As YD would say, the devil is in the details. We can guess all we want, but the company has alleged serious regular and securities frauds, and appears to have sued all the parties it thinks have had a hand in the fraud. Until the complaint is made available, its all speculation, and knowing right now isn't going to change anything. I think the "first" one to uncover "the" smoking gun is probably going to miss the point. This may be part of a much larger, systemic problem faced by other OTC companies - seems like these "players" routinely take advantage of companies on the OTC. Looks like Lorraine decided to do something about it.
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