The tawdry story of CitySite and Amogear offers several lessons, and raises more than a few questions. First, it illustrates once again that fraud is a predictable component of corporate hijackings using custodianship actions. The Kitcher shell, used in the Amogear scam, was provably hijacked. The CitySide shell, acquired by Richard Weed as GFY Foods, may have been hijacked. A glaring figure in the SEC’s highly publicized “Operation Shell Expel” is that it has failed to charge any of the custodianship hijackers despite that they are engage in fraud.
Another lesson is that while SEC filings at least leave an indelible record, they aren’t an infallible guide to the truth. CitySide was a Pink, Amogear an SEC registrant. Yet the filings of both are frequently mendacious and often incomplete. At no time between early 2012 and early 2014 were AMOG’s filings reviewed by the SEC’s Division of Corporation Finance. Had they been, a number of inconsistencies would no doubt have come to light. Perhaps this omission was deliberate despite the harm to stockholders, because scrutiny might have interfered with the sting.
Similar sting operations were put in place with both CitySide and Amogear. Undercover FBI agents were introduced as participants in the planned pump and dump scheme. Yet in the case of CitySide, the pump and dump was allowed to proceed unhindered. Why? Simply because the authorities knew the perps would try it again, and decided to let them have another shot?
We believe it would be fair to say that so far, the results obtained from these elaborate operations have been modest when weighed against the harm to stockholders of the public shell and fraud committed in the custodianship proceedings. Five promoters and one attorney were criminally charged. The promoters were hired to run a pump and dump scam; that’s what promoters generally do. Weed was an enabler, fronting for his clients and writing opinion letters. Both were working for bigger fish who, as things stand now, will apparently not be going to prison. Flaherty and Brazil made $3 million on the CitySide scheme. Weed collected $5000 a month as legal counsel, and a few thousand more for helping out with the promo. The Affas and their associates made nothing on the Amogear pump and dump, but Flaherty had promised them only about $250,000.
Flaherty and Brazil, in this case, were the big fish. They’ve been sued by the SEC. In the Weed indictment, they’re referred to as “co-conspirators,” leaving open the possibility they’ve already agreed to guilty pleas. Despite the obvious illegal takeover of Amogear, the hijackers are not mentioned. But wouldn’t it be more efficient simply to go after these big fish to begin with, rather than hope they can be forced into cooperating with the Feds? Why not seek cooperation from the little guys, and send their employers and the corporate hijackers up the river without the benefit of “licenses to swindle” and reduced sentences? ...
News 
Market Data 
Discover 
