Eros International PLC (EROS) Sues large number of short sellers

On September 29th, 2017 the Indian film distribution company Eros International PLC (EROS) filed a complaint in New York state supreme court against many different short sellers who have criticized the company.

Below is the text of the company’s press release:

ISLE OF MAN, United Kingdom–(BUSINESS WIRE)–Oct. 3, 2017– Eros International Plc (NYSE: EROS) (“Eros”), a leading global company in the Indian film entertainment industry, today announced that it has filed a lawsuit in New York County Supreme Court against Mangrove Partners, Manuel P. Asensio, GeoInvesting, LLC, and numerous other individuals and entities. The lawsuit alleges the defendants and other co-conspirators disseminated material false, misleading, and defamatory information about Eros and are engaging in other misconduct that has harmed the Company. The lawsuit also names various “John Doe” defendants who will be identified and joined as the case unfolds.

The complaint alleges that Mangrove Partners and many, if not all, of its co-conspirators held substantial short positions in Eros stock and profited when its share price declined in response to their multi-year disinformation campaign. Eros seeks damages and injunctive relief for defamation, trade libel, civil conspiracy, and tortious interference, including but not limited to interference with its customers, producers, distributors, investors, and lenders.

The filing of this lawsuit marks another important step in Eros’ vigorous defense of itself and the Company’s stakeholders. On 25 September, 2017, Eros also reported that the United States District Court for the Southern District of New York dismissed a putative securities class action, with prejudice, that was originally filed in November 2015 and arose from a series of baseless accusations that the Eros complaint alleges were disseminated by short sellers.

The Company previously announced that it retained Michael J. Bowe, a partner of Kasowitz Benson Torres LLP, to investigate and pursue all available legal remedies against those responsible for these blatant attempts at market manipulation. Counsel is continuing its investigation. Anyone with information about those responsible for the dissemination of this disinformation can submit that information confidentially at (212) 506-1777.

The case is 653096/2017 at the New York County Supreme Court. The complaint (pdf) is 115 pages long. First, I’ll start with the defendants, some of whom are well-respected short sellers. I have grouped the defendants below according to firm and employee/employer relationships.

  1. Mangrove Partners and Nathaniel August
  2. Manuel Asensio, Asensio & Company Inc, and Mill Rock Advisors Inc
  3. Geoinvesting, LLC, Christopher Irons, Daniel David, FG Alpha Management LLC, FG Alpha Advisors, and FG Alpha, LP
  4. ClaritySpring Inc, ClaritySpring Securities LLC, and Nathan Anderson
  5. John Does 1 to 30

As many of the alleged negative comments at issue were only posted on Twitter, I have linked defendants to their Twitter accounts below:

  1. Alpha Exposure on SeekingAlpha (allegedly Mangrove Partners); @Alpha_Exposure
  2. @Asensiocom (Manuel Asensio)
  3. @Geoinvesting,@DanGeoinvesting (Dan David), @dan_fgalphamgmt (FG Alpha Management LLC / Dan David),  @QTRResearch (Chris Irons)
  4. @ClarityToast (Nathan Anderson)
  5.  The most prominent John Doe is @Unemon1. Other John Does are @HindenburgRes, Spotlight Research (writer on SeekingAlpha), and Orange Peel Investments (writer on SeekingAlpha).

Here is a full listing of all the John Does (from the complaint; emphasis added by me):

34. Defendant John Doe No. 1 refers to the individual or entity, whose identity is
presently unknown to Eros, behind the pseudonym “Spotlight Research.”
35. Defendant John Doe No. 2 refers to the individual or entity, whose identity is
presently unknown to Eros, behind the pseudonym “Orange Peel Investments.” Orange Peel
Investments purports to be a “family office” (or “family fund”) based in New York, New York.
36. Defendant John Doe No. 3 refers to refers to the individual or entity, whose
identity is presently unknown to Eros, behind the pseudonym “Parke Shall,” a purported
employee in the retail and consumer goods division of Orange Peel Investments and an
“anonymous contributor” for Orange Peel Investments’ two Seeking Alpha articles on Eros.
37. Defendant John Doe No. 4 refers to the individual or entity, whose identity is
presently unknown to Eros, behind the pseudonym “Thom Lachenmann,” a purported employee
in the technology division of Orange Peel Investments and an “anonymous contributor” for one
of Orange Peel Investments’ Seeking Alpha articles on Eros.
38. Defendant John Doe No. 5 refers to the individual or entity, whose identity is
presently unknown to Eros, behind the pseudonym “Unemon.”
39. Defendant John Doe No. 6 refers to the individual or entity, whose identity is
presently unknown to Eros, behind the pseudonym “Hindenburg Research.”
40. Defendants John Does Nos. 7-9 refer to Mangrove’s or August’s affiliate(s), or
any related investment fund(s) owned in whole or in part by Mangrove or August, that Mangrove
or August used between January 1, 2015 and the present to short Eros’ stock, whose identities
are presently unknown to Eros.
41. Defendants John Does Nos. 10-12 refer to the Asensio Defendants’ affiliate(s), or
any related investment fund(s) owned in whole or in part by the Asensio Defendants, that the
Asensio Defendants used between January 1, 2016 and the present to short Eros’ stock, whose
identities are presently unknown to Eros.
42. Defendants John Does Nos. 13-15 refer to the GeoInvesting Defendants’
affiliate(s), or any related investment fund(s) owned or in whole or in part by the GeoInvesting
Defendants, that the GeoInvesting Defendants used between 2013 and the present to short Eros’
stock, including but not limited to F.G. Alpha Management, LLC, FG Alpha Advisors, LLC and
FG Alpha, L.P., whose identities are presently unknown to Eros.
43. Defendants John Does Nos. 16-18 refer to the ClaritySpring Defendants’
affiliate(s), or any related investment fund(s) owned in whole or in part by the ClaritySpring
Defendants, that the ClaritySpring Defendants used between January 1, 2017 and the present to
short Eros’ stock, whose identities are presently unknown to Eros.
44. Defendants John Does Nos. 19-30 refer to other individuals or entities, whose
identities are presently unknown to Eros, who work with or at the direction of Defendants.

Below are references to pseudonymous or anonymous Twitter accounts in the complaint (emphasis added by me):

10. Defendants, in a tactic they used repeatedly throughout their conspiracy, created
an “echo chamber” for Asensio, Spotlight Research and Orange Peel Investment’s lies using the
social media site Twitter. Defendants exploited Twitter’s ability to disperse attention-grabbing
sound bites and buzzwords to a global Internet audience, and they created anonymous Twitter
shell accounts to multiply and spread their false and misleading allegations even further.

56. To further their scheme, Defendants used Twitter, which has a number of features
that make it the ideal platform for Defendants’ disinformation. Twitter allows its users to post
anonymously, and thus escape repercussions for false content. Twitter also allows its users to
publish posts, called “tweets,” that are public to any Internet user (not just those registered with
Twitter). Other users can then republish those tweets, called “re-tweeting.” Further, Twitter
allows users to “like” a tweet; the total number of “likes” and identities of the users who “liked”
a tweet are displayed at the bottom of each tweet. Users can thus take advantage of these
features, as Defendants have done, to create the appearance of more interest in a particular story
than there actually is, thus constructing an echo chamber.

215. Moreover, the Asensio Defendants fabricated Twitter aliases to further
reverberate their false, misleading and highly offensive themes. One such alias, “Forest Gump,”
joined Twitter in June 2016, at the precise time period Defendants re-commenced their short and
distort scheme. Forest Gump has only ever published 12 tweets. All of his tweets except for one
were negative commentary on Eros; in his standalone non-Eros tweet, Forest Gump reached out
to anonymous short-seller “Unemon” with the cryptic request, “Can you follow please.” A
sample of Forest Gump’s 11 Eros-related tweets, which all respond to pro-Eros tweets, reveals
that he attempted to spread salacious falsehoods about Eros’ management and to defend Asensio
under the guise of an independent twitter user.
216. Further, an anonymous user acting under the guise of the alias “Market Farce” resurfaced
on Twitter to hype Asensio’s and other conspirators’ lies, including during phases when
those defendants laid dormant. Market Farce’s false and defamatory tweets include, among
other fictions, the baseless assertion that Eros’ accounting practices warrant SEC scrutiny:

288. Defendants, in coordinated fashion, again amplified the baseless concerns they
touted in articles and blog posts using Twitter, including through new anonymous aliases such as
“Lolwut02” and “mboom1991.”

293. Moreover, Defendants fabricated Twitter aliases to further reverberate their false,
misleading and highly offensive themes. One such alias, “Lolwut02,” joined Twitter in May
2017. Lolwut02 has only ever published six tweets, all on May 23, 2017 and related to Eros. In
one tweet, Lolwut02 responds to Unemon’s derisive tweet concerning a securities filing by Eros
International Media with the mocking question, “[t]hey do this every year?” In another tweet,
Lolwut02, purports that it is “getting kind of nervous” at the baseless prognosis of the
Company’s looming liquidity crisis. Another alias, “mboom1991,” joined Twitter in June 2017.
Since then, mboom1991 has published zero tweets of his own but consistently rubber-stamps
Unemon’s negative tweets about Eros by “liking” them.

I cannot find Forest Gump on Twitter. Here is the link to Market Farce. Lolwut02 is on Twitter but shows no tweets. Mboom1991 has two tweets and 106 likes.

Regarding this assertion from the complaint: “Market Farce’s false and defamatory tweets include, among
other fictions, the baseless assertion that Eros’ accounting practices warrant SEC scrutiny:” I present without comment the report from ProbesReporter (John Gavin) on his inquiry into an SEC investigation into Eros.

Read the full ProbesReporter report on Eros (pdf).

One of the interesting things about this suit is how Eros used FOIA requests to purportedly identify Mangrove Partners / Nathaniel August as being behind Alpha Exposure:

67. Specifically, Alpha Exposure disclosed in a June 21, 2013 Seeking Alpha article
that it submitted a FOIA request letter to the SEC concerning Uni-Pixel, Inc. (“Uni-Pixel”).
Alpha Exposure’s article hyperlinked to a partially redacted response letter from the SEC, which
redacted its true identity, but did not redact the fact that the SEC received Alpha Exposure’s
request on June 10, 2013 and denied it in full.
68. The SEC, in turn, keeps public FOIA “logs” that record metadata for the FOIA
requests that it receives. FOIA logs are public and available on the SEC’s website.2 The
metadata recorded by FOIA logs reflect information such as the requestor’s name, the subject of
the request (e.g., company name), the date the SEC receives a request, the date it closes a request
and its final disposition.
69. Here, the SEC’s public FOIA records could not be clearer about the identity of
“Alpha Exposure.” The log dated FY 2013 reveals that the SEC received a FOIA request
concerning Uni-Pixel on June 10, 2013, the same date that the SEC received Alpha Exposure’s
request, and that the request was made by someone named “August, Nathaniel” of “Mangrove
Partners.” The log further reveals that August’s request was “[d]enied in full” and closed on
June 21, 2013, which again conforms to the SEC letter that Alpha Exposure hyperlinked in its
June 21, 2013 Seeking Alpha article.
70. Moreover, the same SEC log shows that the only FOIA request concerning UniPixel
in all of FY 2013 was from “August, Nathaniel” of “Mangrove Partners.” This irrefutable
fact, coupled with Alpha Exposure’s June 21, 2013 article, amount to conclusive proof that
August and Mangrove are, in fact, “Alpha Exposure.”
71. “Alpha Exposure” again leaked its identity through a slipshod admission in a
November 19, 2015 post on its blog (https://alphaexposure.wordpress.com/). In that post, Alpha
Exposure, after publicizing a FOIA letter it had sent the SEC demanding information on Eros,
divulged that its “last” FOIA request to the SEC concerned Uni-Pixel – which, as the SEC’s
FOIA log reveals, was made by none other than August himself

After reading this I would warn anyone considering submitting a FOIA request to not submit it in their own name but have an attorney submit it for them.

I will not rehash the details of the short sellers’ accusations against Eros International other than to say that there are many different accusations of impropriety. Here is a listing of all of the negative articles published about Eros referenced in the complaint (that I found). Please note that I take no position on whether any of these articles or the allegations in them are true or not.

Unemon1 blog posts on SeekingAlpha

EROS Is Everything But The Netflix Of India. I Honestly Believe This Company Is Going Down! (3/30/2017)
Eros Worldwide Pledged Shares In Eros Intl Media As Collateral Last Week: Liquidity Problems And Lack Of Alternatives Never Seemed So Real To Me (4/6/2017)
LIQUIDITY CRISIS AT EROS INTERNATIONAL IS REAL: HERE COMES THE PROOF! (5/10/2017)
EROS: Desperately Raising Cash And At The Same Time Buying Assets From Insiders. How Messed Up Is That? IMO: A LOT! (6/28/2017)

Alpha Exposure articles on SeekingAlpha

Unlike The Name, Investors Should Not Love EROS (10/30/2015)
Eros: Return Of The Short Seller (2015) (11/10/2015)
Eros: Is The Game Finally Over? We Think So (11/13/2015)
Eros: Revising Our TopCo Analysis (11/20/2015)
Eros: Roll The Credits (8/14/2017)

Manuel P. Asensio articles on SeekingAlpha

EROS’s ‘Dozen Unknown’ Unaudited Subsidiaries Out-Earn ‘Big Name’ Grant Thornton ‘Audited’ Parent (6/8/2016)
Eros Backs Away From Skadden’s Independent Review (6/8/2016)
ErosNow’s ‘Fullerton Deal’ Brings ‘New Round Of Questions’ (6/9/2016)
EROS: Prem’s Dilemma (7/18/2016)

Hindenburg Investment Research articles on SeekingAlpha

Eros Earnings Review: An Abundance Of Red Flags (8/2/2017)
Eros International: New Receivables Accounting Red Flags (8/24/2017)

Orange Peel Investments articles on SeekingAlpha

Continue To Avoid Eros After Terrible Earnings (2/18/2016)
New Red Flags About Eros Raised (6/9/2016)
Eros Stock Bump With Lack Of Cash Generation Makes It Attractive Short (7/4/2016)
Eros: Shelf Indicates Possible Coming Equity Issuance, Continued Pressure On Stock
(8/2/2017)
Eros: Take Rumors With A Grain Of Salt (8/7/2017)

Geoinvesting articles on Geoinvesting.com

Eros’ Failed Bond Offering, S&P Downgrade, Could Signal a Very Real Liquidity Crisis (3/16/2017)
Eros Associated Execs Admit on Hidden Camera They Will Launder Money Through Films (3/29/2017)
Eros International (EROS): Critical Warning Signs Ahead of Upcoming Annual Report? (7/14/2017)

Spotlight Research articles on SeekingAlpha

EROS’s Secret: Undisclosed Related Party Links In The UAE? (6/9/2016)
Globus: EROS’s Elephant In The Room (8/18/2016)

Eros, not content to hit back with a simple libel/defamation suit, alleges in its lawsuit that the short sellers conspired against it. In the complaint the word “conspire” is used three times while “cabal” is used twice, “conspiracy” is used 13 times, and “conspirator” is used 32 times. I read through most of the complaint and I really don’t understand how any of the evidence provided supports the conspiracy claims.

The first two counts in the lawsuit are the expected (defamation per se and defamation, against all defendants). Count three is against all defendants and is for commercial disparagement (this is a new one to me — basically it is unfairly disparaging a business). Count four is false light (under Pennsylvania law) against Geoinvesting defendants only. Counts five and six are tortious interference and tortious interference with contract, against all defendants. Count seven is the big one, civil conspiracy, against all defendants. Now I am not a lawyer, but I do believe that Eros included the claim of civil conspiracy to be able to expand the scope of discovery and litigate all the claims against the various defendants in one suit, rather than having to file separate suits against each defendant.

The main lawyer for Eros International is Michael J. Bowe of Kasowitz Benson Torres LLP. Michael Bowe, besides having a sense of humor like mine, is most well known (at least among investors/traders) for representing Fairfax Financial against short sellers (this case lasted over a decade). The Fairfax Financial case also involved allegations of a conspiracy of short sellers.

One last note: this case has a couple defendants (Chris Irons and the Clarity Spring defendants) who wrote no articles or blog posts but only tweeted about Eros. Below is a screenshot of the complaint showing Irons’ tweets:

Perhaps the scariest part of this complaint is the following:

86. Irons, using his “Quoth the Raven” alias, defamed and disparaged Eros, including
by redistributing false information about Eros on Twitter.

In other words, Eros International and its lawyers are asserting that merely spreading information on Twitter (commonly done through a retweet rather than an URL link) can qualify as defamation.

If Eros is victorious in its lawsuit (or even if this just drags on for years) this could have a chilling effect on criticism of controversial companies, online in general and in particular on Twitter.

Post updated on 10/4/2017 with links to more articles, more excerpts from complaint on John Doe defendants, and link to ProbesReporter report.

Disclaimer. No position in any stocks mentioned and I have no relationship with anyone mentioned in this post except that I follow some of them on Twitter and respect their work. 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 Sues Jason McDiarmid & Kenneth George Cedric Telford for allegedly pumping & dumping Interactive Multi-Media Auction Corp (IMMA)

On September 29, 2017 the SEC filed suit against Jason McDiarmid & Kenneth George Cedric Telford for their alleged involvement in the pump and dump of Interactive Multi-Media Auction Corp (IMMA). See the SEC press release.

Excerpt:

According to the complaint, McDiarmid and Telford incorporated IMMA and took it public through a 2013 Form S-1 registration statement, registering a public offering of the company’s common stock by selling shareholders, including two of McDiarmid’s and Telford’s nominees. IMMA’s Form S-1 and its amendments allegedly falsely claimed that IMMA’s chief executive officer, McDiarmid’s friend who had no corporate experience, ran the company, when in fact it was secretly run by McDiarmid and Telford. The complaint also alleges that the S-1s also included lies that certain selling stockholders purchased their shares in IMMA through private placements, which were sham transactions. The complaint also alleges that, after learning that the SEC had subpoenaed testimony from the sister of IMMA’s CEO, who was one of the parties in the sham transactions, McDiarmid suggested a “script” for her testimony, which included false information about her relationship with Telford.

The complaint further alleges that once the Form S-1 went effective, McDiarmid repeated these lies, along with others, to a market maker for IMMA’s stock, who included them in its successful application to obtain clearance from FINRA to quote IMMA’s stock, which was needed for the company to be publicly traded.

According to the complaint, McDiarmid and Telford opened brokerage accounts in the names of nominees in order to sell their stock and, when they deposited IMMA shares into the accounts, they lied about how much stock they owned, how they obtained it, and the relationship of the nominees to them. McDiarmid and Telford also prepared IMMA’s periodic filings made with the SEC, which largely repeated the same lies in the Forms S-1. The complaint further alleges that McDiarmid and Telford organized and implemented a promotional campaign, including email blasts and a boiler room that targeted senior citizens. IMMA’s stock price increased, from $0.93 per share on September 30, 2014 to $1.62 per share on May 1, 2015, during which time McDiarmid and Telford dumped their shares through the nominees, earning them net illegal profits of about $3.1 million.

See the SEC’s complaint (pdf).

From the complaint:

Lastly, from October 2014 to May 2015, McDiarmid and Telford
organized and implemented a promotional campaign, including email blasts and a
boiler room to target senior citizens. As a result of their campaign, IMMA’s stock
price increased significantly, from $0.93 per share on September 30, 2014 to $1.62
per share on May 1, 2015, during which time McDiarmid and Telford dumped their
shares through their nominees for net proceeds of about $3.1 million.

See also the Stockwatch article about the suit (full text available only to subscribers).

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.

SEC Sues alleged boiler room operators involved in New Generation Energy (NGEY) pump & dump

On September 27th, 2017 the SEC sued individuals and companies that it alleges illegally sold shares in multiple penny stock companies through boiler rooms. From the SEC press release:

The Securities and Exchange Commission has charged six unregistered broker-dealers located in California and Colorado with illegally selling securities in penny stock companies.

The SEC’s complaint alleges that brothers David H. Welch and Marc J. Bryant, both located in southern California, and John C. Knight, located in Colorado, sold securities in New Global Energy Inc., its predecessor company, Global Energy Technology Group, Inc., and other companies in unregistered transactions using sales agents located in boiler rooms, both nationally and internationally, raising over $10 million from investors over four years. Welch, Bryant and Knight used various entities, including Defendants Bio-Global Resources, Inc., Diversified Equities Inc. (DEI), and Diversified Equities Development Inc. (DED), to make these illegal sales. In addition, according to the complaint, all of the defendants, including New Global and its CEO, Florida attorney Perry D. West, sold securities without filing a registration statement with the SEC.

See the SEC’s legal complaint (pdf). Excerpt from the complaint:

This case involves numerous individuals and entities acting as brokerdealers
– including operating a boiler room “cold-calling” operation – despite failing
to register with the SEC in violation of Section 15(a) of the Exchange Act. In
addition, all of the Defendants, operating through a web of controlled entities, sold
stock in two successive companies to the public in unregistered transactions in
violation of Sections 5(a) and 5(c) of the Securities Act, thereby depriving investors
of important and legally required information. Through their illegal plan the
Defendants effected millions of dollars of securities transactions in the stock of two
entities: Global Energy Technology Group, Inc. (“Global Energy”) and Defendant
New Global Energy, Inc. (“New Global”).

From their sales of the securities of Global Energy and New Global, the
Welch, Bryant, Knight, Bio-Global, DEI and DED raised over ten million dollars
from more than 500 investors. As a result of conduct alleged in this Complaint, these
Defendants violated the broker-dealer registration provisions of Section 15(a)(1) of
the Exchange Act, 15 U.S.C. § 78o(a)(1)

New Global Energy (NGEY) was the stock that is mentioned in the complaint. Below is the weekly candlestick chart.

The case is Securities and Exchange Commission v. David Howard Welch, et al, No. 17-cv-01968. It was filed in the Central District of California.

 

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.

Jason Napodano of Zacks Small Cap Research sued by SEC (and settles with them) and charged with criminal stock fraud for insider trading

Yesterday the SEC sued Jason Napodano of Zacks Small Cap Research as well as two other men, Bilal Basrai and Bryce Stirton. All three settled the civil suit without admitting or denying the allegations. See the SEC press release. In addition, the employer of all three men, LBMZ Securities (owner of Zacks), agreed to “pay a $240,000 penalty without admitting or denying the SEC’s findings that the firm failed to enforce policies and procedures designed to prevent its employees from misusing nonpublic information.”

The Securities and Exchange Commission today charged a stock market analyst with insider trading prior to the publication of research reports and articles he authored with the false disclaimer that he wasn’t trading in the companies being covered.  He agreed to settle the charges and be barred from trading in penny stocks for the rest of his life.

The SEC alleges that Jason Napodano, who headed a division called Zacks Small Cap Research within a larger investment research firm, misled investors in penny stocks by representing that he wasn’t trading or holding positions in the companies he was writing about while secretly trading the same stocks based on nonpublic information about the publication date of his research.  In an effort to evade detection, Napodano allegedly limited his profits from each illegal trade by taking small positions and closing the positions shortly after his reports and articles were published.

In addition to a permanent penny stock bar, Napodano agreed to pay full disgorgement of his insider trading profits totaling $143,865.48 plus interest of $17,620.87 and a penalty of $143,865.48.  The settlement is subject to court approval.

Basrai agreed to settle the charges by paying disgorgement of his insider trading profits of $39,668.37 plus interest of $4,617.89 and a penalty of $39,668.37.  Stirton agreed to settle the charges without admitting or denying the allegations by paying disgorgement of his insider trading profits totaling $2,218.87 plus interest of $257.43 and a penalty of $2,218.87.  Basrai and Stirton also agreed to be barred from trading penny stocks and from working in the securities industry, with Stirton having the right to reapply after five years.

The parallel criminal charges (one count each of stock fraud) were filed in the Northern District of Illinois (press release) against Napodano and Basrai. Stirton was not criminally charged. From the press release about the criminal charge:

JASON NAPODANO, a former Managing Director of a Chicago investment research firm, used material, non-public information he obtained while preparing equity research reports about companies to purchase and sell stock in those companies, according to a criminal information filed in federal court in Chicago. The illegal trading profits netted Napodano approximately $143,000, the information states.

In a related case, BILAL BASRAI, a former Managing Director of a Chicago investment banking firm, used material, non-public information to earn approximately $37,157 in illegal profits from the purchase and sale of stock in three companies.  Through his legal counsel, Basrai authorized the U.S. Attorney’s Office to disclose that Basrai has cooperated with the government’s investigation and intends to plead guilty to the charge contained in the information.

This case seems to signal increasing aggressiveness on the part of the SEC — while I do know that the SEC is more aggressive against insider trading than many other violations of securities laws, I cannot recall any other time that the settlement (for anything) has included a complete ban from trading penny stocks as opposed to just a bar from participating in penny stock offerings (“barred from trading in penny stocks for the rest of his life.”).

According to the Charlotte Observer, Jason Napodano is currently running a biotech newsletter called Bio5C:

According to LinkedIn, Napodano worked at Zacks from 2003 to 2015. He then came to Charlotte, where he started a company called BioNap Consulting, then Bio5C. His biography says he “has significant experience as a pharmaceutical and biotechnology stock analyst,” as well as degrees from Virginia Tech and Wake Forest.

The “code of conduct” page on the Bio5C web site includes this statement without attribution: “I have made terrible mistakes in the past when it comes to disclosure and personal trading. For these mistakes, I am truly ashamed and sorry. My mistakes, although now just public, were between 2013 and 2015. I learned a tough lesson. I’m committed to impeccable disclosure and ethics on Bio5C.”

 

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.

Some belated updates on John Babikian, Awesome Pennystocks, Jay Fung, Eric Van Nguyen, & Anthony Thompson

I haven’t kept up with John Babikian (evidently the man behind Awesomepennystocks.com, perhaps the most successful stock promoter of its time) for the last couple years as not much has happened with him. But I did notice a few things have happened that I had not recorded on this blog, so here they are.

Babikian’s (now ex-) wife dropped her suit against Babikian in LA Superior Court three years ago. I have no clue what happened to the divorce proceedings (those are normally sealed in Quebec).

Request to drop suit (pdf)
Order dropping suit (pdf)

In October 2016 Jean-François Cloutier of Journal de Montreal wrote about Babikian’s former associate Robert Kalfayan and his alleged attempts to remove money from Canada to allegedly escape seizure by the tax authority (article in French). See previous article on Revenue Québec getting a lien on Kalfayan’s home.

Meanwhile, the SEC’s case against Anthony Thompson, Jay Fung, and Eric Van Nguyen (associated with Awesomepennystocks predecessor websites) continues. That case is:

1:14-cv-09126-KBF Securities and Exchange Commission v. Thompson et al
Katherine B. Forrest, presiding
Date filed: 11/17/2014

Currently the case is stayed pending the resolution of the parallel criminal case against Thompson, Fung, and Nguyen and the CEOs of five penny stock companies. If the criminal case (supposed to go to trial on September 27, 2017) does not immediately go to trial the civil case may continue per request of Thompson’s attorneys (docket 70; PDF copy). Below is the judge’s decision (hand-written on the last page of docket 70)

The criminal matter is New York State Court (Manhattan Supreme Court) case 3853/14. See the press release about the original indictment.

Back on May 16th, 2016 the judge ordered a bunch of the charges dropped, including larceny charges, because they were deemed not to fit the crime. The order described in that article can be found on Justia.

I should mention that while the promoters were the ones who became infamous, they were not the alleged mastermind(s). Instead, that was allegedly Kevin Sepe (who was not charged in the case). From the statement of facts in the order I linked above:

STATEMENT OF FACTS

The indictment arises from 9 alleged fraudulent “penny stock” “pump and dump” schemes. A penny stock is one which trades for less than $5 per share, is not listed on the NASDAQ and requires limited disclosure, making investments more risky and volatile. The company shares in this case traded for pennies or fractions of pennies but the conduct here also involved millions of shares. Those companies and their ticker symbols (the symbols which designated the companies on the market) were: Blast Applications (BLAP), Blue Gem Enterprises (BGEM), Recyle Tech (RCYT), Hydrogenetics (HGYN), Xynergy Holdings (XYNH), Mass Hysteria Entertainment Company Inc. (MHYS), Lyric Jeans (LYJN), SunPeaks Ventures (SNPK) and Smart Holdings (SMHS) (hereinafter sometimes referred to as the “subject companies”).

The architect and orchestrator of the scheme was Kevin Sepe. The remaining defendants, as described infra, were either affiliates of Kevin Sepe or stock promoters who worked with him to implement the alleged frauds. The Defendants’ work with the companies followed a similar pattern. A publicly traded “shell” company (a company with no substantial business) would be [*3]identified and Mr. Sepe and his affiliates would then act to merge a private company they controlled into the shell company. This allowed the shares of the new company to be freely traded without a waiting period. Money would be loaned to the company and then the loan would be converted into equity through the receipt of shares of the company stock as a substitute for the repayment of the debt. A stock promotion would then take place. Typically, there would have been very little trading in the company’s stock prior to the promotion. Immediately prior to the beginning of the promotion, however, some shares might be leaked into the market so that regulators would not see that a company went immediately from having no shares traded to a large trading volume.

The shares held by Sepe and his affiliates would rise in value following the promotion. Sepe and his affiliates would sell the shares at huge profits. The promotional campaign would then end. The share price would then rapidly decline. Kevin Sepe and his affiliates knew, in advance, that the stocks would follow this pattern pursuant to the beginning and end of internet marketing campaigns and scheduled and coordinated their stock sales accordingly. In each case, the sales and profits followed the pre-arranged pattern.

A key part of the scheme was to conceal the fact that Kevin Sepe controlled a vast portion of the trading shares. To conceal his ownership, his shares were placed in the names of multiple loyal nominees including Defendants Luz Rodriguez and Joseph Dervali who then sold their shares and split the profits with Kevin Sepe. In addition to concealing his ownership and control, having shares held by these nominees allowed Sepe to evade requirements that persons who held more than 5% of the shares of a company be disclosed.

Kevin Sepe was sued by the SEC back in 2012 for his involvement in the pump and dump of Recycle Tech and HydroGenetic and he settled that case. “Sepe agreed to disgorgement of $1,416,466.16, prejudgment interest of $126,761.86, and penalties of $185,000 as well as a permanent bar from participating in an offer or sale of penny stocks.” As with most SEC settlements, Sepe neither admitted nor denied the allegations in the settlment.

 

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.

 

Another day, another Bitcoin-related penny stock trading suspension: American Security Resources Corp $ARSC

Just yesterday trading in First Bitcoin Capital Corp was suspended by the SEC. Today, the SEC suspended trading in American Security Resources Corp (ARSC).

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

The reason given for the trading suspension:

The Commission temporarily suspended trading in the securities of ARSC because of questions
that have arisen regarding publicly available information about the company in press releases on
OTCMarkets.com, dated August 1, and August 8, 2017, concerning, among other things, the
company’s business transition to the cryptocurrency markets and early adoption of blockchain
technology.

Following are links to and excerpts from the above-mentioned press releases:

American Security Resources Corp. (OTC PINK: ARSC) Officially Changes Name to Bitcoin Crypto Currency Exchange Corporation (August 1st, 2017)

HOUSTON, TX / ACCESSWIRE / August 1, 2017 / American Security Resources Corporation (OTC PINK: ARSC) is pleased to announce that the Company has officially changed its name to Bitcoin Crypto Currency Exchange Corporation in Nevada, the State of incorporation, as it prepares to enter the booming Crypto currency markets.

“We have decided to make this change to better reflect the new activities of our company. We have already taken steps to bring the company into compliance with OTC Markets and expect to have more announcements soon,” said CEO Frank Neukomm.

He further added, “The Company, today, has appointed Jay Jordon, Michel Beaulieu, and Duncan Brown to its Advisory Board as they have more than 50 years of combined experience in emerging digital technologies. We believe the Company is now positioned to aggressively pursue crypto-currencies and Bitcoin opportunities, and have changed our name to accurately reflect our new direction.”

Bitcoin Crypto Currency Exchange Corporation (OTC PINK: ARSC) Announces the Acquisition of Kachingpay.com

HOUSTON, TX / ACCESSWIRE / August 8, 2017 / Bitcoin Crypto Currency Exchange Corporation (OTC PINK: ARSC), formerly known as American Security Resources Corporation, announces today that it has acquired 100% of Kachingpay.com Incorporated (“KaChing”), in a cash and stock transaction. KaChing will be merged in to ARSC as a wholly owned subsidiary.

About Kachingpay.com:

KaChing is a smartphone-based payment and money transfer system created by Prometheus Software. KaChing is fast, free, and failsafe. KaChing recognizes that current user fees and charges with existing payment and money transfer systems are excessive. Today’s payment transactions and systems are burdened by their complexity and cost.

KaChing will drive down user fees and charges so that purchase payment processing will become a low cost, commodity utility. Using the free KaChing mobile app, consumers purchase tokens for their digital wallet. KaChing gift card tokens are then used for purchases with merchants. Consumers do not need credit cards, debit cards or specialized hardware. Merchants use existing hardware as well: computers, smartphones or tablets. KaChing uses Apple iOS and Android mobile devices for payment.

Management considers this acquisition significant as it provides a mobile front end on iOS and Android to the BitcoinMWallet mobile exchange platform for crypto currencies, which will be created by the Company.

 

ARSC will resume trading on the grey market (no market makers) at the open on September 11th.

 

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.

 

 

 

First Bitcoin Capital Corp $BITCF receives SEC trading suspension

This morning just prior to the market open the SEC issued a trading suspension for First Bitcoin Capital Corp (BITCF), which has a market cap of $545 milliion as of the most recent close of $1.79.

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

The reason given for the trading suspension:

because of concerns regarding the accuracy and adequacy of publicly available information about the company including, among other things, the value of BITCF’s assets and its capital structure.

My bet is that the news from August 2nd of BITCF preparing to pay a dividend in an illiquid cryptocurrency (TeslaCoilCoin) was one of the primary reasons for the trading suspension. The record date for that dividend was to be September 12th which is why I think the SEC acted now. After first posting this article Jacob Ma-Weaver mentioned that BITCF had issued a cryptocurrency version of its own stock and he thought that was the reason for the suspension. I had missed this initially and now agree with Jacob. From the company’s recent PR about the dividend, “We may also from time to time pay dividends in our own common shares in their crypto form which trades under the crypto symbol $BITCF on various foreign cryptocurrency exchanges.”

BITCF will resume trading on the grey market (no market makers) at the open on September 8, 2017.

While I did not follow $BITCF closely, there were plenty of red flags. Besides the usual lack of assets ($673,000 including their cryptocurrency holdings), there was having Anthony M. Santos as legal counsel. I didn’t recognize his name at first but he was attorney for NevWest, a key broker that processed the illegal sales of billions of shares of stock in CMKM Diamonds.

Disclaimer. No position in any stocks mentioned and I have no relationship with anyone mentioned in this post. New information was added to this post later on the day it was first published to give more reasons why BITCF may have been suspended. 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.

 

Environmental Packaging Technologies Holdings $EPTI to resume trading on July 13th after SEC trading suspension

Not long (13 days) after I blogged about the hard mailer promoting Environmental Packaging Technologies Holdings (EPTI) and uploaded a scan of the mailer, during premarket trading on June 28th the SEC suspended trading in the stock. It will resume trading on the grey market (no market makers) at the market open on July 13th, likely gapping down 90% or so.

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

The reason given for the trading suspension:

concerns regarding: (i) the accuracy and adequacy of publicly available information in the marketplace
since at least June 9, 2017 regarding statements in third party stock promotion materials pertaining to Environmental Packaging’s 2016 revenues, projected 2017 revenues, and the company’s buyout potential; and (ii) recent trading activity in the security that potentially reflects manipulative or deceptive activities.

While I would love to take credit for the SEC suspension of EPTI, that “The Commission acknowledges FINRA’s assistance in this matter” means that some broker(s) likely submitted SARs (suspicious activity reports) about potentially manipulative trading and that was the prime reason for the suspension.

 

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.

Environmental Packaging Technologies Holdings $EPTI promoted by 16-page mailer

The newest landing page pump out there is Environmental Packaging Technologies Holdings (EPTI). It has only been pumped for a week and volume is not great and it already crashed today but is bouncing back. A short seller such as I can only hope that the pump recovers and gets more volume so that it will be worth selling short (I currently have no position). The landing page is at: http://profitplaystocks.com/epti/index.html. Today I received a 16-page glossy mailer that I have scanned (pdf).

As of the company’s most recent 10-Q, filed on June 8, 2017, the company reported total assets of $475 and no revenues for the most recent quarter.

Disclosed budget: $1,000,000
Promoter:  Profit Play Stocks
Paying party: SVARNA LTD
Shares outstanding: 12,000,023
Previous closing price: $1.27
Market capitalization: $30 million

Disclaimer (emphasis added by me):

IMPORTANT NOTICE AND DISCLAIMER: DO NOT BASE ANY INVESTMENT DECISIONS UPON ANY MATERIAL FOUND IN THIS REPORT. This publication is distributed free of charge and does not purport to provide an analysis of a company’s financial position. The information contained herein has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company, including Environmental Packaging Technologies Holdings (EPTI). Environmental Packaging Technologies Holdings’ (EPTI) financial position and all other information regarding (EPTI) should be verified with the company. An individual should not invest in the securities of (EPTI) based solely on information contained in this advertisement. Information about many publicly traded companies, including (EPTI) and other investor resources can be found at the Securities and Exchange Commission’s website: www.sec.gov. Investing in securities is highly speculative and carries significant risk. It is recommended that any investment in any security should be made only after consulting with your investment advisor and only after reviewing all publicly available information, including the statements of the company. This mailing piece is not intended to be, nor should it be construed as, an offer to sell or a solicitation of an offer to buy securities, nor should it be construed as the provision of any investment related advice or services tailored to any particular individual’s financial situation or investment objective(s). Profit Play Stocks is a publisher of general and regular circulations offering impersonalized investment-related research to readers and/or prospective readers and is not an investment advisor or broker/dealer registered with either the U.S Securities and Exchange Commission (SEC) or with any state securities regulatory authorities. Profit Play Stocks is neither licensed nor qualified to provide financial advice. As such, it relies upon the “publisher’s exclusion” as provided under Section 202(a)(11) of the Investment Advisors Act of 1940 and corresponding state securities laws. Investing in companies like (EPTI) carries a high degree of risk. Do not invest in this company unless you can afford to possibly lose your entire investment. The “Company” featured herein appears as paid advertising, paid by a third party to provide public awareness for (EPTI). The publisher, Profit Play Stocks, understands that in an effort to enhance public awareness of (EPTI) and its securities through the distribution of this mail and online advertisement, SVARNA, LTD. paid all of the costs associated with creating, printing, postage, and distribution of this advertisement. The publisher was paid the sum of ten thousand dollars for its contributions. The marketing vendors will be managing a total budget of one million dollars, provided by SVARNA, LTD. for all mail and 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. If successful, the advertisement will increase investor and market awareness, which may result in increased numbers of shareholders owning and trading the common stock of (EPTI), increased trading volumes, and possibly increased share price of the common stock of (EPTI). The publisher has not undertaken to determine if SVARNA, LTD. Is, or intends to be, directly or indirectly, a shareholder of (EPTI). This publication is based exclusively on information generally available to the public and does not contain any material, non-public information. The information on which it is based is believed to be reliable; nevertheless, the publisher cannot guarantee the accuracy or completeness of the information. The information contained herein contain forwardlooking information within the meaning of section 27a of the Securities Act and section 21e of the Securities Exchange Act including statements regarding expected growth of The Company. In accordance with the safe harbor provisions of the Private Securities Litigation Reform Act, the publisher notes that statements contained herein that look forward in time, which include everything other than historical information, involve risks and uncertainties that may affect the Company’s actual results of operations. Factors that could cause actual results to differ include, but are not limited to, the size and growth of the market for the company’s products and services, the company’s ability to fund its capital requirements in the near term and long term, pricing pressures and other risks detailed in the company’s filed reports with SEC. To the fullest extent of the law, we will not be liable to any person or entity for the quality, accuracy, completeness, reliability, or timeliness of the information provided herein, or for any direct, indirect, consequential, incidental special or punitive damages that may arise out of the use of information we provide to any person or entity (including, but not limited to; lost profits, loss of opportunities, trading losses, and damages that may result from any inaccuracy or incompleteness of this information.

*Projection: Profit projection based on Environmental Packaging Technologies (EPTI) potential to match their competitor’s (Kirby Corporation: KEX) price surge.

Copy of pump landing page (PDF)

Disclaimer. I have no position in any stock mentioned above. I have no relationship with any parties mentioned above. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

SEC Sues Alpine Securities, continuing a run of bad news for owner John Hurry

As I wrote back in April, FINRA fined Scottsdale Capital Advisors $1.5 million for doing a really poor job at preventing illegal sales by penny stock insiders (FINRA Rule 2010). The owner, John J. Hurry, was barred from the industry. The full 111-page FINRA decision can be found on their website. Unfortunately FINRA prevents direct-linking so you need to go to http://disciplinaryactions.finra.org/Search/ and then enter “John Hurry” as the name. I have downloaded a copy of the decision in case they delete it.

From the FINRA report:

The Respondent firm violated FINRA Rule 2010 by selling securities without
registration and without an exemption, in contravention of Section 5 of the
Securities Act of 1933. The firm’s owner, Respondent John Hurry, also
violated Rule 2010, because he engaged in activities designed to enable the
unlawful transactions and evade regulatory scrutiny.

The Respondent firm and its Chief Compliance Officer, Respondent Timothy
DiBlasi, violated NASD Rules 3010(a) and (b) and FINRA Rule 2010 by
failing to establish and maintain a supervisory system, including written
supervisory procedures, reasonably designed to ensure that the firm
complied with Section 5 of the Securities Act.

The Respondent firm and its President, Respondent Michael Cruz, violated
NASD Rule 3010(b) and FINRA Rule 2010 by failing to supervise and failing
to respond appropriately to numerous red flags indicative of unlawful
unregistered distributions.

The Respondent firm is fined $1.5 million. Hurry is barred in all capacities.
He would also be fined $100,000, but, in light of the bar, the fine is not
imposed. DiBlasi is suspended for two years and fined $50,000. Cruz is
suspended for two years and fined $50,000. In addition, Respondents are
ordered to pay costs, for which they are jointly and severally liable.

From the same FINRA report, John “Hurry is a threat to the investment public.” The SEC must agree because on June 5, 2017 they sued Alpine Securities, which is another broker specializing in penny stocks owned by John Hurry.

The FINRA report on Scottsdale and Hurry describes the close relationship among them, Alpine Securities, and CSCT, which was based in the Cayman Islands.

Respondent Hurry thus owns and controls all three firms involved in the transactions at
issue in this proceeding-Scottsdale, Alpine, and CSCT. In fact, the three firms were almost a
self-contained system for processing and distributing microcap securities. CSCT did all its
business through Scottsdale, and Scottsdale in turn did all its business with Alpine. Alpine’s
current CEO described Alpine as a small”boutique” clearing firm with a focus on the kind of
business brought to it by CSCT. No independent third party was involved in preparing,
approving, or clearing the deposits of stock certificates by CSCT at Scottsdale for resale.

SEC litigation release against Alpine Securities
SEC complaint against Alpine securities (PDF)

From the litigation release against Alpine Securities:

Securities and Exchange Commission v. Alpine Securities Corporation

Civil Action No. 7:17-CV-4179 (S.D.N.Y., filed June 5, 2017)

SEC CHARGES BROKERAGE FIRM WITH FAILING TO COMPLY WITH ANTI-MONEY LAUNDERING LAWS

Washington D.C., Jun. 5, 2017 – The Securities and Exchange Commission today charged a Salt Lake City-based brokerage firm with securities law violations related to its alleged practice of clearing transactions for microcap stocks that were used in manipulative schemes to harm investors.

To help detect potential securities law and money-laundering violations, broker-dealers are required to file Suspicious Activity Reports (SARs) that describe suspicious transactions that take place through their firms. The SEC’s complaint alleges that Alpine Securities Corporation routinely and systematically failed to file SARs for stock transactions that it flagged as suspicious. When it did file SARs, Alpine Securities allegedly frequently omitted the very information that formed the bases for Alpine knowing, suspecting, or having reason to suspect that a transaction was suspicious. As noted in the complaint, guidance for preparing SARs from the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) clearly states that “[e]xplaining why the transaction is suspicious is critical.”

The SEC’s complaint charges Alpine Securities with thousands of violations of Section 17(a) of the Securities Exchange Act of 1934 and Rule 17a-8.

From the complaint, the SEC alleges:

This case concerns Alpine’s practices relating to filing Suspicious Activity
Reports (“SARs”) with the U.S. Treasury Department’s Financial Crimes Enforcement Network
(“FinCEN”). Alpine acts as a clearing firm for many microcap over-the-counter (“OTC”) stock
transactions. Since 2011, Alpine has cleared thousands of deposits of microcap securities, most
of them involving Scottsdale Capital Advisors Corp. (“Scottsdale”) as the introducing broker,
and many of which were used as part of various stock manipulation and other schemes

Alpine’s alleged failures with regard to filing suspicious activity reports (SARs) seem egregious:

Systematically omitting from at least 1,950 SARs material, “red-flag” information of
which it was aware and was required to report under its own BSA Compliance
Program, such as a customer or issuer’s criminal or regulatory history, evidence of
stock promotion, or whether a customer was a foreign financial institution, including
at least 1,150 SARs which included only the customer name, date of deposit, dollar
value of deposit, and the name of the security deposited;
• Filing SARs only on the deposit of stock in approximately 1,900 instances in which
the stock was subsequently liquidated, but failing to file required SARs on subsequent
related transactions such as the liquidation, or transfer of funds resulting from the
liquidation, even though it had identified the deposit of the security as suspicious; and
• Failing to file at least 250 SARs within the required 30 days after the date the
suspicious activity was detected.

Alpine has previously been investigated and cited by FINRA for inadequate SARs in 2012 and 2015.

Lest anyone think that these are just minor paperwork deficiences with no real consequences, I remind you that one pump and dump alone, Biozoom (BIZM), led to over $17 million in fraudulent profits for manipulators / insiders, and many of their accounts were at Scottsdale Capital Advisors.

One interesting thing I noticed: this lawsuit against Alpine Securities came on June 5th, which is exactly the day that the bar against a couple employees of Scottsdale Capital Advisors began. From the FINRA complain from April (emphasis mine):

V. CONCLUSION

The Firm, Scottsdale Capital Advisors, violated FINRA Rule 2010. Accordingly, it is
ordered to pay a fine of$ 1.5 million. John J. Hurryviolated FINRA Rule 2010. For his
misconduct he is barred from association with any FINRA member in any capacity. He would be
fined $100,000, but, in light ofthe bar, the fine is not imposed. Timothy B. DiBlasi violated
NASD Rules 3010(a) and (b) and FINRA Rule 2010. For his misconduct, he is suspended for
two years from association with any FINRA member in any capacity and fined $50,000. D.
Michael Cruz violated NASD Rule 3010(b) and FINRA Rule 2010. For his misconduct, he is
suspended for two years from association with any FINRA member in any capacity and fined
$50,000.

Respondents are also ordered to pay costs in the amount of$22,124.29, which includes a
$750 administrative fee and $21,374.29 for the cost of the transcript. If this decision becomes
FINRA’s final disciplinary action, Hurry’s bar will take immediate effect. DiBlasi’s and Cruz’s
suspension will begin with the opening of business on June 5, 2017 The fines and assessed costs
shall be due on a date set by FINRA, but not sooner than 30 days after this decision becomes
FINRA’s final disciplinary action in this proceeding.

 

Disclaimer. I have no position in any stock mentioned above. I was long BIZM when trading in it was suspended by the SEC and lost money because of that. 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.