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Bravo!
Comforting to know that the SEC actually will suspend a pennyscam publically indulging in prime bank fraud ....
I had fantastic caviar blinis at the RVR.
I think writing stock tickers on blinis using caviar would make for a more nutritious, tasty and classy insider-trading mechanism, compared to using napkins.
I think it's probably because they've recently signed up Walmart, McDonalds, Coca Cola, Home Depot, J&J, Walt-Disney and the Dominion of Melchizedek Retail Association as customers recently, and they're a little over-stretched trying to run things out of the trailer home-office while at the same time rolling around like Scrooge McDuck on mounds of billion-dollar seasoned prime bank MTN's.
So what the PR today adds to the one from December http://finance.yahoo.com/news/vg-life-sciences-inc-phase-110000734.html seems to be just that they are set to go to the next dosage escalation, which was originally supposed to happen in January. Well, carry on ...
YA Global f/k/a/ Cornell Capital is a major pennystock toxic funder. Managed by Yorkville Advisors LLC. Head honcho is one Mark Angelo who is being sued by the SEC for ripping off YA Global investors: http://www.sec.gov/litigation/litreleases/2012/lr22510.htm
The case is currently at the "discovery trench-warfare" stage.
From what I've seen over the years, any company involved with YA Global is almost certainly a POS.
On a very quick skim, the key element of that debenture agt is this: At any time, and at its sole option, the Investor shall be entitled to convert a portion or all amounts of principal and interest due and outstanding under the Debenture into shares of Common Stock at a price equal to 48.5% of the average of the three (3) lowest prices per share of reported trades (not on the same day) of the Common Stock on the OTC Markets or on the exchange which the Common Stock is then listed as quoted by Bloomberg, LP during the twenty (20) trading days preceding the conversion date.
This is a floorless instrument: no matter how low the share price, YA Global can get shares at about half of the recent average low price.
Depending on the size of the debenture relative to the company's current market cap and trading volume, generally such an instrument makes it impossible to value shares in the company at much above zero on fundamental grounds - however low the price goes, YA Global can drag it lower.
Legitimate companies with real prospects don't do this kind of deal.
It seems strange that the auditor gets zapped for ignoring evidence of management apparently looting the company, while management remains un-zapped.
The auditor & his firm are being zapped for not applying professional skepticism with respect to unreported payments and stock issues to the CEO and other officers of Baltia, despite apparently having knowledge of these.
But there doesn't seem to be any SEC (or DoJ) action against the CEO etc announced so far. Maybe there has been an SEC investigation which resulted in this action against the auditor but nothing against management, because amended 10-K's showing the related party stuff were eventually filed, or something? Maybe SEC litigation against management is coming up? Dunno.
The PCAOB doc addresses the auditor standards required:
6. Among the elements of due professional care is professional skepticism, "an attitude that includes a questioning mind and a critical assessment of audit evidence." An auditor acting with professional skepticism "should not be satisfied with
less than persuasive evidence because of a belief that management is honest." In addition, "professional skepticism requires an ongoing questioning of whether the information and evidence obtained suggests that a material misstatement due to fraud
has occurred."
...
8. PCAOB standards require an auditor to obtain satisfaction concerning the purpose, nature, and extent of related party transactions through the performance of certain procedures that extend beyond the inquiry of management. In addition, these
standards require the auditor to evaluate the information available concerning the related party transaction in order to satisfy the auditor that it has been adequately disclosed in the financial statements.
Then for each of the years in question they have language similar to this:
12. During the 2008 Baltia audit, Respondents [ie Rodgers and his firm] became aware of information indicating that certain payments and stock issuances were being made to, or on behalf of, officers of Baltia. After becoming aware of these transactions during the audit, Respondents failed to perform sufficient procedures. Other than obtaining management representations, Respondents failed to take any steps to evaluate the nature of these transactions.
13. Despite being aware of these transactions and the lack of disclosure in the financial statements related to these transactions, Respondents failed to exercise due care and professional skepticism and failed to perform sufficient procedures. Although a portion of the compensation paid to the CEO in 2008 was disclosed, Respondents failed to evaluate additional payments and stock issuances made to or on behalf of the CEO and payments and stock issuances to other officers of Baltia.
14. Respondents also failed to perform any audit procedures to determine whether the transactions reflected related party transactions. Specifically, Respondents failed to perform any procedures to evaluate this issue and to determine whether any
related party transactions should have been disclosed.
Rodgers has been auditor for the following smorgasbord of crap: AMOG, BZRT, BRWC, CPXP, DBTB, DCOU, DOLV, GCLL, PAXH, PMCM, SGTB, SWRF, VIDA.
Patrick Rodgers, CPA and his firm zapped by PCAOB for dodgy BLTA audits for 2008 thru 2011: http://pcaobus.org/Enforcement/Decisions/Documents/2014_Rodgers.pdf
Patrick Rodgers, CPA and his firm zapped by PCAOB for dodgy audits of BLTA over several years: http://pcaobus.org/Enforcement/Decisions/Documents/2014_Rodgers.pdf
Cynically, I've wondered sometimes whether the KPI's for the SEC staff involved in this type of case include anything for "cash actually collected" - or is it just "cases won" and "damages awarded".
Form 10, re-registration questions:
Any recent examples of a pennystock which previously went dark via 15-12g or whatever and then successfully re-registered via a Form 10 filing?
At what point would the Form 10 filings and SEC comments become visible on EDGAR, normally - not until the registration attempt was successful or withdrawn; or before then?
TIA!
He also took the stand.
I'm guessing that didn't help him very much.
It was Weidenbaum - DE #45 says this explicitly.
Looks like it. The SEC orders are on the govt's exhibit list (DE #47). And the judge's jury instructions refer to evidence of similar acts by Altomare in the past.
Govt had a motion in limine to introduce the USXP stuff (DE #32). Docket doesn't seem to indicate whether or not this was granted, but given the exhibit list, I guess it must have been.
The govt submitted a trial brief (DE #45) in an effort to forestall any entrapment argument, probably Altomare's only defence. It's interesting on entrapment defences in general.
Altomare would have to show (a) govt inducement to commit a crime and (b) lack of predisposition. The govt used the USXP stuff to argue against (b).
For (a), Altomare would have had to show only "mild coercion" on the part of the govt. The brief says: To the contrary, the defendant was eager to engage in fraud, and merely had to be pointed to a particular scheme by the government and its confidential informant to ensure that the defendant’s crimes would be captured on tape.
The CI was a guy named Weidenbaum who had been a USXP promoter hired by Altomare. The recordings introduced as evidence in this case had the two often talking about USXP. The govt argues that it needs to be able to introduce the USXP stuff in order to make sense of the recordings of calls between the two for the jury.
Wish we had those recordings! On a similar note, according to the jury instructions Altomare took the stand; a transcript would be entertaining, no doubt.
I wonder what his wife Mimi thinks of this?
She's having a shot at upgrading herself to US Congress: http://mimiwalters.com/2014/02/campaign-update/
Sure was. Five day trial. The minutes docketed for day 5 say that total court time for that day was four hours, including finishing up of General Altomare's defence case, closing arguments, some motion argy-bargy, jury instruction and deliberation.
But this swift delivery of justice may have a partial explanation in the jury notes filed on the docket (always a fascinating read). One jury member writes the judge, "I must leave at 4.45pm for a dentist appointment. Thank you." The final note says, "We have reached a verdict. Feb 25, 2014. 4.45pm."
On the other hand, I doubt it would have taken more than a few minutes for any sensible juror to dispose of Altomare's entrapment defence.
Yep, he'll be the laughing stock of the trailer park if he doesn't follow through on this.
I'm not sure about "Mexican stand-off" though, unless you're thinking of a situation where one Mexican is beating himself over the head with an inflated pig's bladder, and the other one is standing there laughing at him.
It probably made sense to whatever substances were in control of the writer's brain at the time.
What they should do now is securitize the expected proceeds of their damages claims against you & use them as collateral for participation in a Prime Bank MTN roll program with a verified NPV of $127 billion, using conservative assumptions.
What are pennyscams for, if we're going to worry about how cheap the laughs are??
Guess: They think he has funds in offshore accounts and intend to use the civil contempt process to go after them.
I like the sheep going "Baaaa humbug!".
Well, I hadn't heard of the Brazilian bond scam before, so at least it's educational.
CDFT might make a nice stupid-bond-scam case study.
The PWC contempt motion is in the AJW Offshore bankruptcy case (case # 8-13-70078 in US Bankruptcy Court, NY Eastern Division), not the NY state court litigation. FWIW.
That's pretty bizarre behavior by Walters, unless he's dead or on the run or something.
Email from PWC's counsel to him:
From: Jeff Gross
Sent: Monday, February 03, 2014 7:53 AM
To: David Walters
Subject: RE: AJW
Mr. Walters,
Are you trying to force me to move to hold you in contempt of court? You are leaving with few other options. I need to
schedule your examination under oath. Please advise.
Jeff
... after not getting any response to repeated attempts to contact him after this:
From: David Walters [mailto:david@mbsecurities.com]
Sent: Thursday, January 02, 2014 2:56 PM
To: Jeff Gross
Subject: RE: AJW
Jeff,
I have not found anything you have asked for yet. We moved our offices early last year and I am not sure exactly what
made the move and what did not. I will take one more pass through to see if I can find any of the documents you
requested. I have been completely out of the Monarch Staffing business for almost three years and do not have access
to its files but am searching MBS and MBA and my personal.
I will come back with a report by the end of next week.
Regards,
David Walters
PWC on 11 Feb filed a motion for a order of contempt against David Walters and Monarch entities for failing to respond to subpoenas; hearing on 9 Apr.
On October 3, 2013, the Foreign Representatives filed the 2004 Motion, seeking an order directing discovery from various parties, including the Monarch Parties, pursuant to Bankruptcy Rule 2004. As set forth in the 2004 Motion, Walters is the principal of Monarch, an issuer that apparently provided approximately $3.8 million in convertible notes to the AJW Funds. Monarch Bay Securities, LLC and Monarch Bay Associates, LLC appear to be affiliated entities that may have received funds from Monarch. Walters was also involved with other issuers, including Systems Evolution, Inc., later known as Highline Technical Innovations, Inc. (“Highline”). Litigation ensued relating to Highline, which highlighted certain suspicious transactions with NIR and Ribotsky.
...
As set forth in the Affirmation of Jeffrey E. Gross (the “Gross Affirmation”), attached hereto as Exhibit B, after the Monarch Parties failed to produce documents or otherwise respond to the Subpoenas, the Foreign Representatives’ counsel emailed Walters on January 2, 2014, requesting a response to the Subpoenas. Walters responded that same day that he had not yet found any responsive documents, but that he would “come back with a report by the end of next week.”
As set forth more fully in the Gross Affirmation, the Foreign Representatives’ counsel attempted to initiate contact with Walters on numerous occasions after receiving Walters’ email on January 2, 2014, but received no further communication or response from Walters or any of the other Monarch Parties as of the date of this Motion.
Wonder what's going on here ... It's now more than a year since JF was convicted and almost a year since he was convicted, and the judge still hasn't completed his memo setting out his reasoning for various motion dispositions, including dismissal of the ID-theft charge.
The DoJ and JF appeals are waiting on this; and the SE case can't proceed until everything is disposed of in the criminal case. The last info rom the court docket is the judge's order from last year, reiterating his concerns about the possibility of taint:
It has come to my attention that the United States Attorneys
Office has publicly announced findings and conclusions by the
United States Department of Justice Office of Professional
Responsibility that suggestions of misconduct by Assistant United States Attorney Victor Wild related to this case “lack[] factual support and were without merit.”
This case remains under consideration in this court in
connection with the preparation of a full written explanation
sought by the parties in connection with their noticed cross
appeals concerning the grounds for disposing of post trial
motions. The action and reasoning of the Office of Professional
Responsibility are relevant and perhaps material to the
Memorandum and Order I now have in draft.
Moreover, I have indicated that to the degree the suggestions of misconduct are directed to a sentencing proceeding in a case before Judge Wolf [ie Dan O'Riordan's case],it is my intention to forward to Judge Wolf my Memorandum and Order thereby directing his attention to the relevant filings bythe parties before me. The Office of Professional Responsibility report would be relevant and perhaps material to that referral as well.
Is there some investigation of eg Wild in process?
Perhaps he though he could attract a significant number of genuinely good companies, domestic and international, to his "QX" tiers.
It just seems on the face of it to have been a doubtful model, if so. I mean, assuming that this would have been driven to some substantial degree by domestic companies wanting to opt out of SOX requirements: why would sophisticated shareholders be supportive of efforts to reduce levels of disclosure etc etc, and to avoid listing rules?
Since being converted and issued are two different things
Really, they're not: the effect of conversion is to be issued with shares of common stock. It makes no sense to talk about "conversion" without any "issuance".
But then how to explain the MB conversion in Q4 2013: $120K of the $1.5M note at $0.0588? According to the stated terms of the note, it's not convertible until Dec 14 (with 25% of it convertible then, and a further 25% in each of the three succeeding quarters).
Was there a nice insider agreement to let them convert early? If they didn't get free trading shares to dump immediately at a huge profit, why would they want to convert at all?
And DMBM: if that $30K isn't a typo, where did the $0.015 pricing come from? According to the Q1 2013 re-stated terms of the notes, the pricing should have been the minimum of $0.19 and a 30% discount to the trailing 14 day average price - nowhere near $0.015.
Who knows what's going on with this? Perhaps the insiders are all co-operating to keep the VGLS picnic going.
I dunno at this point whether DMBM are sharing a VGLS picnic, or MB has replaced DMBM at the picnic table, or the picnic is over. But I think there is every reason to be suspicious.
Haig owns or controls ~60% of the Series A preferred shares, according to the last annual. The holders of the prefs collectively are guaranteed 50%+ of the shareholder vote. At the very least, Haig has a significant level of control of the vote, and he and his brother Arthur hold two out of three board seats.
But look at the pricing for the other 4.5M shares issued during 2013 Q4 for debt conversion:
- 500K shares to Schott at $0.05.
- 2M shares to MBV at $0.0588
- 2M shares to DMBM at $0.015 (or is there a typo - should it be $300K not $30K, giving $0.15 per share?)
Anyway, it's good to have this disclosure but working out a fully-diluted position is still too much work, particularly as eg the DMBM debt has a floorless conversion feature (30% discount to trailing VWAP). And still no word on how the $862K debt to T&Tis going to be worked out.
An SBLC scam? That's old school!
http://www.sec.gov/divisions/enforce/primebank/howtheywork.shtml
See they've updated the company info at http://www.otcmarkets.com/stock/VGLS/company-info
As of 3rd Jan, they actually have 17.2M common issued.
Oops! That's about 470% dilution in 12 months. History of outstanding common:
31 Dec 2012: 3.0M
31 Mar 2013: 5.4M
8 Aug 2013: 8.2M
30 Sep 2013: 8.7M
Around 6 Dec 2013: 10.7M
3 Jan 2014: 17.2M
I guess they'll get around sometime to letting shareholders know something about that big recent jump.
Haig and his brother Arthur still control the board - two out of three votes. Haig also seems to retain his old level of control over the pref shares - recalling that the prefs are guaranteed 50.05% of any shareholder vote, and therefore have control of the company.
It's a puzzle why Medbridge wouldn't have demanded changes to these things before investing. Maybe there are side agreements in place; maybe they're pretty comfortable with each other. Without some credible independents on the board and much better disclosure, I wouldn't feel at all comfortable with the current arrangements if I were a shareholder.
The increase in authorized common from 60M to 150M was hinted at in the risks section of the last quarterly: Further, proving the efficacy of our products with regulatory agencies is daunting and expensive, and we could be compelled to increase the number of authorized shares in the future, perhaps near future, to make certain we can issue securities to fund the Company’s development.
There's at least 10.7M common on issue currently (8.7M as of 30th Sep and at least 2M issued to MB since then).
A big chunk of the increase would be necessary to cover the various conversion arrangements in place for existing liabilities. The company should disclose the fully-diluted position. Too much work to try to calculate, but as a rough bound: liabilities at the moment are probably around $7M, including the new MBV and DMBM promissory notes; if all of this were converted at the $0.0588 note conversion pricing, it would see issuance of about 120M new common.
A big unknown is what happens with the $862K T&T liability, now past due.
IMO they're the most interesting ones.
Paper-printing scams which are nothing but paper-printing scams are usually just depressing; watching the culties and maniacs who fall for them is often too much like an abnormal psychology display or a visit to Bedlam back in the bad old days for anything like good honest Schadenfreude. Of course, you do get some standouts like SRGE or CDFT or Mr TPK, but the laughs can be very cheap.
The real fun is making a quick $10K on a scam
Really, it may seem strange but there are people who think that kind of thing is boring; just like gambling seems tedious to some people, who may have more interesting and less risky ways of making $10K.
Whereas poking scammers in the eye is fun & digging into their feral little plots can be intellectually stimulating and amusing.
French fry vending machines seem to be a cyclical phenomenon - I vaguely recall another one from the early 90's, not TSTY; and there's a new one which is failing to work very well right now: http://www.foodproductiondaily.com/Innovations/French-fries-vending-machine-get-rich-quick-scam
Finally ... another one which took more than a decade longer than it should have.
As an historical note, poor ole Geoff was originally the target in the DoJ investigation which led eventually to the prosecution of Latorella and Fields, the Locateplus guys (according to govt filings in their cases). They looked tastier to the govt than Geoff did.