| To: Francois Goelo who wrote (10156) | 5/8/2006 8:53:38 AM | | From: StockDung | | | | CARL'S SHELL GAME BY CHRIS BYRON
nypost.com
AN ICAHN REVERSE MERGER BEARS POTENTIAL FOR DANGER
May 8, 2006 -- THREE weeks ago, the Securities and Exchange Commission finally brought closure of sorts to one of Wall Street's biggest and ugliest swindle-romps ever, charging fugitive financier Adnan Khashoggi in the stock-rigging scheme that came to be known as the Genesis Intermedia affair.
Yet don't be surprised if you wake up one morning not long from now to discover that an eerie echo of the five-year-old Genesis affair is making headlines all over again, this time featuring a Nasdaq-traded "China bubble" stock called Intac International Inc.
We'll get to the particulars of the Intac situation in a minute. For now, it is enough to know that the billionaire who has lately emerged as the central figure in the Intac case is the same Wall Street moneyman who surfaced in the final weeks of the Genesis affair back in June of 2001, all teed up to become Khashoggi's reluctant patsy - none other than corporate raider Carl Icahn.
To understand how a man with Icahn's reputed ruthlessness and market smarts could wind up as anyone's patsy, it may help to recall what the Genesis Intermedia affair was all about from the start: the tug of easy money from the land of penny stocks.
Beginning in 1999 from his offshore hideout in Bermuda, Khashoggi orchestrated a price-rigging scheme that over two years illegally lifted Genesis shares by 1,400 percent to a high of $25, giving Khashoggi more than $130 million.
By summer 2001, Genesis Intermedia's rising stock price had caught the eye of Icahn, who seems to have been more impressed by the company's share price performance than its business fundamentals or the creepy reputation of the man who was really running the company: Khashoggi himself.
By the time Icahn became involved in June 2001, Genesis Intermedia's SEC filings had already named Khashoggi as the company's largest shareholder, with a controlling 45.3 percent block of its stock in an offshore front company in Bermuda.
The filings also revealed that Khashoggi had gotten the stock through warrants issued to him by the company in return for $71 million worth of junk loans that made Khashoggi not just Genesis Intermedia's largest stockholder but its largest creditor as well - in effect, the man who was actually running the entire company.
It's simply amazing that Icahn would have been willing to climb in bed with Khashoggi in the first place. By the spring of 2001, Khashoggi's curriculum vitae already included a well-documented history of arms trafficking in the Third World as well as a stint in a Swiss prison on fraud charges, not to mention his fishy middleman role in the Iran-Contra affair.
BUT Icahn jumped right in anyway and agreed to lend Genesis a star tling $100 million in return for stock options and warrants, just like Khashoggi had gotten. And Icahn was plainly interested in the deal as a stock play, too, because he insisted on terms at least as good as those that Khashoggi had been getting, causing a lot of back and forth haggling over details even after the deal was announced on June 29.
That haggling may in fact have saved Icahn's bacon, because subsequent SEC filings show that none of Icahn's $100 million got lent out before the terrorist attacks of Sept. 11 roiled the markets, sending Genesis into a tailspin that ended in the company's demise before the $100 million credit line was ever tapped.
Given all that, you'd think Icahn would have learned his lesson and sworn off any future excursions into the land of penny stocks, where the inhabitants all seem low rent, wretched and sublimely slimy.
Yet that is where we now find Icahn all over again, this time using Intac International in a ploy known as a reverse merger to pump up the value of an investment he made months earlier in a privately held Atlanta, Ga., Internet company called HowStuffWorks.com Inc.
Icahn declined to be interviewed for this column, so it hasn't been possible to nail down just how much money he actually pumped into the Atlanta outfit, or what he received back in return. But one can make a pretty good guess.
Six months ago, the Atlanta company's founder and CEO, Jeff Arnold, told reporters that Icahn had by then become a "significant" shareholder in the operation in return for financial support totaling "tens of millions" of dollars.
Given the fact that data from the D&B credit reporting agency suggests that HowStuffWorks generated less than $1.2 million in gross revenues last year, an investment of the size Arnold says Icahn made may well be enough to rank Icahn as the company's largest shareholder and creditor alike, just as Khashoggi had been at Genesis Intermedia.
IN late April, Intac an nounced plans to merge with HowStuffWorks in a way that seems likely to transfer Intac's valuation as a publicly traded Nasdaq stock onto the privately held shares of How Stuff Works, which Icahn holds much (if not most) of already. And to say that Intac's shares are grossly overvalued would be an understatement.
Like many penny stocks, Intac began life as a Nevada-incorporated shell company, with its shares listed on the fraud-drenched Vancouver Exchange under the name Commodore Minerals Inc.
Though the company's registration papers described it as being in the gold exploration business, its real objective was to be taken over by anyone looking to obtain freely trading public stock for a private company without incurring the expense and bother of an actual IPO.
The gimmick: buy the penny stock shell and merge the private business into it. In October 2001, a Hong Kong businessman named Wei Zhou did just that, acquiring a controlling 64 percent block of Commodore's stock and eventually merging the company with a Hong Kong-based business he was running that imported used cell phones from Germany for resale in China.
But the business was flimsy, to say the least, and by the end of 2003 just one customer - vaguely identified in the filings as a "Mr. Lam" - accounted for 68.6 percent of sales. Though Intac reported $91.3 million of revenues for the year, the cost of acquiring the used cell phones to resell to Lam and other customers ate up nearly $88 million of that money, leaving an illusory gross profit of $3.5 million that actually consisted of uncollected receivables.
Zhou himself soon realized that he needed a sexier business to peddle than used cell phones from Germany, and launched Intac on a string of new ventures that also went nowhere.
So, why would a man with Icahn's financial acumen want to put even 5 cents into such an operation? The answer seems obvious. With most of Intac's 22.2 million shares held by Zhou, and with an average of less than 80,000 of the remaining shares traded day-to-day, the market conditions for Intac were both volatile and easily manipulated, creating valuation multiples for the stock that stood at nose-bleed levels.
At Intac's closing price last week of just under $11 a share, investors are valuing the company at roughly $240 million, an absurd price for an outfit with crumbling revenues, soaring losses and a balance sheet on which goodwill and uncollected receivables account for 83 percent of assets.
With the merger terms between HowStuffWorks and Intac structured to make the current shareholders of each company 50/50 owners of Intac as the surviving entity, the number of Intac shares will wind up doubling.
And with many (or perhaps even most) of those shares winding up in the hands of Icahn, the public market will stay tight, supporting the stock price, while Intac instantly balloons from a $240 million company into a nearly $500 million business, with Icahn's stake surging as well. It's the penny stock market in action, and it helps explain why so many otherwise cautious investors become so beguiled by its charms.
Unlike Khashoggi, Icahn seems so far to have done nothing wrong or acted improperly in his penny stock excursions. Yet his emerging role in Intac presents exactly the sorts of opportunities for abuse that Khashoggi found irresistible at Genesis Intermedia.
And there is no denying that Icahn is a moth now circling ever closer to the flame.
cbyron@nypost.com |
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| To: Francois Goelo who wrote (10156) | 5/8/2006 9:03:42 AM | | From: StockDung | | | | AOL SPAMMER SAYS "Watch CFIN Tomorrow". SPAMMER PAID TWO MILLION FREE TRADING SHARES FROM THIRD PARTY.
"The publisher of this newsletter discloses the payment of two
million free trading shares from an unafilliated third party for the circulation "
From: c44gxljb@aol.com
To: XXXXXXXXXXXXXXXXXXXXXXXX
Sent: Thu, 7 Jul 2005 21:26:04 +0200
Subject: WallStreet NEWS! - Watch CFIN Tomorrow!
Consumers Financial Corporation
CFiN
Keep your eye on the prize!
Our last two alerts took off like ROCKETS sending many of our members straight
to the bank with a smile!
Watch CFIN like a hawk starting right now.
(This is what we said yesterday and we were right once again)
Today CFiN traded over 2 million shares and was up as high as 100% intra-day,
closing up 60% Do not miss watching tomorrow
According to press releases,
Consumers Financial Closes on $2 Million Financing
Consumers Financial Buys an Interest in Medical Service Agency
For the year ended December 31, 2004, Woodmere generated gross revenues
(collected billings) of approximately $16,500,000 and was profitable. That's
just a few reasons, read on...
About,
Consumers Financial Corporation is a diversified merchant banking and financial
services company dedicated to finding and assessing the value of microcap
companies strategically located in markets where significant growth and profits
can be obtained. CFIN targets companies where management is exceptional,
products are proprietary, techniques, software or technology provide some
measure of exclusivity, where profit margins are above average and where these
companies can benefit from CFIN's financial assistance either through equity or
credit facilities. The Company trades under the symbol CFIN and can be found on
the Over the Counter Pink Sheets
Get to know this company.
Start by reading the recently released news and take note that these
acquisitions are not letters of intent. According to the news releases they are
completed!
1, Consumers Financial Announces the Acquisition of Praetorian Financial
Services
2, Consumers Financial Announces the Acquisition of Ontario Pay Day Services
3, Consumers Financial Closes on $2 Million Financing
4, Consumers Financial Buys an Interest in Medical Service Agency
Read this small little clip taken directly from the news release then go read it
in its entirety.
For the year ended December 31, 2004, Woodmere generated gross revenues
(collected billings) of approximately $16,500,000 and was profitable. It
operates from two facilities in Queens, New York, employs 16 people and services
over 30 clients.
(Did they say Profitable?)
Let's remember one thing, these companies don't usually hire us if they have
nothing to say, we never know for sure but our instincts tell us to inform you
to keep a keen eye out for news! YOU know the rest!
Add CFiN to your radar's right now and start watching
Disclaimer,
Information within this email contains "forward looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section 21B of the
Securities Exchange Act of 1934. Any statements that express or involve
discussions with respect to predictions, expectations, beliefs, plans,
projections, objectives, goals, assumptions or future events or performance are
not statements of historical fact and may be "forward looking
statements."Forward looking statements are based on expectations, estimates and
projections at the time the statements are made that involve a number of risks
and uncertainties which could cause actual results or events to differ
materially from those presently anticipated. The publisher of this newsletter
does not represent that the information contained in this message states all
material facts or does not omit a material fact necessary to make the statements
therein not misleading. This company as with many pink sheet and bulletin board
co!
mpanies does have accumulated deficit since inception, has partially relied on
loans from officers or directors,has a nominal cash position, and has no revenue
or nominal revenue in its most recent quarter. All information provided within
this email pertaining to investing, stocks, securities must be understood as
information provided and not investment advice. The publisher of this newsletter
advises all readers and subscribers to seek advice from a registered
professional securities representative before deciding to trade in stocks
featured within this email. None of the material within this report shall be
construed as any kind of investment advice or solicitation. Many of these
companies are on the verge of bankruptcy. You can lose all your money by
investing in this stock. The publisher of this newsletter is n0t a re-gistered
in-vest-ment advis0r. Subscribers should not view information herein as legal,
tax, accounting or investment advice. Any reference to past perf!
ormance(s) of companies are specially selected to be referenced based
on the favorable performance of these companies. You would need perfect timing
to achieve the results in the examples given. There can be no assurance of that
happening. Remember, as always, past performance is n e v e r indicative of
future results and a thorough due diligence effort, including a review of a
company's filings when available, should be completed prior to investing. In
compliance with the Securities Act of nineteen hundred thirty three,
Section17(b),The publisher of this newsletter discloses the payment of two
million free trading shares from an unafilliated third party for the circulation
of this report. Be aware of an inherent conflict of interest resulting from
such compensation due to the fact that this is a paid advertisement and is not
without bias. All factual information in this report was gathered from public
sources, including but not limited to Company Websites and Company Press
Releases. The publisher of this newsletter believes this information!
to be reliable but can make no guarantee as to its accuracy or completeness.
Use of the material within this email constitutes your acceptance of these
terms. |
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| To: Francois Goelo who wrote (10156) | 5/8/2006 4:28:19 PM | | From: StockDung | | | | Ambassador From Mars Receives 181,634 Spam Emails - Says "Earthlings Are Not Ready" and Takes First Available Saucer Back Home
News Released: May 06, 2006
prleap.com
(PRLEAP.COM) Somewhere in America - On a secret mission from Mars, Ambassador Husmaphilpi arrived here last week to offer our world their most valuable commodity, The Reversable Anorak, in exchange for a two years supply of Golden Grahams (which at this time they do not have the license to produce).
Says Ambassador Husmaphilpi, "All I did was post my email address on one of your Internet Notice Boards with the official Martian greeting (ie, Take Me To Your Leader). Well, not only did I NOT get a reply from your President, instead I received 181,634 spam emails asking me for my bank and credit card details. I knew immediately that this was a fraud, because that’s what my wife used to do whilst I was at work. Anyway, now she’s doing 15 to 20……it was a total shock ….. although it saved me a fortune in divorce costs …. but I still love her….. (contd on page 99, problems page)
So, back to the story…..Mr Elwin Bagaaaaaaha, from the planet Saturn who would give his address only as "Hanger 47 somewhere in Nevada" was not amused at this snub to a fellow alien and said the Ambassador should have gone to dotWORLDS as they alone could have prevented this travesty.
Mr Bagaaaaaaha, (who arrived here by starship in the year 1743) is one of a growing band of Earth residents using dotWORLDS unspammable email addresses. With over 85 million domain names currently registered, many to speculators, he found relevant and memorable names were almost impossible to find. As a highly intelligent being, he realised that dotWORLDS has now released a very large range of potential domain names to the Internet to provide unlimited possibilities for all those who want personalization and easy-to-remember options.
Unfortunately however, back on Mars, news of the Ambassador’s treatment on Earth was not being taken well (Mars is not a place you want to be anywhere near when something like this happens). To try and quell the growing unrest and rioting in Slemelvoster (the capital of Mars), Mr Bagaaaaaaha immediately presented Ambassador Husmaphilpi with a signed picture of Jessica Simpson and his very own dotWORLDS email address "edward @ambassador.mars".
Now, edward @ambassador.mars can email president @the.whitehouse, and ask him about Breakfast Cereal Technology. He may not get the leader of America (he might only get a specialist monthly magazine), but there is no way Ambassador Edward Husmaphilpi is ever going get any more spam emails.
So, Earthlings, get with the programme and you could be responsible for peace in the universe and the first ever Trade Agreement between the Earth and Mars. Go to www.dotworlds.net today, join the growing band of converts and get there FIRST!
dotWORLDS (www.dotworlds.net) building on the success of their Internet Communities is now giving away domain names, email addresses and even hosting completely free to encourage more users to come aboard.
dotWORLDS spam free email enables users to communicate both with each other and the outside world. Crucially however, the outside world of spam just cannot reach this space making it the first real global spam free system around.
dotWORLDS Ltd is a UK company based in London that specializes in providing fully personalized internet domains and email addresses , offering the widest range through its global infrastructure. Now with free hosting too.
Please see website for full details.
Contact:
Press Office
dotWORLDS
+44 (0) 870 749 4178
www.dotworlds.net
» Printer Friendly Version
CONTACT INFORMATION
Support Department
dotWORLDS
Email dotWORLDS
+44 (0) 870 749 4178
About This Release
If you have any questions regarding information in these press releases please contact the organization listed in the press release. Issuers of press releases and not PR Leap are solely responsible for the accuracy of the content.
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| To: StockDung who wrote (17699) | 5/9/2006 6:43:10 PM | | From: RockyBalboa | | | | Today's blunder:
AP
Escala Shares Plunge Amid Probe in Spain
Tuesday May 9, 5:14 pm ET
Escala Group Shares Plunge Amid Spanish Probe of Alleged Fraud Involving Collectible Stamps
MADRID, Spain (AP) -- Shares of New York auction house Escala Group Inc. lost more than half their value Tuesday after Spanish police raided the offices of Escala, its majority owner and another company in a probe of alleged fraud involving collectible stamps.
ADVERTISEMENT
Spanish police arrested eight people in connection with the alleged fraud that could affect as many as 200,000 small investors, authorities said Tuesday.
Escala's stock plummeted $19.77, or 62 percent, to close at $12.23 on the Nasdaq Stock Market. The stock has traded in a 52-week range of $9 to $35. Escala, which is based in New York, was previously known as Greg Manning Auctions until it changed its name last year.
Escala said in a statement that members of its board were being questioned and authorities were collecting documents from its offices in Madrid.
"Escala is currently reviewing developments in Madrid, and the company will release relevant details to the market as management can make informed comments," the statement said.
National police officers also raided the Madrid headquarters of Forum Filatelico and Afinsa Bienes Tangibles, the majority owner of Escala with a 67 percent stake.
The raids were part of a joint investigation launched by Spain's National Court, tax authorities, financial crime prosecutors and the National Police over an alleged pyramid-type scheme based on overpriced stamps and other collectibles.
The prosecutor's office said in a statement that Spanish authorities are conducting more than 20 searches at company offices and private residences. The prosecutor's office also said it plans to make "several arrests" as part of a lawsuit against the companies on charges ranging from tax evasion and money laundering to criminal insolvency and falsification of documents.
The raids came after Barron's investment magazine extensively reported questionable practices at Afinsa, which operates a "no-lose" stamp-sales program for investors in Spain and Portugal. Many of the investors are retired individuals allocating an average of 150 to 300 euros ($190-$380), according to court officials.
Afinsa guarantees a return of 6 percent to 10 percent over a fixed period, with a money-back guarantee when the contracts expire. According to Barron's, some stamp experts have expressed doubts about the value of the stamps, which appear to be worth far less than what Afinsa charges for them.
Police did not say who was arrested or how much money the companies are suspected of defrauding from investors.
So-called pyramid, or Ponzi, schemes pay high returns to investors by using the money from newly-arrived investors, rather than from revenue generated by any real business.
Court officials said since Afinsa is not classified as a financial institution, it had received poor government monitoring.
Afinsa and Forum Filatelico officials could not be reached for comment. Afinsa has previously defended the program and denied any wrongdoing. |
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| To: Francois Goelo who wrote (10156) | 5/10/2006 12:18:21 PM | | From: StockDung | | | | US firms seek curbs on prosecutors
Corporations and Wall Street investment firms, after enduring four years of investigations provoked by a flood of financial scandals, are calling for the US Justice Department to rein in its prosecutors.
RobertSchmidt
Tuesday, May 09, 2006
Corporations and Wall Street investment firms, after enduring four years of investigations provoked by a flood of financial scandals, are calling for the US Justice Department to rein in its prosecutors.
The effort, led by the US Chamber of Commerce, targets policies that businesses say give the Justice Department unreasonable leverage to force companies into settlements. Those policies include pressuring companies to reveal confidential talks with lawyers and demanding they not pay legal fees for employees under investigation.
"We don't have to violate people's constitutional rights, and we don't have to set up cooked deals so it makes it easier for the government to extort a settlement or a guilty plea," said Thomas Donohue, president of the Washington- based Chamber of Commerce, which represents three million companies.
The campaign, joined by the New York-based Securities Industry Association and the Bond Market Association, got a boost from two federal trial judges who questioned whether the government forced companies to stop paying their former employees' legal bills. One involves a case in New York, involving former KPMG executives accused of selling illegal tax shelters.
Corporate regulations crafted after accounting frauds at WorldCom and Enron are also under attack in other areas. A pro-Republican research organization has filed suit against part of the 2002 Sarbanes-Oxley law, which stiffened fraud penalties. Several members of Congress are circulating legislation to scale back some of the law's rules.
Investor advocates say revising Sarbanes-Oxley and reducing the power of prosecutors is dangerous and shortsighted. They predict it will lead to another round of scandals, like the one that pushed Enron into bankruptcy in 2001 after revelations it hid billions in losses in off-the-books partnerships.
The Justice Department's policies, set in a 2003 memo by then-Deputy Attorney General Larry Thompson, are designed to help prosecutors decide whether to indict a company.
An indictment is often fatal, and company lawyers say they will agree to almost any demand to avoid charges. The 2002 indictment of accounting firm Arthur Andersen for destroying documents in the Enron probe led to the disintegration of the firm, which at one time employed 85,000 people.
The guidelines give businesses more leniency if they show a willingness to cooperate with the government. One indication of cooperation is a company's agreement to disclose its lawyers' confidential work by waiving attorney- client privilege. Another such sign is "whether the corporation appears to be protecting its culpable employees" by paying their legal bills.
Michael Elston, chief of staff to Deputy Attorney General Paul McNulty, said the memo is an important tool in the fight against corporate crime. He said the Justice Department is willing to listen to the business groups but has not decided if the guidelines should be revised.
Prosecutors do not demand companies cut off employees' legal fees, nor do they order the waiver of attorney- client privilege, Elston added.
In the KPMG matter, the firm, following the Thompson guidelines, avoided criminal prosecution by agreeing to pay US$456 million (HK$3.55 billion) and entering into a so-called deferred prosecution deal. Charges against KPMG, the fourth-largest US accounting firm, will be dropped at the end of 2006 if the firm stays out of trouble.
KPMG's decision not to pay its ex- partners' legal bills drew the ire of US District Judge Lewis Kaplan, who ordered a hearing into whether the firm was pressured by the government. Kaplan called a prosecutor's explanation of the matter "shameful" and told him that the fourth-biggest accounting firm had the right to pay the bills "without your thumb on the scale."
Last week, the Chamber of Commerce, the securities and bond associations and the Association of Corporate Counsel filed a brief in the case calling the attorney-fee provision unlawful.
George Kramer, the securities association's deputy general counsel, said the guidance "turns our criminal justice system on its head." He said the group will continue to press for changes in the Justice Department guidelines.
The case has helped galvanize opponents of the Thompson memo.
On Capitol Hill, lawmakers have also begun to speak out against the policies - in March, Democrats and Republicans at a House Judiciary Committee hearing criticized the attorney- client privilege waivers as prosecutorial overreaching and a likely violation of employees' constitutional rights. BLOOMBERG |
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| To: Francois Goelo who wrote (10156) | 5/10/2006 6:16:36 PM | | From: StockDung | | | | BEWARE THE EVIL TWINS
Investor Information
May 10 2006
stockpatrol.com
We offer this disturbing thought. The federal securities laws, the very rules that were calculated to discourage deception and protect investors, provide a pair of mechanisms that fuel fraudulent stock schemes. Or, to put it slightly differently, securities laws that are designed to foster transparency and disclosure instead protect silence and deception.
One fundamental precept underlies our federal securities laws - investors must be given access to material information about public companies and the people who run and control them. Yet two federal regulations not only ignore that mandate but tolerate secrecy.
What are these tools that can be used to distribute stock clandestinely to the four corners of the globe, conceal identities, launder funds, and defraud investors? They are every con artist's dream and every law enforcement official's nightmare - and they share a common root, the letter "S." They are Regulation S, which allows U.S. public companies to sell stock overseas without registration, and Form S-8, which enables companies to register shares instantly.
When they were first enacted, these two regulations were relatively benign, but promoters and manipulators have discovered ways to utilize both Regulation S and Form S-8 to further illicit schemes.
Regulation S
Regulation S was crafted as a safe harbor that allows public companies to sell shares to non-U.S. citizens. In essence, while regulators wanted to assure that U.S. investors had adequate access to information about public companies, non-U.S. residents were not afforded the same protection. Those non-U.S. residents would be permitted to buy and sell shares, among themselves, even though the issuer had never registered those shares with the SEC.
In other words, companies were given license to do abroad what they could not do at home - dump shares on the marketplace without registration or disclosure.
Why would lawmakers, who so carefully crafted securities laws that demanded both registration and disclosure, also create this massive loophole in the system? Perhaps they truly wished to provide the international community easier access to U.S. public companies, or, conversely, they wanted to afford those public companies the ability to attract foreign capital. Cynics might say that American lawmakers were willing to overlook the impact on foreign investors so long as they could maintain order in their own home.
Whatever the rationale, Regulation S has engendered a booming business, particularly for small, struggling companies who are desperate for funding at any cost. Those companies, many of which trade on the OTC Bulletin Board or the Pink Sheets, have been willing to sell stock to overseas investors, at a deep discount from prevailing market prices, under Regulation S.
To qualify for a Regulation S exemption, the shares must be sold offshore to a non-U.S. resident, and may not be sold back into the United States for one year. Those requirements are not as stringent as they may seem at first blush. The U.S. market is foreclosed to re-sales for one year, but that leaves the rest of the world - and the market for U.S. public companies is thriving around the globe.
Boiler rooms operating in Europe and the Far East aggressively hawk Regulation S shares. Consider the case of the Brinton Group, which operated out of Bangkok, Thailand and other locations in Indochina.
In September 2001, a small over-the-counter company called Oasis Resorts International Inc. announced plans to sell $15 million of its stock to the Brinton Group under Regulation S. In exchange, Oasis was to receive $4 million in cash and 1.1 million shares of another obscure OTC company, Virtual Gaming Technology.
The public records do not indicate that Oasis ever received the cash. In fact, when it stopped filing public reports in 2001, the Company had a working capital deficit of $6.4 million. On June 8, 2004 the SEC revoked Oasis's registration because of the Company's failure to file financial reports.
There is little doubt, however, that Brinton was issued the Oasis stock - and proceeded to dump it on unsuspecting investors in the Far East and Australia. According to a November 19, 2001 article in Time Asia, the Brinton boiler room prodded Australian investors to buy Oasis shares by telling them that the Company was a global casino operation run by the team that had set up a restaurant chain featuring Gary Coleman, the diminutive star of the 1980s TV show "Diff'rent Strokes." They did not bother to mention that the only jewel in that chain was a failing restaurant in Denver, Colorado.
Brinton was also peddling Virtual Gaming stock. In all likelihood that included the Virtual Gaming shares that had been handed out to Oasis as part of the Regulation S deal. Virtual Gaming was an internet gambling firm run by one Virgil Williams, who was once tied to a boiler room scam in San Diego, California.
Brinton's activities were interrupted in July 2001 when the firm was raided by a task force that included the Securities and Exchange Commission of Thailand, the FBI, U.S. Customs, the Royal Thai police, the Thailand Anti-Money Laundering Office, the Thai Immigration Bureau and the Australian Federal Police. Thai authorities charged Brinton with running an unlicensed securities firm and engaging in fraudulent activities, including the use of high-pressure sales tactics.
Despite that raid, Brinton, and other boiler rooms utilizing the same aggressive sales techniques, continued to sell stock. On June 10, 2004, a Thai court convicted seven individuals who ran the Brinton Group - and a trio of other boiler rooms - of illegally selling securities.
Other regulation schemes have a distinctly different flavor - but they all have the same goal, to dump unregistered stock on the market. One such Regulation S manipulation centered on an individual named David Wolfson, who apparently inherited his affection for stock scams from his father Allen. Allen Wolfson has been named in multiple SEC and criminal stock fraud suits and was convicted in March 2003 of scamming investors out of $7 million.
David Wolfson, as regulators discovered, is quite a chip off the old block. Earlier this year he and his cohorts were charged with orchestrating a massive Regulation S scam. The SEC says that Wolfson and his colleagues found struggling U.S. companies that were hungry for cash (and occasionally formed the companies themselves) and then arranged for them to sell stock to a British Virgin Island corporation called Sukomo at a deep discount - 30% of the bid price.
Since Sukomo was purportedly a non-U.S, citizen, the stock was sold without registration under Regulation S. There were a few problems with this setup, as the SEC discovered. First, Sukomo was actually a boiler room operating from Laos and Thailand - so its agenda was clear. It wanted stock to dump on overseas investors. Second and more important as far as Regulation S is concerned, Sukomo may have been a non-U.S. resident but it never was a bona fide purchaser. In reality, Sukomo was simply acting as a broker and the proceeds from its boiler room operation were going back to Wolfson, his colleagues, and to a lesser extent, the issuing companies.
Nor do the Wolfsons seem to have been deterred by regulatory scrutiny. In April 2006, a Utah Grand Jury indicted the father and son team for creating a phony company called Stem Genetics, and then dumping shares overseas, to hapless investors in Great Britain, Australia and New Zealand.
Regulation S also has been used to fuel schemes concocted by U.S. residents who established phony offshore companies to act as Regulation S buyers. Those Regulation S. shares quickly found their way back into the U.S., long before the one year holding period expired.
In other words, Regulation S is an invitation for abuse. Its potential harm far outweighs its actual benefit.
Form S-8
The S-8 Registration Statement is rapidly becoming the weapon of choice for stock scams. It is quick and effective and takes advantages of a glaring loophole in the federal securities laws.
Form S-8 allows public companies to register shares that have been, or will be, issued to directors, officers, employees and consultants - instantly, with minimal disclosure. Here is how it works. A company that wishes to register securities begins by filing a Registration Statement with the SEC. In most cases, the SEC reviews that Registration Statement, issues appropriate comments, asks pertinent questions and requires reasonable clarification. Then, after the company provides satisfactory responses to these questions, the SEC allows the Registration Statement to be declared effective, and permits the sale of the securities.
This process is designed to protect investors by ensuring that they receive ample information about the company in which they are about to invest.
Form S-8 abandons that protection and leaves investors to fend for themselves. An S-8 Registration becomes effective immediately after it is filed with the SEC, before it is reviewed by anyone. In an instant, the shares are registered and may be sold. Let the buyer beware.
Rather than provide detailed disclosure, Form S-8 includes fragmentary information, including the number of shares being registered. The company's financial condition is rarely presented in detail. Instead, the Form S-8 incorporates prior financial statements "by reference." As a practical matter, few investors will bother to review those earlier documents.
The absence of meaningful disclosure is only one of the disturbing features of Form S-8. Here is another. The company is not required to identify the individuals who will be receiving shares. Instead, the shares may be registered for a generic "Employee Benefit Plan." Which employees will "benefit" from that plan? The company is not required to identify the potential recipients when the Form S-8 is filed. And while companies are supposed to amend each Form S-8 to add the names of the new stockholders as shares are issued, they rarely do.
In reality, the recipients of shares may not be employees at all - and that is another distressing feature of S-8. Under the statute that controls this registration form, employees may include "consultants" and "advisors" - opening the possibility for shares to be distributed to a host of individuals with mere marginal connection to the company.
And the company is never obligated to account for the services rendered by those consultants in consideration for the stock.
The impact of these registrations can be seen in dozens of Form S-8 Registration Statements filed each week. Consider this example. A company, called Bach-Hauser, has made a business out of issuing S-8 shares. In fact, so far this is the only discernible business developed by the Company, despite a seemingly endless stream of consultants.
Since early 2000, Bach-Hauser has filed twenty three Forms S-8, registering more than 220 million shares issued to consultants, including a variety of lawyers. What have all these consultants been doing for Bach Hauser? The proof, as they say, is in the pudding, and Bach-Hauser's bowl remains quite empty. The Company has no business and no revenues.
Although Bach-Hauser initially named the consultants who had been issued shares, in recent years they have adopted a practice - followed by most small companies - of registering shares for unidentified recipients under an Employee Benefit Plan.
Bach-Hauser is a glaring example of the way Form S-8 has been used to flood the market with shares. It is hardly alone. Virtually every day, tiny companies issue mounds of shares to unidentified individuals for unspecified services - and it is all within the letter of the law.
But the common use of these two rules, Regulation S and Form S-8, hardly reflects the spirit of disclosure that is at the foundation of federal securities regulation. Instead, these twins seem destined to leave investors in the dark.
Just be grateful they weren't triplets.
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| To: Francois Goelo who wrote (10156) | 5/11/2006 8:01:41 AM | | From: StockDung | | | | Psychic and Delray detective sentenced in fraud case
Associated Press
MIAMI - A Delray Beach police detective and a self-proclaimed psychic were sentenced Wednesday to prison for their part in a scam in which elderly and seriously ill people were told they could be magically cured of diseases.
Detective Jack M. Makler, 64, of Boynton Beach, pleaded guilty in February in U.S. District Court in Miami to a charge of honest services fraud. Linda Marks, 57, of Delray Beach, pleaded guilty to three counts of wire fraud.
Makler was sentenced to five years in prison and three years supervised release. He was also ordered to pay $235,700 in restitution. Marks was sentenced to four years in prison and three years of probation, and ordered to pay $2 million, according to the U.S. Attorney's Office.
"Today's long prison sentences send an unequivocal message that we will not tolerate official corruption in South Florida," U.S. Attorney R. Alexander Acosta said Wednesday. "The conduct of this officer tarnished his badge and brought disrespect to fellow police officers."
Marks previously acknowledged she was responsible for bilking more than $2 million from numerous victims from 1994 to 2002. She told sick people she could cure them by praying over their money. Makler was assigned to investigate some of the cases, but instead allegedly helped Marks avoid prosecution.
The detective also admitted in court that he lied to federal investigators when questioned about the case. |
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| To: Francois Goelo who wrote (10156) | 5/11/2006 9:29:58 AM | | From: StockDung | | | | FDA Rejects Green Tea Health Claims
The U.S. Food and Drug Administration has refused a petition that would have allowed manufactures of green tea to display labeling linking consumption of the popular ancient brew to a reduction in the risk for cardiovascular disease (CVD).
The petition, filed July 28, 2005 by Japanese-based Ito En, Ltd., a leading manufacture and importer of green tea products, requested FDA approval of the following health claim:
"Daily consumption of at least 5 fluid ounces (150 mL) of green tea as a source of catechins may reduce a number of risk factors associated with cardiovascular disease. FDA has determined that the evidence is supportive, but not conclusive, for this claim. (Green tea provides 125 mg catechins per serving when brewed from tea and 125 mg catechins as a pre-prepared beverage).”
In a letter to Ito En denying their petition, the FDA states its finding that “there is no credible scientific evidence to support qualified health claims about consumption of green tea or green tea extract and a reduction of a number of risk factors associated with CVD.”
After reviewing nearly 150 scientific studies on green tea, the FDA found the data "not credible to support the relationship between consumption of green tea or green tea extract and a reduced risk of CVD."
The FDA’s action does not imply that green tea is dangerous or unhealthful; merely that it did not find scientific evidence that green tea reduces the risk of CVD. In 2005, the FDA rejected a similar petition claiming that green tea reduced the risk of cancer.
Also See: The Miracle of Green Tea
Thursday May 11, 2006 | comments (0) |
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| To: Francois Goelo who wrote (10156) | 5/11/2006 1:00:42 PM | | From: StockDung | | | | STOCKLEMON RIGHT ON THE MONEY AGAIN:
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Glancy Binkow & Goldberg LLP, Representing Investors Who Purchased Fairfax Financial Holdings Limited, Announces Class Action Lawsuit and Seeks to Recover Losses -- FFH
Friday May 5, 7:14 pm ET
LOS ANGELES, May 5, 2006 (PRIMEZONE) -- Notice is hereby given that Glancy Binkow & Goldberg LLP has filed a Class Action lawsuit in the United States District Court for the Southern District of New York on behalf of a class (the ``Class'') consisting of all persons or entities who purchased or otherwise acquired securities of Fairfax Financial Holdings Limited (``Fairfax'' or the ``Company'') (NYSE:FFH - News) between March 24, 2004 and March 22, 2006, inclusive (the ``Class Period'').
A copy of the Complaint is available from the court or from Glancy Binkow & Goldberg LLP. Please contact us by phone to discuss this action or to obtain a copy of the Complaint at (310) 201-9150 or Toll Free at (888) 773-9224, by email at info@glancylaw.com, or visit our website at glancylaw.com.
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The Complaint charges Fairfax and certain of the Company's executive officers with violations of federal securities laws. Among other things, plaintiff claims that defendants' material omissions and dissemination of materially false and misleading statements concerning Fairfax's business and operations caused the Company's stock price to become artificially inflated, inflicting damages on investors. Fairfax engages in property and casualty insurance and reinsurance, conducted on a direct basis principally in Canada, the United States and the United Kingdom. The Complaint alleges that defendants' Class Period representations regarding Fairfax were materially false and misleading because (i) Defendants had manipulated Fairfax's accounting for purchases and sales of certain ``finite risk'' reinsurance to and from the Company's captive subsidiaries, and/or allowed such manipulation to occur; (ii) Defendants allowed and/or authorized the Company to enter into bogus reinsurance contracts with Odyssey Reinsurance Holdings Ltd. (``Odyssey Re'') and Northbridge Financial Corp. (``Northbridge''); (iii) Defendants failed to maintain adequate operational or financial controls within Fairfax such that the officers and directors of the Company could assure that its reported financial statements were true, accurate or reliable; (iv) the Company's financial statements and reports were not prepared in accordance with Generally Accepted Accounting Principles and SEC rules; and (v) as a result of the foregoing, defendants lacked any reasonable basis to claim that Fairfax was operating according to guidance sponsored and/or endorsed by defendants, or that the Company could achieve such guidance.
At the end of the Class Period, investors finally learned that the Company had engaged in inappropriate ``finite risk'' insurance transactions with its captive subsidiaries, including Odyssey Re and Northbridge. Defendants then revealed that the Company's CEO and others related to the Company had received subpoenas from U.S. market regulators concerning Fairfax's finite risk insurance business.
These sudden and shocking disclosures had an immediate impact on the price of the Company's stock, causing Fairfax shares to decline almost 30% in the days following these belated disclosures.
Plaintiff seeks to recover damages on behalf of Class members and is represented by Glancy Binkow & Goldberg LLP, a law firm with significant experience in prosecuting class actions, and substantial expertise in actions involving corporate fraud.
If you are a member of the Class described above, you may move the Court, not later than June 12, 2006, to serve as lead plaintiff, however, you must meet certain legal requirements. If you wish to discuss this action or have any questions concerning this Notice or your rights or interests with respect to these matters, please contact Lionel Z. Glancy, Esquire, of Glancy Binkow & Goldberg LLP, 1801 Avenue of the Stars, Suite 311, Los Angeles, California 90067, by telephone at (310) 201-9150 or Toll Free at (888) 773-9224 or by e-mail to info@glancylaw.com.
More information on this and other class actions can be found on the Class Action Newsline at primezone.com.
Contact:
Glancy Binkow & Goldberg LLP, Los Angeles, CA
Lionel Z. Glancy
(310) 201-9150
(888) 773-9224
info@glancylaw.com
www.glancylaw.com
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Source: Glancy Binkow & Goldberg LLP |
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