Re: 7/24/00 - Traders Corner: Janice Shell
Traders Corner: Janice Shell
By Giando Argentina
Published by OTCNN.com
07/24/2000 08:25 AM CST
Janice Shell is arguably the most controversial personality in the message board community of OTCBB stocks. She brings out the worst in many posters. The accusations against her include a paid basher, a Market Maker, a basher that profits from shorting BB stocks and some accusations that I will not mention.
Amazingly, most posters on the Internet hide behind anonymity, while Janice Shell is rather forthcoming about her identity. Actually, Janice has a history of exposing corrupt company officers and alerting the online investment community about what she perceives are attempts to defraud the investor. Many articles have been written about her in the press, and a search of her name on the Internet will reveal a wealth of information.
She has also shown us how easy it is for all of us to fall victim to investing scams online. In April of 1999, she along with others set up a fictitious website for a company that was to revolutionize the Internet. webnode.com. The investor response was eye opening considering that the next day the April Fools joke was displayed on the web page and requests for investing information kept coming. I think the intent was to show how easy it is for the unscrupulous to make a buck in the online world of investing.
Giando: When did you first decide that you wanted to expose OTCBB companies that you felt were less than truthful in their claims to investors?
Janice: It all started with Cashco, Inc (CSHK). Not a proven scam, but a truly dreadful investment. I was amused and intrigued by a company that claimed its flagship products were kitty litter and Year 2000 remediation software. I intended to spend only a few days looking into it, but the story turned out to be so interesting, and so funny, that days became months.
Giando: Most online investors seem to have a derogatory opinion of you. Why do you think that is, considering you may have saved some from investing in fraudulent companies?
Janice: They firmly believe in killing the messenger. Most BB stock "investors" show extraordinary loyalty to "their" stocks, much more than do, say, shareholders in MSFT or CSCO. They tend very much to identify with the company, and consider any criticism of it to be a form of personal attack. Even if the stock tanks, their enthusiasm remains undimmed. An online friend of mine aptly refers to this as "Penny Stockholm Syndrome". The worse things get, the more likely they are to turn to conspiracy theories, blaming everyone but the firm, and refusing to consider that they may have made a poor investment decision.
Giando: Were you amazed at the response you received from investors on the Webnode and FBN (Fly By Night) Associates pranks?
Janice: Oh yes. You’d think claims of a Personal Papal Blessing for FBNA would have tipped people off, but most hardly noticed in the rush to drive their brokers crazy trying to find (nonexistent) shares. Webnode was even scarier. 2000 responses within 36 hours, only a few of which were from people who’d figured out it was an April Fool’s joke. Hilariously, when we told them it was a spoof, a few accused us of trying to prevent them from getting shares.
Giando: What tips can you share with us to help us perform better Due Diligence about the companies we invest in?
Janice: If you want to play the BBs, the single most important thing to do is to check out management. Honest and competent company leadership is critical. Nearly all BBs are absolutely controlled by a few individuals who own huge amounts of stock. If they don’t do a good job, shareholders will NOT be able to get rid of them. Contrary to what many think, you aren’t investing in a hot sector, or even in a product. First and foremost you’re investing in management. So be sure they don’t have skeletons in the closet. Any criminal convictions? A poor track record heading up other companies? Forget it; choose another stock. Be sure also to read the SEC filings, and to make certain you know how the company gets its financing. All BBs have problems with this, or they wouldn’t be BBs. Watch out for Reg-S deals, offerings of convertible preferred stock or convertible debentures, and hints of a reverse split in the offing. All of these will very likely do tremendous damage to shareholder value.
Giando: You have exposed several fraudulent companies in the past, is there one in particular that you feel was the most deserving?
Janice: It’s hard to choose. There’ve been so many good ones. I have a soft spot for HitsGalore (HITT), a story that’s not quite over, despite an SEC investigation. The CEO and chairman of the board spent time in Federal prison on 78 counts of felony fraud, and then was sued (successfully) by the FTC, again for fraud, but that was of no concern to most longs. He set up a weird financing deal with a woman who runs HYIP schemes and is known to have used seven Social Security numbers, but again, no problem! Another favorite is LVEN. Amazing cast of characters, including a woman who claimed to be a wealthy Indian, and who tried to put out a tender to buy the Minnesota Vikings for her husband’s birthday; the felonious head of a phoney "charitable" trust; and the immortal Dr Fred Cruz, jailed four times for fraud, but ever optimistic. Dr Fred, a podiatrist, claims to own $1.1 billion in Indonesian Bank Guarantees that yielded interest of 9% a day. He’s also involved with the Dominion of Melchizedek, a fake country. And people actually bought the stock. No kidding. The SEC stopped trading before this bunch really got started, but Dr Fred, undeterred, is currently busy with a new venture.
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