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Tuesday, August 04, 2020 12:37:37 PM
The SEC frowns down on the taking over of abandoned shells considering abandoned shells to be “ripe for fraud” because after they are taken over they often get used for pump & dump schemes and other sorts of illegal activities. Back in 2012, the SEC initiated a program called “Shell Expel” to try to combat the problem. Through the Shell Expel program the SEC suspended trading in over 568 abandoned shells between 2012 – 2015. The program went cold though in 2015, and since that time custodianship filings have been on the rise. Just the past month alone there has been over 2 dozen new custodianship petitions filed.
The “Fraudulent” way is pretty much any other way people use to take over control of an abandoned shell. This could include:
Making fraudulent filings with the local Secretary of State to reinstate the entity and add your name or the name of others as new officers of the Issuer (without authorization)
Making a new entity by the same name in the same State or a different State then filing fraudulent/forged documents with the Transfer Agent showing that you were transferred/sold control of the Issuer (I recently exposed a group from New York that was doing this)
Making fraudulent filings with the SEC saying you acquired control of the shell [I recently exposed a group out of Canada (Richard Tang) and Minnesota (Mark Miller) that was doing this]
The SEC has filed several Complaints against individuals for fraudulent hijackings in the past including David Stocker and Jason Wong (among others).
Recently we have even seen groups using other types of fraud on abandoned shells like hijacking their old domains to create fake websites and/or put out fake press releases often supported with fake twitter pages. I built a whole IHUB forum to expose the groups involved in this type of fraudulent activity. I expect SEC action against some people involved in the not too distant future.
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