By JENNY ANDERSON
Published: December 8, 2007
What began with an undercover F.B.I. agent’s posing as a corrupt hedge fund manager led to the indictments of six people yesterday on charges of fraud in the shadowy world of penny stocks, federal prosecutors said.

A year-long investigation code-named Missed Information uncovered five separate stock schemes, according to the United States attorney’s office for the Southern District of Florida.

In each case, the undercover agent posed as a hedge fund manager at Fillmore Capital, a fake firm created by the F.B.I. in Palm Beach.

The unidentified agent got word out to the penny stock community that he was willing to buy stocks in struggling companies in return for bribes. Prosecutors said he accepted kickbacks from company insiders and stock promoters for buying stocks, some through an online brokerage account, to pump up prices.

The case was brought in conjunction with the Securities and Exchange Commission, which brought civil charges against seven defendants; six defendants were indicted by the United States attorney on criminal charges in the case, the S.E.C. said.

The charges exposed a murky underworld of penny stocks, a longtime staple of boiler rooms running illegal pump-and-dump schemes. Such shares trade over the counter, rather than on an exchange.

In each of the cases, company insiders or stock promoters tried to build support for their share prices by making a deal with the undercover hedge fund manager to buy large stakes of shares. In return, the insiders would pay the hedge fund manager a kickback, usually 25 to 35 percent of the total purchase price, the prosecutors said.

In each instance, the agent insisted he had to hide the transaction from his hedge fund clients — because of a “fiduciary obligation” to them, leading the parties to execute a fake consulting agreement with a fake company, Global Connect Services. “This case illustrates the commission’s ability to work together with criminal authorities in creative ways to uncover fraudulent schemes and to protect our markets,” said Linda Chatman Thomsen, director of the S.E.C.’s division of enforcement.

The five suspected penny-stock schemes were remarkably similar. In mid-April, prosecutors say, Virgil G. Williams, the 59-year-old chief executive of Asgard Holdings, a Nevada-based investment firm, contacted the agent posing as a hedge fund manager and asked him to buy Asgard Holdings shares.

Mr. Williams agreed to pay the agent 25 percent of the price of the transaction as a kickback, the prosecutors said. The next day, Mr. Williams contacted his broker to make sure that the broker accepted the appropriate bid in the marketplace, the complaint says.

The agent told Mr. Williams he had a fiduciary duty to his hedge fund requiring that he hide the kickback. As a result, the complaint charges, the agent and Mr. Williams agreed to set up a fake consulting agreement to hide the bribe.

But then the operation almost went awry. On April 24, the agent and the stock owner talked about the transaction and agreed to the terms, but the next day, the seller said he was uncomfortable with the deal and did not want to do anything illegal. Two days later, Mr. Williams rescinded the offer because he thought he was part of a sting operation, the complaint says.

In late July, Mr. Williams contacted the agent again to do the deal. In August, the agent used an E-Trade account to buy two million shares of Asgard Holdings at $0.015 a share. In the preceding month, only 172,00 shares had been traded.

A few days later, a Florida corporation believed to be controlled by Mr. Williams wired $7,500 to the agent’s fake consulting firm.

In a separate scheme, according to the complaint, the agent entered into a deal with William L. Haynes, a 42-year-old Palm City, Fla., resident and stock promoter, to have the hedge fund buy shares in Environmental Service, a home environmental inspection company.

The agent bought one million shares of the company. Prosecutors said he had agreed to receive a kickback of 35 percent, which included a 2.5 percent kickback to Efrim Gjonbalaj, a colleague of Mr. Haynes who introduced the two.

After receiving a $532.68 payment, Mr. Gjonbalaj returned the money to the agent with a letter saying he did not recall participating in any dealing with the agent, prosecutors said.

Many of the schemes involved individuals with past regulatory infractions. Mr. Haynes was enjoined by the S.E.C. in 2001 in a fraud case associated with a $7 million stock offering and barred from associating with a broker- dealer. A defendant named in the civil suit, Vincent Cammarata, is on supervised release after serving time in federal prison on drug-related charges.

Other criminal defendants include Ron Williams, 57, of Miami; Mark Foglia, 52, of Hypoluxo, Fla., and Rex Morden, 57, of Henderson, Nev.

If convicted, Mr. Haynes faces a fine of $5 million and 25 years in jail while the others face 20 years in jail and potential fines of $250,000 to $500,000.

The other civil defendant is Sean Sheehan.

Lawyers for the defendants could not be reached for comment.

6 Arrested Over Plots to Pump Up Share Prices


By JENNY ANDERSON
Published: December 8, 2007
What began with an undercover F.B.I. agent’s posing as a corrupt hedge fund manager led to the indictments of six people yesterday on charges of fraud in the shadowy world of penny stocks, federal prosecutors said.

A year-long investigation code-named Missed Information uncovered five separate stock schemes, according to the United States attorney’s office for the Southern District of Florida.

In each case, the undercover agent posed as a hedge fund manager at Fillmore Capital, a fake firm created by the F.B.I. in Palm Beach.

The unidentified agent got word out to the penny stock community that he was willing to buy stocks in struggling companies in return for bribes. Prosecutors said he accepted kickbacks from company insiders and stock promoters for buying stocks, some through an online brokerage account, to pump up prices.

The case was brought in conjunction with the Securities and Exchange Commission, which brought civil charges against seven defendants; six defendants were indicted by the United States attorney on criminal charges in the case, the S.E.C. said.

The charges exposed a murky underworld of penny stocks, a longtime staple of boiler rooms running illegal pump-and-dump schemes. Such shares trade over the counter, rather than on an exchange.

In each of the cases, company insiders or stock promoters tried to build support for their share prices by making a deal with the undercover hedge fund manager to buy large stakes of shares. In return, the insiders would pay the hedge fund manager a kickback, usually 25 to 35 percent of the total purchase price, the prosecutors said.

In each instance, the agent insisted he had to hide the transaction from his hedge fund clients — because of a “fiduciary obligation” to them, leading the parties to execute a fake consulting agreement with a fake company, Global Connect Services. “This case illustrates the commission’s ability to work together with criminal authorities in creative ways to uncover fraudulent schemes and to protect our markets,” said Linda Chatman Thomsen, director of the S.E.C.’s division of enforcement.

The five suspected penny-stock schemes were remarkably similar. In mid-April, prosecutors say, Virgil G. Williams, the 59-year-old chief executive of Asgard Holdings, a Nevada-based investment firm, contacted the agent posing as a hedge fund manager and asked him to buy Asgard Holdings shares.

Mr. Williams agreed to pay the agent 25 percent of the price of the transaction as a kickback, the prosecutors said. The next day, Mr. Williams contacted his broker to make sure that the broker accepted the appropriate bid in the marketplace, the complaint says.

The agent told Mr. Williams he had a fiduciary duty to his hedge fund requiring that he hide the kickback. As a result, the complaint charges, the agent and Mr. Williams agreed to set up a fake consulting agreement to hide the bribe.

But then the operation almost went awry. On April 24, the agent and the stock owner talked about the transaction and agreed to the terms, but the next day, the seller said he was uncomfortable with the deal and did not want to do anything illegal. Two days later, Mr. Williams rescinded the offer because he thought he was part of a sting operation, the complaint says.

In late July, Mr. Williams contacted the agent again to do the deal. In August, the agent used an E-Trade account to buy two million shares of Asgard Holdings at $0.015 a share. In the preceding month, only 172,00 shares had been traded.

A few days later, a Florida corporation believed to be controlled by Mr. Williams wired $7,500 to the agent’s fake consulting firm.

In a separate scheme, according to the complaint, the agent entered into a deal with William L. Haynes, a 42-year-old Palm City, Fla., resident and stock promoter, to have the hedge fund buy shares in Environmental Service, a home environmental inspection company.

The agent bought one million shares of the company. Prosecutors said he had agreed to receive a kickback of 35 percent, which included a 2.5 percent kickback to Efrim Gjonbalaj, a colleague of Mr. Haynes who introduced the two.

After receiving a $532.68 payment, Mr. Gjonbalaj returned the money to the agent with a letter saying he did not recall participating in any dealing with the agent, prosecutors said.

Many of the schemes involved individuals with past regulatory infractions. Mr. Haynes was enjoined by the S.E.C. in 2001 in a fraud case associated with a $7 million stock offering and barred from associating with a broker- dealer. A defendant named in the civil suit, Vincent Cammarata, is on supervised release after serving time in federal prison on drug-related charges.

Other criminal defendants include Ron Williams, 57, of Miami; Mark Foglia, 52, of Hypoluxo, Fla., and Rex Morden, 57, of Henderson, Nev.

If convicted, Mr. Haynes faces a fine of $5 million and 25 years in jail while the others face 20 years in jail and potential fines of $250,000 to $500,000.

The other civil defendant is Sean Sheehan.

Lawyers for the defendants could not be reached for comment.

PR this morning:
http://biz.yahoo.com/iw/071204/0335519.html

Anyone see the PR this morning
http://biz.yahoo.com/iw/071130/0334096.html

This is a classic case of crgo being squeezed financially. I believe someone (money lenders) is trying to force it over the edge so that they can take over a well run company for next to nothing. It is all because the ceo refuses to play the P&D game. Just my opinion. I have watched this long enough to know this for certain.

Good luck to all.

Harr, you said it all. The man is the company except he doesn't have a company, not even a proper email account within a proper company domain (which one can register and maintain for a pocket change of money).

No. I don't think a gmail account is a repectable account for a legt company. gmail = hotmail. It's an account people use to evade being traced. Simple as that.

Has anyone seen a public company anywhere that would ask investors to send inquiries to a "gmail.com" (..., please e-mail contact information to plkcinvestor@gmail.com). gmail is the same as hotmail? What kind of people would use a hotmail account to communicate with investors?

Good luck with your pumping. But, people are smarter than you think.

No. I think you got it wrong. Be very careful here and watch out for those same drumb beat that got many lost their retirement money before. This is a sucker play engineered by a masterful individual who knows how to steal money from investors. Now, the B has sucked enough moneny, he is unloading this worthless shell to let someone else to suck money out of the unsuspecting investors.

Also, a 1:150 reverse merger will take this stock to zip for people who have bought or are buying the stock now. If you want to get lucky, wait till this merger is complete for a quick flip.

Good luck. By the way, the same pumpers who have helped the B to suck money from the old investors are still around here. They are ready to help the new master to suck money from the new investors.

Bain is not incompetent. He is highly competent, only in a different way. He knows how to steal from investors. He knows what he is doing.

It is obvous you have not been here long enough. The biggest thief is Bains himself. Period.

I meant your signature pic only. lol.

Very fun.

Good work!

Watch the shorties to start covering ...

Up-Down, thanks for the alert. It looks good. The wait is over. Now, let's rock-n-roll.

fish

Something is going for sure. I think we'll knwo soon. It's the lenders' positioning for larger shares of the pie.

Is there not an end in sight for this pain? But then, is that not how the money lenders squeeze hard-earned money from all who need their mercy.

The ancient people made their fortune with their lending and many are doing the same in this day. Look no further than the mortgage market where money is all what the lenders have kept their gaze over. Forget about your house, think of their money.

So, we common people continue to suffer, to bleed to satisfy the greed of a few.

Now, peace to all.

In my view, the game is over regardless of the outcome(s) of the trial(s).

To fully appreciate the implication of the indictment Cyberkey (as an entity) received, one only needs to read what happened to Arthur Anderson. The following is an excerpt from Wikipedia.org.
==============================================

On June 15, 2002, Andersen was convicted of obstruction of justice for shredding documents related to its audit of Enron, resulting in the Enron scandal. Nancy Temple (Andersen Legal Dept.) and David Duncan (Lead Partner for the Enron account) were cited as the responsible managers in this scandal as they had given the order to shred relevant documents. Since the U.S. Securities and Exchange Commission does not allow convicted felons to audit public companies, the firm agreed to surrender its licenses and its right to practice before the SEC on August 31, 2002. This effectively ended the company's operations.

The Andersen indictment also put a spotlight on its faulty audits of other companies, most notably Sunbeam and WorldCom. The subsequent bankruptcy of WorldCom, which quickly surpassed Enron as the biggest bankruptcy in history, then led to a domino effect of accounting and other corporate scandals that continues to tarnish American business practices.

On May 31, 2005, the Supreme Court of the United States unanimously overturned Andersen's conviction due to flaws in the jury instructions. In the court's view, the instructions allowed the jury to convict Andersen without proving that the firm knew it had broken the law or that there had been a link to any official proceeding that prohibited the destruction of documents. The opinion was also highly skeptical of the government's definition of "corrupt persuasion" — persuasion with an improper purpose even without knowing an act is unlawful.

Despite this ruling, it is highly unlikely Andersen will ever return as a viable business. The firm lost nearly all of its clients when it was indicted, and there are over 100 civil suits pending against the firm related to its audits of Enron and other companies. Before voluntarily surrendering its right to practice before the SEC, it had many of its state licenses revoked. It began winding down its American operations after the indictment. From a high of 28,000 employees in the US and 85,000 worldwide, the firm is now down to around 200 based primarily in Chicago. Most of their attention is on handling the lawsuits and presiding over the orderly dissolution of the company. Arthur Andersen, LLP has not been formally dissolved nor has it declared bankruptcy. Ownership of the partnership has been ceded to four limited liability corporations named Omega Management I through IV.

Jking - thanks. I think that has satisfied my assessment of the situation we are in.

It's unfortunate how we got here. I thought about offering a Agatha Christie like summary here, but have decided against it. I think anyone who has time to think it over will get the same picture.

It has become clearer to me this is not about cheating investors out of their money.

I hope you are right. I really do. The key at this point to me is whether it is still on GSA. Without it, the game is over.

And, in the end, what has happened here is more of a company that has been engaged in "deceptive marketing campaign" rather than "deceiving investors for ill gained money". At least, that is based on what has been put out in the public. I know what some have been saying, but to think a company is doing all what it is accused of and to steal just $3.5 millions to fatten JP's pocket is more than being naive.

However, I do wonder if CYKS is still on the GSA list at this point. If it is and can continue, then the sacrifices may be worth something. If not, then ...

The company is showing only three products on its website. I am not sure if I would call it a good sign. It looks obvious that the relationship with SQUM is over. The question is "can the company continue selling the three products? And, for how long?"

We may be nearing "turning light off". I really hope I am wrong on this. But, it doesn't look encouraging at this point.

The indictment (of the company as an entity) will discourage any vendor to continue doing business with the company, in my view. At least, new vendors will stay away from it.

I don't know the whole story behind this saga as I stated all along. But one thing is certain: I think those who wish ill of this company have prevailed or about to.

Sad, indeed.

"And how did you get the figure of 9.5 million shares? Where did that figure come from? At best, JP got 50 to 60 cents on the dollar on average selling stock. That's pretty standard, especially when stock is your only product. You take what you can get for it. After all, you can always print more. It's just paper."

The indictment says "millions of ... personal shares were sold for over $1 million dollars". I wish it would be more specific so it is safe to assume conservatively as:

9.5 million shares (since double digits will be called tens of millions). We don't know how much "over $1 million" is, so safely assume only $1 million.

Technically, I guess we can assume 9.9 millions for $1.9 million dollars.

However you assume it, the shares would have to be sold at much higher price than 4.4 cents

Some questions about the indictment:

1. JP's third party appears to be Kikomac. The indictment says JP said there were five wire transfers between Cyberkey and Kikomac. I understand the government said DHS has no business relationship with Kikomac.
---- Is there evidence such transfers occurred? I didn't see this being mentioned in it (though the government stated 'no wire transfer related to DHS transaction from Kikomac')

2. Assuming there were five wire transfers between CKYS and Kikomac and if Kikomac didn't have business with DHS,
--- What are the money really for? and,
--- How much money they add up to?


3. The indictment stated JP issued 880 million shares directly or indirectly to entities and individuals.
--- Were all 880 million issued to people other than himself? Does it mean the total OS is 880 million + 400 million (his personal shares) = 1,2 billion?


4. How did he sell millions of his personal shares for $1 million dollars? (my note here: assuming he sold 9.5 million shares for $1 million dollars, he would have sold the shares for over 10 cents. In the meantime, the highest pps had reached 4.4 cents. If he indeed sold the shares for 10 cents, did he sell them in private transactions since pps never went to 10 cents).

I will do the same. Beer the night away....

I have no idea what JP did or didn't do. I am just speculating how the case is going to proceed based on today's ruling, purely for the purpose of entertainment.

Litigation is all about "hair splitting" whether you like it or not. That's what a lawyer does best. So, relax and grab a beer and start the play.

Although it is possible to establish JP stated receiving $18 million dollars that turned out nonexistent based on the prs, you have yet to establish

--- he did that for the purpose to deceive and inflict damage on the shareholders which includes himself.

The reasoning behind this is clear, the same damage, if any, incurred on you (a small-stakeholder in comparison), applies to him also, therefore, technically, he is as much of a victim as you if your assertion is allowed to stand. Thus, the court will be asking the prosecution to demonstrate the "intent to deceive and inflict damage" upon shareholders (which includes himself and in a large extent more so than any as he owns 400 million shares).

Your argument cannot and will not prevail in the court proceeding. I would like to be sympathetic, but I can't because you have not demonstrated what the Supreme Court asks for.

Court does not rule emotionally, it rules on hard evidence.

--- Which statement/segment of the video reveals "intent"?
--- How are those segment(s) the video "directly" linked to your account?

Think with reason, not with emotion, as emotion will eat you away.

I got you confused with another daily poster. There have been so many, I lost track of who is who especially when most of them were saying the same thing every day (not you of course). lol.

Furthermore, in my view, the government will need to establish:
1. intent;
2. to deceive;
3. the investors; and
4. the combination of the three above resulted in "damage" that is a direct result of those

If you think carefully, I see major huddles ahead for the feds particularly, if the defense remains silent. How do you get someone to say "I, JP, plotted the following xyz in total secret, without my investors supecting, so that I can inflict maximum damage on them."?

I didn't see that either. I misunderstood your question. Maybem, Divine will offer a link of his own.

See my post earlier.

Actually, it may just mean, you will not get a penny one way or another, through litigation. In my view, today's supreme court ruling will compel the government to show "intent to deceive" in order for it prevail in court, which is almost impossible to do. Unless the government can establish the "intent", there will be no case. The current charge is based on "false statements", which is a long way from establishing the "intent".

"Intent" is something internal to your head. Unless you confess that you "intend" do something, it is very hard for others to know whether the action you take is intentionally or not. And, you can't establish one's intent based on he said or she said either.

Time to end the day-dreaming. Period.

Now, everyone had time to digest the Supreme Court ruling today. Anyone is still thinking about filing a law suit against the company?

Take a guess why the Feds has not indicted CKYS yet? What is the chance the case will be tossed out altogether based on today's ruling?

Just to provoke some thinking here?

http://www.nytimes.com/aponline/business/ap-scotus.html?_r=1&hp&oref=slogin

Justices Tighten Rules on Shareholder Suits

By THE ASSOCIATED PRESS
Published: June 21, 2007
WASHINGTON (AP) -- Investors lost another round at the Supreme Court Thursday when the justices imposed a strict standard for shareholder lawsuits seeking to recover losses from companies accused of fraudulent business practices.

The 8-1 opinion written by Justice Ruth Bader Ginsburg will make it harder for groups of investors to file lawsuits alleging they lost money because company officials violated federal securities laws.

.........

Plane,

Do you always feel such a strong and burning desire to pick fights with everyone around you?

It seems your comment about my comment is completely out of line.

I am aware you have strong opinions about this stock and this company. But, that remains to be just your opinions. Nothing more. Everyone is entitled to his/her opinion. You may not like what others say, but the society does expect a mature individual to respect others even though he/she doesn't neccessarily agree with them.

It's time to grow up, my friend.

-- fish

Very well said, knowlesmsncom.

Plane - I must give you credit for making this very sincere suggestion.

If anyone takes a quick glance at this board, he/she will see an overwhelming number of "negative" posts about this company than the "positive" one. For people who constantly post the "negative" to demonize the very few who voice a glimpse of hope, in my view, is extremely unbalanced. If you can or would like to voice the negative, you should let others to say to the contrary and vice versa. A discussion that is one sided is more than just boring, it is meaningless. This explains why this board had several days of complete silence.

If people would like to enjoy some civil conversations here and make this board a place to EXCHANGE views, or facts if any. By the way, for those who constantly proclaim posting facts here, I would like to remind them, this is a stock message board where everyone has a personal agenda. NOTHING HERE CAN AND SHOULD BE TAKEN AS FACTUAL or you can loose shirts every single day. EVERYONE IS HERE TO EXCHANGE VIEWS to varying degree influencing the views of others.

So, let's all enjoy the conversations and make this board useful.

Thanks, Tom. We owe you our gratitude for keeping us informed.

-- fish