The Absolute Health and Fitness story:Anatomy of a stock fraud
Home > Junk fax profiles > Winningstockpicks.net
www.uspennystocks.com
AKAs include:
www.WinningStockPicks.net
www.hotstockpicks.net
Fire Your Broker! Stock Picks (FYBSP)
www.thepennystockpicker.com
Micro-Cap Hot Stock Picks! (MCHSP)
The Micro-caps News
Wall Street Stock$ (WSS)
Hot Stock Picks (HSP)
The BEST Penny Stock Picks! (BPSP)
PowerHouse Stock Picks (PSP)
Big Profits Stock Picks (BPSP)
Winning Stock Picks (WSP)
Hot Penny Stocks! (HPS)
The Penny Stock Investor
The $tock Insider
The$tockInsider
The Stock Insider
TheStockInsider
The Street Insider
streetinsiderstockpicks.com
TheHeysekReport
TheHey$ekReport
www.greatstock.net
hotstockcenter.com
Newsletter: The Optimist (TO)
Investor Letter: Market Cents (MC)
Hot Stock Finder.com
Worldwide Picks LTD
The Stock Profit:
Anatomy of a stock fraud
From their website:
Tom Heysek, the Editor of the WSP newsletter and our financial guru, has extensive experience in stock investment analysis and financial forecasts. His stock tips and financial expertise help WSP members to make informed investments!
That's complete bullshit. So is their criteria to be "selected" by them for profiling. The whole thing is a scam.
This page explains who they are, how they do it, and how they can illegally make tens of millions of dollars in full view of the public without getting arrested or stopped.
12/9/04 UPDATE: Heysek didn't show up for my 10 small claims cases against him for sending me the junk faxes. I won a default judgment for $25,000. As far as I know, other than my $25K judgment against him for sending junk faxes, and Mayflower's $35K judgment (present value with interest) because he stiffed them (case citation is below), there aren't any other judgments against him. Just goes to show how you can scam people out of millions and walk away (relatively) unscathed. His next chance to defend himself is January 3, 2004 at 1pm in the Palo Alto, CA courthouse. If you want to meet him in person, this is an excellent opportunity.
Typing in the URL for AHFI (www.ahfi.net) used to bring up the uspennystocks.com site! Here it is preserved for posterity showing the link between AHFI and Kos: ahfiWhois.pdf.
11/22/04 UPDATE: The winningstockpicks.net and uspennystocks.com sites have been shut down. Fortunately, I created a PDF file of every page of USPennyStocks.com at uspennystocksSpider.pdf so you can find the criteria page above as well as other pages in this PDF. I also spidered their website in HTML form before they took it down, but this isn't posted on the web (let me know if you need it). Also, they've changed their identity yet again. They are now called www.pennystockpro.com aka Penny Stock Investment Advisor - Penny Stock Guide and are currently pumping AHFI where they recently (12/3/04) moved 10 million shares at $3/share.
IMPORTANT: If you are a victim of these folks and have actually lost money in your purchase of any shares promoted by these gentlemen, please join this Yahoo group and wait for an announcement. This is a moderator-post only group so you will only receive a small number of critical emails a month (if any):
Yahoo! Groups cnddStockFraud
Also, if there are an factual errors in this writeup, I wish to know about them as soon as possible. Please use the contact link and supply your evidence of the error and I will promptly look into the matter.
These guys made one big mistake: they sent me a unsolicited fax. I'm the last person on the planet you want to send a junk fax to.
Here are 18 faxes I got from Winningstock picks: wsp18faxes.pdf. Some of these were sent by Protus IP Solutions. But we also know they used fax.com, e.g., see page 5 of VerifiedSamplesJul04 which promoted TWTN, another WSP stock. I also verified this with former employees at fax.com.
I've never lost a junk fax case because I'm always super careful to only sue people I can prove are liable.
This case was intriguing because of the sheer volume of spam they've sent out as well as the incredible lengths they've gone to in order to make themselves "invisible." They tried to hide behind a company manufactured in Anguilla (where it's illegal to disclose who formed the company), used an address in the Bahamas (out of reach of US law), and used their Florida legal firm's bank account to make vendor payments in order to hide behind attorney-client privilege so that there is no person nor company to sue.
When I called Heysek, he denied sending the faxes and dared me to sue him. Tom said I was a "chicken" if I didn't sue him. He said he was counting on my suing him and would be really disappointed if I didn't.
Well, to be honest, that ticked me off. Chicken eh? So I took this as a personal challenge. I have never found any spammer I couldn't uncover and these guys are no exception to the rule.
In fact, after I figured it out, Tom changed his mind and told me not to sue him!!! Unfortunately for Tom (and his gang) his request came too late. He's not calling me a chicken anymore.
It was quite an adventure. I've spent several hundred hours over two months (July and August 2004) trying to figure out exactly who these guys are and how they do it. There were hundreds of pieces to this puzzle and I have most of the pieces solved. There are only a few loose ends I don't yet understand, but these are all on the periphery.
This page is published to help aid those people who are investigating this matter. It is also posted as an aid to people who are thinking about suing those people who are truly responsible for sending the faxes and/or the stock fraud. Or even if you are merely curious as to how e-mail spammers make money, you'll find the story a fascinating read; how they can illegally make tens of millions without anybody in law enforcement stopping them until just recently when one of the core players, Jeremy Jaynes, was sentenced to 9 years in prison by a Virginia jury (for spamming, not for illegal stock promotions).
So in what follows, I will explain what the all evidence I got indicates. While the stuff done here is obviously criminal, I am not accusing anyone of a crime here. I am just reporting the facts based on my first-hand research (Internet primarily but using both public and proprietary databases), personal contact with the people involved (including personal conversations with Heysek, Kline, Ross, Rutkowski, Katz, Martin, Lord, the Woltz family, the Paulson brothers, Frappier, Cuadra, and several former employees of fax.com) and with evidence which I have been able to uncover through a huge number of subpoenas.
This information has been shared with my contacts in the Attorney General's offices, the SEC, the FCC, and the FBI, all of whom have read it.
Note to law enforcement: There is more information posted on a secret website if you are a government agency investigating this case. Use the contact link.
DEFINITIONS
"WSP" when used below means www.winningstockpicks.net aka Worldwide Picks LTD (the company behind the websites) aka www.USPennystocks.com aka www.hotstockpicks.net aka Fire Your Broker Stock Picks and so on. See the full list of AKAs at the top of the page. They are all the same people, just different names for the same set of players.
YOUR GUIDE TO THE PLAYERS
First, we introduce to you the cast of characters in our incredible-but-true real-life saga. The following people are covered here:
Jeremy Jaynes aka Gaven Stubberfield (Cary, North Carolina)
A top 10 ROKSO e-mail spammer (see ROKSO page on Jaynes and Rutkowski). Hangs out mostly around the Raleigh and Cary, North Carolina area. Profit margins are down so partners with Bryan Kos to stock scam pump and dumps for greater return on investment. Gets personally involved in the execution of promotions.
Jaynes is kind of in a little trouble right now in Virginia. He was arrested and faced up to 20 years in prison for spamming: Raleigh businessman arrested on felony spam charges - 2003-12-11 - Triangle Business Journal and 12-11-03 - Spam Arrest. He got lucky and was sentenced to only 9 years by the jury.
I spoke to the lead prosecutor on the case, Russell E. McGuire, and the following facts came out at trial (and reported in the press): Jeremy lists his net worth at $24 million and he was making at least $500K/mo in his spamming business before being arrested.
Jeremy used to own Vinnie's Steakhouse & Tavern which is a real restaurant in Raleigh, NC, but he sold it in 2003. Food quality at Vinnie's has reportedly declined under the new management so perhaps this was a bad move.
As noted in news articles, Jaynes also is a part owner of Beyond Fitness aka AHFI aka Sampsons' Gyms (919-816-9853), which is one of the stocks promoted by WSP. So it wasn't just two email spammers joining forces... Jaynes is a stock promo client of Kos and, in turn, Jaynes helped Kos with the promotion. Crooks helping crooks you might say. For more info, see Raleigh spammer faces prison time (Nov 14, 2004).
Moral of the story: Jeremy should have stuck to the restaurant business.
Bryan Kos (eastern Canada): THE BOSS
Like Jaynes, Kos is also a top ROKSO e-mail spammer (see ROKSO page on Kos). Born and lived in the US (Sunnyvale CA, Scottsdale AZ, and Chicago IL). Went to high school at St. Viator High in Arlington Heights, IL. He's now based in Quebec partly because he thinks he'd be harder to get there and partly because his wife Caroline is from there. Kos and Jaynes hooked up in 2000 and are the top people which is consistent with their psych profile as well (i.e., they don't take orders from anyone). According to one of Kos' former associates I spoke with, Kos, like Kevin Katz (of fax.com), is very charming and charismatic in person. People want to like him and help him. Just like Katz, his charisma creates a huge sense of loyalty to him that transcends their better judgment.
Kos is co-founder of SGNJ, a heavily promoted WSP stock. Not really surprising because the profit margins are much higher on a pump and dump when you own the whole company, rather than do it for someone else.
Kos' ROKSO page says this: "Another long time spammer. Normally spams for hire using free websites or "fake free websites" that either he, or a spamming partner run. Normally spams porn and illegal stock hyping schemes."
Kos's main company is Internet Opportunities aka IOPS Inc aka www.i-ops.com aka Internet Promos LLC aka BK Ventures aka XTR Capital Resources, LLC based in Canada (see the ROKSO page for more info). He started IOPS around 1996. IOPS actually stands for "Internet Optimized Promotion Services."
Kos is quite diversified as he describes in this e-mail excerpt from 2001 where he is recruiting for talent:
Internet Promos is an Internet company that owns an ever-growing number of Internet Properties. We own a Financial Education Center including many Financial Newsletters, Dating Services, as well as many additional Free Newsletters on diverse topics (such as: Health, Travel, Credit, Taxation, etc.) as well as an Internet Public Relations Firm specializing in the promotion of Public companies.
Note that he forgot to mention his porn business. Here's just one of the websites he created to promote the I-OPS turnkey porn business: Koss porn promo.pdf. Kos will supply the porn expertise and marketing guidance; you run it.
As noted in the writeup, IOPS provides "investor relations services" as one of their core businesses. Investor Relations (IR) is the euphemism that they use to describe their illegal "pump and dump" stock promo business. For example, they provided "investor relations service" to Advanced Optics Electronics Inc. according to their SEC Form SB-S/A Filing of 9/21/01.
He's been involved with promoting a lot of stocks including the WSP stocks as well as the stocks listed in the next paragraph.
In 2000, Kos, started with Steve Reid (THE WIZZ KID) using the names "MOEBIUS-Emerging Company Reporter", Moebius "STOCK PICKS." In 2001, Kos switched to Heysek as "The Penny Stock Picker" and The Heysek Report and Micro-Caps News. From April 2001 to April 2003, Kos and crew promoted the following roster companies: Wasatch Pharmaceutical (WSPH), Ziasun (ZSUN), UICO, ARSN, ESPB, ZABC, FASI, TELI, DDD, First Aid Direct (FADI) in 2001, Thaon Communications Inc. (THAO) in April 2001, VisualMED Clinical Systems (VSMD), Regency Group Limited (RGNC), MLM World News Today, Inc. (MLMS), Biomerica Inc. (BMRA), HouseHold Direct, Inc. (BYIT), CastPro.com (KPRC), Internet Venture Group, Inc. (ITVI), NanoPierce Technologies, Inc (NPCT.OB), KCS Energy, Inc. (KCS), Parallel Petroleum Corporation (PLLL), Contango Oil & Gas Company (MCF), American Bio Medica Corporation (ABMC), Bradley Pharmaceuticals, Inc. (BPRX), Lynx Therapeutics, Inc. (LYNX), Questcor Pharmaceuticals, Inc. (QSC), Align Technology, Inc. (ALGN), Derma Sciences, Inc. (DSCI.OB), Endocardial Solutions Inc. (ECSI), I-trax.com, Inc. (IMTX.OB), inTEST Corporation (INTT), MDSI Mobile Data Solutions Inc. (MDSI), Vital Images, Inc. (VTAL), EP MedSystems, Inc (EPMD), eUniverse, Inc. (EUNI), Ostex International, Inc. (OSTX), Carroll Shelby International Inc. (OTC BB:CSBI), and Genius Products, Inc. (GNPI).
Kos also promoted Geoffery Eiten's OTCFN.com aka OTC Financial Network (OTCFN) a full-service financial communications and investor relations firm that specializes in emerging micro-cap companies listed on the OTC Bulletin Board (see Stock Profit About Us).
I obtained a copy of the Genius Products, Inc. contract with Kos, for example. The short story is that he gets paid based on a fixed dollar value of the stock calculated right before the promo starts. Specifically, in this particular case, the payments are:
$50,000 in shares - price per share to be that on the day that the Company gives the "go-ahead"
$25,000 in stock due the day the Company gives the "go-ahead"
$25,000 due 30 days after "go-ahead" date
Therefore, Kos is incentivized to blow up the price as high as he can so he (and the company that hired him) can sell their shares at the inflated price.
Here's some more info on NanoPierce, for example, which Kos promoted sometime around April 2002:
The CEO of NanoPierce has been sued by the SEC three times for fraud. Their current stock promoter and past stock promoter is currently being sued for securities fraud for illegally promoting the scam stock.
See Nanopierce Technologies Inc., NPCT Paul Metzinger CEO, potential securities fraud NPCT.ob
Note: the author of that page is being sued by the current stock promoter for libel, but has won the first 5 rounds.
Here's a screenshot of the i-ops home page on April 18, 2001, showing The Penny Stock Picker and The Heysek Report: i-opsHeysekReport4-18-01.pdf.
Here's a writeup on THAO on i-ops.com in April 2001: Thaon Communications Inc. (THAO)
Here's the pitch i-ops.com used to solicit "investor relations" (IR) business: i-ops.com Investor Relations "pitch"
Here is Bryan Kos management team. Caroline (who is listed on that page) is his wife, Caroline Kos aka Caroline Archambault. The key thing here is that the two top executives are Kos and Heysek.
Thomas M. Heysek aka Tom Heysek aka Milton Thomas Heysek (San Francisco, CA): VP STOCK FRAUDS
The "editor" of winningstockpicks.net aka USPennystocks.com aka www.thepennystockpicker.com aka Fire Your Broker Stock Picks aka The Heysek Report aka Micro-Cap Report aka Micro-cap News aka Heysek Research Corp aka the Penny Stock Picker aka PennyStockPicker aka Tom Kudolo (Financial Radio talk show host on Kos' iops radio). Other newsletter names include "Exit Wounds" It's the same Tom Heysek behind all these entities. He's the "candyman" here, or should I say the CNDD man? He can take a company with no revenue and package it with his writeups (with the appropriate illegal fax and spam advertising) to a $2 billion dollar market cap (like he did with CNDD). He uses his real name because otherwise it doesn't look credible.
Heysek's resume on the USPennystocks.com site is missing critical details of places of employment that have been expunged (like that he learned his craft under Ray Dirks at Security Capital in 1999 and that he worked at Med Gen) and other things have been "inflated" just like his stock writeups.
The "company that was re-named Asian-American Capital in 1993" mentioned in his resume was registered in Florida on May 2, 1990. It is Inactive, the Registered Agent resigned October 11, 1990, and the only officer listed is Thomas M. Heysek, 9887 N. GANDY BLVD., ST. PETERSBURG FL. His registered agent was Max C. Tanner of Las Vegas, Nevada. Max is currently serving an 8 year prison term for evading $2M on profits from an illegal stock swindle (NY Times, November 9, 2002).
More fascinating is Heysek's real resume, his broker file: Thomas Milton Heysek CRD#: 2375660 showing his real jobs and disciplinary action against him for entering into contracts that were not authorized, not telling the truth when confronted by management, placing stocks into accounts without their permission, mishandling customer funds, etc. Compare his Central Registration Depository (CRD) history with his self-proclaimed "resume" and it doesn't seem like you could possibly be talking about the same person since there is nothing in common other than it is absolutely the same guy (even the social security numbers match up; Tom uses at least 4 of them).
Heysek and his wife Regan, while still working for Securities Research and Analysis, Inc., moved from Florida to Santa Cruz, California in September 1996. We know that for sure because Tom sort of forgot to pay the moving company. OK, it wasn't like he forgot or anything... Heysek actually defrauded the movers with phoney papers. Mayflower filed suit against the Heyseks and won a default judgment of $21,980 on April 9, 1998 (1998 WL 184328 (N.D.Cal.)).
Heysek is very tight with Kos and has been since around 2001. For example, a spam of 2/28/01 promoting CHWT and "The Heysek Report" is from stockfinder5@i-ops.com (see StockTalk Discuss ATEL - ACCESSTEL INC (#62-127)). Whoopsie! That was a mistake. i-ops.com is Kos. So we have proof that Heysek and Kos go way back to the beginning of 2001! There was a lot more. For example, i-ops.com used to host Tom's newsletter. See stuff below for more about Heysek and his training under Ray Dirks in 1999 (they have since parted ways).
According to his employment record on file with the National Association of Securities Dealers (CRD history), Heysek has held five jobs on Wall Street over the past decade, and has been fired from three of them, for offenses ranging from "unsatisfactory sales practices" to "improper handling of customer funds." That is neglected from his resume on his website. I'm sure that is probably just an inadvertent oversight that Tom forgot to mention. Also, Tom forgot to mention that in the midst of working for Kos, he also did double duty as VP Finance and Chief Compliance Officer at Med Gen Inc, according to the Med Gen Inc 10KSB filed on 12/20/01 (symbol: MDGN.OB) and then was VP Investor Relations and Compliance according to a Med Gen press release on January 14, 2002. That's the same company that brought you Snorenz where on March 29, 2001, the FTC found that the advertising was full of unsubstantiated claims and that they failed to disclose that a purported expert endorser featured in some of the infomercials for the product had an investment in Med Gen, giving him a financial interest in promoting sales of the product. Remember, Tom was in charge of Compliance at the company.
Also, Tom always neglects to mention the name of the third party that paid for the promotions he does. That is a violation of SEC rules. SEC Regulation 17(b) as interpreted by the SEC requires the full compensation to be disclosed, and if from a third party, the specific source of the compensation and the relationship of the payer to the issuer (see the SEC statement at Investrend.com, for example).
And his track record of picks in his newsletter? Well, all I can say is that I could find the buy recommendations, but not the sell recommendations! Try for yourself.
Here's his claimed buy/sell "track record": NewsletterTrackRecord.pdf
Here's what he actually wrote at the time: 4MB archive of his past WSP newsletters. Note: None of the magically timed sell orders listed on the track record can be found; just the buy orders. What a surprise!!!
I spoke to Heysek on 9/24/04. Heysek claims he has no clue who sent the faxes and who made the $40M+. He says he only gets paid $10K to $20K per month via wire transfer from the Bush Ross account that is set up to pay everyone. He said he talked to Hartley and got 14 pages of notes, had Hartley initial every page, and he then boiled it down to 2.5 pages. He asked me what I wanted. I said I wanted to know who sent the faxes. He said he hired a detective and he knows where they are coming from and he said it was all in-state so the federal laws don't apply (which of course he is completely wrong about). He refused to tell me the numbers the faxes were from saying I would have to pay for that information. He said he had no idea how anyone could make $40M+ on Concorde and had no idea who did it. He admitted he's talked to Kos, Oehmke, Lord, and Ross (no surprise). In his court filing against me, he claimed his real name is Milton Thomas Heysek, but he sure seems to go by Thomas M. Heysek a lot, e.g., this is the first I've heard of this.
For a guy who is so innocent, one has to wonder: 1) why did he want so desperately to quash the subpoena for his financial records? 2) why did he tell me he's closing all the accounts I discovered? Innocent people wouldn't have to do any of that.
Andrew M. Kline (San Rafael, CA): STOCK FRAUD ASSISTANT
Heysek's "partner" in creating fraudulent stock writeups. The two of them constitute the editorial staff for WSP. After I pointed out to Kline that Heysek's report on CNDD can't possibly be reasonable and was so outrageously false, Kline hung up on me. I must have really gotten to him because five minutes later Heysek makes a threatening phone call to me to back off my cases against him (which confirms he was served). Tom didn't say "please" so I ignored his "request." It could be that Tom never saw any of the Barney tapes about "please and thank you are the magic words" when he was a kid.
The only possible explanation for Kline's reaction I can think of for this is that Kline knows exactly what he is doing. That fits the facts since anyone honest with half a brain (and Kline is a member of Mensa) would immediately figure out what Heysek is doing; they wouldn't need me to point this out. The CNDD profile is just a mind blower...full of impossible assertions like 0 to $600M in revenues (and $400M in profit) in 4 months from a standing start. Anyone with basic financial analysis skills could see the fraud. The fact that Kline had no interest in the facts suggests he's like a mini-Heysek, a "Heysek wannabe," learning the tricks of the trade from the master. I'll bet he is paid pretty well...maybe he even gets a cut of the action. Kline worked at the family business Noe Valley Cyclery just a few years ago (on or about 2000). I called over there at around 10:20am on 8/17/04 at (415) 647-0886 and spoke with the owner, Lawrence E. Kline, Andrew's brother. He refused to say anything about his brother, not even verify dates of employment. It's a bicycle shop. Impressive credentials. That seems like the perfect background for evaluating complex speculative investments.
Dan Hartal (Montreal, Canada)
Dan, who is lives on Queen Mary Rd in Montreal, Canada, collected checks (the few there were) and handled upsells to premium packages for winningstockpicks.net. When we talked to him Hartal claimed he was just a "consultant" but that isn't true. He's a team member and this isn't the only Kos venture he's been proven to associate with. You can talk to Dan at 514 293 7660, but he's probably not going to want to say very much.
Don Oehmke aka Donald Edward Oehmke (Kalamazoo, MI)
The purchaser of all of CNDD's stock (a WSP promoted stock) as well as Chairman of SGNJ (another WSP promoted stock) and Ventana Consultants LTD, Kalamazoo, MI. Oehmke arranges the stock transactions since he's "experienced" in this area (see Rel. No. 41755 - August 18, 1999 for his credentials). Oehmke and Kos incorporated SGNJ, for example. Even though the Nevada Secretary of State record for Storate Innovation Technologies Inc shows the name "Scott Wilson," that's just a dummy name. I was able to find a paper trail that proves that it was actually Kos and Oehmke that set up this company. Heysek conveniently neglects to mention how Kos, a well known e-mail spammer, fits into the company in his writeup on SGNJ. In fact, he doesn't mention Kos's involvement at all. Gee, I wonder why? Heysek and Kos talk just about every day. Heysek is normally so thorough in his research. How could he have missed that one? Could it be that if he did, that his readers would realize they were being set up...a company founded by two people of "questionable" reputations with a track record of breaking the law, none of whom appear to have any experience in the line of business they are in? Also, Heysek neglects to mention that Oehmke ran a brokerage business that was expelled from the NASD in 1991 and involved in selling unregistered securities to the public at manipulated prices. Oversight, no doubt. Don and his third wife live in an estimated $500,000 home in Kalamazoo. He reportedly throws a terrific 4th of July party. Approximately 20 years ago, Don was a policeman. He's 55 years old today. He's used several company names and he's been sued in several states including Louisiana and Texas. He has a history of pump and dumps. Very charismatic according to people who know him. Hires really expensive attorneys. He used to live in Ventana Canyon (in Tucson, AZ) which is presumably where he got the idea for the name Ventana Consultants.
Hartley Lord (Boca Raton, FL)
The 75 year old head of CNDD (a WSP promoted stock). Concorde's official phone number is Hartley's home phone. The official address is his home address. Unlike all the other suspects here, Hartley actually wanted to talk when I called him! Based on what I heard, I thought he was innocent of any wrong doing, but I didn't spend a lot of time on this and probing into his background. He was completely cooperative (until I started getting wise to him) and all his answers made sense. My initial guess was he's just being played by these guys. But I now believe my initial instincts were wrong. The fact that he has a history of having been involved in securities fraud and market manipulation was a big factor in my change in opinion. Also, Lord has been barred for life from association with any member of the NASD in any capacity. So that was a huge red flag too. That is quite an achievement. I can't say I know anyone else who has achieved such an honor. See the Hartley Lord follow section below for more details. Also, I can't find anyone at the SEC who knows of a pump and dump case where the company being pumped was determined to be innocent. If you know of any such cases, please let me know and I'll post it here.
Jere Ross aka Jeremy Ross (Tampa, FL)
Co-founder and partner at Bush Ross Bush Ross Gardner Warren & Rudy PA in Tampa Florida (see Bush Ross Gardner Warren & Rudy, P.A. - Jeremy P. Ross Bio). Ross provides legal counsel for Kos, Oehmke, and Lord. Both Lord and Oehmke are heads of companies featured in WSP. Lord says he didn't have a current lawyer when Oehmke contacted him. Yeah right...and if you believe that I have this bridge I'd like to sell you...
The Bush Ross website says that they have become one of central Florida's leading [law] firms because they "adhere to the long term philosophy that clients want caring, insightful, ethical, and qualified problem solvers who will add value to their businesses and lives. Thanks to the standards set by the founders of Bush Ross, our mid-sized firm has been recognized as providing the highest levels of excellence in legal advice and service to our clients."
Well, let's just say that when all the evidence comes out, I think they will have to re-write certain parts of that. Money laundering is a crime the last time I checked. We know that Ross and Kos talk all the time. All of the vendors I talked to were paid out of the Bush Ross bank account. At first I was surprised that they would do something like this instead of creating some bogus bank account somewhere. But after I tried subpoenaing the Bush Ross bank account records at SunTrust, Bush Ross hired local counsel in California to file a 5 page objection citing 14 reasons why my request should be denied. None of the arguments had any merit that I was worried about. But they wouldn't have gone to that length if they weren't trying to hide something very important. So I am led to the obvious conclusion that they used the Bush Ross account for three reasons:
Hide behind attorney-client privilege: If it's a law firm's bank account, they can avoid answering any questions as to the purpose behind each transaction. Unfortunately, that only works for them if the plaintiff isn't successful in invoking the crime-fraud exception to the privilege. Also, only attorney-client communications are exempted, not the transactions with third party vendors. So they can't protect the transaction history at all from discovery.
Hide behind the mass of transactions: Since Bush Ross is a big firm there are a LOT of transactions and most people wouldn't have the time to investigate every one and even if you did, you'd probably find nothing without Bush Ross's cooperation. Unless you knew specifically what you were looking for, it would be like trying to find a needle in a haystack. For example, instead of hiring of the fax broadcasters directly, they paid a third party (Camelot Promotions) to do that. Therefore, transactions with Camelot Promotions would appear in their account and most Plaintiff's wouldn't know what it is for. Bush Ross would claim attorney client privilege and Javier (at Camelot) would probably "not remember" who paid him and probably is so bad at record keeping that he wouldn't be able to find anything. Therefore, unless you are really good at detective work, they look clean.
Hide behind the P.A. structure: Bush Ross is a Professional Association. This provide some amount of insulation so that the acts of one shareholder don't affect the others. However, since it is unlikely Ross could have used the official account without permission of the firm, it is possible that the whole firm is liable.
Richard E. Rutkowski (Cary, NC)
The technical computer guru for Jaynes. Hangs out in Raleigh and Cary, NC (see ROKSO page on Jaynes and Rutkowski). Sets up technical infrastructure. Was involved in setting up the WSP technical infrastructure.
I've talked to him on his cell phone and wanted to ask him some questions. He said he'd have to talk to his lawyer first. He never called me back. Guess he forgot. I warned him if he didn't call me back, I'd have to do a lot of digging to prove my case. I had no choice. So you can thank Richard for providing me the incentive to dig out all this stuff since he wouldn't tell me who hired him on this job.
Richard was quite pleasant to talk to on the phone, not rude at all...quite unlike Heysek who comes across as really arrogant and impolite. Richard faced 20 years in prison and was been arrested: 12-12-03 - Kilgore Announces Second Criminal Spammer Surrenders to Authorities, but he was acquitted because, for some reason, the judge didn't allow key pieces of evidence (like a video tape of him doing it) because the judge thought it would be prejudicial. Hard to believe, but absolutely true (a matter of public record)
Jessica Jaynes aka Jessica DeGroot (Cary, NC)
Jeremy's sister. A bit player. Works for Jaynes. Does Internet related stuff for them. The nice folks in the Virginia AG's office know her well. She's also sort of in trouble with the law too. Here's a nice article about her indictment on criminal charges: 04-07-04 - Kilgore Announces Indictment of Sister of World's Eight-Worst Spammer. She was found guilty of spamming and fined a paltry amount.
Chad DeGroot (Cary, NC)
Works for Jaynes too. He does some graphic design work. He's Jessica's husband. Some of the WSP website is Chad's work, we can prove that so it is yet another piece of evidence that ties Jaynes directly in with the WSP site.
Tom Martin (Ottawa, Ontario, Canada)
CFO of Protus IP Solutions. They send out junk faxes for WSP, most likely in return for stock or cash. Martin refused to tell me who hired them, but they claim they will respond to a subpoena that is "properly served." Seems to enjoy making my life difficult. If he wanted to help me, he could still be legal, but he refused to do that. Seems to be more interested in seeing if I'll jump through the hoops. I will. I have already hired the #1 TCPA attorney in the country to sue them and we'll be suing them for a few million dollars and an permanent injunction to prohibit them from continuing to fax anyone illegally anymore.
Kevin Katz (Laguna Beach, CA, Aliso Viejo, CA)
CEO of fax.com (aka Impact Marketing aka Access Sales Inc). They also sent out junk faxes for WSP on a cash deal. They got paid by Javier at Camelot Promotions who in turned was paid from the Bush Ross account.
Katz' lawyer that he uses for his SEC cases, Jackie Meyer, flatly refused to comply with any subpoena. That suggests to me that they know this is criminal to be doing this. Why admit you knowingly are sending out fraudulent faxes? So they are remaining silent.
One of my fax.com insiders says that they ABSOLUTELY know this stuff is fraudulent. Frank Frappier (top sales person for fax.com) specializes in this area...he reportedly did almost a million dollars a month on these accounts! So fax.com alone was sending out over 20M of these promos a month. Fax.com NEVER complies with discovery that I've heard about. The California Attorney General spent 6 months to get some questions answered and after 6 months got 20 boxes of removal requests; nothing of value. That should make conviction rather easy I would think if federal charges are brought... obstruction of justice.... now that would be cool. You can learn more than you ever wanted to know about Kevin at on the fax.com page.
Paul Spreadbury (Pensacola, Florida)
A freelance marketing consultant. His name (or phone numbers associated with him) were on the phony press releases. Appears to be currently located in Pensacola, Florida.
I left lots of messages, but doesn't return my calls or my emails. No criminal history. Probably an innocent pawn in this chess game. Not enough info yet for an opinion on him until I make direct contact.
Doug Paulson (Toronto, Ontario, Canada)
Does audio and video work featured on the WSP site through their company Vault Studios www.vaultstudios.com in Ontario, Canada. At first I thought they were just innocent pawns in this, but they sure don't act like it. They act like they are hiding something big. They refused to comply with my subpoena. They send "send me the subpoena" but then never even bothered to call to discuss any issues that they might have had with it. It was basically a trick so they could find out what I was fishing for. Most honest people don't act that way. The Paulson's treated me like I'm the criminal and Kos is a whitehat. Gotta be a reason for this...I haven't figured this out yet, but it makes me very suspicious that they are still obstructing justice even after I've pointed out to them exactly who Kos is. I gave them a final chance to pick sides. They just ignored the email. Guess the Paulson's are rooting for the blackhats to win. This was not so surprising after I found out that Vault Studios is a client of Kos' firm (and vice-versa)! So it seems quite probable that if they turned Kos in, that Kos would turn them in. That explains the silence and lack of co-operation.
Jon Paulson (Toronto, Ontario, Canada)
Works for Doug. He's either Doug's son or his brother. Also is refusing to talk. Not surprising after I learned that they've employed Kos in the past. However, when I first called Jon, I caught him off guard and he admitted to me that Kos and Heysek direct their activities. That was a very helpful admission at the time.
Howell Woltz (Advance, NC): "Asset Protection and Investments"
Howell is head of the Sterling Group of companies. This guy is incredibly evasive when you ask him simple yes-no questions (like "have you ever heard of Worldwide Picks LTD?" and "did you incorporate them?"). I've still not gotten a straight answer from him on these simple questions (even though his staff can answer them easily)!
Also, he's made statements and given answers that are deliberately misleading. That is a huge red flag. I spent several days trying to ask him a simple question: "Did you set up Worldwide Picks LTD, yes or no?" Woltz completely danced around the question for days and a week later still never answered it. It's a matter of public record that Woltz created the company in Anguilla (Worldwide Picks Ltd is Anguilla Corp #2036475). He likely did it for Jaynes and crew so they can hide their identity from being discovered. There are several ties between Jaynes and Woltz: not only are they both in North Carolina, but I have other evidence of a connection between Rutkowski (Jaynes' CTO) and Woltz that would be impossible to happen by "accident."
Like Jaynes, Woltz is also in North Carolina but he makes it appear he's based offshore by bouncing his email off a Bahamas based mail server and using a 714 area code cell phone when he is really in North Carolina. He told me "I'm done with my vacation in North Carolina." I knew he was lying about that because I already had his coordinates so I called his home in North Carolina and talked to his son. I asked "is Howell there?" The son passed me to Vernice, his wife, who asked me why I was interrogating her son!!! Talk about extreme paranoia. Oh, and by the way, Vernice is an officer of the Sterling companies. Anyway, they were nice enough to confirm to me that my info was correct; that he really lives there.
Howell is associated with the website registration info for WSP (the address is his Sterling Trust in Bahamas) and other things they used. Also, you are supposed to send your WSP membership fee to Howell's other offshore branch office where they did the incorporation of Worldwide Picks Ltd (Sterling Trust (Anguilla), Ltd) in Anguilla. When you call down there and ask what they do, they can't answer the question. No surprise...I asked Howell the same question and he was completely flustered trying to explain what he does for a living. If Howell doesn't know what they do, it's natural that his "employees" can't figure it out either! Howell stopped talking to me when I started cc: government agencies on my emails to him, specifically when I asked him: "who did you recall talking to on the day you incorporated Worldwide Picks LTD?" I guess that was too tough to answer. We should be able to pull the phone records on that one to help Howell's memory which seems to be conveniently bad. Also, Howell's firm seems to have been involved in financial frauds before: See Sterling Group and investment fraud.
Upon reading this, Howell sent me an e-mail. I responded with some questions to clarify his statements. Here's the most recent e-mail thread with Howell Woltz. I never heard back from him which is perfectly understandable.
Also, I've talked to at least one other person who said Howell represented to him that he was in the "asset protection" business.
John R. Rooney (Jupiter, Florida)
Rooney was quoted in a press release from WSP (see Abe Goes Tommy in New Campaign for USPennyStocks.com).
Rooney, with his wife Natalie, moved from New York to Jupiter, Florida at the end of 2003. Has a history of pumping up stocks well beyond their value. He's the son of Patrick J. Rooney who also has a history of stock manipulation. I guess it runs in the family. Might be genetic or something. John was head of HORNBLOWER & WEEKS INC INVESTMENT BANKING 110 WALL ST FL 24, NEW YORK NY 10005-3806 before moving to Florida. John is quite a guy. Here are a few choice articles about John:
Stock Patrol In Trouble Again (jul 11, 2002)
StockPatrol Through The Looking Glass (aug 10, 2002)
Stock Patrol The Terminator
Hornblower & Weeks, Inc. Order Revoking Broker-dealer Registration
FindLaw Class Action and Mass Tort Center Securities SEC Resources
NASD Regulation News Release - 05-07-02
LITIGATION Release No. 16733 - September 27, 2000 (it's the family business I guess)
I don't have any evidence that Rooney is involved in this fraud other than his name popping up on a WSP press release. We'll see what comes out from further research.
John Richey
Haven't had time to research him (yet). Nothing came up on a quick search I did. His name was in one of the press releases, but is otherwise unknown. Could be a random name like Rooney. If I get to Spreadbury, I'm sure he'd know. You just can't believe everything you read in press releases nowadays.
Javier A Cuadra (Key Biscayne, FL)
Javier is the fax contractor for these guys. He was paid from the Bush Ross bank account which is how they paid all their vendors. Javier then takes that money and pays the fax broadcasters (in advance) and other vendors related to faxing (such as the fax back service). He is also based in Florida. Javier is a busy guy and runs several companies such as Oncall Telecom, LLC, Camelot Promotions LLC, and a whole bunch more out of his home in Key Biscayne FL. Cuadra has experience with junk faxes since he also works at VeloFAX LLC (formerly Visionlab Miami). I know that because I called him there. Javier (as Camelot Promotions) does the actual dealing with the fax vendors; I was able to confirm that with one of the fax broadcasters as well as the fax-back service he used. For example, we know from fax.com's records that Javier used fax.com to send faxes between 6/7/2004 - 8/19/2004.
Javier even confirmed that he did work for Winningstockpicks when I called him, but then started denying just about everything (including stuff I knew were facts) so he was clearly hiding a bunch of things. I'm sure he has an interesting story to tell.
Here's the story as best as I can piece together. If there are any errors, please use the contact link to let me know about them.
What follows is MY BEST GUESS as to what really happened based on the evidence.
The setup
Jeremy Jaynes and Bryan Kos are well known e-mail spammers (on the ROKSO list). But the profit margins have eroded in their chosen profession due to a combination of factors:
Effective spam filters cut their margins and their response rates making it harder to make money
Increased competition from other spammers has driven down the prices they can charge advertisers
Increased volume from other spammers makes it harder for their spams to get above the "noise level" and thus affects the "click thru" rate which in turn means they have to charge lower prices than in the past
Fewer advertisers are willing to engage in sending out spam due to the laws
They now risk criminal prosecution and 20 or more years in prison if spams end up in Virginia. That risk is not hypothetical. It is very real. In fact, Jaynes just got sentenced in November 2004 to 9 years in prison in Virginia on spamming charges. That's a good incentive to change your business plan.
For all these reasons, they do a little "career development" training and end up getting into the much more profitable business of "pump and dump" of securities (buy low, promote, and sell high) or just "dump" (create or print the shares yourself, sometimes illegally, and sell them since it is so unregulated nobody notices). Kos has figured this out by 2000.
Kos hooked up with Jaynes by mid-2000, and possibly before that. We know that because Internet Promos LLC has two founders: BK Ventures, Inc (i.e., "Bryan Kos Ventures") and Jeremy Jaynes and was incorporated in Nevada on June 26, 2000 (LLC6129-2000). Similarly, Bryan and Jeremy are the principals of INVESTMENT PROFILES, LLC (a Nevada company they incorporated on July 30, 2003; LLC11400-2003).
The focus is on the DOLLAR-VOLUME of the stock (i.e., the volume of stock multiplied by the price), not the price itself. This is because they get their shares for either "free" or nearly free so that the only thing that matters is how many shares they can move (dollar volume). For example, in CNDD they moved 5M shares at $8 in a single day. They "paid" 10 cents for those shares from CNDD (although in reality they probably didn't pay a dime). So they made $40M in a single day on August 11, 2004. Profit. More than likely, it was also tax free (they aren't worried about the IRS going after them...the IRS is too short staffed).
In our current situation, it's early 2004 and Jaynes and Kos connect up with Oehmke (the stock expert) who has "experience" in the stock tout area, having been cited by the SEC for his company Ventana Consultants for similar work (See Rel. No. 41755 - August 18, 1999) and later earned his stripes by running a company (Boucher, Oehmke & Co) that had been involved in selling unregistered securities to the public at manipulated prices and expelled by the NASD on or about August 23, 1991 (see Complaint U.S. Enviromental, Inc.).
Oehmke, who lives in Kalamazoo, MI, is a client of Jere Ross, a prominent attorney in Tampa, Florida. Oemke's job is to find the shell corporations that they can pump.
Interestingly, people in this line of work are known as "IR promoters," i.e., Investor Relations Promoters. That makes it sound legit. Cool eh?
Jaynes employs Rutkowski (who does technical work like websites and servers) and Jessica DeGroot aka Jessica Jaynes (Jeremy's sister) and Chad DeGroot. There are a whole bunch more people who work for Jaynes. I have their complete employee roster (and list of company names they hide behind) if you are in law enforcement.
Kos has a long-standing (since 2000) relationship with with Heysek promoting penny stocks that he brings to the partnership with Jaynes. Heysek employs Kline.
Heysek is a specialist in providing convincing looking company writeups and managing the promotion of that information and Kline appears to be a Heysek "wannabe." Both Kline and Heysek know fully well that they are wildly distorting the truth in their company writeups.
Jaynes also works out a deal with Howell Woltz to set up Worldwide Picks LTD in Anguilla where it is against the law to reveal who the officers of a corporation are. That way, if winningstockpicks.net is sued, Howell can just claim he can't tell you who to sue or how to collect from them even if you win. That's what he told me. He said it was against the law to tell people who is behind a company. I've never done service on a company in Anguilla and trying to collect on a shell would be pretty hard.
Howell's company in the Bahamas is called Sterling ACS, Ltd. So I asked Howell, "on the day you set up Worldwide Picks LTD do you recall who you spoke to?" That is not illegal for him to answer. At that point, he stopped talking to me completely.
Howell lives on Woltz Lane in Advance, NC so when you have a street named after you, you are probably a bigwig. He certainly acts consistent with someone who has a lot to hide. Also, WSP says to send your membership fee to Howell Woltz's company in Anguilla, B.W.I. which has a slightly different name, Sterling Trust (Anguilla), Ltd (it's their other "branch office"). And there are other connections with Woltz's company and Jeremy Jaynes that I found that could not have happened by chance. Woltz is definitely tied in with Jaynes. No doubt about that.
The promotional activities (website, memberships, videos, faxing, etc.) are directed by Heysek and Kos. They utilize people like Spreadbury, the Paulsons, DeGroot, etc. to create their websites (winningstockpicks.net and it's successor, uspennystocks.com) and they contract with fax broadcasters fax.com and Protus IP solutions to send out faxes (using Javier A Cuadra in Florida who has experience in fax promotion).
The memberships on the web is just a come-on to get your email address. They make all their money on the stock trades. The membership fee income stream is peanuts, and are just there to make them look like they are a legit newsletters. The goal is to get your email address and get you to sign up for the free membership so that they can push the latest "hot tip" to you via email since you're not going to remember to come back to the website. If you are stupid enough to sign up for one of the premium packages that you have to pay for, that's just fine with them...they'll take your money, but the real value is getting you to enter your email address so they can market to you on a regular basis with their latest tips.
So now they have the core team to execute their new profession of IR promotion.
That's the setup. Now here's how it operates.
The Concorde America Story (CNDD)
Hartley Lord, 75 years old, has an interesting history of securities violations (see stuff below). Among other things, Mr. Lord is the subject of a permanent injunction entered on consent in a Federal Court action brought by the SEC charging him with securities fraud and market manipulation. Mr. Lord has been barred from association with any member of the NASD in any capacity.
Somehow, Oehmke connects up with Lord. I'm not sure how they know each other. Lord told me Oehmke called him out of the blue and claimed to have met him at an investor conference. This probably happens in early to mid June 2004. Heysek gets involved too at this stage and talks with Hartley about the story they are going to use to promote the new company.
Lord claims Oehmke's attorney, Jere Ross, impresses him, so Lord hires him to represent CNDD. My notes say this was in April 2004 which is of course very interesting that they are talking even before they have acquired a shell. In short, it seems impossible to believe that Oehmke is going to call Lord out of the blue like that and he gets "lucky" to find someone who is planning on starting a company exactly at the same time he calls. It would be one thing if Lord's company had already been formed...Oehmke could have done a search on that. But months before the company is formed??!?! That's a little too hard to swallow that story.
With Ross' help, Hartley does a reverse merger in June 2004 with MBC Foods to form Concorde America. He authorizes 213M shares (an interesting number to say the least) and registers 10M of those shares to sell to the public on Rule 504 offering (limited to $1M raised) with 209.2M shares issued and outstanding.
Lord claims that Oehmke is a promoter and offers to buy the entire Rule 504 offering of 10M shares for 10 cents a share on or about June 30, 2004. Which means Oehmke valued a company with zero revenues and no employees and no contracts at $20M.
Man, I wish he'd do that for my company!! Don...if you are listening...please use the contact link and I'll give you a great deal on my company!
Anyway, Lord can now tell the SEC he just sold 10M shares to a promoter at 10 cents and he is happy he got his financing done and he goes about his business. So he's got a good cover. Oehmke however, has a lot of explaining to do on why he supposedly paid $1M for a 5% stake in a company with nothing of value. That's impossible to justify unless you are going to promote a fictitious story about the company (which is what they did).
That's exactly what happens. Oehmke tells Kos he got 10M shares of CNDD at 10 cents. Kos and Heysek arrange for a profile of CNDD to be promoted via fax, email, and web advertising.
Heysek had already gotten the basic facts from Lord in mid June. Heysek blows the whole CNDD story completely out of proportion. So a company with zero revenue as of June, 2004 is expected to do $630M in revenue in 2004 (and over $400M in Net Income!!!!!) according to Heysek and Kline.
Here's the report they published preserved as a PDF on August 13, 2004 so they can't change it: CNDDProfile on USPennyStocks.pdf. And this company is going to supply hundreds of thousands of workers under a contract with the Spanish government (later changed to an unnamed firm in Spain that employs less than 10 times that number now)!?! I don't think so!!! And according to Lord, even the CNDD officers listed in the writeup are wrong (Lord says that one is a shareholder and doesn't even work for the company).
As of November 7, 2004, it looks like my analysis was right. I see that CNDD now has a website (www.concordeamericainc.com) and they posted their SEC 15c-211 Quarterly Report of September 30, 2004 (here's a copy in case they move it: CNDD_SEC_10.12.04.pdf). Here are some highlights:
They have had ZERO revenue since inception!
If everything goes well, they expect to supply 50 workers to Spain from Costa Rica by the end of the year (but that's only if EVERYTHING goes well).
Hartley Lord is the only executive and the only board member.
There are no contracts in place.
If they sign a contract in December, it will only bring in $250,000.
They have only $16,000 in cash left!!
The company they are trying to get a contract with, Almeridor, S.A., doesn't even appear in a Google search of the entire web or Internet newsgroups.
Bottom line:
Even with CNDD's most optimistic projections, Heysek's $630M revenue projection is off by an astounding $630M!!
Our own Archer Daniels Midland (ADM) is the largest agricultural company in the entire planet. ADM only employs 25,000 people. So how could an agricultural company in Spain, which by definition must be smaller than ADM, enter into a contract with CNDD to supply 350,000 workers over the next 3 years??? Answer: They can't. That's completely impossible. Is is preposterous.
The largest employer (in any category) in Spain is the phone company with 95,000 workers. So once again, it's impossible that an agricultural company in Spain could sign a contract for 350,000 workers.
Growing revenue from 0 to $630M in 6 months is impossible. This has never been done in history. Nobody has ever been close to doing this. The company doesn't even have a website and no employees we could verify.
A net income of $400M on revenues of $630M is an absurdly high profit margin. That sort of margin could ONLY be achieved if you had protected intellectual property, like a patent, that everyone needed and there are no alternatives. That isn't the case here. Nothing they are doing can't easily be duplicated. Know of any public companies with a profit margin this high in a commodity business? I don't. It doesn't make any sense at all.
Spain doesn't have a labor shortage as indicated in the report. It's exactly the opposite...they have chronically high unemployment; one of the highest of any EU country. "Spain’s 11.4% remained the EU’s highest rate." (see Eurostat). "Although Spanish unemployment has descended to levels unseen since 1980, Spain still holds the unattractive distinction of having the highest unemployment rate in the eurozone. According to European Union statistics, Spanish unemployment in the second quarter was 14.2%, while the eurozone averaged 9.1%." according to THE SPAIN - U.S. CHAMBER OF COMMERCE.
The CNDD business model makes no sense. When you add the average wage of a worker in Spain and compare it to the cost of the Latin American workers plus the CNDD profit margin, it turns out its cheaper for a company to hire locally than pay CNDD for these workers.
The business model is simply preposterous anyway. If it were true, we'd simply transport low cost workers from India into the US and pay them 1/10 the salary of American workers. It simply doesn't pass a basic smell test
The authors of the report are proven liars
The company won't provide any information about the "contract"
The authors talked to the company even before it was formed...how could they have even found out about it?
Virtually all the top people involved in the promotion have a track record of securities fraud
But it looks credible to people without any investment experience since Heysek is so skillful, so investors buy the story and the stock. They promote the shit out of CNDD using various means (varies with each stock but a combo of Google ads, spam, junk fax, TV ads, etc). I did a Google search of "Concorde America" on August 31, 2004 and got over 16,000 pages of results; virtually every one telling you how much you'll make on CNDD and to buy it now. This is an extensive web promotion campaign.
According to statements made to me by Jon Paulson, Kos and Heysek probably direct Spreadbury to send out a phony press release talking about this monster deal with the Spanish government that was in the Heysek writeup. Spreadbury apparently does as they request and financial records obtained from the wire services show he pays the invoice from the wire services so there is no money trail to them.
Result: on a good day, 5M shares of CNDD trade at $8. In short, the bad guys net close to $40M in profit in ONE DAY. Now that's where the REAL money to be made in penny stocks is!!! But Heysek never writes about that aspect.
Put it this way:
CNDD with zero revenue and no "monster contract" that anyone has independently verified that I'm aware of (or that they even claim to have in their SEC filing), has a market capitalization that is more than Delta Airlines!
It first traded as a stock on July 28 with a $660M market cap and issued it's "Monster" press release later that same day. Remember, there are no revenues.
Here are the press releases:
Company News and Press Releases From Other Sources:
Concorde America, Inc. Disclaims Prior Information Releases
Aug 11 2004 5:09PM ET PRNewswire-FirstCall via COMTEX/
Concorde America Revises Press Release
Aug 9 2004 6:32PM ET PRNewswire-FirstCall via COMTEX/
/C O R R E C T I O N -- Concorde America/
Aug 9 2004 3:34PM ET PRNewswire-FirstCall via COMTEX/
First Global 'Monster' Employment Placement Service Launched
Jul 28 2004 2:30PM ET PRNewswire-FirstCall via COMTEX/
Lord claimed he gets wind of what is going on, so Kos and Heysek get Spreadbury to issue a correction. But they just change the name of who the contract is with: from the government of Spain to an unnamed company in Spain. At no time, is there a mention of the name of the company or a quote from the mystery company! Pure fabrication.
So now Lord claims he is really pissed because none of these press releases was from him so Lord has Ross draft a real press release that is really from CNDD and explains what is going on. He claims he has trouble getting the wire services to take it initially because of all that has just happened (this one is actually true; I verified it myself). He is finally able to get it run and the stock immediately tanks to $2.50 a share.
But even at that price, Jaynes, Kos, Oehmke, Heysek et al. stake is still worth $25M!!! But they've already sold close to $40M.
Of course, this whole story is hard to believe. Lord is conveniently out of the country when his company goes public and the monster press release is released by Kos's people on the first day of CNDD trading. Are we to believe that Lord didn't know about the press release at that time and the market cap of the company. Why didn't he immediately issue a correction press release? What was his lawyer Jere Ross doing? He was in the country and saw what was going on, wasn't he? And wouldn't he know how to contact Hartley? Or some other officer of this company that just signed this monster contract?
The most likely scenario is that Lord is in on the scam and the trip out of the country is the excuse for the slow response from the company. That would give Kos enough time (i.e., stock volume) to inflate the company and sell their shares without getting Lord in trouble with the SEC.
The bottom line is that after the hype, they needed enough volume of the stock to sell their original 10M shares before Lord issues the press release intended to give Lord a clean alibi and also deflate the stock so Kos can make money on taking a short position in the stock just before the press release.
Interestingly, the most active brokers in Concorde stock on Friday included Newbridge, Sunstate and Intercoastal, all Florida-based. NewBridge has a history with authorities of "high pressure sales tactics"--i.e., it is a "boiler room." Either NewBridge Securities Corporation (Miami, FL) or Sunstate is located approximately 3 miles from Lord's home/headquarters.
Despite the bad press, Kos and company continued to hype CNDD in August 2004 In Heysek's letter to his subscribers, he completely forgets to mention the devastating press release that the real company issued that the previous press releases were bogus. Instead, the newsletter claims they are being attacked by shorts (which was true) and that this is a GREAT buying opportunity.
From: newsletter@USPennyStocks.com
To: [snip]
Sent: Thursday, August 12, 2004 3:18 PM
Subject: USPennyStocks.com Update
CNDD: Attack of the Short-Sellers Today, the common stock of Concorde America, Inc. was attacked by a group of short-sellers. For those of you who are not familiar with short selling, it occurs when individuals or groups get together to FORCE the price of a stock down in the hope that they can pick up those same shares at a cheaper price. In other words, they want to buy your shares cheap! We view this as a tremendous buying opportunity. Our recommendations are still in place, and we feel that CNDD will see a price of $38.00 per share over the next 6 months. If you are already invested in the stock, we see this as an opportunity to add to your positions. If you are new to CNDD, this is a great chance to accumulate shares at a price we won't see again. We will update you more on CNDD this weekend in our "Weekly Update" section. News Release Disclaimer - None of the views expressed in this email are of the Company, and NO company officials have been contacted regarding this information. Click here to read our full Disclaimer
$38/share?!?! You've got to be kidding. As I write this paragraph less than 3 months after they sent that email, CNDD's stock price is less than 50 cents (it was $4 in September 2004 and was under 20 cents on November 1, 2004).
You gotta admire their tenacity. And, by the way, in general, it is very difficult to short sell any volume of a pink sheet stock as far as I know. On 8/13/04, I asked my broker if he could short 1 share of CNDD. He talked to his pink sheets desk and they couldn't because they couldn't find even a single share to borrow to do this (they had 30 calls today wanting to do the same thing). So I couldn't short a single share!!!
Prior to 8/13/04, "locates" for short sales were available in larger quantities. I know one person who shorted 25,000 shares on 8/11/04. I received the following e-mail on 8/15/04:
After the press release disavowal, everyone wanted to borrow and it became impossible to get a "locate." When I called Goldman Sachs' stock loan desk on Thursday, I was told "everyone wants that one today," which may be the first time in the history of Goldman Sachs that so many people cared about a pink sheet stock. I am not sure what statistics regarding short sellers are required to be kept for pink sheet stocks, but I can tell you with certainty that by now every share that is available to be shorted is shorted. Insiders take special precautions (like taking physical delivery of their stock certificates or prohibiting their broker from lending) so that their shares can not be loaned. As a result, inventory for short sellers is limited to the public float less any public shareholders who take anti-short seller precautions.
Fool me twice? I guess you can do it. The net result of the "attack by shorts/great buying opportunity" e-mailing is the stock price on 8/13/04 is up over $4 and has traded over 2.3M shares today. So that's another $9M in "tax free" income for our spammer friends today alone even after supposedly being exposed by the company.
What's really cool though is that Jaynes, Kos, and crew, if they are smart, would be making money on every swing.
We might imagine that this was probably carefully thought out; that every swing is planned in advance. So they have the 10M shares and pump it up to $8 and sell the 10M shares. Then they take a short position in the stock just prior to the Lord "we didn't issue those press releases" press release in order to (a) give Lord a cover story that he is innocent and (b) deflate the stock so that they can cover their short position at a profit. That might be why there were no locates on the stock; because Kos and crew had already shorted everything they could find. They use the Lord press release as the opportunity to cover their short, and then take a long position, and start the promotion again, claiming this is an ideal time to buy and they were just attacked by the shorts.
If you are wondering why CNDD just doesn't register more shares and make a fortune, here's why: under reg 504, the company is limited to raising $1,000, 000 or less, by the sale of common stock, in a 12 month period. That was done by the current 504 exclusion on or about June 25, 2004.
Final note: In Heysek's newsletter to his subscribers, he noted this amazing fact:
In the final two trading days of last week, CNDD exhibited a swing in Market Value for both days of $1.4 Billion. Remember, the OTC Bulletin Board has a total Market Value of only about $2 Billion --- a statistic we present to ensure the average individual investor has a perspective on how visible CNDD has now become among the Penny Stocks, and in a relatively brief period of time.
Note that at its peak on August 12, 2004, CNDD had a market cap of $1.9 billion.
For more info, see the excellent article on CNDD on StockPatrol.
Scam#2: Storage Innovation Technologies, Inc (SGNJ)
Let's start with the management team on this WSP promoted stock.
Don Oehmke is the Chairman (and co-founder) of Storage Innovations Technologies. Previously, Mr. Oehmke was the Chairman & CEO of Ventana Consultants (1991-2004), a business consulting and venture capital firm. As its CEO, Mr. Oehmke operated at the highest organizational levels, for both domestic and international companies.
From 1985 to 1990, he was Chairman & CEO of Boucher, Oehmke $ Company, a securities broker / dealer with 26 offices in the USA and 5 in Europe.
Does that name sound familiar. You bet!! He bought Lord's shares on the CNDD deal! Our friend Don keeps popping up!
And you gotta love Tom's writeup on Don. On August 16, 2004,I did a Google web search for Ventana Consultants LTD. I got two hits: this page and a link to Ventana Consultants, Ltd. Zero hits in Google Groups. So for a firm around for 13 years Don sure has kept a low-profile for someone who "operated at the highest organizational levels, for both domestic and international companies."
Even more cool is this tidbit I stumbled across on the SEC website: Complaint U.S. Enviromental, Inc.. Here's an excerpt:
Beginning in or about January 1990, the D'Onofrio group began selling its holdings in USE stock to the public in an unregistered offering and at manipulated prices. The stock was sold to the public primarily through two broker-dealers, Freeland Co. and Boucher, Oehmke & Co. ("Boucher Oehmke"), a defunct broker-dealer that was expelled from membership in the NASD on or about August 23, 1991.
Damn!!! Tom forgot to mention that little gem in his write-up on Oehmke!! He probably didn't think it was material I guess.
On to the deal. On this deal it's even better. Don can buy the shares for nothin' because it's his company (along with Kos)! So unlike the CNDD deal where they supposedly "risked" $1M (they bought 10M shares at 10cents), on this deal there is no downside since they probably paid virtually $0 for the stock.
Actually, SGNJ came about via a reverse merger (sound familiar?) with NATIONAL BOSTON MEDICAL INC. This was an entity run by Daniel J. Hoyng. He was President and CEO. Hoyng has an interesting history. See for example:
Lawsuit against Hoyng for securities fraud
Business Wire Law Firm Goodkind Labaton Rudoff & Sucharow LLP Announces Class Action Lawsuit Against Infotopia, Inc
Stock Patrol: Hoyng files for bankruptcy
However, the "story" they (Kos and Oehmke) put together isn't as sexy as the big contract with the Spanish government billion dollar story of CNDD. So they can't get the volume up. They make only $100K a day on a good day. Although that is great money by most measures, it's peanuts compared to CNDD. However, the benefit is that they don't attract attention of law enforcement by keeping the scams small like this.
So that's two examples of a real pump and dump (CNDD), and an example of a "dump" (SGNJ). Those are the principal methods. It's all about the volume, not the price.
But wait....There's more to this story!!!!
But that's not the end of the story... I've learned a lot more about these folks since publishing the above information. That new information is included below (see More Information below). But first, a slight digression on how these guys can get away with this without any fear of being stopped by anyone; how they can completely violate the law right out in the open, be exposed on this page, and still promote with impunity.
Who sent me the fax?
So who do you sue for your junk faxes? Well, it looks like Rutkowski and Jaynes and a few more will be living in state housing for a long time so suing them may not be very productive. If you sue in small claims, you can get a quick judgment, but then you have to collect. So it's really risky suing these guys because they may not be around to enable you to collect.
I've personally decided to sue Heysek because (1) it is Heysek's analysis that is being promoted in the fax (2) Heysek and Kos direct the promotion of the site and control it and (3) it is a very reasonable assumption that Heysek is an officer and shares in the upside. Also, he's not going to comply with my subpoena (see Heysek suggested discovery questions), so he'll probably lose.
I have subpoenaed Heysek's financial records. I should have these by September 10 (the timeframes are regulated by statute to allow him time to object). I believe it is extremely unlikely that Heysek would be able to quash the subpoena; since Heysek says he isn't Worldwide Picks but just a writer, this is central to my case and it won't be quashed. After September 20, I will be able to share this information with anyone filing a case against Heysek where this information is relevant.
Heysek's receptionist at his HQ rent-an-office (Gloria Valerio) appears to have been specially trained in "process server avoidance techniques" by the "Heysek Legal Academy" aka Tom Heysek. Therefore, I used a process server who has been doing this for 30 years: Jeff Cunningham at 408-395-6778. He knows the proper drill to obtain legal service in these situations.
It's extremely unlikely that Heysek will comply with discovery since it would expose his business associates, so it's an easy case to win.
See Heysek suggested discovery questions for some ideas for your subpoena/document requests. Let me know using the contact link if I missed anything obvious.
In the unlikely event he does comply, please contact me and I'll be able to discredit any phony information he might supply the court.
Also, if he does comply with any of the requests, kindly have the judge hold it in the court file so that you can make a copy of anything he produces and send it to me using the contact link so that it can be analyzed.
Junk |
