Just wow, what a scam this was, and WE were the bad guys that caused this disaster to tank according to some. LMAO after reading all this:
Liceaga admitted that he “slowly leaked” River North's NTEK shares into the market in order to stay between 20% and 30% of the stock's trading volume; he did not want to “kill” the stock by dumping all of River North's shares at once.
David Foley included some of the funds that he and Lisa Foley received from converting and selling NTEK stock to River North as operating income on NTEK's financial statements. This improperly inflated NTEK's income during the applicable periods by approximately $7.2 million. Both NTEK and NTGL needed, and relied upon, this funding generated by David Foley because the companies had little or no actual income.
Accordingly, the financial statements of NTEK and NTGL were false and misleading. Without the $7.2 million generated by David Foley from the sale of NTEK stock, NTEK would have reported losses of approximately $5.8 million between 2014 and 2016. In addition, the financial statements prepared by David Foley disclosed only $60,500 of the $495,000 in convertible promissory notes and debentures purportedly issued to David Foley or his assignees (including Lisa Foley, Royal Capital, and Galaxy Entertainment).
David Foley provided Jeff Foley with handwritten instructions to issue 15 million shares of NTEK stock to River North each week. Using forms created by David Foley, Jeff Foley prepared the documents necessary for River North to deposit the NTEK shares into its brokerage accounts and obtain legal opinions stating that the shares did not need to be registered with the SEC.
In 2013, acting at David Foley's direction, Jeff Foley opened a brokerage account in his own name at E-Trade. This account was funded by David Foley, and used by David Foley to manipulate NTEK's trading volume and stock price while he was selling NTEK stock to Liceaga and River North.
While David Foley was in prison, Lisa Foley helped him negotiate the sales of NTEK and NTGL stock to Liceaga and River North. Lisa Foley was a substantial factor and a necessary participant in these transactions. Between June 2015 and September 2016, Lisa participated in more than 40 stock sales to River North, and allowed Jeff Foley to place her electronic signature on the required SPAs, conversion notices, and non-affiliate shareholder representation letters.
At David Foley's direction, Lisa Foley asked River North for advance payments before the NTEK and NTGL shares were deposited with River North's brokerage firms, and River North paid advances before certain of the transactions. Lisa Foley used the proceeds of the sales of NTEK and NTGL stock to fund NTEK's and NTGL's payroll and bills, and to cover the Foleys' personal expenses, including the mortgage on their home and their son's private school tuition.
Through Royal Capital, David Foley directed a total of $25,000 to be paid to Blankenship for his “support” of NTEK and NTGL shares, pursuant to an agreement between Blankenship and David Foley. These payments were made by wire transfer between October and December 2016. Certain of these payments were handled personally by Lisa Foley.
In December 2013, David Foley and Blankenship agreed to artificially support the market price and volume of NTEK and NTGL stock during the time David Foley planned to sell stock to River North. David Foley offered to give Blankenship shares of NTEK stock under a purported consulting agreement with Royal Capital in exchange for Blankenship's promotional efforts and “secondary” trading support for NTEK and NTGL.
Blankenship owned a stock promotion company, named Big Investment Group LLC, through which he could promote NTEK stock. Beginning in January 2014, pursuant to his agreement with David Foley, Blankenship used Big Investment Group to promote NTEK on social media through Twitter and YouTube videos.
Around that same time, in early 2014, David Foley began trading NTEK stock in Jeff Foley's E-Trade account, as well as in David Foley's personal E-Trade account. Between January 15, 2014 and September 15, 2014, David Foley placed over 2,000 limit orders in the two accounts in order to purchase over 6.5 million shares of NTEK for a total cost of approximately $500,000 (a weighted average share price of $.0771 per share)
During this same time period, David Foley could have acquired the same number of shares of NTEK stock at substantially lower prices of either $0.0001 or $0.001 by converting a small portion of his remaining convertible promissory notes.
Instead, by purchasing shares in the open market, David Foley attempted to increase the prices at which he could sell shares to River North, and at which River North and Liceaga could sell all of their NTEK and NTGL shares. As part of this effort, on May 29, 2014 David Foley advised Liceaga and Chavez that “I spent $50k in the last two days ensuring that your sale price never got below 15% of your purchase price.” In August of 2014, David Foley advised Liceaga that “I'm buying up to bring it back, and I have more support coming on Tuesday,” and “I've been buying to support”.
In early 2014, David Foley had agreed to give Blankenship 7.58 million shares of NTEK stock as partial payment for his promotions of NTEK's stock. However, in an April 3, 2014 email exchange, David Foley and Blankenship agreed that they would represent that Blankenship's deposit of these shares into his brokerage account was the result of a “private placement” for $250,000, rather than as payment for supporting NTEK stock.
David Foley and Blankenship did not complete this transaction until March 2015. At that time, David Foley created a fake convertible promissory note, issued from NTEK to Blankenship, and backdated it to April 1, 2014. David Foley also placed Jeff Foley's electronic signature on NTEK board minutes and consents, without Jeff Foley's knowledge or permission. Blankenship then used these bogus documents to obtain a legal opinion stating that the NTEK shares did not have to be registered.
Blankenship also created a phony check, backdated to March 26, 2014, purportedly as payment by Blankenship for the 7.58 million NTEK shares, in the amount of $250,000. Blankenship then endorsed the fake check with a forged bank stamp and provided it to his broker - along with the false representation that NTEK already had deposited the check into its own bank account.
. Throughout 2014 and the first half of 2015, David Foley and Blankenship worked together to purchase shares of NTEK stock on the open market and to place bids for additional shares of NTEK.
In addition, Blankenship promoted NTEK and NTGL stock and sent emails encouraging an investor group he had cultivated on social media to buy shares of NTEK and NTGL stock at specific times throughout the relevant time period. Blankenship documented his own purchases of NTEK shares in numerous emails to David and Lisa Foley, and included the number of shares purchased by members of his investor group as evidence of his successful stock promotion efforts.
Blankenship pressured the members of his investor group to buy NTEK and NTGL shares during the same times that David Foley and Blankenship were supporting the stock. Blankenship did not tell the members of his investor group that he was being compensated to promote NTEK and NTGL. The members of Blankenship's investor group who purchased NTEK and NTGL based on his recommendations eventually suffered substantial losses on their investments.
During the 18 months when David Foley was in prison, from June 2015 through December 2016, he was not able to support the market for NTEK and NTGL stock through his own trading. So David Foley paid Blankenship to provide artificial “primary” support for NTEK and NTGL, and asked Lisa Foley to find someone else to provide “secondary” support.
. Between March 2015 and February 2017, David and Lisa Foley issued more than 28 million shares of NTEK stock to Blankenship, and also paid him $25,000 for supporting the market for NTEK and NTGL stock. Blankenship deposited these NTEK shares in his brokerage account and immediately began selling them in the open market.
Between May and August 2014, David Foley, Blankenship, and Blankenship's investor group purchased more than 25 million shares of NTEK in the open market, and sold more than 17 million shares. Between December 2015 and February 2016, these same individuals purchased more than 4 million shares of NTGL in the open market, and sold 2 million shares. This trading activity created the appearance of a liquid and active market for NTEK and NTGL stock, and increased the trading volume of NTEK and NTGL stock.
