><font color=red> <font size=150>"Based upon this hype, Winning Stock Picks shamelessly encouraged "conservative individual investors" to buy 2,000 shares putting half in an IRA and the balance in a trading account. More aggressive investors are encouraged to pony up $50,000, "starting with a 10,000 share block, and building a position from there.""
CONCORDE AMERICA, INC. (Pink Sheets: CNDD) - NEVER MIND
Investigative Reports
August 16 2004
Speculative investors recently became enthralled with the prospects of Concorde America, Inc. (Pink Sheets: CNDD), a little-known company based in Boca Raton, Florida, that says it has a plan to recruit and supply unskilled Central and South American workers to fill jobs in Europe.
But were those investors duped by a pair of misleading press releases that the Company never authorized? Concorde America says they were, leading to the possibility that a major stock manipulation scheme has been underway - and that its victims include both investors and the Company.
On July 27, 2004, the first day we could find reported trading numbers for the Company, Concorde America closed at a price of $3.10 on modest trading volume of $21,500 shares. On August 9th, more than 1 million shares of Concorde America changed hands, closing at a price of $5.38. The following day, August 10th, volume more than doubled, to over 2.35 million shares. That day, Concorde America closed at $6.69 a share.
The upward trend continued on August 11th, as over 5 million shares were traded and the stock closed at $8.90 a share.
The stellar rise of Concorde America defied logic. The Company does not file regular reports with the Securities and Exchange Commission so investors do not have access to timely audited financial information or verifiable details of operating developments. In fact, the public record has not contained any information about the condition of the Company, its financial resources, the state of its operations, or the nature and experience of its operating team.
Maybe investors just liked the name Concorde America. Or perhaps they were basing their investment decisions on a series of rambling, vague press releases that Concorde America now claims were not authorized.
The Monster Mess
It is a fair guess that the public was unaware of Concorde America when a press release appeared on July 28, 2004, proclaiming the launch of the "First Global 'Monster' Employment Service." The press release went on to explain that Concorde America had developed a strategy to address Europe's employment shortage by recruiting, screening and supplying "qualified workers from Latin American nations" to fill needs in the agriculture, hospitality, sanitation and security industries.
The prospect of transporting and transplanting Central and South American workers sounds intriguing - at first blush. To accomplish that goal, however, we suspect that the Company would have to overcome a laundry list of significant obstacles, from the mundane to the seemingly overwhelming.
On the more routine front, the Company would have to establish a system for identifying, screening, and qualifying potential candidates. This will no doubt involve considerable expense, trained personnel, and sufficient familiarity with the laws of every nation involved. The Company will have to identify potential employers in Europe, negotiate both wages for the workers and fees for Concorde America, and arrange for the transport and timely delivery of the employees.
Then there is the language barrier, which could pose a hurdle for workers headed for non-Spanish (or Portuguese in the case of a Brazilian workforce) speaking nations.
All of these obstacles could pale in comparison to securities concerns which have emerged in this post 9/11 world. In ordinary times, workers must obtain visas before they can travel to European countries and fill a job. Today, the threat of terrorism has necessitated even more careful screening of applicants. Even if Concorde America were poised to conduct those inquiries, European nations will certainly be inclined to run their own security checks before admitting an overseas workforce.
Not surprisingly, the July 28th press release did not address any of these issues or potential concerns. Instead, it put a decidedly positive spin on Concorde America's prospects, indicating that the Company already had taken an important first step by securing an "agreement" with the Spanish government.
Despite the absence of significant language barriers, Spain seemed to be an unlikely Petri Dish for the Company's plan. The March 11, 2004 terrorist bombing in Madrid had claimed 190 victims and persuaded Spaniards to withdraw from the world stage. Spain could be expected to proceed with caution going forward.
Nevertheless, the press release insisted that an agreement had been reached between Concorde America and the Spanish government, and offered this statement, purportedly from Concorde America's President, Hartley Lord:
The recent agreement with Spain is just the tip of the iceberg. The need for qualified labor is rampant throughout almost all the nations of the European continent. Once this contract is underway and others can see for themselves our global solution in action, we anticipate the floodgates to open.
Exactly what had the Spanish government promised to do to assist the fledgling Pink Sheet Company? The press release provided no details of the alleged agreement and did not identify any agent or agency of the "Spanish government." Instead, glossing over the agreement, the press release suggested that Latin Americans who earn $60 a week as domestics, security guards or field workers in their own countries, could garner over $1,000 a month in Spain, Germany or Italy, "provide their families back home with health and dental insurance benefits to their families back home and even be part of a pension plan."
Que pasa?
Beware of Unidentified Third Parties
The July 28, 2004 press release also included a hearty endorsement of Concorde America from an individual identified as Tom Heysek, who was described as a "noted financial advisor" who had conducted extensive research on the Company. It noted that Heysek, who recommended the Company as a "strong buying opportunity," had prepared a report on Concorde America, which could be found on an Internet site called Winning Stock Picks that is paid to tout public companies.
We note, however, that the "report" does not identify Heysek, or any other individual as its author. In view of subsequent revelations, that is not surprising.
In this case, the promoters had received 25,000 shares of Concorde America from an unidentified "third-party and not the profiled company" to disseminate an unabashed "advertisement" on the Company's prospects.
Unlike many of the tout sheets that appear on promotional websites, the Winning Stocks report is chock full of details and information, including an overview of the European employment market. Among its more striking claims, the report:
Characterizes the Company's planned "Trans Atlantic Worker Fulfillment" venture as a potential $200 Billion industry;
Claims that Concorde America has no competitors;
Says that Spain has entered into an agreement with Concorde America to provide over 350,000 Latin American workers over three years - a deal which will generate $2.6 billion in revenues for the Company. According to Winning Stocks, Concorde America has contracts to provide 150,000 unskilled laborers to an unidentified "private sector agribusiness in Spain," and an additional 50,000 "unskilled agri-business laborers" commencing in the second quarter of 2005.
That only adds up to 200,000 workers, but then again, who's counting;
Claims that the Company has recruited workers from Honduras to fulfill its first contract;
Maintains that 1000 of these workers will arrive in Spain on August 1st, and continue to descend on the Spaniards at the rate of 1000 per day for the remainder of the year;
Suggests that the immigrant workers will each enjoy an income of $1,260 a month;
Projects that the Company will realize estimated revenues of $630 million in 2004, $915 million in 2005 and over $1 billion in 2006; and
Projects net income for Concorde America totaling $420 million in 2004, $915 million in 2005 and $839 million in 2006.
How will Concorde America generate such healthy revenues? Winning
Picks describes the projected income for its "Earning Model" - although it stops shot of stating that anyone has actually agreed to pay those fees.
According to the promoter's report, Concorde America will generate fees from three sources:
First, it claims that Concorde America will earn a $1.47 million "placement fee" in consideration for recruiting the initial 350,000 Honduran workers;
Second, it states that Concorde America will share in the salaries earned by half of the workers, to the tune of $1.024 million. Winning Stock Picks assures its readers that this additional cost will not come directly from the workers' pay;
Third, the Company will earn $480 for each worker who renews his or her contract.
And, voila - or should we say olé - investors have a portrait of Concorde America, as requisitioned by a mysterious third-party.
Based upon this hype, Winning Stock Picks shamelessly encouraged "conservative individual investors" to buy 2,000 shares putting half in an IRA and the balance in a trading account. More aggressive investors are encouraged to pony up $50,000, "starting with a 10,000 share block, and building a position from there."
Winning Stock Picks even offers to recommend brokers who will execute the trades.
Some investors may have taken the bait, contibuting to the enormous volume and price rise for Concorde America shares from July 27th to August 11th. They already may be lamenting that decision.
Just how accurate was the information contained in Winning Stock Picks' paid "advertisement" for Concorde America - prepared by an author who is not identified on the promoter's website, at the behest of an unidentified third party? Concorde America has distanced itself from the July 28th press release, casting considerable doubt on the credibility of the report - and the agenda of its preparers.
Buy Buy Leads to Deny, Deny
Observers should have detected a percolating problem on August 9, 2004, when a second press release appeared, purporterdly to "correct" information in the July 28th release.
The August 9th press release began by stating the following:
we are advised by the company that from the second paragraph, second sentence, through to the end of the third paragraph, the original text should be replaced with 'Concorde America has entered into an agreement with one of Spain's largest agricultural firms. The need for qualified labor is rampant throughout almost all of the European nations. Once this first contract is underway and others through Europe see Concorde America's global solution in action, the floodgates will open. The Concorde America solution demonstrates how the problems of one area of the world can become the solution to another…'
Gone is the reference to an agreement with the Spanish government, replaced by the purported understanding between the Company and a Spanish agricultural firm. Far more disturbing, however, is the presence of the phrase "we are advised by the company" - which indicates that the Company did not issue the original press release.
So who did issue the July 28th and August 9th press releases? No author was identified, although the two announcements both contain contact information. The July 28th press release named "Paul Spreadbury" of WallStreet2MainSt Inc. as the Contact Person. The revised August 9th release identified the Contact as "John Richey of Concorde America"
But the Company says that neither of these men speaks for Concorde America.
In fact, Concorde America now insists that the two press releases were bogus and unauthorized. On August 11th Concorde America issued its own press release, disclaiming "any involvement in the composition or public dissemination" of the July 28th and August 9th announcements.
The Company has now directly refuted the contents of the July 28th press release, insisting that:
No Company official was interviewed or contacted in connection with the release;
Concorde America has never characterized its business plan as "unique";
The Company has not entered into any agreement with the Spanish government;
The Company has made no public prediction of future earnings, growth or profitability;
Concorde America has not specificed the number of workers it might be ble to supply under any existing or future contract; and
Paul Spreadbury of WallSt2MainSt, Inc., the designated "Contact" for the July 28th release, has no relationship with Concorde America.
The August 11th press release went on to explain that the August 9th "Correction" press release also was unauthorized, and appeared only after the Company contacted Spreadbury and other unnamed individuals seeking the source of the July 28th release. According to Concorde America, the August 9th pres release also was riddled with misinformation. The Company explained that:
The Company was incorrectly identified as the source of the new content;
The Company did not direct how the original statement was to be revised;
Concorde America had no contact with the author of the new statement; and
The Company does not employ John Richey, has no relationship, and has no knowledge of his existence or involvement with the press release.
While the Company does not refer directly to the Winning Stock Picks "report," it insists that the unauthorized press releases - and presumably the Winning Stock Picks "analysis" they incorporate - "make aggressive predictions about how the Company's business model may be received in Europe."
The Company did not deny that it has contracted with "one of Spain's largest agricultural firms," but insisted that the statements in the August 9th press release were dramatically overblown. In fact, Concorde America acknowledges that it has "no information as to the comparative size of the entity with which it has contracted."
Concorde America offers no meaningful details of that contract and no projections of anticipated revenues. In essence, the Company provides no information about its business, management or finances.
So what is the state of Concorde America? The Company's President, Hartley Lord, concedes that it is in a "formative stage." He also insists that the Company must "develop substantial experience in the European marketplace before [providing] any public information concerning our operational results or expectations."
That is a puzzling position. As a public company, Concorde America already is making its shares available to the public - so why decline to share information as well? Plenty of "formative" companies do.
Considering the evident effort to manipulate Concorde America shares, it is incumbent upon the Company to be more forthcoming. Indeed, the Company's disclaimer apparently has not had a sobering effect on the individuals running "Winning Stock Picks." On August 12th they issued an updated report predicting that Concorde America stock would hit $38 a share within six months.
The update also referred to a recent attack on Concorde America shares by "a group of short-sellers." Evidently, it was referring to the fact that the Company's shares had gone into freefall following the Company's August 11th disclaimer - dropping to $2.51 a share by the close of trading on August 12th. Winning Stock Picks apparently was attempting to rally a new wave of buyers.
That strategy may have worked. On August 13th, Concorde America's stock price doubled, to $5.00, on volume of more than 5.8 million shares.
Had short sellers depressed the stock price or, as seems more likely, did prices descend as investors dumped their shares in response to the Company's revelations. Once investors learned they had been misled did they simply cut their losses?
One significant question remains to be answered - perhaps by regulators. Has there been an effort to manipulate Concorde America Stock? Were the misleading press releases part of a "pump and dump" scheme - an effort to boost stock prices so that the unidentified third party or its cohorts could dump shares at a profit?
Or perhaps it signified something novel. Was this part of a "pump and short" scheme, where someone pumped up the value of shares by disseminating false information, planning to short shares as prices peaked, and profit when the truth was revealed and prices fell.
Someone should be asking these questions - and soon.
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