Tom Heysek is JAWS of Death and is now added to the Truthseekers list of scammy, scummy stock promoters masquerading as unbiased analyst.
October 29, 1998
Great White Marine and Recreation, Inc. (OTC BB: JAWS)
10/28/98 close: $2.22
Sponsored by WallStreet Guru
JAWS of Death?
By Lynn N. Duke, staff writer
Thursday, October 29, 1998 - By the close of business Wednesday, Great White Marine and Recreation, Inc. (OTC BB: JAWS) supporters up and down the Internet message boards had dug in. Despite evidence released earlier in the day that the company had profited from the illegal manipulation and sale of its stock, investors still staunchly defended the company.
"Again GW (Great White) appears to be to be the victim of unscrupulous people," one person wrote on Yahoo!'s message board. "The company has done nothing wrong and will emerge stronger still. Don't be weak, hold tight and ignore negativity."
"I don't mean to sound as if I totally excuse Colin's ineptness at running this aspect of the business, but it does sound more like someone who hasn't had a lot of experience in advertising on the Internet, rather than someone with a devious plot to screw shareholders," wrote another SLOG (Still Long on Great White) on Silicon Investor's board.
Colin is Alvis Colin Smith, president and CEO of Great White Marine, a marine equipment and watercraft distributor based in Waco, Texas. Great White was just one of dozens of stocks mentioned Wednesday in an SEC announcement that it was charging 44 people and businesses with securities fraud and deceiving investors through the Internet.
No one directly employed by Great White was charged Wednesday by the SEC. But three people Great White had hired to promote its stock were named in the SEC's announcement.
Anita Carlisle, Carlisle Communications, L.A., Calif.; J. Scott Sitra, Sitra Enterprises, Austin, Texas and JAFLC Capital Management, British Virgin Islands; and Jeffrey Brommer, Investments 101, Ltd., Aurora, Ill. were charged with two counts of securities fraud and one count of violating the SEC's compensation disclosure rules.
While many companies associated with the doomed tout sheets will plead ignorance, it appears Great White may have eliminated that defense when it allegedly took kickbacks from Carlisle, who is accused of illegally selling stock into the market.
According to the complaint filed in U.S. District Court in Fort Worth, Texas, Carlisle received at least $2,500 between March and September 1998 to promote Great White stock. She also received 1.5 million shares of Great White stock, which she sold into the market after her promotional work had spiked share prices. Carlisle sold about one-third of the shares for $573,000, at the same time she was urging others to buy. Carlisle could not be reached Wednesday for comment. The SEC calls this "scalping", and it's a big no-no on the Commission's list.
Not content with the publicity Carlisle generated, Great White wanted some of the gravy she sopped up in the open market. Carlisle kept less than 10 percent of the stock proceeds, depositing the balance - $522,000 - in a Great White bank account in Waco, according to the SEC complaint.
If that's true, then this statement, which Smith made in April, is a bit of a stretch: "Neither myself nor any of the other insiders have been selling stock?.Tigershark (Great White's former name) has 7.2 million shares outstanding?with insiders owning about 70% through restricted holding?.Tigershark has not engaged in any Reg S, S-8, or other deals that could result in blatant dumping." It's the "other deals" that pulls the noose tight.
Smith is out of the country and could not be reached for comment. Great White's attorney, Thomas Pritchard of Houston, did not return phone calls.
Great White's zeal for promotion set it apart from some of the other stocks tainted Wednesday by the doomed tout sheets. Besides Carlisle, Sitra and Brommer, Great White paid for coverage from at least two other promoters and received allegedly unpaid coverage from three more. Great White paid Talk Stock between 7,500 and 57,500 shares of common stock (no one could make the exact amount clear) and Stellar Stocks received 50,000 shares of common stock for hyping the stock.
Even without the promotional overkill, Great White meets many Stinky Stock criteria, from lack of reporting to the SEC to non-conforming financial statements prepared by an unlicensed accountant. But it was the company's ferocious quest for promotion, and the high price the fledgling firm was willing to pay for it, that really reeked.
"Just sold 170 Shares of Dell to buy some more Jaws. Take that you fricken (sic) shorts." A message posted on the Yahoo! JAWS message board, Oct. 28, 1:12 p.m.
Left alone to languish in the obscurity most bulletin board companies enjoy, Great White probably would have gone unnoticed, by regulators and investors alike. But, due at least in part to its heavy self-promotion, Great White has developed quite a following among investors in online chat rooms. More than 60,000 messages have been posted about the company since February between Yahoo! and Silicon Investor, two of the Internet's most popular sites for penny stock investors to chew the fat. Heavy message board traffic can attract regulators' interest, who often sense where there's chatter there's the makings of a scam.
Not surprisingly, most of the posters are Great White investors and cheer on what they hope is a golden egg. Pitted against the cheerleaders are a couple of lone voices, whose credibility is sometimes in doubt, committed to pointing out Great White's faults. Some, possibly, are short sellers who stand to gain if Great White's share price drops. Others simply see bashing as a sport, and thrill to the argument and their own self-righteousness.
And some of Great White's bashers aren't without fault. One has been banned from Silicon Investor's message boards for violating the site's rules of etiquette. The same person sometimes pushes Yahoo!'s limits too, and he's given Great White devotee's plenty of ammo since he has a criminal record for attempted stalking (a love triangle gone awry, he explains) and disorderly conduct. Even people who never post online can find themselves the target of Great White boosters. Take the Texas CPA who got suspicious about the company while trying to buy a building Great White owned that had gone into foreclosure. Great White supporters claim he's a former business partner of Smith's with a personal vendetta, although the accountant says he's never met Smith and has only spoken to him once on the phone.
Great White hasn't done a lot to help its case, and many things the company has initiated during the past year make it an easy target for naysayers.
The veracity of Great White Marine's business claims is tough to back up without audited financials that conform to generally accepted accounting principles and filings with the SEC. Its choice of accountants, and the documents he produced, raises a lot of questions about Great White. Teamed with some other suspect moves - including plenty of paid promotion, unsubstantiated financial predictions, and its long running but unfulfilled promise of filing with the SEC - and the company was bound to get a heavy dose of bashing on the boards.
"Carlisle, Sitra and Brommer received stock proceeds totaling approximately $573,896, $66,416 and $42,650, respectively." That's nearly $700k spent in order to get you suckers to buy stock. The ho`s are dirty and you think this clears JAWS ???" Posted on the Yahoo! JAWS message board, Oct. 28, 11:10 a.m.
While companies often revel in the gushing support of message boards, they sometimes get stung when information they'd rather collected dust in a court file becomes public. Take the personal bankruptcy filing last year for A. Colin and Margaret J. Smith, Great White's secretary and a director. The petition was mysteriously withdrawn and creditors paid in June 1998. It is not clear how Smith paid off his creditors. With some of Carlisle's allegedly laundered stock perhaps? And there are reports that Smith denied in a taped teleconference that he was the person who filed for bankruptcy protection, claiming it was his father who couldn't pay his bills. Court records indicate otherwise. As a matter of routine, the service that hosted the conference has since erased the tape.
It was also around this time that Great White satisfied a $120,000 judgment against it, which was awarded to Deutsche Financial Services Corp. by a federal court in Waco. The judgment was entered after Great White failed to repay a collateralized loan from Deutsche once the inventory purchased with the loan had been sold. Even before the judgment was entered, the court ordered other inventory seized as a hedge against Great White's possible default.
But it's no wonder Smith had money problems if the person who prepared Great White's financials also attended to his personal finances. John Reyes, JCR S.A. de C.V., signed off on at least three "audited" quarterly financial statements for Great White, identifying himself as a certified public accountant based in Waco. There are a number of problems here. First, Reyes is not a licensed certified public accountant in Texas, according to state records. Identifying himself as one violates Texas law, and makes Reyes and the company that hired him subject to penalty, according to Bill Treacy, executive director of the Texas State Board of Accountancy.
Credentials aside, Reyes' reports would make most accountants blanch, not only for their complete lack of detail and pertinent information, but for the picture they convey of Great White.
For example, in the quarter ended June 30, Great White - a growing company whose core business is sales in an ever-expanding geographic territory - supported $9 million in revenues with only $80,000 in operating expenses, excluding salaries, commissions ($156,000) and income taxes ($140,000). With numbers like that, Great White's CFO could write his ticket at any Fortune 500 company - if it had a CFO. This blossoming rose of an investment has no one at the helm when it comes to its books, it would appear, aside from Reyes.
"To me, the bottom line is that the SEC didn't implicate the company and that the investigation is concluded regarding Great White. The SEC isn't in the business of reporting information piecemeal. Investigations are not ongoing, but concluded." Posted on Silicon Investor Great White message board, Oct. 28, 6:07 p.m.
There are other accounting irregularities. For example, the company's entry for income tax in the second quarter is only about 10 percent of its taxable profits, even though it's in the 34 percent corporate tax bracket. And the corporate income tax entry is in the wrong place on the profit and loss statement.
The turnaround on the company's last report also is odd. Within three weeks of the quarter's close on June 30, Reyes had issued an audited financial statement. That's a remarkable turnaround, and a further curiosity since even companies that file with the SEC don't file audited quarterly reports. They save the big guns for the end of the year. Another omission from the financials Reyes produced: Great White's hefty investment in stock promotion is nowhere to be found in this year's books.
Postings on the message boards claim Great White has told certain individual investors that it has hired a new accountant who was diligently working on the company's initial SEC filing, a document that's been promised for more than six months now. But Great White would not reveal the new accounting firm's name, and there's no sign of a new accountant's activity. The company has made no formal announcement regarding its accountant.
Great White's stock price took a beating Wednesday, plunging almost 17 percent shortly after the SEC press conference announcing the fraud sweep. Supporters surged into the market, buying enough shares to buoy the price more than halfway back to its earlier high of $2.56. But reality took a firmer hold as the day wore on and shares closed Wednesday at $2.22.
Great White's public statements heralding its profitability and growth seem to fly in the face of evidence indicating the company has been staying afloat through accounting shenanigans and stock market manipulation. There's just no way to tell whether any of Great White's financial statements or other public claims are true. But the company doesn't seem bothered by Wednesday's news from the SEC. Although its officials could not be reached for comment and it made no acknowledgment of the charges against its stock promoters, Great White did issue a press release on Oct. 28, announcing its participation in a boat show in Mexico next month.
It wouldn't surprise Stock Detective if they have to make bail in order to attend.
As always, tread lightly?????????..
Related links
Silicon Investor's Great White message board
Subject 19490
Yahoo!'s Great White message board
messages.yahoo.com. 8516425&topicid=12m2&msgid=6httor$mmj$4@m2.yahoo.com&type=date&first=1 |
