner whatsoever as an indication of the Profiled Issuer’s future stock price or future financial performance. You may encounter difficulties determining what, if any, portions of the Information are material or non-material, making it all the more imperative that you conduct your own independent investigation of the Profiled Issuer and its securities with the assistance of your legal, tax and financial advisor. When 3rd parties that hire us acquire, purchase and / or sell the securities of the Profiled Issuers, it may (a) cause significant volatility in the Profiled Issuer’s securities; (b) cause temporary but unrealistic increases in volume and price of the Profiled Issuer’s securities; (c) if selling, cause the Profiled Issuer’s stock price to decline dramatically; and (d) permit themselves to make substantial profits while investors who purchase during the Campaign experience significant losses. The securities of the Profiled Issuers are high risk, unstable, unpredictable and illiquid which may make it difficult for investors to sell their securities of the Profiled Issuers. 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If a Profiled Issuer is an SEC reporting company, it could be delinquent (not current) in its periodic reporting obligations (i.e., in its quarterly and annual reports), or if it is an OTC Markets Pink Sheet quoted company, it may be delinquent in its Pink Sheet reporting obligations, which may result in OTC Markets posting a negative legend pertaining to the Profiled Issuer at www.otcmarkets.com, as follows: (i) “Limited Information” for companies with financial reporting problems, economic distress, or that are unwilling to file required reports with the Pink Sheets; (ii) “No Information,” which characterizes companies that are unable or unwilling to provide any disclosure to the public markets, to the SEC or the Pink Sheets; and (iii) “Caveat Emptor,” signifying buyers should be aware that there is a public interest concern associated with a company’s illegal spam campaign, questionable stock promotion, known investigation of a company’s fraudulent activity or its insiders, regulatory suspensions or disruptive corporate actions. If the Information states that a Profiled Issuer’s securities are consistent with the future economic trends or even if your independent research indicates that, you should be aware that economic trends have their own limitations, including: (a) that economic trends or predictions may be speculative; (b) consumers, producers, investors, borrowers, lenders and/or government may react in unforeseen ways and be affected by behavioral biases that we are unable to predict; (c) human and social factors may outweigh future economic trends that we state may or will occur; (d) clear cut economic predictions have their limitations in that they do not account for the fundamental uncertainty in economic life, as well as ordinary life; (e) economic trends may be disrupted by sudden jumps, disruptions or other factors that are not accounted for in economic trends analysis; in other words, past or present data predicting future economic trends may become irrelevant in light of new circumstances and situations in which uncertainty becomes reality rather than predicted economic outcome; or (f) if the trend predicted involves a single result, it ignores other scenarios that may be crucial to make a decision in the event of unknown contingencies. The Information is presented only as a brief snapshot of the Profiled Issuer and should only be used, at most, and if at all, as a starting point for you to conduct a thorough investigation of the Profiled Issuer and its securities. You should consult your financial, legal or other adviser(s) and avail yourself of the filings and information that may be accessed at www.sec.gov, www.otcmarkets.com or other electronic media, including: (a) reviewing SEC periodic reports (Forms 10-Q and 10-K), reports of material events (Form 8-K), insider reports (Forms 3, 4, 5 and Schedule 13D); (b) reviewing Information and Disclosure Statements and unaudited financial reports filed with the OTCMarkets.com; (c) obtaining and reviewing publicly available information contained in commonly known search engines such as Google; and (d) consulting investment guides at www.sec.gov and www.finra.org. You should always be cognizant that the Profiled Issuers may not be current in their reporting obligations with the SEC and the OTC Markets and/or have negative legends and designations at otcmarkets.com. American Water Baron, reserves the right, at its sole discretion, to change, modify, add and/ or remove all or part of this Disclaimer and / or Terms of Use at any time

PDF copy of promotion page

Public Ventures Of America Corp, might be a Belize corporation, and it also promoted AMLH this last summer.

 

Disclaimer. I am short RAKR and I may add to or close this position at any time. No position in any other stock mentioned and I have no relationship with anyone mentioned in this 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.

Recent SEC Trading suspensions of pump & dumps

I have been remiss in not posting much over the last months (and years!). While in 2016 I traded almost no pump and dumps because so few were successful and so few even had decent volume, 2017 has had several successful pumps and now several high-profile SEC trading suspensions of stocks in mid-pump. I look at these in reverse chronological order and then address common themes and what we can expect in the future.

Bingo Nation (BLTO)

Bingo Nation was a landing page pump: http://wallstreetblaze.com/blto/index.html (at the time I write this that page is still online). At its peak on April 11th ($3.10) it had a market capitalization of $85 million. Trading was suspended on April 12th, 2017.

Archived PDF copy of landing page

Excerpt from disclosure on landing page (emphasis mine):

The “Company” featured herein appears as paid advertising, paid by a third party to provide public awareness for (BLTO). The publisher, Wall Street Blaze, understands that in an effort to enhance public awareness of (BLTO) and its securities through the distribution of this online advertisement, Star Step Limited paid all of the costs associated with creating, and distribution of this advertisement. The publisher was paid the sum of two thousand five hundred dollars for its contributions. The marketing vendors will be managing a total budget of three hundred thousand dollars, provided by Star Step Limited for all online advertising and marketing efforts and will retain any amounts over and above the cost of production, copywriting services, mailing and other distribution expenses, as a fee for its services.

SEC trading suspension release (PDF)
SEC trading suspension order (PDF)

Reason for suspension (from above order):

concerns regarding (i) the accuracy and adequacy of publicly available information in the marketplace, including on Bingo Nation’s website and multiple third party promotional emails and articles relating to, among other things, the company’s existing capacity to generate near-term revenue provided on both Bingo Nation’s own website and, since at least March 20, 2017 through April 5, 2017, to multiple third party promotional emails and articles from different sources (at least one of which is also available on Bingo Nation’s own website); and (ii) potentially manipulative transactions in Bingo Nation’s common stock.

Bingo Nation will resume trading on April 28th on the grey market.

 

Emedia Group (EMMD)

eMedia was promoted via emails, primarily from QRC Investment Group. At its peak of $4.17 on March 24th, eMedia Group had a market cap of $83 million. Trading was suspended on April 4th, 2017 (also suspended at the same time were IMMG and EURI below).

SEC trading suspension release (PDF)
SEC trading suspension order (PDF)

Reason for suspension (from above order):

concerns regarding the accuracy and adequacy of assertions by EMMD in press releases to investors concerning the company’s assets and business operations and because of potentially manipulative transactions in EMMD’s common stock. Specifically, the company issued press releases dated February 13 and February 21, 2017 in which it described acquisitions by the company of a hotel-booking website portal and a flight- and hotel- booking mobile application.

eMedia Group will resume trading on April 19th on the grey market.

 

Immage Biotherapeutics (IMMG)

Immage Biotherapeutics (IMMG) was promoted via emails, primarily via QRC Investment Group. At its peak at $1.62 on April 3rd it had a market cap of $245 million.

SEC trading suspension release (PDF)
SEC trading suspension order (PDF)

Reason for suspension (from above order):

concerns regarding the accuracy and adequacy of information in the marketplace and potentially manipulative transactions in IMMG’s common stock

 

AgriEuro Corp (EURI)

AgriEuro Corp had been promoted via emails in February and March 2017 and it was formerly a FinestPennyStocks pump and dump at the beginning of 2016. At its peak of $0.225 on March 21st it had a market cap of $57 million.

SEC trading suspension release (PDF)
SEC trading suspension order (PDF)

Reason for suspension (from above order):

concerns regarding the accuracy and adequacy of information in the marketplace and potentially manipulative transactions in EURI’s common stock

 

George Sharp, anti-fraud pro-se legal gadfly (and former promoter himself), proposed that the reason for the suspensions of EMMD, IMMG, and EURI was that they all were connected at some point to attorney Scott Lawler. I am not convinced of that. That EMMD and IMMG were promoted by QRC Investment Group makes me think the SEC could be targeting that stock promoter. Of the suspended stocks, IMMG and EURI just received the boiler plate explanation for why they were halted. The EMMD halt order specifically mentions two of the company’s press releases and the BLTO halt order mentions the company’s revenue projections on its website. One thing is clear: the SEC is still active in fighting pump and dumps and those promoters and stocks that attract its attention have a significant risk of having trading in their shares suspended. The most prominent stock promotion is currently Zenosense (ZENO) so I think there is a decent chance it will be suspended.

 

Disclaimer. No position in any stocks mentioned and I have no relationship with anyone mentioned in this 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.

ElitePennyStock Paints target on its back: Best stock promoter out there

Disclosure: I’m short ElitePennyStock’s current promotion, AREN. See details at bottom.

In a world in which ever more promoters and manipulators have not just been sued by the SEC but sent to prison by US Department of Justice it is a dangerous thing to be known as the best stock promoter. But with Stocktips.com having spectacularly failed in their most recent pump (of Coastal Integrated Services, COLV), ElitePennyStock is now in my opinion the best promoter out there. As detailed in a blog post by Tim Grittani (use code NEXT100 to save on his DVD), ElitePennyStock (and I use this name to refer to the people that run all the related websites) has ties to AwesomePennyStocks. See also the Promotion Stock Secrets research report on ElitePennyStock.

The two most recent ElitePennyStock pumps were American Leisure Holdings (AMLH) in January and February, and Media Analytics (MEDA) in December 2014 and January 2015. The AMLH pump lasted for 19 days prior to the big drop in price (note that the promotion continued through February 17. The MEDA pump lasted for 10 days prior to the precipitous drop (the last pump emails I received for MEDA came on December 19th).

amlh

meda

So far the AREN (America Resources Exploration Inc) promotion is on day 17. I believe it very likely that the end of this pump is quite near. See the Promotion Stock Secrets report on AREN if you care to learn the details on the insiders in the company and how it was set up to be a promotion.

aren

Interestingly, AREN filed a form 12b-25 with the SEC just before the market close today, indicating that they will not be able to file their quarterly report on time. I wonder if that may be another indication that the pump will soon be over.

 

Compensation: [different in emails from the different websites]
Promoter:  ElitePennyStock
Paying party: Intraday Holdings Ltd
Shares outstanding: 129,400,000
Previous closing price: $0.861
Market capitalization: $111 million

 

A Few miscellaneous notes

Penny stock gadfly and one-time stock promoter George Sharp threatened AREN with a lawsuit but never followed through.

goniffs

I cannot vouch for their reporting skill / reliability, but The OTC Today reported that FINRA had asked clearing firms Alpine and ETC to voluntarily restrict the sales of large blocks of AREN stock.

One of the ElitePennyStock websites has a nice little video promoting AREN here. ElitePennyStock is following the lead of StockTips by inventing a fake person to be the promoter, in this case, Keith Richie.

 

Disclaimer: I am currently short 5200 shares of AREN. I may cover those shares or short more in the days following the publication of this post. 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.

Promoters Eric Cusimano & Jamie Boye indicted

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

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

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

Case Summary

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

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

 

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

 

Defendant: Jamie Boye
Plaintiff: USA  represented by Aaron J. Mango(Designation government attorney)
Phone: 716-843-5882
Fax: 716-551-3146
Email: [email protected]

 

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

 

Defendant: Jessica Cusimano
Plaintiff: USA  represented by Aaron J. Mango(Designation government attorney)
Phone: 716-843-5882
Fax: 716-551-3146
Email: [email protected]

 

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.

The Most obviously fake financial statement I have ever seen, courtesy of $FRTD

There are few words that can adequately describe this quarterly report from non-SEC reporting company Fortitude Group (FRTD), which is currently suspended from trading after their absurd buyout press release. Read the 1st quarter report at OTCMarkets.com. There is so much idiocy in this report that I cannot do more than scratch the surface. But take a look at the cash flow statement for a start (on page 3).

The cash flow statement has the number of shares issued to pay for services as the dollar value of those shares, which of course don’t even belong in the “cash flows from operating activities.” The two acquisitions mentioned in the “cash flow from investing activities” section are just as nonsensical: it doesn’t matter that FRTD thinks those investsments are worth $38 million and $24 million — Fortitude Group didn’t pay those amounts in cash so they do not belong on the cash flow statement. The best part is that the “net increase in cash” of $63,194,456, when combined with the cash at the beginning of the quarter ($153) should add up to the “cash at end of period”; this is a very, very basic principle. But somehow FRTD only ended the quarter with $412,162. In other words, the company is off by over $62 million in its “net increase in cash”.

The balance sheet is just as bad: “stockholders equity” is, by definition, total assets minus total liabilities. But it also must equal the sum of paid in capital and retained earnings / accumulated deficit. For an example of how that works, look at the balance sheet of Livedeal (LIVE). The total stockholders equity is equal to the sum of the par value of all shares outstanding, the paid in capital, and the accumulated deficit. However with FRTD the resulting sum is $3,541,332 (and not $62,791,956).

[Edit 2014-6-9]: See George Sharp’s article on FRTD.

 

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.

SEC Suspends trading in third pot stock and perennial scam Citadel EFT $CDFT

Smart people have been saying for well over half a year that the SEC should do something about Citadel EFT. The stock almost never traded though until the company put out a press release three weeks ago announcing that the company was getting into the marijuana business.

SEC suspension press release
SEC suspension order

I warned about CDFT multiple times:


I shorted CDFT the day after the marijuana news came out and ended up getting squeezed badly. That is the problem with shorting scams, particularly in a bull market — the stock can go up a lot and squeeze you out before getting suspended by the SEC.

 

($2,713)lossCDFTShort Stock
IB batch import through 3/18/2014

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

Unlike with most of its suspensions, the SEC was quite detailed in its reasoning for the trading suspension of CDFT:

The Commission temporarily suspended trading in the securities of Citadel because of questions that have been raised about the accuracy and adequacy of publicly disseminated information concerning, among other things, the company’s business operations and assets. In particular, there are questions regarding the accuracy, completeness, and validity of Citadel’s several recent press releases, Form 8-Ks, and other public statements since January 2014 relating to transactions involving standby letters of credit (“SBLC’s”), see Prime Bank Instrument Fraud, TreasuryDirect.gov (U.S. Department of the Treasury), http://www.treasurydirect.gov/instit/statreg/fraud/fraud_primebank.htm (last visited Mar. 20, 2014) and Brazilian Letras Tesouro Nacional (“LTN’s”), see Frauds Related to Public Bonds, Tesouro Nacional (Brazil), https://www.tesouro.fazenda.gov.br/en/about-the-federal-publicdebt/ frauds-related-to-public-bonds (last visited Mar. 20, 2014). Citadel is a Wyoming corporation based in Oceanside, California. It is quoted on OTC Link under the symbol CDFT. This order was entered pursuant to Section 12(k) of the Securities Exchange Act of 1934 (Exchange Act).

The Brazilian bonds aren’t even the first fake bonds CDFT has been involved with: there were fake US bonds that they acquired last summer. Janice Shell’s expose of that led the company to threaten her and with a libel lawsuit. I love this quote from that PR:

Gary DeRoos, CEO, Citadel EFT, Inc., states, “The author, Janice Shell, who published batten falsehoods, undermines Citadel EFT, Inc.’s efforts to grow our company to our shareholders’ benefit. Our shareholders are quite perturbed with this website and its posting, and have been proactive in bringing attention to this matter. “

On a related note, George Sharp, the owner of Pumpsanddumps.com, sued CDFT and its CEO a year ago.

Disclaimer: 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.

SEC Suspends trading in Nevada Gold Corp $NVGC

Another day, another trading suspension of a big stock promotion. This time the ‘victim’ is Nevada Gold Corporation (NVGC). NVGC has been promoted by illegal spam emails from “StockCastle”. This trading suspension comes just two days after the previous trading suspension of a major active stock promotion, Life Stem Genetics.

Here is a chart of NVGC: nvgc

George Sharp had also found a hard mailer promoting NVGC.

NVGC will reopen for trading on the grey sheets on December 12th.

From the trading suspension release:

The Commission temporarily suspended trading in the securities of NVGC because of questions
regarding the accuracy and adequacy of assertions by NVGC, and by others, to investors in press
releases and promotional material concerning, among other things, the company’s assets,
operations, and financial condition

 

SEC trading suspension release (pdf)
SEC trading suspension order (pdf)

 

Disclaimer: I am short 15,000 shares of NVGC at Interactive Brokers and I am long 10,000 shares at Speedtrader. I intend to exit those positions soon after the stock reopens for trading. I have no position in any other stock mentioned. I have no relationship with any parties mentioned above, other than that I am friendly with the author of the negative SeekingAlpha article on LIFS. 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.