All lenders do it but now the company has to be more transparent about it. Here are some of the companies that do it: Red Cliffs, LG, Magna, Bourncare, etc...just look at the SEC filings and you will see the usual names.
Sometimes there are people who have ill gotten money they need to launder so they loan it to a QB or Pinkie and it gets launder when they convert the shares and dump them. For instance, maybe there is a guy who has an illegal business and lots of cash...he gives this to the CEO of one of these companies in exchange for PAR shares. The not e will default no doubt about it. Already prearranged and then the guy dumps the shares on the due date and makes a killing. Sometimes they change the PAR shares at the last second before the dump. So instead of .001 they change it to .00001. Now you do the math and tell me how much money you make if you dump 500 million shares that you hold at .00001 at a price of trips3?
The legit toxic lenders however, call up the CEO and wine and dine them, write them a big check and then hire a promoter to pump the stock on the message boards and with bogus PR releases then it runs and they dump the shares into the run.
You can start a pink sheet company by buying a shell. Create some bogus product and make fluffy PR releases. Costs about 25-40K. Then you rack up 3-5 million dollars in accumulated debt that is mostly tax free because that money comes from the lenders who make a lot more back when they sell it to guys like you on the retail end. The company eventually ends up at trips1 and no bid then there will be a R/S and it rolls into another shell often carrying the same debt so as to avoid taxes.
