totally possible, although I did know of another pinkie (never got involved, but a few at my firm did) that had been selling unregisitered, free trading shares at 50% discount to market which led our trading dept and other MM's to start shorting the crap out if it,(part of "the street", as I define it), covered with the sells from the new unregistered share owners.
But here is the real kicker in all this... If PBLS is as healthy financially as they claim, why go through all this??? Why not go Legit? If they had the financials that they claim, ALL THEY NEED TO DO IS SHOW THEIR TAX RETURNS to prove it, they can get legitimate funding without breaking SEC regulations and having to play these games.
They are running this thing as id it is a privately held company, much like Adelphia did, instead of a publicly traded one. What is permissible for a privately held company is very different than what is permissible for a publicly held one.
They may have a game plan, as you say, but that would make them smart enough to have done it legitimately, and with much better results. It would show how greedy these guys are, and willing to break every rule and ethic with reckless abandon. They aren't that smart, in my most humble opinion.