1. Feds Nail Russian Nationals At LAX After A $40 Million Scam
Nice try but no cigar: Two Russian nationals were arrested last week on their way out of the United States after attempting a mail fraud scam that would have hauled in millions. The U.S. Attorney in Los Angeles said Viktor Ryzhkin, 45, and his son, Evgenii Ryzhkin, 22, were arrested as they were about to board a flight at Los Angeles International Airport. Prosecutors said the men had mailed notices to more than 170,000 California small business owners, informing them all that they owed $225 to the state. The letters were actually sent from “Corporate Business Filings,” a Beverly Hills company controlled by the elder Ryzhkin. In addition to the collection amount, they threatened penalties of $250 if the bills were not paid by April 15. The defendants apparently got wind of a federal investigation, and were caught at LAX with two family members and one-way tickets to Moscow. Had all the intended victims complied, the scam would have made nearly $40 million, officials said. The father is now charged with mail fraud. His son is charged in a separate complaint with conspiracy and bank fraud, the government said.
2. 89 Defendants Are Arrested In $223 Million Medicare Scheme
A massive Medicare fraud takedown has concluded with charges filed in eight cities against 89 people, including nurses, doctors, and other licensed healthcare professionals. The cases - announced by the U.S. Attorney's Office and Department of Health and Human Services - involved false billings worth $223 million for medical services that were either unnecessary or non-existent, officials said. Alleged offenses included fraudulent billings for home health care, mental health services, psychotherapy, and durable medical equipment. This is the sixth major takedown reported by the Medicare Fraud Strikeforce, prosecutors said.
3. California Man Convicted In $250 Million Real Estate Ripoff Case
A California man who was part of a sweeping real estate Ponzi scheme has been convicted on 35 of 36 felony counts in Shasta County. The Associated Press said James Stanley Koenig, 60, was found guilty of charges including securities fraud and burglary for the scam, which took $250 million from 2,000 investors. Many lost their life savings to the crime, the AP said. Koenig had two co-defendants in the case, the AP added. One has already been sentenced to 10 years and the other pleaded guilty to lessser charges. Koenig will be sentenced in June, and could get a maximum prison sentence of 50 years.
4. Forex Ponzi Scheme Results In Court Order To Repay $23 Mil
A federal judge has ordered two Ohio residents, their companies, and a Canadian woman to pay $23 million for operating an off-exchange foreign currency Ponzi scheme. The order came after an enforcement action by the Commodity Futures Trading Commission against Kevin and Keelan Harris, of Warren, Ohio, and Barrie, Ontario resident Karen Starr. The CFTC said the defendants took more than $23 million from investors between 2006 and 2008 to trade forex, but actually misapropriated the money. The amount they were ordered to pay includes penalties and restitution.
5. Texas Man Gets 71 Months For Pump & Dump That Made $3 Mil
Texas resident Christopher Rad has been sentenced in New Jersey to 71 months in prison for a pump- and-dump scheme that netted nearly $3 million. The Associated Press reported that Rad, of Cedar Park, Texas, gained computer access to the brokerage accounts of investors, sold off their stocks, then manipulated other securities. Two co-conspirators to the crime had already pleaded guilty, and Rad was convicted last November, the AP said.
6. Regulator Sues Metal Dealer For Allegedly Cheating Buyers
Federal regulators are after a Florida precious metals company and its owner, claiming they stole more than $800,000 from investors. The Commodity Futures Trading Commission said Michael Ghaemi and Global Precious Metals Trading Company LLC, of the Miami, Fla. area, ripped off nine customers who believed they were paying to buy and store gold, silver, platinum, and other metals. The customers also paid for loans to finance portions of the deals, the CFTC said. But the agency is charging that no metals were actually purchased, and the loans were bogus. The CFTC also said Ghaemi used customer money to pay himself and underwrite his car notes, travel, and entertainment. The agency has sued Ghaemi and his company in federal court and is asking for injunctions and restitution.
7. FINRA Fines Three Companies For Ignoring Money Laundering
A financial industry regulatory group has fined three firms for failing to keep a close enough eye on money laundering activities. The Financial Industry Regulatory Authority said its has leveled a total of $900,000 in fines against the companies, and also fined and suspended four executives. The firms include Atlas One Financial Group, LLC, of Miami, Fla.; Firstrade Securities, Inc., of Flushing, N.Y.; and World Trade Financial Corp., of San Diego. Firstrade, an online company catering to the Chinese community, failed to report suspicious trading of Chinese-issued stocks, FINRA said. WTF was accused of failing to properly monitor illegal activities in penny stock trades, and Atlas also ignored red flags warning of improper activity.
8. D.C. Judge Throws Out Charges After Seven-Year Litigation
A federal judge in Washington, D.C. has ended seven years of litigation by dismissing civil fraud charges against Gary Prince. His attorneys, Zuckerman Spaeder LLP, said Judge Gladys Kessler rejected all six charges filed against Prince, who had been accused by the Secuurities and Exchange Commission of conspiracy, harming investors, and making material misrepresentations. The ruling came in a 118-page opinion after a three-week bench trial, the law firm said.
9. Mortgage Servicing Company To Pay $14 Mil To Settle Lawsuit
A mortgage servicing company has agreed to pay $14 million to settle a lawsuit alleging that it misled investors about practices that harmed homeowners during the foreclosure process. According to a report by Thomson Reuters, Lender Processing Services, Inc. entered the agreement in a Jacksonville, Fla. federal court. The company and several of its executives had been accused of making false or misleading statements regarding fees and illegal document filings. The company's stock subsequently plummeted by 18 percent during a seven-month period ending in 2010, Thomson Reuters said. Lender Processing did not respond to comment requests after the settlement was announced, the news service added.
10. Delray Beach Resident Charged With Fla. Land Ponzi Scheme
Florida police have arrested Leonard Ansill, of Delray Beach, on charges that he collected $1.1 million from investors in a Ponzi scheme. WPTV News reported that Ansill allegedly sold investments he claimed were secured by mortgages on properties located from Miami to Jupiter, Fla. The mortgages never actually existed and Ansill paid early investors with money received from later ones, according to a complaint filed by the Florida Office of Financial Regulation, WPTV said.
Melissa Davis, senior editor of The Street Sweeper, poses with celebrity stock picker Jim Cramer after a recent taping of his "Mad Money" television show. Davis worked as an investigative reporter for TheStreet.com, where Cramer serves as chairman, before assuming her current role at The Street Sweeper.
Lot78 (LOTE): A Glorified Fad Headed for the Discount Bin?
by Melissa Davis, 5/2/2013 10:43:16 AM
As an overhyped microcap name touted by dubious stock promoters, Lot78 (OTC: LOTE: OB) sure looks like a fashion stock that will soon go out of style. After rocketing all the way from $1 to $9 a share in recent weeks – an inexplicable spike that has left the bleeding retailer with a bloated $500 million market value that now exceeds 1,000 times its prior-year sales – LOTE bears an awfully close resemblance to another hot fashion pick that wound up with the shelf life of a momentary fad.
Forget about all of the warnings that LOTE has included in its official regulatory filings for a moment: the modest sales, totaling less than $500,000 annually, that actually declined last year; the relentless losses and lack of cash that drove the company to borrow $40,000 from its founder just to stay afloat; the onerous debt, owed to its major shareholder, that literally exceeds the dwindling sales mustered by the company over the course of the past year; the doubt expressed by its independent auditor over its very chances of survival; even the insolvent status of the company reflected by the imbalance between the meager assets and the far larger liabilities recorded on its books.
In fact, go ahead and forget about the reverse merger that magically transformed the company from a defunct energy firm into a highflying retailer – using a vehicle long associated with “pump-and-dump” schemes – that has somehow exploded to reach double-digit prices rarely achieved (let alone maintained) on the lowly penny-stock exchange. Granted, under the terms of that reverse merger, the original owners of the empty shell wound up holding almost half of the stock that now trades under the LOTE symbol and now stand to make a tremendous fortune by unloading those expensive shares with the stock in overdrive. Of course, now that LOTE has mysteriously surfaced on a foreign stock exchange that’s particularly vulnerable to manipulation, those lucky investors could further boost their outsized gains by actually selling some of that overvalued stock short – effectively betting on its decline -- and hitting a nice jackpot on any future collapse.
Overlook the fact that the founder’s citizenship makes it virtually impossible for poor, disgruntled shareholders to seek justice, should the need arise. Indeed, filings state:
"Our sole officer and director, Mr. Oliver Amhurst, is a resident of Great Britain. As a result, it may be difficult or impossible for our investors to effect service of process within the United States upon him, to bring suit against him in the United States or to enforce in the United States courts any judgment obtained there against him predicated upon any civil liability provisions of the United States federal securities laws."
Forget that, anyway. Simply focus on the glossy newsletter mailed to thousands of potential investors – courtesy of a massive publicity campaign with a $2.5 million budget that actually exceeds the total sales achieved by LOTE to date – instead.
Lululemon: Sheer lunacy
by Sonya Colberg, Senior Investigative Reporter, 4/18/2013 1:44:10 PM
Lululemon Athletica’s pants fiasco is just getting worse, forcing the yoga gear company into a futile battle that we believe will persist and lead to missed earnings.
The pants debacle cost LULU an estimated $75 million -$86 million expected to cut earnings per share by 11 cents to 12 cents. But now, the company has pulled more garments and even more recalls could be ahead.
Last Friday, the company pulled clothing made of its candy-striped Luon fabric but did so quietly, notifying only a minority of customers who happened to catch the recall mention on LULU’s Facebook page. This comes almost a month after the initial recall of the core black Luon women’s pants. TheStreetSweeper wanted to ask LULU why the candy-striped bottoms were no longer listed on its website this week but LULU declined an interview.
Even more clothes may need to be recalled because the sheerness problem would be as bad or worse than the black Luon garments because of the characteristics of the fabric, according to a source with 29 years of experience, including many years with a key competitor.
Photographs show some colored pants offer little more coverage than panty hose.
The company, meanwhile, is striding forward in its tried-and-true fashion of not discounting, Day also assured analysts during the March 21 conference call.
Here’s what she said:
“We achieved these results in a very brand-appropriate way, and did not buy our comps through discounting, which ultimately would have harmed the brand. We maintained a full price strategy up to the holidays, then used our traditional warehouse sales as an effective and low-risk way to clear our inventory.” (italics added)
Just one week after she made that statement, the company quietly held a massive weekend sale.
LULU customers in New York, Dallas, Los Angeles and other cities sorted through racks loaded - and often reloaded - with numerous garments over three days. These were not just last season’s styles and colors but also new styles, according to our checks of more than 20 stores. In one case, the sale was so secretive that an irate customer said that, the day before the sale began in a New York City store, an assistant manager left a message on her phone saying there would be no sale.
The sales - which clerks or educators typically referred to as “markdowns,” (one former clerk says the word “sale” was strictly forbidden) - are common and continuing. Indeed, significant markdowns were offered in many stores we checked on again last weekend.
Educators in Las Vegas and Seattle stores said that customers can always find a rack or two of new and older styles marked down. In fact, the sales are directed by corporate headquarters, as a Vegas educator said that, while the store can exercise autonomy, it also gets weekly calls from corporate to learn which items to mark down.
Photos showing recent sales racks in stores across the country, along with discounted inventory and price tags are here.
LULU’s strategy of scarcity is the coveted key to keeping customers running to its stores to buy yoga gear on the spot at full price. This is not just something she alluded to in the March 21 conference call. Day has made it obvious time and again that brand-harming discounting is not the LULU way.
“Our guest knows that there’s a limited supply, and it creates these fanatical shoppers,” Day told The Wall Street Journal last year.
And in an interview on CNBC in January, Day reiterated LULU’s disdain of promotions: “You’re either going to play in that game of discount or you’re not. And we’re in the ‘not’ category,” Day said.
JAMN Finally Spills the Beans -- And It's an Ugly Mess
by Janice Shell, 6/2/2011 10:32:51 AM
To be sure, the 10-K offered investors little reason to sing. For starters, the filing reveals, this once-hot “coffee company” sells no coffee of its own at all. JAMN relies on a supplier based in frigid Canada – far away from the tropical Jamaican home of its co-founder Rohan Marley – to provide the company with an actual product to sell to its customers instead.
Back in April of 2010, JAMN inked a “supply and toll agreement” with Canterbury Coffee of British Columbia that gave it access to some brew. According to that agreement, JAMN relies on Canterbury to fulfill every role – save a minor one – normally satisfied by a firm that classifies itself as a coffee company. Canterbury purchases the coffee beans. It roasts them. And it then packages them in bags supplied by JAMN – the company’s only real product – for sale to the public.
JAMN signed this deal more than a year ago, right before Shane Whittle – a notorious Vancouver stock promoter – officially resigned as CEO of the company. But the company never mentioned that agreement, seemingly material enough to warrant at least a quiet 8-K report, in a single regulatory filing until now.
Jammin Java (JAMN): Hot Stock ... Bitter Aftertaste?
by Janice Shell, 6/2/2011 10:30:25 AM
It’s time to wake up and smell the coffee! That’s exactly what Jammin Java (OTC: JAMN.OB), a heavily promotedcoffee company, and – for very different reasons – TheStreetSweeper would like investors to do.
Since the beginning of the year, JAMN has miraculously risen from the ashes of the “Grey Market” graveyard to become one of the liveliest – and richest – stocks in the entire microcap arena. JAMN has seen its stock shoot straight toward heaven, soaring from 55 cents to peak above $6 a share on massive daily volume, with its market value nowtopping $355 million despite the company’s limited resources and operating history. (As covered in more detail below, two of the Internet tout sheets pushing JAMN the hardest effectively vanished -- disabled by their Internet servers -- on the day the stock’s trading volume exploded past 20 million shares.)
CCME: Few Signs of Life at 'Healthy' Chinese Firm
by Roddy Boyd, 3/23/2011 9:30:34 AM
Also, and this cannot be understated, hanging out on a sidewalk in Fujian–the sidewalks double as parking spots when the streets, which appeared to have been designed in the Han Dynasty, fill up–was not a viable option. There was also the matter of the world-class headache the Financial Investigator was developing from Fuzhou’s diabolical smell, an epic conflation of poor sewage treatment, air pollution and the smell of cabbage that made getting the hell off Dongjie street a matter of vital importance.
The Financial Investigator and his traveling companion for the trip, an American investor with extensive experience in China, decided to head upstairs despite our interview with the CFO having been cancelled at the last minute (with no explanation given.) We thought a quick tour of the offices and meeting a few other executives might open our eyes to a few things.
Though the language barrier was a little steep with the young receptionist–when we asked for writing paper, she provided Kleenex–we were in short order shown to their conference room and told to wait. It did not escape notice that pride of place in the conference room belonged to a framed certificate of participation from the Fall 2010 Rodman & Renshaw conference, the World Cup for reverse merger companies and the pumpers and touts who peddle them.
Eventually chief operating officer James Yu came down and after spending 30 minutes trying to understand who we were, concluded that giving us a tour wouldn’t hurt. Soon enough, his colleague, Vinne Ye–the chairman’s assistant–came out and took us around.
It was most eye-opening.more...
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