1. Fla. Commodity Fraud Scheme Ends In Judgment For Millions
A federal judge in South Florida has ordered a Palm Beach Gardens man and his company to pay millions for operating an expansive commodities trading scam6 that took 2,000 investors for $28.4 million. The judgment stems from a Commodity Futures Trading Commission complaint filed in 2010 against Philip Milton and Trade, LLC. Milton will now pay restitution of $10.8 million and a $7.6 million penalty, the CFTC said, while Trade, LLC will pay restitution and penalties of $11.4 million and $24.8 million. Relief defedants in the case will pay about another $4 million. Litigation against two other men still continues, the CFTC added.
2. Australian Broker Enters Plea To Trades That Only Made $371.07
A former Australian stockbroker is not likely to go to jail for insider trading, but his career is now in shanbles, The Sydney Morning Herald reported. The newspaper said Norman Graham, 53, the former director of the brokerage firm Lonsec, has pleaded guilty to two counts of insider trading. He admitted to dumping shares of Clean Seas Tuna, a fish farming company, after learning the firm was about to announce a $14.2 million loss. Perhaps because Graham's lawyer told the court his client had been ordered by investors beforehand to sell off their Clean Seas shares, the court is not expected to impose a jail term, the Morning Herald said. But Graham can never again hold a broker's license, and is barred from working as a company director for five years. His firm's profit from making the illegal trades? The Morning Herald said Lonsec made $371.07 on the deal.
3. SEC Charges Ill. Dad And Son In Stock Cherry-Picking Case
A father and son in the Chicago area have been charged with fraud for allegedly running a “cherry- picking” stock scheme that allowed them to make nearly $2 million in illegal profits, while their clients lost money. The Securities and Exchange Commission filed an action in federal court against Charles J. Dushek and his son, Charles S. Dushek, along with their investment firm, Capital Management Associates, of Lisle, Ill. Regulators said that from 2008 to 2012, the men placed millions of dollars worth of stock trades, but waited to allocate the trades until they knew whether the transactions were profitable. They then kept the winning deals for themselves and assigned the losers to the accounts of clients - many of whom were senior citizens, the SEC said. The senior Dushek used his profits to maintain his luxury home, buy a Mercedes, and take vacations abroad. His son allegedly used trading profits to support a lifestyle that included boats, ski vacations, and getaways to Hawaii. The SEC is seeking final judgments requiring the men to return all of their gains, along with penalties and interest.
4. Authorities In Britain Arrest Ex-BlackRock Fund Manager
A former money manager for the BlackRock funds in Great Britain has been arrested on insider trading allegations, the New York Times said. The newspaper quoted anonymous sources as saying Mark Lyttleton, 41, and an unidentified woman were arrested as the country's Financial Conduct Authority continues a crackdown on financial crimes. Lyttleton had managed two BlackRock investment funds, UK Dynamic and UK Absolute Alpha, The Times said. He is now believed to have left the company.
5. Orange County Yacht Dealer Is Arrested In Florida For Ponzi
A West Coast yacht dealer has been arrested in Florida and will be returned to California to face multiple counts stemming from an alleged Ponzi scheme. NBC Southern California reported that Edward Fitzgerald is charged with ripping off investors who kicked in money for his company, Dana Island Yacht Sales and Charters. The cash was used to buy and sell boats, but investors seldom got returns on their money, NBC said. Fitzgerald, who is charged with stealing $1.6 million, now faces 58 counts of grand theft, elder abuse, and fraud.
6. Three Charged In New Jersey For Phony Facebook Stock Deal
Three men have been charged in federal court with hustling shares of Facebook stock they did not actually possess during the company's initial public offering last year. The charges were filed in Newark, N.J. U.S. District Court against Eliyahu Weinstein, 37; Alex Schleider, 47; and Aaron Muschel, 63, according to Bloomberg News. The victim lost nearly $6 million to the bogus Facebook deal and other investments allegedly peddled by the three men, Bloomberg said. At the time of the transactions, Weinstein was already under indictment for an alleged, $200 million real estate fraud, prosecutors said. His bail in that case has now been revoked, and bonds for Schleider and Muschel were set at $1 million, the news service said.
7. Corporate CEO And Chairman To Pay For $3.5 Mil 'Misdirection'
The husband and wife top executives of a China-based company have settled a case with U.S. regulators, who charged them with stealing from their firm to buy a luxury home, cars, and designer clothing. The Securities and Exchange Commission announced the case against RINO International Group, its CEO, Dejun “David” Zou, and board Chairman Jianping “Amy” Qui. Without admitting or denying guilty, the two have settled charges that they misdirected $3.5 million in corporate funds to buy a home in Orange County, Calif. and to make other unauthorized expenditures. Zuo and Qui will pay penalties along with $3.5 million in disgorgement for a related class action settlment, the SEC said. They are also barred from serving as officers and directors of a public company for 10 years.
8. 'Just An Everyday Person We Trusted' To Serve Jail Time
North Carolina resident Jerry Lynn Helms had a successful business laying pipe for cconstruction sites, but told friends and neighbors he was also raising money to buy and resell used heavy equipment. They were happy to invest with him, the Gaston Gazette reported, and pitched in hundreds of thousands expecting hearty returns. Now they have learned it was a scam, and Helms used the money to try and save his dying company, Prestige Pipeline. He has pleaded guilty in Gaston County Superior Court to 14 criminal counts, and will serve from 2 ½ to seven years in prison. The newspaper quoted one of the defendant's victims as saying no one suspected wrongdoing: “We has just an everyday person we all trusted,” the investor said.
9. Tom Petters Wants His Current Prison Sentence To Go Away
Convicted Minnesota Ponzi scheme artist Tom Petters, who is scheduled to get out of prison in 2052, is highly anxious not to wait that long. A lawyer for Petters, who was convicted in 2009 of masterminding a $3.5 billion Ponzi, has now filed court papers seeking to have his client's sentence thrown out. WJON.com reported that the filing claims Petters' original lawyer failed to tell him prosecutors had proposed a 30-year plea bargain deal, instead of the 50 years he eventually received. As things now stand, Peters will be nearly 95 years old before his current sentence expires.
10. ASC Files Ponzi Case Charges Against Two Canadians
Candidian securities regulators have charged two men and their companies with running a multi-mllion dollar Ponzi scheme that lasted nearly four years. Canadian News Wire said the Alberta Securities Commission filed the charges against Dale St. Jean and Gregory Tindall and their companies, TransCap Corporation and Strata-Trade Corporation. The two allegedly raised $52 million between March 2005 and December 2009, promisting safe returns as high as 22 percent in what amounted to an “unsustainable Ponzi scheme,” the ASC said. The defendants have until May 27 to inform the commission of any additional evidence they wish to submit.
Melissa Davis, senior editor of The Street Sweeper, poses with celebrity stock picker Jim Cramer after a recent taping of his "Mad Money" television show. Davis worked as an investigative reporter for TheStreet.com, where Cramer serves as chairman, before assuming her current role at The Street Sweeper.
Lot78 (LOTE): A Glorified Fad Headed for the Discount Bin?
by Melissa Davis, 5/2/2013 10:43:16 AM
As an overhyped microcap name touted by dubious stock promoters, Lot78 (OTC: LOTE) sure looks like a fashion stock that will soon go out of style. After rocketing all the way from $1 to $9 a share in recent weeks – an inexplicable spike that has left the bleeding retailer with a bloated $500 million market value that now exceeds 1,000 times its prior-year sales – LOTE bears an awfully close resemblance to another hot fashion pick that wound up with the shelf life of a momentary fad.
Forget about all of the warnings that LOTE has included in its official regulatory filings for a moment: the modest sales, totaling less than $500,000 annually, that actually declined last year; the relentless losses and lack of cash that drove the company to borrow $40,000 from its founder just to stay afloat; the onerous debt, owed to its major shareholder, that literally exceeds the dwindling sales mustered by the company over the course of the past year; the doubt expressed by its independent auditor over its very chances of survival; even the insolvent status of the company reflected by the imbalance between the meager assets and the far larger liabilities recorded on its books.
In fact, go ahead and forget about the reverse merger that magically transformed the company from a defunct energy firm into a highflying retailer – using a vehicle long associated with “pump-and-dump” schemes – that has somehow exploded to reach double-digit prices rarely achieved (let alone maintained) on the lowly penny-stock exchange. Granted, under the terms of that reverse merger, the original owners of the empty shell wound up holding almost half of the stock that now trades under the LOTE symbol and now stand to make a tremendous fortune by unloading those expensive shares with the stock in overdrive. Of course, now that LOTE has mysteriously surfaced on a foreign stock exchange that’s particularly vulnerable to manipulation, those lucky investors could further boost their outsized gains by actually selling some of that overvalued stock short – effectively betting on its decline -- and hitting a nice jackpot on any future collapse.
Overlook the fact that the founder’s citizenship makes it virtually impossible for poor, disgruntled shareholders to seek justice, should the need arise. Indeed, filings state:
"Our sole officer and director, Mr. Oliver Amhurst, is a resident of Great Britain. As a result, it may be difficult or impossible for our investors to effect service of process within the United States upon him, to bring suit against him in the United States or to enforce in the United States courts any judgment obtained there against him predicated upon any civil liability provisions of the United States federal securities laws."
Forget that, anyway. Simply focus on the glossy newsletter mailed to thousands of potential investors – courtesy of a massive publicity campaign with a $2.5 million budget that actually exceeds the total sales achieved by LOTE to date – instead.
Lululemon: Sheer lunacy
by Sonya Colberg, Senior Investigative Reporter, 4/18/2013 1:44:10 PM
Lululemon Athletica’s pants fiasco is just getting worse, forcing the yoga gear company into a futile battle that we believe will persist and lead to missed earnings.
The pants debacle cost LULU an estimated $75 million -$86 million expected to cut earnings per share by 11 cents to 12 cents. But now, the company has pulled more garments and even more recalls could be ahead.
Last Friday, the company pulled clothing made of its candy-striped Luon fabric but did so quietly, notifying only a minority of customers who happened to catch the recall mention on LULU’s Facebook page. This comes almost a month after the initial recall of the core black Luon women’s pants. TheStreetSweeper wanted to ask LULU why the candy-striped bottoms were no longer listed on its website this week but LULU declined an interview.
Even more clothes may need to be recalled because the sheerness problem would be as bad or worse than the black Luon garments because of the characteristics of the fabric, according to a source with 29 years of experience, including many years with a key competitor.
Photographs show some colored pants offer little more coverage than panty hose.
The company, meanwhile, is striding forward in its tried-and-true fashion of not discounting, Day also assured analysts during the March 21 conference call.
Here’s what she said:
“We achieved these results in a very brand-appropriate way, and did not buy our comps through discounting, which ultimately would have harmed the brand. We maintained a full price strategy up to the holidays, then used our traditional warehouse sales as an effective and low-risk way to clear our inventory.” (italics added)
Just one week after she made that statement, the company quietly held a massive weekend sale.
LULU customers in New York, Dallas, Los Angeles and other cities sorted through racks loaded - and often reloaded - with numerous garments over three days. These were not just last season’s styles and colors but also new styles, according to our checks of more than 20 stores. In one case, the sale was so secretive that an irate customer said that, the day before the sale began in a New York City store, an assistant manager left a message on her phone saying there would be no sale.
The sales - which clerks or educators typically referred to as “markdowns,” (one former clerk says the word “sale” was strictly forbidden) - are common and continuing. Indeed, significant markdowns were offered in many stores we checked on again last weekend.
Educators in Las Vegas and Seattle stores said that customers can always find a rack or two of new and older styles marked down. In fact, the sales are directed by corporate headquarters, as a Vegas educator said that, while the store can exercise autonomy, it also gets weekly calls from corporate to learn which items to mark down.
LULU’s strategy of scarcity is the coveted key to keeping customers running to its stores to buy yoga gear on the spot at full price. This is not just something she alluded to in the March 21 conference call. Day has made it obvious time and again that brand-harming discounting is not the LULU way.
“Our guest knows that there’s a limited supply, and it creates these fanatical shoppers,” Day told The Wall Street Journal last year.
And in an interview on CNBC in January, Day reiterated LULU’s disdain of promotions: “You’re either going to play in that game of discount or you’re not. And we’re in the ‘not’ category,” Day said.
JAMN Finally Spills the Beans -- And It's an Ugly Mess
by Janice Shell, 6/2/2011 10:32:51 AM
To be sure, the 10-K offered investors little reason to sing. For starters, the filing reveals, this once-hot “coffee company” sells no coffee of its own at all. JAMN relies on a supplier based in frigid Canada – far away from the tropical Jamaican home of its co-founder Rohan Marley – to provide the company with an actual product to sell to its customers instead.
Back in April of 2010, JAMN inked a “supply and toll agreement” with Canterbury Coffee of British Columbia that gave it access to some brew. According to that agreement, JAMN relies on Canterbury to fulfill every role – save a minor one – normally satisfied by a firm that classifies itself as a coffee company. Canterbury purchases the coffee beans. It roasts them. And it then packages them in bags supplied by JAMN – the company’s only real product – for sale to the public.
JAMN signed this deal more than a year ago, right before Shane Whittle – a notorious Vancouver stock promoter – officially resigned as CEO of the company. But the company never mentioned that agreement, seemingly material enough to warrant at least a quiet 8-K report, in a single regulatory filing until now.
Jammin Java (JAMN): Hot Stock ... Bitter Aftertaste?
by Janice Shell, 6/2/2011 10:30:25 AM
It’s time to wake up and smell the coffee! That’s exactly what Jammin Java (OTC: JAMN.OB), a heavily promotedcoffee company, and – for very different reasons – TheStreetSweeper would like investors to do.
Since the beginning of the year, JAMN has miraculously risen from the ashes of the “Grey Market” graveyard to become one of the liveliest – and richest – stocks in the entire microcap arena. JAMN has seen its stock shoot straight toward heaven, soaring from 55 cents to peak above $6 a share on massive daily volume, with its market value nowtopping $355 million despite the company’s limited resources and operating history. (As covered in more detail below, two of the Internet tout sheets pushing JAMN the hardest effectively vanished -- disabled by their Internet servers -- on the day the stock’s trading volume exploded past 20 million shares.)
CCME: Few Signs of Life at 'Healthy' Chinese Firm
by Roddy Boyd, 3/23/2011 9:30:34 AM
Also, and this cannot be understated, hanging out on a sidewalk in Fujian–the sidewalks double as parking spots when the streets, which appeared to have been designed in the Han Dynasty, fill up–was not a viable option. There was also the matter of the world-class headache the Financial Investigator was developing from Fuzhou’s diabolical smell, an epic conflation of poor sewage treatment, air pollution and the smell of cabbage that made getting the hell off Dongjie street a matter of vital importance.
The Financial Investigator and his traveling companion for the trip, an American investor with extensive experience in China, decided to head upstairs despite our interview with the CFO having been cancelled at the last minute (with no explanation given.) We thought a quick tour of the offices and meeting a few other executives might open our eyes to a few things.
Though the language barrier was a little steep with the young receptionist–when we asked for writing paper, she provided Kleenex–we were in short order shown to their conference room and told to wait. It did not escape notice that pride of place in the conference room belonged to a framed certificate of participation from the Fall 2010 Rodman & Renshaw conference, the World Cup for reverse merger companies and the pumpers and touts who peddle them.
Eventually chief operating officer James Yu came down and after spending 30 minutes trying to understand who we were, concluded that giving us a tour wouldn’t hurt. Soon enough, his colleague, Vinne Ye–the chairman’s assistant–came out and took us around.
It was most eye-opening.more...
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