Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Connect the dots on what this means to the record labels and visa vie what it means to Sunncomm and of course shareholders (us).
===========================================================
P2Ps Score Landmark Legal Victory
Roy Mark
08/19/2004
This article can be found online at the following location:
http://www.internetnews.com/bus-news/article.php/3397551
>> Bush told me I am safer now that Saadam is in jail. If you visited NYC last wekend you can tell me if you fel safer or not.<<
So we'd be safer with Iraq still a poster child for unrest in the region? The enemy is the enemy, not Bush. Disgaree with him, fine, vote him out, fine but but why vett him out for trying to deal with these bad guys?
And if you recall the entire "ALERT" thing began when extremly partisan groups attacked the admin for not "warning" us about 911 with the bald faced LIE that we somehow knew about 911 ahead of time. I can only imagine the comments if they didn't warn and something happened in NYC.
"Bush should have warned us!"
Geez, you can't have it both ways can you? Get rid of Bush and Kerry will hopefully have the belly for dealing with the bad guys just as forcefully and I say that as a patriot not as a partisan. We're facing some real nasty's out there and unlike previous encounters, the lines aren't as clear and precise as I imagine EVERYONE would like.
Seems to me Bush got dealt a rotten deal with the whole terorism thing and is trying to do what he believes is best. Let me make it simple, I'd rather trust Bush's admin to kill bad guys than the U.N., France. I believe if Kerry is elected, he'll do the same and I won't second guess and snipe every damn thing he does or says. Hell I even stood behind Clinton when it came to issues of our National Security.
good points/rebuttal
>> 1) The extra shares (over 200 mln, up to 280 mln) were issued to finance the rapid expansion of the company <<
I have no issue with WHY it was done but the fact remains we have too many shares. Right now at .10c we have a market cap of 45mill... now perhaps we will warrant that eventually based on earnings per share, but presently we don't and that's one reason we have trouble moving much off of these levels.
Prior to this, with only 200 million shares, we would have had a market cap of 20mill. So again, part of the challenge moving forward is to clean up the corporate structure. If you spoke to ANY Wall Street investment banker, they would blanch at where we presently are.
>> 2) That is on the company's aims list.<<
Right, but here we sit and it's a year later. In all fairness I recognize some of this needs revenues to fix, but my point in mentioning it is that presently we're not making headway at resolving this issue.
>>) The new relationship with QTIG was devised to shorten the time needed to get off the pinks. <<
And it hasn't worked, nor will it imo. This was a deadend move entered into inadvisadly and with very negative effects the longer the Sybill effect remains... confusion NEVER leads to higher pps.
>> 4) Incorrect. The last time I checked there were four institutional holders. For a pink sheets stock, that's not bad. <<
Lets talk when you have real institutions in here supporting it... how about a single one of the Boston Mutual Fund giants? A major retail brokerage? Given our current position, they wouldn't touch this with a 10 light year pole.
>> 5) OK, what are you suggesting -- a vigilante group to go out and eliminate them? <<
LOL! Can I vote for that?? Seriously though, I simply mentioned it as one of the "issues" that revolves around and helps dictate the low pps we presently suffer with. Fix the rest of the crap on my list and they magically go away... the NAKED SHORTING anyway.
>> You also seem to be forgetting that, SO FAR... <<
I give them plenty of kudos for pulling off a real David vs Goliath type victory (to date) but this rah rah doesn't change the .09 cent price, only an adherence to the strict Wall Street rules.
As far as MSVN goes, they are doing a wonderful job increasing revenues and supply real pps value to shareholders... they don't have to do badly for SCMI to do well and no, I don't own any MVSN stock and never have.
Thanks for your comments, I don't think we're really on different pages for the most part, I'm just concerned with how the ending comes together in this story.
>> STEHSUCKER-i'm sure peter is very aware of all your concerns. and he himself holds a substantial position. it makes sense, then, that whatever course he is pursuing is one which he has carefully considered and which he strongly believes will positively influence shareholder value. JMO <<
Unlike some, I do not have a moment's doubt that Peter's interests are aligned with what he believes is best for shareholders, so to make it clear, this isn't a pick on Peter thing.
I do however believe that he has and continues to get advice from people in the company (and out) that are either not all that bright, wrong or have other agendas, you take your pick.
So I belive it completely consistent that we could head down a road (Sybill split personality)less traveled that while seeming on the surface to be a good idea (QTIG) it really isn't. Wall Street prefers things as simple as possible and the QTIG/SCMI affair is anything but that.
Sure they could, but they'd need one helluva lot of revenue to do that, something I wouldn't expect until next year or beyond. Given the ridiculous number of shares outstanding, that would be a wonderful thing indeed.
It is my belief that all of the ingredients are present for success EXCEPT the five items I listed that have to do with the corporate structure more than anything else.
I was able to get clarification of the "shift-key" release and it is a bigger deal that I at first understood. Apparently we aquired the technology from our Israeli source and it modifies the Redbook without any playability issues, so that the shift-key problem is obviated. Impressive.
Based on my conversation today I have re-thought my consideration to lighten my position.
I honestly don't think they have a clue what they are doing... I am hearing some lame ass plan to buyback 100 million shares, but of course that would be done by BORROWING 10 mill and with god only knows what provisions.
The product appears to be real and they have a lead on the market, however I am begining to comprehend why the short side does so with such confidence. Despite all the promise, there is a lack of follow through on the fundamentals and a distortion of what is really going on that would make the Bush admin blush.
I am also hearing the same tired old blather about how we'll soooooooon run to .40 cents or more... sorry I'm not buying the bullshit any longer. Peter, fix the goddamn company so we can all benefit... these stupid schemes your people keep hatching have never paid any dividends (pun intended)
Perhaps some of that discussion sank in? Due to a series of smaller events it has caused me to re-evaluate Peter and company. At one point I was taking a lot on "faith", something I am less inclined to do.
To say I am frustrated with our corporate progress to date would be an understatment. I have no issues with the pps as that will ultimately take care of itself if the company takes care of "business". What concerns me at this juncture is that I don't see any progree in solving issues 1 - 5 on my list and I don't get any reasonable answers from the company as to how those issues are going to be resolved.
I think we have a limited amount of time to make hay before Macrovision finally gets it right and makes a huge impact in this sector. I see Nero fiddling while Rome burns.
I am hoping for some decent pr next week and perhaps a slight pop to begin exiting at least a portion of my position. I have no problem placing capital at risk when I see a reasonable opportunity for return.
I think there were a lot of misguided reasons behind the QTIG fiasco, none of which benefit existing shareholders going forward
I do and am less certain of that... items 1-5 on my list need to be addressed or else we go no where imo
Sunncomm still has some major issues from my point of view:
1) too many shares
2) non-reporting status
3) Pink sheets
4) zero institutional support
5) significant short groups
6) significant potential competition from MVSN
In order to build the pps, the 1st 5 items need to be dealt with. There was a plan to do just that but for reasons beyond me they seem convinced they can continue down the QTIG course that to me seems fraught with danger/confusion.
We clearly have a lead on Macrovision but counting them out of the game is a fools errand. Macrovision will eventually move to dominate this space because they have the resources and cash. You can count the number of small companies that have beaten the big guys, on less than one hand.
If we were to move quickly enough to solve some of the fundamental structural issues confronting us, I believe we could get our piece of the pie, however I am not encouraged by what I am hearing. I believe Peter has surrounded himself with less than quality people and he is getting poor advice from them.
Anyone waiting for the SEC with their SHO rules to ride to the rescue is a fool. The SEC has shown zero interest in solving this very real problem and in fact has voiced to me several times over the phone that most small companies "deserve" to be shorted. There are some groups, so upset with the SEC's complacency over some of these issues that they have been forced to resort to suing them in order to attempt to get them off the dime. I'm not holding my breath.
Professional shorts of the sort that have been preying on Sunncomm shareholders to date, seldom lose. Sad but a fact of life.
The bright spots continue to be the contracts we are signing with major record labels however this is not going to be, all by itself, enough as our current pps so dramatically proves.
yeah, I figured that would be the response and I get that... sorry
none of the above... contracts are still on schedule, there is nothing negative in my admittedly cryptic comments, simply don't be looking for an "unexpected" event as I previously implied.
I thought I answered that question, yes I am a shareholder and no I have never shorted steh or scmi.
The unknown event I alluded to is now off the table... eom
EMeye going critical, Uni on deck
I hate to be cryptic but there are other things brewing and it's not bad news (unless you're short!)
is that a serious question?
I'm NOT an insider but presently I probably have more info than is good for me. I know what caused the run-up and vol on Friday and it wasn't any of the things speculated over... I thought that info was of importance but I can see how the normal healthy dose of "wtf should I believe a word of an anonymous poster" is in play here.
You don't see me pumping or bashing the stock, I try to take a realistic view recognizing both the promise of the company as well as it's current failings.
I can tell you that I know for certain that we have at least 50 million shares naked short and my guess is it's 200+ but I can't provide my sources to confirm this so you'll just have to decide on the merits of my previous posts, if you choose to believe me or not. I do this all the time with select posters on other boards.
Good luck to all long investors
sorry, won't do it anymore
I am extremly long my position and expect to reap major profits in a years time frame... the issues haunting the stock
1. shorts
2. no revs
3. not all of the CD labels
4. too many shares
5. non-reporting
6. not on a real exchange
all will be solved in due course
you'll find out soon enough
it was NOT the knobias site that had anything to do with last week and I know that for certain
you'll get your wish, but not the way you expect it... recall the options I laid out?
>> Ouch! That hurts kinda like hitting below the belt <<
Sorry, was responding after 9 hours of watching Democratic Convention and popping Dramamine and Pepto Bismol
Nice how we got crucified over that "shift_key" issue and the big Mac gets a get of of jail free pass
The company has several options imo...
1. Combine the QTIG and SCMI entitites under the QTIG symbol and lose the past on SCMI, become fully reporting and reduce the total number of shares to a reasonable number.
2. Attempt to become fully reporting with SCMI but run the risk of whatever issues lie in the past, cropping up and red flagging an SEC investigation that takes time and potentially harms potential contracts with labels. Part of the issue with labels in th epast was the concern regarding signing onto to a companies technology that may not be in business later... and as I understand it this has been a sales tactic of MVSN in the past as well.
3. Take the whole kit & cabuddle private, clean up the corporate structure, reduce the number of outstanding shares dramamtically, book revenues and then go public again with an IPO and institutional support.
There is no question that there are some overhang issues with the current situation that need to resolved... these three scenarios are the only reasonable options I can forsee for correcting things and continuing with operations, though with this company I suppose anything is possible.
Personally I prefer #3, but then nobody asked me!
Merlyn... I agree with all of your points... basically
The thing is... they ARE trying to get off the pinks and they do have a plan but the plan has been pretty fluid as things keep changing. One thing they were spending time on last year and early this year was a way to force the sizable short position to cover and that resulted (on advice) in the convolution of entities we now have before us. As I said before, I am never a fan of complication, but I do understand that they thought this was going to work. They also felt it part of their job description to fight against the naked shorting... after owning numerous companies that just rolled over and did nothing against these crooks I find it refreshing that they would even try. I just wish it had worked.
And as to the undisclosed "issues" whatever they might be, I doubt they are concerned with what YOU or I might think about it, I think the concern is the SEC and their ability to hold up the process of becoming fully reporting and exchange listed, because of it.
>> Can someone...anyone....give me one good reason why we haven't been filing? <<
AS stated previously, they would have to account for the last five years of operations. While I don't know specifically WHAT is in the woodpile back then, there is apparently something they would rather not disclose or that they believe might be looked upon poorly.
I think it's common knowledge that this was far from a perfect situation five years ago, but that was then and today is a different story. QTIG was created as a vehicle for the company to be able to publicly report earnings and eventually use as a conduit for getting to the Amex.
>> they have however
made very little headway to get us out
of the pinks. <<
God you sound like a Democrat... you make it sound as if all they need do is wave a magic wand and we're off the pinks, so of course they are guilty since they haven't done such a simple thing...
The only way off the pinks is to create a real company. You say they haven't "done much". You probably also say Bush "lied". This restructuring of reality is absurd.
Macrovision, the undisputed giant in the copy-protection business, the one with all of the resources and money has to date not landed a single major (or minor) record label to emrace their technology.
Sunncomm on the other hand, as you already well know, has contracts with BMG (soon Sony), EMI and channel checks confirm Unniversal is either signed already or very close. Peter has pulled off a David vs Goliath type miracle.
A calm reasoned look at the fundamentals would go a long way to eliminate the hysteria you seem to presently be experiencing.
>> Anyone ever ask why Peter listed SCMI on the Berlin Stock Exchange? <<
I think they/he thought it would be a good thing and allow some locals (Bertlesman) to participate in the emarket. My suspcion is that Peter had no idea he was walking us into a minefield
I believe it's called *bullshit*
When Sunncomm finds its way to a real exchange, picks up institutional coverage along with showing positive and rapidly growing earnings, then pps will take care of itself. Everything else between then and now is simply waiting for long term cap gains treatment to kick in.
you won't have long to wait(hours?)... though I hardly consider it a seminal moment for Sunncomm.
You missed my point... under Peter we have accomplished the seemingly impossible, while Krepick has accomplished exactly nothing in this sector. Macrovision has a reputation, like Apple of being rather arrogant.
Peter isn't perfect anymore than anyone else is, but you have to hand it to him, he has delivered the customers and more are on the way. Anyone who can't see where this is going must be attending the Helen Keller University.
When we begin stealing the crown (DVD) jewels, I wonder what the reaction will be then? You can sell yours for .20 cents if you like, I'll hang on for a more realistic number.
>> Peter is a bad CEO! <<
Well then, what would you call William Krepick, CEO of Macrovision (MVSN) whose company, the clear leader in copy-protection, has failed to land a single major record label or any other label for that matter to use their flagship CDS-300 product? Under his guidance, Macrovision has squandered millions of dollars and man hours in producing a product that absolutleyt no one wants as evidenced by the complate and total lack of customer interest.
Actually for Sunncomm to have acheived what they have, with no money and up against a well financed and influential competitor such as Macrovision, it is almost a miracle that they have emerged as an Industry equal. I can't imagine how all of this accidentally occured without someone pretty sharp at the helm.
But then again, perhaps you still believe in the tooth fairy.
Sirus (SIRI) has over a billion shares outstanding and has traded at $4+
While I would prefer a 1:10 reverse split to lower our share count to 45 mill, this can occur when the company is generating solid and increasing revenues next year.
There is no reason the company can't earn .05 cents in revenue for 2005 and using a 50 P/E that would give you a pps of $2.50
Macromedia is a different company than Macrovision... though the names are similar
The inherent problem with Hedge funds is their "unregulated" status. Whenever people are allowed to work in the dark, bad things happen... that has been the driving force on Wall Street for 100 years as excesses and loop holes have repeatedly been plugged... the latest alteration in accounting practices and accountability is just another example of the market evolving to a better position.
The other issue I did not raise but have before, is the universal clearing exchange known as DTCC or by many just as DTC. In the old days of Wall Street shares were held physically in vaults at member firms. So if you had an account with Merril and sold your shares to someone with an account at Kidder Peabody, the physical shares needed to be collected from Merril and delivered to Kidder Peabody and there was an entire industry of "runners" who accomplished this on a daily basis.
The the idea to create a central cleearing house was born and since all the certificates from all firms were held there, all you had to do to mark shares from Merril to Kidder was a ledger entry... this simplified things enormously but still if you were shorting, you were shorting actual real certificates.
Then the digital age came and with it a new idea which on the surface seemed to simplify things even more but in actuality opened a Pandora's Box of trouble by "Pooling" assets. Now there was no longer any matching of certs there was simply shorting against the pool. While this was easier for DTCC to manage, it also meant that you could theoretically(and in practice) short the same certificate an unlimted number of times. This was a critical piece of the scam that allowed it to work, intended or otherwise.
Many companies, including Sunncomm have requested to be removed from DTCC but have been turned down by the very agency (SEC) that supposedly was created to protect shareholders. I can tell you from my personal conversations with SEC staff that they view the naked shorting issues with a decided level of arrogance and indifference. SEC staff has made comments to me such as "Most of these small companies deserve to be shorted" as if they are in a position to pass moral relevance on the companies that "deserve" to make it and those that deserve to go under. It is a sad day when the cops are protecting the crooks and telling the victims that they "deserve" it.
Up to now the free market has been a pretty good mechanism to determine actual worth of a company. What naked shorting does is to upset those normal mechanisms and rather than assist in capital formation, the purpose of our markets to begin with, it in fact is nothing short of (pun) the destruction of capital.
When companies succeed they create jobs, products and capital that resonate throughout the economy in numerous ways. When companies fail, jobs are lost, products dissapear and capital is lost... the only winners are those who helped destroy the company and profited from it. Make no mistake, by artifically depressing the share price of small companies, Hedge funds have driven hundreds if not thousands of companies into a death spiral where they are forced into a dilutionary spiral of issuing more and more shares and selling them at lower and lower prices until they fail.
The SEC presently enforces (or doesn't) naked shorting by keeping tabs on the number of days of failure to cover... naked shorts are supposed to settle (cover) within three days and when they fail to do so, they pop up on the SEC radar screen when the numbers get big enough. The Hedge funds of course know this and so they have devised a strategy referred to as "desking" to mask their operations. This simply amounts to them creating another market maker entity either in Canada or offshore and then trading the shares back and forth between themselves to "refresh" the shares so that the Days Failure to Deliver numbers never get too extreme. This is also another reason the SEC ignores a problem it doesn't know/realize exists.
Hopefully this further explains the problem, which honestly is a bit complicated for people to easily grasp at first. For the record, I have no problem with normal shorting and I see that as normal mechanism to allow the markets to correct for excesses and or hype. It is also my opinion that we have been driven to these levels so that some seriously exposed groups can cover some of their shares while there is still a profit.
Millions
By John William Tuohy
--------------------------------------------------------------------------------
John William Tuohy is a writer who lives in Washingon, D.C.
--------------------------------------------------------------------------------
The fall out from the New York mob's failed attempt to manipulate the New York Stock Exchange promises to go far and wide. Prosecutors charge that DMN Capital Investments had mob ties and stole from thousands of investors across the country. The latest figure on the amount stolen is thought to be at least $50 million, possibly more.
Prosecutors have daubed DMN Capital Investments, a financial services company, as "a real fraud magnet."
The federal indictment filed June 14 charged 21 people with stock manipulation and fraud, bolstered by violence and threats. The charges involve 120 defendants, including eleven alleged Mafia capos and soldiers, 57 stockbrokers, a hedge fund manager, two top executives of the Ranch 1 grilled chicken fast-food chain and a former treasurer of the New York City detectives union.
Prosecutors have also linked the case to the five Mafia families operating in New York. More than 600 FBI agents carried out the arrests from New York to California. More are expected.
Criminal charges were also filed against William Stephens, a member of the board of NHancement Technologies. Stephens, a chief investment strategist of Husic Capital Management, a San Francisco-based investment adviser, was appointed to the NHancemenet board on March 1, 2000. He allegedly agreed to manage up to $300 million in union pension funds knowing that a portion would be invested in corrupt deals aimed at funding kickbacks to certain defendants and corrupt union officials.
Also caught up in the mass arrest was a retired New York Police Department detective once hailed as a hero. Former Detective Stephen Gardell once helped to arrest a mentally unstable man who mailed a deadly booby-trapped book to his own mother.
Now Gardell is accused of being a Mob lackey who leaked information to the hoods and arranged for them to get permits to carry pistols and provided them with Police Department parking permits.
According to the indictment, Gardell "corruptly leaked confidential information, concerning federal investigations of the mob to two accused mob associates, James Labate of the Gambino crime family and Salvatore Piazza of the Bonanno crime family, from early 1997 through April."
Gardell also allegedly used his position to persuade authorities to drop state assault charges against Michael Grecco, a reputed Colombo associate and obtained pistol-carry permits and NYPD parking permits for Labate and Piazza. In exchange for his help, the hoods allegedly built an $8,000 swimming pool at Gardell's Long Island home, comped him at casinos and gave his wife a fur coat.
But what brought Gardell to the attention of federal investigators was that he allegedly used his position as treasurer of the Detectives Endowment Association to invest the union's pension fund in mob stock schemes.
Other alleged Capos caught up in the scam include Bonanno crime family capo Robert "Little Bobby" Lino, alleged Genovese associate Bobby Gallo, reputed Colombo associate Michael Grecco, alleged Luchese associate John Black, Jr. and reputed Colombo crime family soldier Anthony Stropoli. Two of those arrested, purported Colombo associates Frankie Persico and Vincent Langella, were also registered stockbrokers.
Prosecutors said two other alleged Colombo associates were caught up in the raid, Ranch 1 CEO Sebastian Rametta and Vice Chairman James Chickara. Both were arrested for their roles in the scam and are accused of secretly kicking back profits to the mob.
In 1999, Ranch 1, which specializes in grilled chicken sandwiches, was dubbed "Best Fast Food in New York" by New York magazine. The chain has 46 restaurants in 11 states.
Ranch 1's original investors included Brand Equities Investors, a prestigious venture fund, along with John Sculley, a former Apple Computers CEO, and David Sculley, former president of Heinz USA.
"The greed and reach of this racketeering enterprise knew no bounds," said Manhattan US Attorney Mary Jo White.
Barry Mawn, head of the New York FBI office, said the mobsters involved in the scheme used the same violence that once helped the mob control the construction industry in New York. "It shows us again that organized crime has sought to regroup and tried to infiltrate the markets," he said. "When the mob enters the new world of white-collar crime, it brings along its traditional tools of the trade."
Tens of thousands of potential investors are apparently guided by the same impulse as the mob brokers trying to fleece them . . . an easy money, no-risk deal. What amazes investigators is that these otherwise intelligent and well informed investors are willing to write checks for thousands of dollars to a complete stranger they've met over the telephone.
The answer, of course, is greed and gullibility. "These are people," one federal law enforcement agent told AMERICAN MAFIA.COM, "who hear what they want to hear and see what they want to see. Greed has clouded their senses. They think everybody but them is making a killing on the market and they want in on it, so they write checks. I understand the motive to make money, sure, but, really, it's simple, if you get a phone call from a broker you don't know, from a company you never heard of, and he's touting a stock that no one knows . . . hang up, and quickly,"
For mob historians, the recent happening in New York is an old story, played out hundreds of times in the past since the early 1920s. As an example in 1923, New York's leading narcotics dealer, Arnold Rothstein joined with Chicago's Al Capone to finance a massive stock fraud in London, England. The mastermind was John Factor, AKA "Jake the Barber" and half brother to Hollywood's leading make-up expert, Max Factor.
Working under various names, in 1923 and again in 1926, Factor had organized small but lucrative stock scams in England. In 1927, he approached Rothstein and Capone for funding for a third and even larger swindles.
Working with the mob's capital, Factor touted several stocks belonging to fictional African mining corporations. An expert salesman, Factor's scam took in tens of thousands of investors, including the head of Scotland Yard and several members of the royal family. When he pulled the plug on the operation, Factor's gross profit was $8 million pounds, or just under $100 million dollars by today's standards. Fifty-million more than the scam in New York.
The plan is essentially the same today as it was eighty years ago. What makes the scam so much easier today are the remarkable overnight rise of once obscure Internet companies which has left millions of investors with little experience to come believe that companies with no previous record can make a fortune overnight. Skilled salesmen call between 500 to 800 potential investors a day, which produces perhaps 50 leads which might develop into as many as 5 sales.
In the New York case, prosecutors charged that the hoods recruited stockbrokers to inflate the value of companies in which they had secret ownership interest. The brokers hired promoters who hyped the so-called micro-caps on Internet stock trading sites. The mob members or their associates then collected kickbacks from the brokers over dinner at Joseph's Ristorante near Wall St. or over breakfast at the upscale St. Regis hotel in midtown.
Brokers who didn't kick back enough money to their mob overseers were beaten bloody, and in one case, a gangster allegedly conspired to kill a suspected informer.
The broker will rope in those five prospects, bit by bit, by selling a stock that the mob-owned firm completely controls. A stock that is guaranteed to earn the buyer a small, but steady profit.
After several weeks or even several months, depending upon the complexity of the scam, the broker calls back with another tip on a hot stock, which, unknown to the buyer, is also controlled by the mob's front company. This stock also earns the buyer a healthy profit.
If the buyer becomes suspicious, the broker explains that his client base is working with the individual investor, that client loyalty and smaller profits over a series of decades is the bedrock of their firm's credo.
The final step is to sell the buyer a worthless stock whose value has been inflated over several months by the broker and the mob. In the New York case, the brokers allegedly sold stock in shell companies that claimed to do everything from produce software to operate amusement parks to recycle shingles. One firm claimed to run day-care centers from an office on Avenue U in Brooklyn. That firm had $2,000 in its bank accounts but was able to sell enough stock to claim assets of $90 million before collapsing.
The buyer purchases tens of thousands of dollars worth of the useless stock. When the bottom falls out, the broker usually disappears, but not always since "Boiler room cases" tend to be hard to prosecute as it's often virtually impossible to prove fraud and because the true value of a stock, any stock, is arbitrary, at best.
Most of these cases can only be brought to court when prosecutors can prove fraud, when they have evidence that the selling broker knew what he was selling was worthless, something that's almost impossible to prove.
Prosecutors may have caught a break in the New York case since, over the past year, undercover FBI agents made stock buys and secretly gained an inside informant, a Bonnano associate. The agency also bugged the Hanover Square office of DMN for months.
Mr. Tuohy can be reached at MobStudy@aol.com
Investing 101 - Jun 11, 2004
- Is Dateline Losing Credibility Over StockGate Story Delays?
by Mark Faulk
It's been called the biggest financial scandal in the history of the world, with incurred losses estimated by some experts at well over $1 trillion dollars. It's a scandal that involves over 1,200 offshore hedge funds, over 150 US brokers, and has already bankrupted over 7,000 US companies in the past six years. According to many of the lawsuits filed to date, the crooks include terrorist groups and organized crime syndicates. Sources say that this scandal, which involves an intricate system of selling electronic counterfeit shares of stock in an effort to destroy the market value of small publically traded companies by utilizing a method known as "naked short selling", will eventually implicate almost every major broker in America, all of the governing bodies that oversee trading, and will extend into Canada and Europe. Amazingly, the SEC has admitted it had been "observing" naked short selling for six years, but up to now has done absolutely nothing to put a halt to it.
As The Faulking Truth has written about and followed this story over the past few months, one nagging question has remained: where is the national press coverage on this issue? Aside from a few recent articles in national newspapers, which have barely scratched the surface of this worldwide scandal, why has this been largely ignored by the mainstream media? Why hasn't one of the major network investigative shows put together an in depth expose' to blow this scandal wide open?
Incredibly, we have confirmed that Dateline has done that very thing. According to sources involved with the story, NBC's flagship news program has filmed over 100 hours of explosive footage on the "StockGate" scandal, which includes evidence that will "blow the roof off this scandal". There is only one problem. Originally scheduled to air in January or early February, they have postponed the show repeatedly, and now plan to air it "sometime in August". Even more incredibly, we have learned that they have signed an exclusivity contract with the two law firms that have filed the class action lawsuits that deal with the naked shorting scandal, in effect suppressing the public release of even more information about the scandal.
After publically speaking out about the scandal early on, attorneys John O'Quinn (of the Houston law firm of O’Quinn, Laminack and Pirtle), and Wes Christian (of Christian, Smith, Wukoson and Jewell) have been uncharacteristically quiet for the past few months. That's because Dateline has kept a muzzle on the two attorneys until the "StockGate" segment airs. However, lead attorney Wes Christian has filmed over twenty hours of exclusive interviews for the Dateline segment. Although exclusivity contracts involving the media aren't unusual, this situation is a bit different. This scandal is ongoing, and in fact seems to be accelerating in the past couple of months, even after new NASD regulations supposedly aimed at putting a halt to the corruption went into affect on April 1st.
The shelving of this important expose' by Dateline NBC raises some very important moral and ethical issues, in this writer's opinion. If in fact they have collected information that would help to put a stop to the massive criminal activity that is robbing American companies and their stockholders of literally hundreds of millions of dollars every day, aren't they at the very least morally obligated to release that information in a timely fashion? And since they have postponed the show for the last four months, shouldn't they release attorneys O'Quinn and Christian from their exclusivity contract, so that they can disseminate information that might be vital in helping the victimized companies, their shareholders, and the various governing bodies put to end this ongoing corruption? And if in fact the money being stolen from honest Americans is being used to fund terrorism and organized crime, then shouldn't Dateline immediately make public any information that could help put an end to those insidious activities? Dateline declined to respond to repeated emails inquiries for this article.
The question remains: why has Dateline been so slow to expose this monumental ongoing scandal, even as the corruption continues? There is some debate on that point. Some sources believe that they have "caved in to political pressure from the Right, who see this as a political time bomb for the Bush Administration", while C. Austin Burrell, who has provided litigation and research support to O'Quinn and Christian in their lawsuits, believes that Dateline has it's own political and journalistic agenda, and plans to air the show in August to coincide with the Democratic Convention. The scheduled August air date concerns Burrell as well. "August is a dead month, with half of all people on vacation, and the other half not paying attention. It is not an appropriate month to release a piece with such a business focus."
Still others close to the story say it is the complexity and constantly evolving nature of the story that makes it difficult to edit and air. "Complex and constantly evolving" is an understatement. However, this writer for The Faulking Truth has managed to gather pertinent information and write relevant articles on the topic, and in all honesty, I'm just a guy with a computer and a cell phone who does this in his spare time. Dateline, on the other hand, is, well, Dateline. According to Burrell, "This is not a difficult story, and it needs to get out there now. Dateline has made an important time commitment to this topic, and we simply want to see the payoff for the victims."
Regardless of the reason, the time for full disclosure is now. Dateline NBC owes it to the American people to release what information they have immediately, and if necessary, air a followup segment as the story continues to develop. As the Associated Press and rival CBS show 60 Minutes recently pointed out, "In one month, NBC's signature newsmagazine devoted some five hours of programming to the season finale of 'The Apprentice' and the series finales of 'Friends' and 'Frasier.' " If The Donald, Ross, Rachel, and Fraiser rate five hours of coverage in one month on what is supposed to be a major news show "bringing viewers compelling investigative reports", then surely the "biggest financial scandal in the history of the world" is worth a segment or two.
What dilution? They recently issued another 50 million shares... is this what you are referring to? Some have called the issuance of the QTIG shares dilution, this is completely wrong and untrue. I'm not certain if they have done this out of shear ignorance and stupidity or if there are other motives involved, but it remains a fact that receiving a stock dividend is NOT dilutive to the existing shares in any way. Anyone who says otherwise is dead wrong.
Now that the revenue ramp has begun they will no longer be in need of issuing shares to rasie funds and therefore there should be no further dilution.
There were only 1,000 Hedge funds in 1990... now there are nearly 8,000. Hedge funds remain unregulated entities in a highly regulated market. It is a well known fact that organized crime has entered the market and is present in some of the Hedge funds.
The SEC's mandate is to protect small investors. It is a tenet of the markets that they are a fair and even play ground and indeed if that view is ever significantly tarnished, then investors will eventually shun Wall Street.
It is also true that naked shorting both exists and is illeagal at least in the way it is presently practiced where the seller never covers his naked short. The reason this is so devastating is simple
1) This is effectively the same as the company printing shares, thereby adding up to massive dilution (which lowers the price)
2) For small companies with no revenues that must sell shares to fund operations, this means they must sell much more stock at depressed levels to continue to function
3) It allows the Hedge funds to have nearly unlimited selling power to swap any buying surge, effectively killing it and protecting their own naked position so that they are never forced to cover their short at higher prices.
I have several sources in NYC that are well placed... they were able to check with 3 Hedge funds there with connections they have and they uncovered nearly 50 million shares naked on Sunncomm. This check was made nearly 9 months ago and I had to call in several favors to get it. Obviously there are a lot more than 3 Hedge funds involved with this.
Any article that writes about naked shorting taking the tack that "it's not all that bad" is simply propaganda written by people on the Hedge fund dole. The fact that naked shorting exists is well documented, the fact that the Hedge funds have media outlets, which they use to publish articles about companies they are shorting and raising "questions" about those companies to assist in driving down prices, is also well known... try reading Herb Greenberg sometime from TheStreet.com. He works as a shill for a very large Hedge fund run by John Rocker.
If you have ever owned a company that Herb "investigates" then you know what it feels like to be gang raped by the shorts. I use quotes around the word investigates because Herb doesn't do any such thing, he merely writes things that suggest there may be problems, insinuates there are issues and asks damning questions without making any concrete statments so that he can never be really held responsible for the carnage that ensues... the worst part to me is that he does this all in the guise of being the modern day Robin Hood protecting small investors and riding his high horse as though he is some sort of noble knight fighting evil companies. He is instead just a stooge of the Hedge funds.
I have spoken to the SEC on numerous occassions as well as the NASD and I can tell you the attitude there remains that while they acknowledge there is a problem here, they're not too sure how big it really is. They are not spending any real time or effort investigating any of this and I believe it is because ultimately this scandal is so widespread and amounts to so many Trillions of dollars that no one can figure out how to extricate the situation without major financial pain to the large institutions and so it is they who are being protected here and not the small investor.
Treating Hedge funds as if they are the boogey man and don't exist is to ignore one of the major forces in the market place. Indeed due to their unregulated stature they remain aloof and above the law. If this outrage upsets you, then please click on the link below and become a part of the solution by making your voice heard. Perhaps if there is enough hue & cry something may eventually be done... in Politics the squeaky wheel always gets the grease.
http://www.investigatethesec.com
Well... my agenda is clear. I hope to profit on a very large multi-million share position. I've done my homework. I am very open to any news/info that could effect my holdings, particularly negative news.
I don't mind the short/negative view as it does lend balance and sometimes works to help you see a real issue/problem before you lose money... but that is the unimaginably rare case. Mostly I just get lying, exaggeration, purposeful twisting of facts, name calling and generally vile behaviour from the shorts.
As they seldom present themselves in a respectful manner, I have no respect for them in turn. On this board I see very little blind optimism, despite very good reason for it. What I have mostly witnessed to date is petulant complaining over timing on issues that will resolve themselves with a liberal dose of time.
That's ok... I get that some people have been with Sunncomm forever and are tired of waiting. IMO and my portfolio backs that up, Sunncomm is the rarity among pink sheet companies that will actually grow into something interesting. I love software companies like this... margins are obscene and it takes nearly nothing to ramp from hundreds to millions.
This stock has been heavily naked shorted by a group of very large hedge funds and I hardly put it past them to hire shills to post negative stuff on msg boards... this is pretty much common practice for them.