1. Lawyer Convicted Of Swindling Millions Through Stock Capers
A lawyer who ran a stock manipulation scheme for five years has been convicted of multiple felonies in a Florida federal court. Prosecutors said Mitchell J. Stein, 53, of Hidden Hills, Calif., was convicted at trial this week for manipulating the stock price of Signalife Inc., a publicly traded company that sold electronic heart monitoring devices. Stein was charged with creating false sales figures that inflated the value of shares in Signalife, now known as Heart Tronics. Officials said he made millions through manipulative trading, including $1.8 million gained in a single swoop by issuing shares to a third party who sold them and then paid him. Stein will be sentenced Aug. 16; his convictions could bring a possible maximum of 190 years in prison, the government said.
2. 'Ad Toppers' Ponzi Artists Are Sentenced In L.A. To 27 Years
Three Ventura, Calif. residents have been sentenced in Los Angeles to a total of 27 ½ years in prison for an investment fraud that reaped more than $27 million from victims across the United States. The U.S. Attorney's Office in L.A. reported the punishments for the defendants, who were also ordered to pay more than $27 million in restitution. The three - Alan G. Flesher, 65, the ringleader; his brother, Wayne D. Flesher, 62; and Nanacy Carol Khalial, 65 - pleaded guilty to soliciting investments to buy and install “Ad Toppers,” computer monitors that would be placed atop ATM machines and broadcast video advertisements. The whole thing turned out to be a Ponzi scheme that took money from investors between 2001 and 2005, federal prosecutors said. Alan Flesher received the harshest prison term of all the defendants, and will be packing off for 210 months.
3. LPL To Pay $7.5 Million Fine For Lack Of E-Mail Oversight
National firm LPL Financial LLC has been fined $7.5 million and will create a $1.5 million restitution fund for failing to supervise 28 million e-mails sent and received by representatives who acted as independent contractors. InvestmentNews reported the fine, levied by the Financial Industry Regulatory Authority, a private securities industry watchdog. FINRA said LPL - a financial planning and investment firm with 2,900 employees in Boston, Charlotte and San Diego - suffered 35 major e-mail system failures between 2007 and this year. The company, which said it cooperated with the FINRA investigation, accepted the settlement without admitting or denying the charges, InvestmentNews said.
4. Utah Property Deals Result In Fines, 41-Month Prison Term
A Utah man who pleaded guilty to running a crooked property investment scheme will be going to prison, the U.S. Department of Justice said. Salt Lake city resident Patrick Merrill Brody, 47, was originally charged in a nine-count indictment with soliciting investments to buy, restore, and run rental properties. But prosecutors said he and his wife commingled investor funds with other money, made Ponzi payments, and misappropriated cash for personal expenses. Brody finally pleaded guilty to wire fraud and money laundering, Justice Department officials said. He will be sentenced July 25 under a plea bargain deal that calls for 41 months in prison and restitution of more than $1.3 million.
5. Georgia Currency Trader Gets Barred From Business By CFTC
A Georgia-based commodities trader and his company have been banned from the business because of a fraud case that began back in 2008. The Commodity Futures Trading Commission said Robert A. Christy, of Milton, Ga., and his Crabtree Capital Group LLC had been the subjects of an enforcement action in 2012, when they were charged with running a fraudulent foreign exchange currency trading pool. The CFTC said Christy and Crabtree had been ordered in October 2012 to pay $2.6 million in restitution and penalties, for lying to 22 investors and misappropriating their money. Now, a new action taken this week assures they will never legally trade again, the CFTC said.
6. Alleged Development Ruse Ends With Multiple Criminal Counts
A federal grand jury in California has indicted an Oregon man on charges that he stole $50 million from 150 investors in a property development scheme. The U.S. Attorney's Office in San Diego said Bradley Holcom, 55, of Canby, Ore., faces eight counts of mail fraud, four counts of wire fraud, and one count of securities fraud. He allegedly solicited money from investors for residential and commercial property developments, promising to secure their interests with first position leins that could be foreclosed upon if the projects failed. But the leins allegedly did not exist, and Holcom knew that many of the properties he sold were already encumbered, prosecutors said. The scheme ran from at least 2004 through 2010, the U.S. Attorney's Office said.
7. Of God And Oil: Petro America White Hat Case Finally Over
In the beginning, they called themselves the “White Hats.” The big wheels at Petro America - some of them fundamentalist ministers - would meet at restaurants wearing white Stetson hats and planning new ways to rip off investors. They did so by fraudulently claiming that “Petro America” was a legitimate oil and gas firm worth $284 billion. Together, they raised more than $10 million from gullible investors across the U.S., Canada, and England. Eventually, the entire scheme collapsed under the weight of a federal investigation. Now, the Kansas City Star reports that five of the ringleaders, including the company's founder, have been convicted at trial. Nine other defendants had already pleaded guilty. The founder, Isreal Owen Hawkins, unsuccessfully defended himself at trial. And that's about the end of the story. Sentencings are still pending.
8. Former Broker Gets 84 Months For Role In $43 Mil Scam
A former Dallas, Texas stock broker is going to federal prison for 84 months after pleading guilty to money laundering and also being convicted at trial of securities fraud. Prosecutors said Joshua Wayne Lankford was guilty of a stock manipulation scheme that took more than $43 million from 17,000 investors. A news release from the U.S. Department of Justice said Lankford, 39, was sentenced in Oklahoma. He and others had acquired controlling interests in three penny stocks, then manipulated trading and pumped up share values by blasting fraudulent positive faxes and e-mails to thousands of investors, the government said. A prosecutor said Lankford & friends made millions at the expense of legitimate investors, “without regard to anything but their wallets.”
9. Ontario Resident Asking That Pump & Dump Case Be Dropped
Jean-Francois Amyot, who lives in Quebec, Canada, is asking a U.S. federal judge to throw out charges that he made $5.8 million in a penny stock pump-and-dump scheme. Stockwatch reported that Amyot filed a motion to dismiss charges by the Securities and Exchange Commission. The agency is accusing Amyot of pumping up the stock price of Spencer Pharmaceuticals by fraudulently claiming the company would be acquired for $245 million. Amyot then allegedly dumped shares of the firm through offshore accounts, Stockwatch said. In his motion, Amyot said the SEC does not have the evidence to support its claims, and the pump-and-dump occurred long after he ceased to be an officer or director at the company. Amyot wants the charges dismissed before the case ges to trial, Stockwatch added.
10. The Bernard Madoff Exhibit: Things To Remember Him By
Some names, however onerous, just won't go away. Now, the National Museum of Crime and Punishment has assured that Ponzi king Bernard Madoff will be with us forever. This week, according to the Huffington Post, the privately owed museum in Washington, D.C. opened its Bernie Madoff Exhibit. The permanent exhibition of Madoff personal and business items will put the $50 billion fraudster right up there with the likes of other displays including Bonnie & Clyde and John Dillinger. Madoff is now serving 50 years in prison for defrauding major corporations, the wealthy and powerful, and individual investors alike. Opined the Huffington Post: “This exhibit is sure to be an insightful look into the life of a man who destroyed so many.”
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) 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.
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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