Source: https://www.goodetrades.com/category/fraud/page/2/
Timestamp: 2019-04-26 00:11:45+00:00

Document:
Stock Promoter litigation follow-up: Jay Fung in prison for Insider trading, more litigation for Anthony J. Thompson Jr.
I usually ignore SEC insider-trading litigation so I managed to miss when Jay Fung was arrested for insider-trading on a takeover (specifically, the Gilead takeover of Pharmasset in 2011). This was a follow-up to SEC v. Kevin L. Dowd (3:13-cv-00494) and USA v. Kevin Dowd (3:13-cr-00636-AET), all in the US District Court for the District of New Jersey (links are to dockets at CourtListener.com). The original civil complaint (pdf) was brought by the SEC on January 25, 2013. The final judgment against Dowd ordered him to pay $33,325 to the SEC. As to the criminal complaint, Dowd plead guilty and was sentenced to 3 years probation and forfeiture of $35,000.
j. Co-conspriator J.F. was defendant DOWD’s childhood friend, and resided in or around Del Ray Beach, Florida. Among other things, J.F. operated “Company A” , which maintained a brokerage account with a brokerage firm headquartered in Shrewsbury, New Jersey (“Brokerage Firm B”). J.F. previously worked at a penny stock promotion company in Boca Raton, Florida (the “Stock Promotion Company”) from approximately in or about 2000 to approximately in or about late 2006, where defendant DOWD also worked between in or about May 2000 through in or about July 2001.
approximately in or about 2003 through in or about 2005, and knew defendant Dowd.
“Con-conspirator J.F.” was later revealed to be Jay Fung when he was charged on information on March 9, 2016 and immediately pled guilty. The case was US v. Fung (3:16-cr-00107) in the US District Court, District of New Jersey. On January 17, 2018 he was sentenced to 1 year in prison to be followed by 3 years of supervised release. Jay Fung forfeited $345,245.
Previously, Jay Fung had been sued by the SEC for his promotion of RecycleTech (RCYT). That case was SEC v. Recycle Tech, Inc (1:12-cv-21656) in the US District Court, Sourthern District of Florida. I blogged about that case when it was first filed in 2012. In that case, the final judgment against Jay Fung was rendered on February 14th, 2014. Fung and his company Pudong LLC were judged to be jointly and severally liable for disgorgement of $456,457 along with interest of $30,998.36. Fung was also ordered to pay a civil penalty of $120,000.
The Manhattan District Attorney charged a number of stock promoters including the three listed above, back in 2014. The case is 03853-2014 in Manhattan Supreme Court. I first reported on that case in September 2014 and then provided an update on September 26th, 2017.
The appearances in the case are shown below. Unfortunately, details are not given so I cannot be sure if any of the defendants have been dropped from the case. Sentencing is scheduled for September 27th, 2018.
The most recent decision in the case that I can access is from May 16th, 2016. Decisions do not appear to be accessible through the court’s website.
We write in advance of the July 10, 2018 prehearing conference in this matter in order to provide the Court with additional background as to the status of this litigation. Unfortunately, it has become apparent that defendant Anthony J. Thompson (“Thompson”) has engaged in a pattern of obfuscation and delay. The SEC has recently obtained documents from other litigation in which Thompson is involved that suggest not only that he has deliberately delayed the discovery process in the SEC action, but that his misconduct might be far broader than originally thought, and that Thompson might have significant assets secreted abroad.
As to defendant Jay Fung, he was agreed to a settlement offer that the staff is prepared to submit senior management and the Commission for review.
After approximately two months of what the SEC believed were good faith settlement discussions, Thompson has failed to formally agree or execute the settlement papers sent to him.
The SEC has learned from an initial and by necessity cursory review of some of the materials it has recently received of certain facts that are potentially material to the case at bar. These facts include that Thompson, in addition to the funds received in from the schemes set out in the Complaint, sold off OTC Solutions, Inc. for $6 million. The SEC was also informed that Thompson has been providing “consulting” services to companies located in Belize, might have been paid several million dollars in Belize. The SEC further learned that Thompson might have converted his ill-gotten gains into luxury cars and boats, and jewelry, including expensive watches. Finally, from reviewing the pleadings in those cases the SEC learned that Thompson was accused of similar dilatory and obfuscatory discovery tactics therein, including failing to adequately produce tax returns, banking information, and other financial data.
This morning prior to market open the trading in AXM Pharma (AXMP) was suspended by the SEC.
because of questions about the adequacy and accuracy of information concerning AXMP’s leadership and operations contained in a Quarterly Report issued by AXMP on May 14, 2018, AXMP’s press releases issued between July 2, 2018 and July 6, 2018, and a Supplemental Information Report issued by AXMP on July 5, 2018. AXMP is a Nevada corporation based in Las Vegas, NV. AXMP’s stock is quoted on OTC Link (previously “Pink Sheets”) operated by OTC Markets Group Inc. under the symbol AXMP.
This trading suspension is related to the suspension earlier this month of WSML, CYPE, and BTHI. AXM Pharma shares many connections with those other three companies including a connection with Mandla J. Gwadiso.
On March 9, 2108 Brian Robert Sodi aka ‘Mailman’ was arrested and criminal and civil charges were announced against him. See the SEC press release and the Department of Justice press release. I have been behind in my blogging and did not realize just how important Brian Sodi allegedly was to the pump and dump industry until I finally got around to reading the criminal indictment and the SEC complaint.
How did Sodi acquire the nickname “mailman”? According to the SEC complaint he ran a large number of stock promotions (both online and physical mail) for 17 years.
A ten-count indictment filed in U.S. District Court charges BRIAN ROBERT “Mailman” SODI, 46, of Boca Raton, with conspiracy to commit securities fraud and mail fraud, and related charges.
According to the indictment, Sodi used his Florida-based publishing houses to distribute deceptive promotional mailers recommending the purchase of select penny stocks, while hiding from potential investors that he secretly was selling the stocks he was urging them to buy. The indictment also charges that Sodi obscured his involvement in the scheme by using offshore accounts and intermediaries to launder the proceeds of his fraud back to himself and his publishing houses.
He would acquire shares of a publicly-traded stock, positioning himself to benefit from selling the shares at inflated prices. Sodi would try to induce the public to purchase the stock by developing and disseminating promotional and marketing mailers that exaggerated the stock’s prospects for growth and urged readers to purchase it. The mailers would falsely and deceptively conceal and fail to disclose that Sodi intended to sell the stock he was urging others to buy. After the stock price rose, Sodi would sell the stock for a profit.
Sodi hid his ownership interest in the promoted stock by trading through Arliss, a Swiss account, instead of through a brokerage account held in his own name. He brought the proceeds of his fraud back to himself and his publishing houses through offshore accounts held by firms in Switzerland, the Cayman Islands, and elsewhere.
The SEC appreciates the assistance of the U.S. Attorney’s Offices for the Northern District of Alabama, District of New Jersey, Eastern District of New York, and Eastern District of Virginia as well as the Criminal Fraud Section of the U.S. Department of Justice, Federal Bureau of Investigation, U.S. Postal Inspection Service, U.S. Department of Homeland Security, Alabama State Securities Commission, Financial Industry Regulatory Authority, Alberta Securities Commission, British Columbia Securities Commission, Cayman Islands Monetary Authority, the Cyprus Securities and Exchange Commission, Dubai Financial Services Authority, Guernsey Financial Services Commission, Hong Kong Securities and Futures Commission, Liechtenstein Financial Market Authority, the Malta Financial Services Authority, the Mauritius Financial Services Commission, Investigation Section of the Financial Services Regulation Division of the Government of Newfoundland and Labrador, Ontario Securities Commission, Québec Autorité des Marchés Financiers, Monetary Authority of Singapore, Swiss Financial Market Supervisory Authority, United Arab Emirates Securities and Commodities Authority, and United Kingdom Financial Conduct Authority.
There are three court cases that have been generated by this so far. The first (and least interesting) is United States v. Sodi (9:18-mj-08088) in the US District Court of the Southern District of Florida. All my links to court cases in this post are to the freely-available docket on CourtListener.com. In addition to the docket, some of the court documents are available to download from that website for free.
The criminal indictment was originally filed in the US District Court, Northern District of Alabama before being removed to the Southern District of Florida — where it was promptly transferred back to Alabama. My guess is that the only reason for the brief removal of the case to Florida was because Sodi was arrested there so therefore bond had to be set there. On March 8, 2018, was released on $250,000 bond (pdf).
Pursuant to Rule 7 of the Federal Rules of Civil Procedure, Defendants Brian Robert Sodi (“Sodi”), Capital Financial Media, LLC, and List Data Solutions, LLC (collectively, “Defendants”), respectfully move the Court for an order staying this matter pending resolution of the criminal case against Sodi in this District.
Consistent with discussion on the record during the telephone conference on June 28, 2018 in this matter, on or before July 20, 2018, the parties shall please submit a proposed partial stay order that addresses the Fifth Amendment concerns in this case. The Court STAYS the defendants’ obligations to respond to the complaint in this matter until the Court reviews the parties’ joint submission and enters an appropriate order. Signed by Judge Madeline Hughes Haikala on 6/29/2018.
The third and most important case is United States v. Sodi (5:18-cr-00056) in US District Court, Northern District of Alabama. Read the criminal indictment (pdf). The indictment was filed under seal on February 22, 2018.
A first production of discovery has already been delivered to the defense and further productions are being prepared. The Government estimates that the organized discovery ultimately made available to the defense will amount to at least 100 gigabytes of data, mostly in the form of thousands of documents, with additional materials to be made available for inspection or copying.
A telephone status conference has been scheduled for July 30, 2018 to discuss the timeline for pretrial motions, plea notification, and trial.
The Indictment alleges that Sodi participated in such fraud schemes involving four separate stock tickers during 2012 and 2013.
Because the frauds alleged in the Indictment were directed at influencing the stock price of each of the targeted stocks, and thereby influencing the market for the stocks as a whole, the number of victims harmed by the defendant’s activities reaches far beyond the typical range for ordinary financial fraud cases. The Government currently estimates that 48,848 investors, in the United States and elsewhere, purchased manipulated stock during Sodi’s frauds.
Considering that the same people would tend to trade many different pumps, rather than dividing 48,848 by 4 to get 12,000 traders/investors during each pump and dump, I would estimate 24,000 traders/investors traded each of the stocks Sodi is alleged to have promoted.
c. The defendant, BRIAN ROBERT SODI, known to others involved in penny stock fraud as “Mailman,” personally controlled companies Capital Financial Media, LLC (CFM), List Data Solutions, LLC (LDS), GLJ Holdings, LLC (GLJ), Trinity Investment Research, LLC (TIR), and other companies using the same business address in Delray Beach, Florida. BRIAN ROBERT SODI and his entities were involved in penny stock promotion s, primarily through the distribution of mailers by postal mail, email, and online advertising.
e. Arliss International, Inc. (Arliss) was a corporate entity incorporated in the British Virgin Islands in and around October 2009. BRIAN ROBERT SODI used Arliss to scalp stock during the pump-and-dump schemes described in this Indictment. Although Arliss’s manager was nominally an official of EuroHelvetia Trustco S.A. (EHT), a wealth administration firm headquartered in Geneva, Switzerland, Arliss was in fact used by and operated for the benefit of BRIAN ROBERT SODI.
f. Southern USA Resources, Inc. (SUSA) was a Delaware corporation doing business in Ashland, Alabama, in Clay County, within the Northern District of Alabama. From in and around 2012 to in and around 2013, SUSA operated a gold mine in the Northern District of Alabama. SUSA registered its common stock with the U.S. Securities and Exchange Commission (SEC) under Section 12 of the Securities Exchange Act of 1934 on or about May 10, 2012. SUSA securities were quoted on OTC Link, an electronic inter-dealer quotation system for over-the-counter securities, under the ticker symbol “SUSA.” SUSA shares were available for public trading until on or about March 1, 2013, when the SEC issued an order suspending trading in SUSA stock. BRIAN ROBERT SODI used Arliss to scalp SUSA stock during a promotion by BRIAN ROBERT SODI’s publishing houses that was executed from in and around 2012 to in and around 2013. On or about November 22, 2013, the SEC revoked SUSA’s registration for various violations of the securities laws.
g. Great Wall Builders Ltd. (GWBU) was a Texas corporation. GWBU common stock was registered with the SEC under Exchange Act Section 12(g) and was quoted on OTC Link under the ticker symbol “GWBU.” BRIAN ROBERT SODI used Arliss to scalp GWBU stock during a promotion by BRIAN ROBERT SODI’s publishing houses in and around 2012.
h. Potash America, Inc. (PTAM) was a Nevada corporation headquartered in Boca Raton, Florida (originally named Adtomize Inc.). PTAM common stock was registered with the SEC under Exchange Act Section 12(g) and was quoted on OTC Link under the ticker symbol “PTAM.” BRIAN ROBERT SODI used Arliss to scalp PTAM stock during a promotion by his publishing houses in and around 2012.
i. Goff, Corp. (GOFF) was a Nevada corporation headquartered in Cork City, Ireland. GOFF common stock was registered with the SEC under Exchange Act Section 12(g). BRIAN ROBERT SODI used Arliss to scalp GOFF stock during a promotion run by his publishing houses in and around 2013. GOFF securities were quoted on OTC Link under the ticker symbol “GOFF” and were available for public trading until on or about June 29, 2013, when GOFF terminated its stock registration.
Of the four stocks mentioned in the indictment, two of them (GOFF and GWBU) were also promoted by the infamous AwesomePennyStocks. I wrote a blog post detailing the Goff Corp (GOFF) stock promotion by email and by online landing page and hard mailer (distributed by Capital Financial Media). I wrote about the Great Wall Builders (GWBU) email promotion by Awesomepennystocks and how that campaign was interrupted by SpamHaus and iContact. I previously blogged about the SEC suspending trading in Southern USA Resources (SUSA). Tim Lento posted a scan of the front and disclaimer page of the SUSA hard mailer. Here is a copy of that scan.
6. It was further a part of the scheme that BRIAN ROBERT SODI’s mailers would falsely, deceptively, and misleadingly conceal and fail to disclose the material fact that BRIAN ROBERT SODI intended to sell the very stock that he was urging others to buy.
8. It was further a part of the scheme that sometimes, accomplices and co-conspirators of BRIAN ROBERT SODI, both known and unknown to the Grand Jury, would use “match trading,” i.e.,coordinated transactions designed to manipulate the stock price, to deceive investors into believing that the public was actively trading in the stock.
9. It was further a part of the scheme that after the stock price rose, BRIAN ROBERT SODI would sell the stock for a profit.
10. It was further a part of the scheme that BRIAN ROBERT SODI would conceal his ownership interest in the promoted stock by trading through Arliss, a Swiss account, instead of through a brokerage account held in his own name.
11. It was further a part of the scheme that BRIAN ROBERT SODI would repatriate the proceeds to himself and his publishing houses through offshore accounts held by firms in Switzerland, the Cayman Islands, and elsewhere.
12. From in and around 2012 through in and around 2013, all dates inclusive, BRIAN ROBERT SODI, together with CW-1, CW-2, and others known and unknown to the Grand Jury, conspired to defraud investors in the Northern District of Alabama and elsewhere through the fraud scheme described above by executing trades of SUSA stock.
e. other Swiss Administrative Firm A-administered accounts wiring funds to reload the very same Swiss Visa Card that Front Company B, as alleged in paragraph 81.c above, wired funds to reload.
At the time of these purchases, Sodi knew that the massive GWBU promotional campaign his Penny Stock Promotion Platform had prepared was about to launch, and that it would also coincide and be coordinated with a massive APS campaign likewise promoting GWBU.
88. In addition to the Front Company A and Front Company B-linked funds that were routed circuitously to Sodi’s CFM entity in April 2014 via Hong Kong Account A, as alleged in paragraph 81.b above, other funds followed a similar path. These include six transfers totaling $950,000 between June 18 and September 22, 2014 from Hong Kong Account A to Sodi’s LDS entity.
89. Sodi’s Penny Stock Promotion Platform booked all $950,000 of the aforementioned wires from Hong Kong Account A as income relating to the Sodi Platform’s promotion of a marijuana stock called Graham & Hill Industries (GHIL). Every penny of this $950,000 however, was first sent to Hong Kong Account A by the very same account – which happened to be at a Cayman Islands bank – that was selling GHIL stock into the price and volume rises generated by that touting campaign. Moreover, every penny of this $950,000 was funded by sales of GHIL stock.
93. During the staff’s investigation leading to the filing of this action, Sodi appeared for testimony. During that testimony, Sodi made false statements, including claims that he (i) never had, and never was given the use of, any foreign accounts; (ii) never received or shared, directly or indirectly, in any proceeds of any sales of any of the stocks his publishing houses promoted; and (iii) had never – apart from a single instance over twelve years ago – been paid in stock for running a promotional campaign.
I have collected a large number of records of stock promotions on this blog. While this collection is not exhaustive, I do make sure to collect disclaimer info and details of the promotion for each big promotion I have blogged about. Below are all the stocks not mentioned in the SEC complaint or indictment for which I have records showing CFM or LDS as being involved in the promotion. I blogged about many of these but many of the promotions below are linked only to archived webpages at The Internet Archive showing the promotion; others are linked to PDF copies of the online landing pages promoting the stocks that I made at the time of the promotion.
Note that my inclusion of the promotions in this below list does not mean that I believe that Sodi or his companies violated the law in promoting these companies — it is possible to legally promote a company — I only indicate that he and/or his companies promoted these stocks. Dates below are approximate — many of these promotions ran for many months.
Many more stock promotions run by List Data Solutions and/or Capital Financial Media can be found by using the Internet Archive Wayback Machine on SmallcapFortunes.com although the pump pages were not accessible directly from the main page, so a reader needs to find the direct link to find the archived page. It appears that at least at one point Capital Financial Media LLC owned SmallCapFortunes.com (another messageboard source from someone I trust saying the same thing). The current owner of the SmallCapFortunes.com domain name is Trinity Investment Research LLC of Florida (per current WHOIS search; screen capture).
This morning the SEC suspended trading in three stocks that had “unusual and unexplained market activity” (in other words, they looked like pump and dumps) and because of questions about the accuracy of the companies’ press releases and 8-Ks. The date on all the suspensions is July 3rd but the most liquid of the stocks CYPE traded all day July 3rd (a half-day) and the suspensions didn’t show up in the SEC trading suspension RSS feed until this morning after the open.
The three stocks are: Century Petroleum Corp (CYPE), Big Time Holdings, Inc (BTHI), and Williamsville Sears Management (WSML). All three companies show Brian K. Kistler as a consultant or officer. On OTCMarkets.com he is listed as CEO of BTHI and a consultant at WSML and a consultant at CYPE.
The Commission temporarily suspended trading in the securities of CYPE because of questions about the accuracy of information in the company’s press releases since at least May 25, 2018, regarding the company’s business plans and acquisitions, and concerns since at least May 25, 2018, about recent, unusual and unexplained market activity in the company’s common stock.
The Commission temporarily suspended trading in the securities of BTHI because of questions about the accuracy of information contained in BTHI’s Form 8-K filed with the Commission on May 24, 2018, and concerns since at least May 24, 2018, about recent, unusual and unexplained market activity in the company’s common stock.
The Commission temporarily suspended trading in the securities of WSML because of questions about the accuracy of information in the company’s press releases since at least May 29, 2018, regarding the company’s business plans and acquisitions, and concerns since at least March 9, 2018, about recent, unusual and unexplained market activity in the company’s common stock.
Yesterday (July 2, 2018) the SEC filed suit against and then settled with “attorney T.J. Jesky and his law firm’s business affairs manager, Mark F. DeStefano,” for “violating the registration provisions of the federal securities laws” when they sold UBI Blockchain Internet (UBIA) stock. See the complaint (pdf).
$1.4 million in a ten-day period from their unlawful offers and sales of securities into the public market of UBI Blockchain Internet Ltd., which trades under the ticker symbol UBIA (“UBIA”). Even though the Defendants were required under the registration statement to sell their shares at a specific price that had been reported to the Commission and to the investing public, Defendants nonetheless sold their shares in the market for as much as thirteen times the required price.
early 2017, however, UBIA announced that it had entered a new business, to engage in “the research and application of blockchain technology with a focus on the Internet of things covering food, drugs and healthcare.” The Defendants have been associated with UBIA since at least 2011.
registration statement with the Commission. Pursuant to that registration statement, UBIA sought to register the public resale of certain shares, including the shares issued to Jesky and DeStefano. The registration statement prepared by the Jesky firm required that all Class A shares sold pursuant to the registration statement had to be sold at a fixed price of $3.70 per share.
Defendants sold more than 50,000 of their UBIA shares into the public over-the-counter market (“OTC”). Jesky sold 24,995 UBIA shares at prices between $21.12 and $48.13, for total proceeds of $766,036. DeStefano sold 26,000 UBIA shares at prices between $21.56 and $48.40, for total proceeds of $798,473.
UBIA’s SEC filings and the recent, unusual market activity in the company’s stock.
statement filed with the Commission, were in violation of Sections 5(a) and (c) of the Securities Act of 1933 [15 U.S.C. § 77e(a) & (c)].
Without admitting or denying the allegations in the SEC’s complaint, Jesky and DeStefano agreed to return approximately $1.4 million of allegedly ill-gotten gains, pay $188,682 in penalties, and be subject to permanent injunctions. The settlement is subject to the court’s approval.
Plandai Biotechnology (PLPL) was a stock promotion that lasted for over a year from early 2013 through mid-2014. At the peak the stock went over $3 on volume of 10 million shares. On June 20th, 2018 the SEC filed suit against Joseph A. Fiore and two companies he allegedly controlled, Berkshire Capital Management Company, Inc. (“Berkshire”), and Eat at Joe’s, Ltd. (now known as SPYR, Inc., a public company that trades OTC as SPYR) (“Eat at Joe’s”).
Below is a chart of Plandai Biotechnology during the period in question.
Case docket on CourtListener. The case is Securities and Exchange Commission v. Fiore (7:18-cv-05474) U.S. District Court, S.D. New York.
1. Defendant Fiore orchestrated a fraudulent scheme to promote and otherwise manipulate the market for the common stock of microcap company Plandai Biotechnology, Inc. (“Plandai”). Fiore engaged in a variety of deceptive conduct to affect the market for Plandai stock, while concealing that he controlled a large number of Plandai shares and intended to sell them. Fiore generated more than $11.5 million in illegal proceeds through his undisclosed sales of Plandai shares, through his own accounts and in accounts that he controlled in the names of Defendants Berkshire and Eat at Joe’s.
and acting through his company Berkshire, organized, financed and directed a steady stream of stock alerts and research reports that promoted the purchase of Plandai stock. Fiore paid promoters directly to promote Plandai stock or, more commonly, paid third-party consultants to retain promoters to promote Plandai stock.
Plandai holdings into the public market. During the course of his scalping campaign, Fiore sold nearly 12 million shares of Plandai common stock through accounts he controlled.
4. Manipulative trading was another facet of Fiore’s fraudulent scheme. During the Relevant Period, Fiore, Berkshire, and Eat at Joe’s knowingly engaged in manipulative trading practices in order to induce investors to purchase Plandai stock, by artificially supporting and increasing the share price and creating the false appearance of market activity in the stock.
brokerage accounts held in the name of Berkshire and six brokerage accounts held in the name of Eat at Joe’s. Fiore directed and controlled these accounts and used them, along with a brokerage account in his own name, to engage in the unlawful trading, as alleged herein.
stock. Fiore personally selected the promoters, including the promoters that the consulting companies located and later retained on his behalf. He also paid the promoters for each promotional publication that they disseminated, and controlled the timing of their promotions.
materials to coincide with Plandai’s issuance of press releases, in order to generate additional positive news about Plandai.
28. On multiple occasions, Fiore received copies of Plandai press releases directly from Plandai before they had been publicly disseminated, and then forwarded the releases to third-party promoters for use in their promotional materials.
disclaimer, and none of the promotions disclosed the true state of affairs: that Berkshire and Fiore beneficially owned, intended to sell and were actively selling shares of Plandai stock.
market in advance of the publication of the negative article.
55. On the eighteen trading days from June 25, 2013 to July 22, 2013, Fiore not only bought more Plandai shares than he sold, but his purchasing accounted for a significant portion of the market volume in Plandai stock. As discussed in paragraphs 63 to 77 below, Fiore’s purchases during this period were manipulative. Fiore’s trades set the closing price for Plandai stock on eleven of these eighteen trading days. On seven of those days, Fiore had also been responsible for the prior trade execution reported in the market, further indicating that his trades were an attempt to artificially inflate the stock price.
The SEC complaint does not name the brokers and it is important to point out that Fiore is alleged to have lied to his brokers. The brokers have not been charged in the suit. For this reason, although I have identified “Broker B” with a high degree of certainty I will not identify the broker here. The complaint did not provide enough information for me to identify any of the other brokers allegedly used by Fiore or his companies.
On September 3rd, 2013 Alan Brochstein, CFA wrote a negative article on Plandai Biotechnology, Plandaí­ Biotechnology: Avoid This Green Tea Fantasy. Less than a month later he received a letter from Plandai’s outside counsel (Paula Colbath of Loeb & Loeb) accusing him of defaming the company. Ultimately the article stayed up (although behind SeekingAlpha’s paywall) and nothing came of the legal threats.
On August 3rd, 2016 Fuzzy Panda Shorts (follow him on Twitter) wrote on SeekingAlpha about SPYR Inc as a good stock to short and outlined many of the connections with Fiore and Berkshire Capital and many of the penny stocks that Fiore has financed. This is an excellent article that has lots of details on Fiore not easily found elsewhere.
This morning the SEC issued a trading suspension for the shares of Evolution Blockchain Group Inc (EVBC).
The Commission temporarily suspended trading in the securities of EVBC because of (1) questions about the accuracy and adequacy of information in the marketplace since at least May 17, 2018, including the accuracy of information contained in an Evolution Blockchain press release dated May 17, 2018, referencing a whitepaper, and (2) concerns since at least May 15, 2018, about recent unusual and unexplained market activity in the company’s common stock. Evolution Blockchain is a Nevada corporation whose stock is quoted on OTC Link LLC (previously Pink Sheets), operated by OTC Markets Group, Inc., under the ticker symbol EVBC.
The Commission acknowledges FINRA’s assistance in this matter.
Las Vegas, Nevada (FSCwire) – Evolution Blockchain Group Inc. (OTC: EVBC) (“Evolution” or the “Company”) is pleased to announce that it has acquired two new blockchain technologies, Drive-coin and Gamebitcoin.
Drive-coin is a peer-to-peer blockchain solution for the automotive and parts industry. It is in development and when completed will allow for peer-to-peer vehicle and parts sales using a blockchain inventory management system designed with the use of smart contracts. It will also have a social networking component with many features to localize sales of the vehicles and parts. The technology will support automotive financing options integrated with traditional lenders to facilitate the purchasing or leasing of vehicles with Drive-Coin.
Gamebitcoin is a game specific blockchain development solution tailored to gaming transactions across the globe. Currently a prototype token, Gamebitcoin will be built out on our own unique blockchain with various unique features that will allow for multiple revenue streams. Gamebitcoin will be an open platform where software and game developers can connect to API’s and integrate their game to the Gamebitcoin. Fees are transaction based granting new developers easier access to revenue at a lower cost.
Our whitepaper outlines a unique and proprietary blockchain technology system that improves on current blockchain methodology by improving the user experience, enhancing user asset protections, improving security methodologies and implementing unique and proprietary features. Extensive auditing of the blockchain will occur before release.
In addition, Evolution has launched its new website: www.evolutionblockchain.com.
Evolution Blockchain Group is focused on acquiring, developing and launching globally scalable blockchain technology solutions, as well as building cryptocurrency mining operations. Initial product launches will utilize smart contracts and showcase our products core features. EBG is committed to becoming a significant contributor in the evolution of blockchain technology that yields long term value for its shareholders and the global community by providing engineering, development, capital and expertise to our own proprietary blockchain core projects – projects that we will license and generate royalties from. Our unique technologies improve on various aspects of current blockchain developments and focus on producing revenue driven results. Evolution has entered a new and exciting field of technology, a field that is changing the way businesses and people interact.
Perhaps more interesting than the press release is the SEC mention of the trading of the stock, which doubled before losing almost all its gains and closing close to the opening price on May 15th (the date mentioned in the SEC press release). The volume on that day was only about 35,000 shares and I cannot remember the last time the SEC mentioned unusual trading activity in a suspension press release in a stock that was trading so little volume. The SEC also mentioned the assistance of FINRA so perhaps SARs (suspicious activity reports) filed by brokers found evidence of wash trading. The somewhat increased volume and fairly tight trading range after May 15th does lead me to believe that there may have been wash trading going on in the stock to prepare it for a stock promotion.
EVBC will resume trading on the grey market (no market makers) at the open on Wednesday, July 11th.
EVBC previously traded as Garmatex Technologies (GRMX) and was reported by Promotion Stock Secrets to be a boiler room / email pump by StockCallers. The ticker and name were changed on March 27, 2018. Promotion Stock Secrets also reported that there had been some phone calls promoting the stock over the last month.
Of all the various kinds of pump and dumps, I like shorting boiler room pumps the best. The reason for that is once they end, they don’t bounce back. The boiler rooms these days use fake names and temporary phone numbers and mail drop boxes to pretend to be in a location when they are halfway around the world. They cold call people on their suckers list to get them to buy and once they sell all the stock or they can’t get anymore suckers, they disconnect the phones and move on. No re-pumps or big bounces for a short seller to worry about and utter account destruction for the people who bought. See for example the Tactical Services (LUADD then TTSI) pump and dump and the OneLife Technologies (OLMM) pump and dump.
Of note: OLMM received the caveat emptor designation (skull and crossbones) by OTCMarkets on Mary 8th and that likely caused the promoters to abandon it.
While I missed out on shorting Comerton Corp (COCM) because I did not find shares to short, OLMM and TTSI were both remunerative shorts for me.
Below is the chart of COCM. Once again, suckers got destroyed. OTCMarkets gets significant credit for stopping this promotion — they gave the stock the dreaded caveat emptor designation on June 5th. After that it had one more up day before falling drastically. One note to short sellers: Interactive Brokers now prohibits new positions in stocks with the caveat emptor designation (although they take a couple days to apply this after the stock gets the designation). See stocks that have received the caveat emptor designation.
I would like to thank Promotion Stock Secrets / Day Trading Buzz for mentioning this in their daily update back in early May. I don’t trade a lot of pump and dumps anymore but especially for the under-the-radar ones their service is very useful — if you aren’t on the sucker call list it is hard to find out which stocks are undergoing a boiler room promotion. I searched and searched for shares to short but ended up missing out on shorting Comerton Corp. Only a few people were able to short it.
about ticker symbol $COCM to buy at .99 cents promising me we going to the moon on this pump and dump boiler room event. lol I just stood on the side line and watched. Now I can see Moon.
A quick call to the above phone number led to a voice-mailbox for “Stephen Harris” so it looks like that virtual phone number was already disconnected and reused by someone else (who likely has no connection to the boiler room).
It has now been eight months since Eros International (EROS) sued a large number of short sellers for defamation after they publicly criticized the company. Anyone can see the court docket and download files for free at the New York County Supreme Court website (the case is 653096/2017). So far a not much has been decided in the case, with the majority of the defendants having responded having filed motions to dismiss and Eros attempting to move to discovery. The plaintiffs and defendants (specifically, the Mangrove Defendants, the GeoInvesting Defendants, and the ClaritySpring Defendants) wrote to the judge (read the letter) on May 4th, 2018 to argue whether it was proper to move to discovery prior to the judge considering the motion to dismiss. The judge has not yet decided those issues.
A number of subpoenas were served on third parties by Eros’ counsel to attempt to ascertain the identity of John Doe defendants and this has taken up a lot of time. On February 22nd the judge ruled that Eros had until June 1st to properly serve remaining John Doe defendants. See doc 161 (pdf) for ruling.
On February 14th, 2018 the judge granted Eros’ motion for default against Manuel Asensio and Mill Rock Advisors for failing to respond to the complaint. See doc 160 (pdf) for ruling.
Yesterday attorney Diane Dalmy was sentenced to three years in prison for her work on behalf of penny stock companies and insiders.
According to court documents and statements made in court, DALMY, an attorney, performed securities-related legal work on behalf of several public companies, including Mammoth Energy Group, Inc., a company that later became known as Strategic Asset Leasing Inc.; and Fox Petroleum, Inc. (the “Subject Companies”). Between approximately January 2009 and July 2016, DALMY conspired with others, including William Lieberman, of Boca Raton, Florida, and Christian Meissenn, of Suffield, Connecticut, to defraud investors through a stock “pump and dump” scheme. During the course of the conspiracy, DALMY acted largely at Lieberman’s direction.
Finally, between February 2015 and July 2016, DALMY laundered a portion of the proceeds of the scheme on behalf of the co-conspirators. DALMY helped Lieberman to incorporate and open bank accounts for a private company, Queen Asia Pacific Ltd. (“Queen Asia”), which was controlled by Lieberman. These bank accounts were used to receive proceeds of the scheme from a brokerage account in Queen Asia’s name. DALMY periodically received money in Queen Asia’s bank accounts, transferred those funds to her IOLTA, and then transferred the funds again to Lieberman, Meissenn, and their network of stock promoters. In total, DALMY laundered approximately $825,000 on behalf of the co-conspirators through Queen Asia’s bank accounts and her IOLTA.
DALMY’s total gain from her participation in this conspiracy, and related legal work for the Subject Companies, was approximately $30,000.
Judge Meyer ordered DALMY to pay $2 million in restitution.
On February 6, 2018, DALMY pleaded guilty to one count of conspiracy.
The lesson we can learn from this: don’t commit serious crimes for small amounts of money, especially if you are an attorney.
Dalmy has less than one more month of freedom. She has been ordered to report to prison on June 14, 2018.

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