I know!
Readers of our research should know that we are in the business of exposing alleged fraud or folly. Some of our targets present fantastic short opportunities, while others represent more of an altruistic crusade to eradicate blatant fraud from capital markets, specifically the OTCBB microcap market.
This report will be a mixture of both. The company we will be reporting on, Pristine Solutions (PRTN.OB) is an obvious short, given it now trades at a $220 million dollar valuation even though it has no revenues, no cash and negative shareholder equity. Most importantly the company has $90 million worth of undisclosed, free trading shares parked offshore that are being liquidated onto unsuspecting retail investors.
In addition to highlighting this obvious short opportunity, we will uncover the infrastructure that has allowed the repeat offenders behind PRTN to methodically extract $250 million or more annually from the US retail investor, since at least 2010. This infrastructure is comprised of gatekeepers, such as securities attorneys that willfully turn a blind eye while they create securities they know will become weapons of mass destruction, and most importantly the brokers and market makers -- the actual human beings that not only deposit these shares, but dutifully serve them by trading the stocks in an effort to liquidate as many shares as possible and in the process collect a fat commission for themselves.
This is the story of PRTN, The AwesomePennyStocks Collective, and most importantly a trader at Wilson & Davis & Company (WDCO) who sits behind a computer screen in Denver, Colorado and helps offshore perpetrators commit what we believe to be the most audacious stock market manipulations since the days of Jesse Livermore and his infamous bull pools. The only differences being that Jesse Livermore would corner the shares of real companies by purchasing shares in the open market (as opposed to being issued them at fractions of a penny), and when he engaged in this activity it was not yet illegal as the Securities and Exchange Commission was only formed in 1934.
Pristine Solutions, Inc.
Pristine Solutions Inc., through its wholly owned subsidiary Eaton Scientific, is purported to be engaged in the development of a drug to treat hot flashes in pre-menopausal woman. The company repeatedly states (almost on a daily basis) that it is in the process of preparing for Phase 1 & 2 Clinical Trials.
The Fundamentals
Shares Outstanding (Pro Forma Merger)
443,000,686
Most Recent Share Price (9/21/2012)
$.50
Market Value
$219,285,340
Cash as of March 31,2012
Zero
Debts & Liabilities as of March 31,2012
$-57,627
Shareholder Equity as of March 31,2012
$-46,099
Revenues as of March 31, 2012
Zero
Undisclosed Shares in Float
178,000,686
Value of Undisclosed Shares in Float
$89,000,000
Looking at the fundamentals one has to wonder how any ethical adult would distribute any press releases at all when the company they head has not even one dollar in cash and is running a deficiency (liabilities that exceed assets) of $46,000!
We are not going to waste any more time on the purported business of PRTN as doing so would be an injustice to readers of this report as it would only be validating what is a blatant fraud. The only true objective of this enterprise is to provide the narrative for investors to be duped into purchasing shares @ $0.50 cents directly from offshore scammers that own 178,000,000 of those shares and paid only $.0003 (one thirtieth of one penny).
The "Set Up"
On September 3rd, 2010 Pristine Solutions a company based in Jamaica Filed an S-1 registering 29,666,781 shares that were purchased at $0.002 per share (one fifth of one penny). We wonder what Mr. Luis Carrillo the principal of Carrillo Huettel, LLP was thinking when he filed this document with the SEC. Was he intoxicated? He did after all misspell the name of his firm in the filing. Surely this must be one of the lowest prices ever paid for shares in an S-1 ever.
What happens next? Surely our readers know by now... But of course, a Forward Split!
On February 27, 2012 PRTN completed a 6 for 1 forward split turning those 29,666,781 free trading shares into 178,000,686 shares. Following the split the average cost of the shares has been reduced to $0.0003 per share ($0.002 original price divided by 6).
There is so much more that can be written about the sloppiness in the way this company was put together. For example the company never filed an 8-K about the split, instead choosing to disclose the split in a line item on the 10Q.
Following the forward split PRTN has been loaded up with 178,000,686 free trading shares and a total outstanding share count of 443,000,686.
The next step in building this scam is to inject a story with pawn officers and directors to hold the front line. On August 24, 2012 at precisely 4:33:37 PM EST PRTN disclosed to the world that it had acquired Eaton Scientific for 25,000,000 shares of PRTN.
The reason we highlighted the time of the disclosure is because of what happened on the day of August 24, 2012 in the full trading day leading up to the release. In what appears to be an obvious case of confidential information being leaked by insiders shares of PRTN traded volume of 22,611,000 shares from a low of $0.17 cents to as high as $0.53 cents. Why they traded so aggressively can only be explained by three words: Awesome Penny Stocks.
AwesomePennyStocks.com (APS)
AwesomePennyStocks.com also known as APS is a collective of penny stock promoters most likely headed by the following people:
Eric Van Nguyen
John Babikian
Jad Tabari AKA Jad Tabara
Robert Kalfayan
Richard Burton
Kevin Sepe
This group of unscrupulous individuals has essentially mastered the art of stock promotion taking a production line approach to creating, promoting, and liquidating worthless securities for hundreds of millions of dollars in illicit gains. Their approach is completely methodical and consists of:
Acquiring a DTC eligible OTCBB shell where they can own every share in the float
Completing a forward stock split prior to initiation of trading to increase their block of shares to an average size of 50-100 million shares and at an average cost that is always less than $.005 cents (half of one penny).
Using a syndicate websites that include: awesomepennystocks.com, equityreporters.com, pennystockgains.com, pennystockexpert.com, pennystockuniverse.com, secretpennystocks.com, premiumstockreport.com amongst a slew of others to advertise on Google (GOOG), Yahoo (YHOO), AOL (AOL), MSN (MSFT), and IAC (IACI) under search terms revolving around investing in finance for textual ads and financial related websites for display ads.
These websites all serve as aggregators that harvest email addresses into one centralized database. In the weeks and months leading to a promotion the cartel will increase their ad spends to as much as $1 million per month competing with the ad budgets of TD Ameritrade (AMTD) and E*Trade (ETFC) while they send their growing list of subscribers emails preparing them for their next pick going so far as giving instructions on how to open online brokerage accounts and entering stock orders!
When all systems are go (ie: worthless shares have been deposited into a US Broker Dealer and ready to be sold) APS unleashes emails announcing their newest pick. Like clockwork, the same day that APS begins to send a barrage of emails the OTCBB companies conveniently begin to issue daily press releases touting their purported businesses.
Once the emails begin to hit and naïve buyers rush in to buy the worthless shares from the APS clan their work only begins. In what is a meticulous effort to manipulate nearly every tick in the trading of their scams the APS clan uses a group of market makers to place abnormally sized bids allowing them to quite literally move their scams up and down to their liking, inducing panic sell offs, buy backs, and short squeezes.
Once they have manipulated the stock to the point of liquidating most of their worthless shares, the APS group ceases to support their scams with the abnormal bids leading to massive collapses of between 40-80% in ONE DAY. Watch this video to see one of these collapses in real-time and note the insane amount of volume trading every second. Every single one of these prints equates to worthless shares being sold to US investors.
Once the shares collapse APS simply moves on to the next deal like a swarm of locust while they funnel their illicit proceeds to their offshore jurisdictions including: Canada, Poland, Costa Rica, and Spain. Let us review a table of the list of APS stock scams and their respective performance:
Table of "Awesome Penny Stock" Cartel Scams
