Pumpin’ and dumpin’

Capitalism fascinates me. Not necessarily the accumulating wealth part, but the process where a business grows and begins to need additional capital, so it takes itself public. Quite often a company has what they call an IPO, or initial public offering. As an example Google started out in its IPO at $85 per share as I recall and now it’s 5 times that. But for every Google you have to assume there’s 100 companies out there that simply tank because of a poor business plan or a harebrained product. Eventually these companies flame out to such a point that their stocks aren’t worth the paper they’re printed on. It seems like that’s the point where some “investment guru” decides to send out thousands of junk faxes (with names such as “Hot Stocks On The Street”, “On The Move Stock Alert”, “Green Stock Alert”, “Wall Street Insider”, or “Uptrend Finder”) to pump up the stock price so they can recoup their investments.

At our business we’re saddled with a number of these faxes a week. So just for fun I kept a few of these and decided to do an imaginary portfolio – $1,000 each at the price they’re listed at the day we received the fax, and track their performance through Friday’s close (the final trading day of 2006.) All of these are “OTC” stocks so they’re very thinly traded.

Allied Energy Group (AGGI) – close at fax date (12-12) was $0.53, closed Friday at $0.40.
Environmental Control Corporation (EVCC) – close at fax date (9-11) was $1.19, closed Friday at $1.39.
Global Beverage Solutions, Inc. (GBVS) – close at fax date (8-30) was $0.89, closed Friday at $0.42.
Homeland Security International (aka Sniffex, Inc.) (HSFI) – close at fax date (10-23) was $0.18, closed Friday at $0.04.
Hybrid Technologies, Inc. (HYBT) – close at fax date (10-20) was $6.80, closed Friday at $3.52.
Syngas International Corp. (SYNI) – close at fax date (9-18) was $0.40, closed Friday at $0.33.
TAO Minerals Ltd. (TAOL) – close at fax date (9-27) was $0.15, closed Friday at $0.10.

So the mythical $1,000 investments in each fared thusly:

AGGI would be worth $754.71.
EVCC would be worth $1,168.07.
GBVS would be worth $471.91.
HSFI would be worth $222.22.
HYBT would be worth $517.64.
SYNI would be worth $825.00.
TAOL would be worth $666.67.

The total “portfolio” would only be worth $4626.22 – off 33.9% from when it was bought scant months ago. Meanwhile, the overall stock markets gained double-digits in 2006 as a whole. There was one gainer out of seven but just randomly picking seven stocks on the NYSE or NASDAQ would probably get me more than one gainer.

So who’s making the money on these? Well, if you read the fine print at the bottom there’s a disclosure that the company which distributed the flyer was compensated for doing so. Here’s a list of the companies that distributed each and their renumeration.

AGGI – “OTM Stock Alerts…was compensated seventy three thousand five hundred dollars by a third party, who is not affiliated with AGGI.”
EVCC – “Sonora Associates Inc. has received one hundred twenty thousand dollars from a third party for the production and distribution of this newsletter.” (This was the “Green Stock Alert”.)
GBVS – “Pathfinder (Marketing) was paid $150,000 for the distribution of this report.”
HSFI – “Cyber (Communications Services) was paid $200,000 for the distribution of this report.”
HYBT – “UTF (Newsletter) has been hired by a third party and is expected to receive $18,000 for the publication and circulation of this report.”
SYNI – Pathfinder (Marketing) was paid $80,000 for the distribution of this report.”
TAOL – “Sonora Associates has accepted compensation in the amount of $120,000 for the distribution of this information.”

Folks, that’s a LOT of stock shares. And I’d have to say that UTF is really selling themselves short since their fee was much less than the others. Something tells me it’s probably pretty easy money because I’m thinking all you need is a nice word processor and a program that can broadcast faxes to thousands of numbers from your computer.

Which leads to the $761,500 question – who’s paying for all this?

In a few cases, it’s noted in the fine print. Sonora Associates “may own a non-controlling share of (Environmental Control Corporation) and reserves the right to sell their shares at any time without prior notice.” Uptrend Finder notes that “UTF and its insiders may from time to time buy or sell (Hybrid Technologies) common shares in the open market without notice.”

Both Pathfinder Marketing and Cyber Communications Services (responsible for the “Hot Stocks On The Street” newsletter) were paid by an outfit called Gemini Market News, Inc. And wouldn’t you know it – “Gemini Market News, Inc.’s affiliates, officers, directors, or employees may own shares of the companies described herein and in that event intend to sell such shares.” Can you say bingo? Seems to me they transfer money from one corporation they own to another (so no loss to them) and they pump up the price to dump the stock (hence, “pump and dump.”) Imagine my surprise when I looked up the stocks through my brokerage account and noticed that there was a spike in volume just after the faxes went out. Yeah, it could be a coincidence, but let’s be real here.

Legally, these fax distribution companies have to provide an “opt-out” number but from accounts I’ve read it’s perpetually busy. And what this also does is verify that you have a “good” fax number so their sister company starts pounding away with junk faxes. I chuckled during my reading on this as one person described how they made a loop of black construction paper and faxed one of these numbers back over a weekend. But if it’s done off a computer there’s no way to get back the faxer in this manner.

Before I finish, I don’t want to make this a vendetta against the companies who offered their shares on the OTC market. They can’t always help who’s bought their stock and the efforts to make a profit (or at least cut their losses) on those shares. Allied Energy Group, et. al. are apparently legitimate companies and who knows, it’s possible they may turn the corner and be successful. Unfortunately, with these penny stocks sometimes the odds are better of hitting the lottery than getting rich off the stock.

Author: Michael

It's me from my laptop computer.

60 thoughts on “Pumpin’ and dumpin’”

  1. Also once you have the company fax number, get some black construction paper and fax it to them a number of times. This should eat all of their ink. and everytime you get a fax fax the company again.

  2. I have saved all the junk faxes, have called the removal lines, have forwarded the faxes along with the complaint form to the Indiana Attorney General’s office, and I still get them too. Most recently, they are all coming from Cyber Communications Services. One web site for a Cyber Communications says that it isn’t them, it is a company in Afghanistan. That may explain why the FCC or other state governments can’t shut them down. It sure is frustrating though. If anyone finds the phone number for this place, please let us know.

  3. For whatever it’s worth – refer to:
    26: Jacob Cyber based in Uganda
    30: Dave One I received from Hong Kong
    37: J. Luesse ” .za South Africa

    I recently discover “CYBERFAX”
    http:/ww.cyberfax.com.pk/, located in Karchi, Pakistan. With the description and information included, perhaps #8 Karie and her IT guys can figure out what’s going on and give the rest of us “suffering souls” suggestions on how to hang the P & D’s.

  4. Let’s get organized – it it’s not Cyber Communication Inc., then let’s hammer the other suspects:
    Per Deus ex Macina: Paid for a reverse lookup on the number for Gemini (951) 587-8072 and found it register to: Javelin Advisor Group at 43180 Business Park Dr., Temecula, CA 92590, (951) 587-9100.
    Someone in the area drop by their office, get some names, pickup/ask for business cards, pick up any leterature lying around, check the walls for certificates & other useful information. Be sure to check (or ask for)a certificate from the city verifying they are duly licensed to do business in the city. Obtain names, License #, dates, etc. and then follow up by contacting the City’s Business Registration office. Pass along any useful information gathered to the rest of us other “suffering souls” so we can do our part in bombarding their fax, email addresses and other outside telephone lines. In addition, inquire and talk to their neighbors. Get business names, telephone #’s, business cards, etc. They may be useful later.
    In searching for Cyber Communications Services, LTD. I located a very likely PERP. CYBERFAX – http://www.cyberfax.com.pk/contact.html. “CYBERNET is the largest internal & data communication Network Service Provider in Pakistan.”
    They have a very interesting range of services that my include the P&D formula.
    Let’s give them a blast of Yankee know-how until they yell “UNCLE SAM” and clean up their act or rat on someone else.

  5. I am looking for contact information as well. They are faxing to a SECURED Army fax line. The BG and COL want it stopped as soon as possible and “go after them”. I can’t type what else they have said but you can’t tell a three star GEN no. Any help would be greatly app.



  7. Why not let Terra Nostra know how irritated we are by all these junk faxes? Terra Nostra may not be behind these faxes, but then again maybe they are. If we let Terra Nostra know what a PR nightmare this is creating maybe, just maybe, they will do something about it.

    My suggestions:
    Every time you receive a fax about Terra Nostra fax it to Terra Nostra, but don’t just fax it once fax it several times. The fax number is 1-626-796-5999.

    Heck, why not send them an email telling them how you feel: requests@tnr-corp.com

    If you want to call them, their investor relations phone number is 1-866-626-0088 (toll-free). Their main number is 1-626-796-0088. Don’t forget, everytime you call their toll free number they pay for the call.

    Maybe you want to snail mail them a copy of the faxes.
    Mr. Don Nicholson, President
    Terra Nostra Resources Corp
    790 East Colorado Blvd., 9th Floor
    Pasadena, CA 91101

    Don’t forget, Even if the faxes go to a computer or you leave a voice mail someone still has to take the time to review each one of them.

    These firms keep filling our fax machines with their junk faxes, well it time we let them know what we think. Let’s fill their fax machines, email boxes, snail mail, and phone lines with our disdain. Let them stop the junk faxes!

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