Saturday, September 27, 2008 2:39:54 PM
I do know that most of these "companies" are nothing more than shells being used by a "lender" and "promoter". In most cases some naive small company is sold on the idea of "merging" into one of these shells. The company gets $100,000 in working capital simply by signing a piece of paper, the promoters and lender makes $1,000,000 off the "promotion" and the naive small company gets left with a bloated share structure from matured CD's the promoters/lenders had, a bunch of pissed off shareholders and in most cases the business fails as a result of the negative sentiment left from the "pump and dump". Shareholders blame the company, when in fact it is the people behind the shells they merged into. Those "third party" payments of compensation for promotion, those are the lenders paying to over inflate the price of the stock so they can sell out their holdings in the shell.
It boils down to dirty hedge funds, private lenders and unscrupulous promoters taking advantage of naive entrepreneurs. Hell, all you have to do is go to www.go4funding.com, www.gobignetwork.com etc.. there are dozens of these sites. The pickings are good and with the credit markets seizing up and banks not loaning money I feel a lot more of these shady shell brokers are going to be unloading a bunch of bad companies in the market.
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