I cannot BELIEVE that nobody's posted this. My connection was down for five hours. Was SURE someone would have done:
Site Offering Aid to Investors
Is Linked to Penny Stock Site
By JASON ANDERS
THE WALL STREET JOURNAL INTERACTIVE EDITION
Stock Justice bills itself as a place where investors can get help with
stocks they believe have been manipulated. The Web site features a
"complaint sender" that helps investors write to the U.S. Securities and
Exchange Commission, and lately the site is trying to organize a
class-action lawsuit.
But Stock Justice isn't the unbiased resource that investors may think it
is. It is closely linked to another Web site, called Penny Picks, that
promotes penny stocks, but that relationship isn't disclosed on the Stock
Justice site.
The target of Stock Justice's proposed lawsuit is a former Penny Picks
stock selection that went sour. And the two men who run both sites at times
have gone through charades in on-line message boards to promote the two
sites, and their stock picks.
The Web sites are owned by Value Plus Marketing, a Tuckerton, N.J.,
marketing company founded and operated by Mark Schellenberger and Tom Clay.
Mr. Schellenberger says Penny Picks doesn't take any money for its stock
picks, and says neither of the Web sites generates any revenue. He says he
produces Penny Picks "just to stay in touch with the people. It's kind of
like a forum for what I think of these stocks." Both men say they own some
of the stocks featured on Penny Picks.
All of this points up the risks that investors face in using the Internet
for investing information. While it is easy to construct a Web site that
looks authoritative, it is difficult for readers to determine the expertise
or motives of those who run the sites.
Stock Justice provides a package of information for investors. It includes
forms that readers may use to send complaints via electronic mail to the
SEC, as well as phone numbers and mailing addresses for the agency, and a
copy of a statement the SEC released recently to warn investors about
manipulation of small stocks. The site also includes links to information
about the standards that companies must meet to list their shares on
markets, or to have them quoted on the OTC Bulletin Board.
Stock Justice doesn't specifically refer to Penny Picks by name. But amid
the regulatory material, the site includes hyperlinks that send users to
message boards and an on-line "chat" page on the Penny Picks site. Until
recently, Stock Justice also had a prominent link to a featured stock on
Penny Picks.
Mr. Clay, who came up with the idea for Stock Justice, says he thought such
a site was needed because of "all the manipulation and deceit" going on in
cyberspace. "You've got to be careful on-line. You don't know who you're
dealing with. Anyone can go into the boards and hype," he says.
Still, he acknowledges that he and Mr. Schellenberger have at times
misrepresented themselves on message boards in an effort to promote their
Web sites. Mr. Clay says that he and Mr. Schellenberger have posted
messages about the sites where they pretend to have no affiliation to them.
Mr. Clay, at times, "pretends to be the dumb investor," he says. In one
posting promoting Penny Picks, he wrote, "Nice site, found it through
Yahoo." The posting was made to a message board on the Silicon Investor Web
site. Mr. Clay says he doesn't see anything wrong with these on-line
conversations. "We're trying to educate people," he says.
They have done the same thing in connection with a favorite stock pick,
Mountain Energy. In July, Mr. Clay, posting on a Silicon Investor message
board under his alias "Thomas Patrick," called attention to Penny Picks.
"Man, pennypicks.com sure is popular of late. LionHeart, you behind this?"
he wrote, referring to Mr. Schellenberger by his screen name. Mr.
Schellenberger, as "LionHeart," replied: "No, not I. I mentioned [Mountain
Energy] to pennypicks.com. Mark Schellenberger, the Web site owner, said he
would look into it."
John Stark, head of Internet-related enforcement matters at the SEC, says
there is nothing inherently wrong with creating a Web site to promote the
stocks you own.
"I think the first thing we have to be concerned about is people spreading
false information, and using Web sites in the context of microcap fraud,"
he says. "I have heard of people going around talking about companies that
they own and trying to drum up excitement. It's no different from how stock
promoters work, but it depends on a case-by-case basis whether or not that
is market manipulation."
Mr. Stark declines to comment specifically on Penny Picks or Stock Justice.
Mountain Energy has since become the focus of venom on Stock Justice and
Penny Picks, after the company ran into trouble with the SEC. The agency
set a two-week trading halt in Mountain Energy's stock last month, amid
allegations that the Texas oil company disseminated faulty information
about its land holdings.
Mountain Energy on Monday issued a press release saying it had discharged
all of its employees because it did not have enough money to continue
operating. Now Stock Justice is gathering information from investors, and
says it may launch a class-action lawsuit against Mountain Energy.
Mr. Schellenberger says he still has his holding in Mountain Energy stock,
which has fallen sharply in value over the past month. Mr. Clay couldn't
immediately be reached for comment on whether he still holds stock in the
company.
A spokesman for Mountain Energy couldn't be reached for comment on the
possible suit. The company has previously conceded some press releases may
have been inaccurate, but said those releases were issued by previous
management.
Mr. Schellenberger had been a strong backer of Mountain Energy. Using his
"LionHeart" alias, he regularly talked up Mountain Energy's stock on
Silicon Investor, often making references to the Penny Picks Web site. "I
am not telling you to invest in this stock, BUT if you are looking for an
excellent potentially rewarding and VERY CHEAP stock, here it is: MTEI," he
wrote in one message, referring to Mountain Energy by its stock symbol.
Even after the SEC halted trading in Mountain Energy, Mr. Schellenberger at
least initially held firm in his support for the company, suggesting that
the SEC inquiry was a good thing as it would clear Mountain Energy's name.
In one message board post, he wrote, "Regardless of what happens, this
company is NOT a scam." Message board participants have long traded barbs
over the merits of investing in Mountain Energy.
Only after Mr. Schellenberger's recent about-face on Mountain Energy, and
the launch of Stock Justice's lawsuit crusade, were the connections between
Stock Justice and Penny Picks finally revealed. But Mr. Schellenberger has
continued to shield his identity on-line.
On Sunday, a Silicon Investors message board participant wrote that she had
been told LionHeart was behind both Penny Picks and Stock Justice. Mr.
Schellenberger, posting as "LionHeart," acknowledged his involvement in the
sites, but didn't make his identity clear. "Where's the secret? I've been
posting for both sites. Stock Justice I'm heavily involved with, not my
site. Penny Picks is my responsibility. Both sites are owned by a Mark
Schellenberger."
Mr. Schellenberger says he hasn't actively tried to hide his identity
on-line, and says "a few people know" he operates the Penny Picks Web site.
"I don't really go out there and say this is my site," he says. "There is
no hype. There is no 'this baby is going to outer space.' I wouldn't call
myself a stock promoter."
Read it and when you're through, let's ask LH a few questions... He's the guy who's got all your personal info, after all...
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