Archive for the Internet Frauds and SCAMS Category

Separation of Fool from Purse

Posted in Internet Frauds and SCAMS on 20, April 2017 by nathanbusch

I recently received the following from an audience member.

I paid $500.00 for 5,000 shares. The shares tripled almost overnight. I’m an investor not a trader. I didn’t sell. Again, almost overnight, the price went to zero. Do I have any recourse? How can I get this out of my portfolio?

Because I so often hear and read of such stories, I have decided to put my response to his query front and center in this post.

I was not aware that TAGG was still being flogged as a penny stock. It is a fraud perpetrated upon those who are looking for a “get-rich-quick” scheme only to soon be separated from their purse.

Let us look at the basics of your transaction. You claimed to have purchased 5,000 shares for $500.00, which means that you paid $0.10 per share. Let us take this transaction apart in an exercise to demonstrate that you do not know what you are doing. Anyone who purchases a stock at $0.10 per share is not an investor: rather that person is a speculator. I am a deep value investor: however, I will not even consider any ticker symbol with a market price of less than $4.00. Also, you spent $500.00 on this transaction. I do not know which broker you used nor do I care. The arithmetic is simple. Say your trading cost is $10.00: that means you paid 2% of the total transaction amount in transaction costs. We will not even start to consider the bid/ask split problem, slippage, liquidity, & etc. By paying 2% going in and 2% coming out of a ticker symbol, you have already paid someone else 4% of the total transaction amount just so you can lose money on an ill-considered transaction: that means, you were betting that the market price of the ticker symbol would appreciate by $25.00 by the time that you intended to sell it. By the way, I would bet a dollar to a doughnut hole that you never thought about the rules by which you would sell the shares. If I am correct, you are not an investor: you are a fool intent on retiring poor and being a greeter at Walmart. Let us look at that $25.00 claim: you would spend $10.00 purchasing the shares; you would spend $10.00 selling the shares; and, you would have to make enough to pay the income taxes that $20.00 assuming that your average tax rate is 25%. This means that you were betting that the market value of the shares would appreciate 5% just to break even. What were you thinking?

Also, did you give any consideration to the people on the other side of this transaction: odds are that they were shorting the ticker symbol whilst you were intending to go long. I find it incredulous that any one would be long against a short on a stock trading at 10¢ per share: that is just too much to get my simple mind around.

Also, did you do any research on this company? Years ago before I purchased REGI, I travelled from southwest Minnesota to the other side of Des Moines, Iowa, to visit the plant that the company had in that location. The first thing I looked for was whether the parking lot was full of vehicles of the employees and what was the condition of those cars. That told me almost everything that I wanted to know about the company. Then I considered the condition of the plant, was it using electricity efficiently, was it using rail instead of semi for transportation. I then visited the office: were the employees happy with their work and their pay, & etc. Upon return home, I carefully examined the financials of the company; I read the transcripts of the past 4 quarterly investor conferences; I studied biodiesel credits and at what price were those credits were trading. In other words, I knew more about the company, most probably, than the employees working at the company. I established the rules by which I would sell the shares. Only then did I purchase shares. The appreciation in the stocks by the time that I sold was quite satisfactory.

As to what you can do now that you have lost money: first rule, never lose money; second rule, never forget the first rule. You could file a complaint with the FBI and the SEC. A few years back, an agent from the FBI contacted me about John Bell. Amongst all the information that I gave him, I informed him that because the FBI was so incompetent that they could not even find a buggar hanging out of their nose, they would never find or convict John Bell. John Bell is still alive, well, and perpetrating frauds upon idiots willing to believe his stories about “fantastic penny stocks”. With President Bannon in the White House, your chances of ever getting the FBI or the SEC to do any thing are about as good as your having a date with Ivanka Trump: good luck.

You could try to sue: good luck.

Here is my advice: register for automatic withdrawals from your paycheck every month to fund your 401(k) or 403(b) retirement account and utilize the matching program offered by your company. That matching money is a freebie, use it. Instruct the manager of your retirement account to put everything into either VTI or RSP. Leave the money alone until you retire at 72: you will be just fine.

And, please, do not try to invest in any ticker symbols on your own: you do not know what you are doing. If you insist on repeating such foolish trades, then first purchase and memorise the following books: Graham and Dodd, Securities Analysis; Graham, The Intelligent Investor; Philip Fisher, Common Stocks, Uncommon Profits. Also, stay away from anything regarding investing that was written after 1960. Further, turn off your television, your radio, and stop reading any news paper other than the Wall Street Journal, the Financial Times, and Barrons.

I hope that this helps.

Nathan A. Busch

 

Our John Bell has Returned, 7th August 2013

Posted in Internet Frauds and SCAMS on 8, August 2013 by nathanbusch

Readers:

It has been some time since I have had any reason to write about our mysterious “John Bell”. In fact, the last time that he had anything marginally interesting to say was at about the time that I broke my left leg. Nevertheless, today at 1501h, 7th August 2013, I received the following missive from him:

******************
Hello Everyone,

I have a very time sensitive pick that I may be releasing very soon.

Perhaps as soon as tomorrow morning.

I just stumbled upon this pick, I’m still doing my research but I’m very, very excited.

This is a NASDAQ pick that I believe could be a massive win for my subscribers.

Keep checking your emails and I’ll keep you updated.

John Bell

HacktheStockMarket

******************

The last couple of times that he has issued “magic stock picks”, a tiny handful of people might have made some pennies; however, a lot of suckers lost a bunch. He has since turned rather pathetic in his messages and, at one time, even was touting AAPL. Sad to see such a great SCAMSTER fall back to earth.

As his latest SCAM develops, I shall give my analysis and commentary with the goal of preventing at least a few people from losing their life savings on his “magic stock picks”.

I hope that this helps.

Nathan A. Busch

John Bell, 19th March 2013

Posted in Internet Frauds and SCAMS on 22, March 2013 by nathanbusch

At 0607h, 19th March 2013, I received the following e-mail purportedly sent by our mysterious “John Bell”

***************

Apple Computer (Nasdaq:AAPL)

The once darling of Wall Street, Apple has fallen back to earth. Ticking off a high of near $700 just 6 short months ago, the stock came all the way down to under $425!

That’s a 40% correction folks.

Of course as I was penning this Alert, Apple put on a little rally. Regardless, it is still trading at a PE of 10.

The company has a cash and investment hoard exceeding $137 billion, and will add $42 billion in earnings to that in 2013!

Apple and Exxon flip flop one another for the title of most valuable company on earth!

That cash hoard is important to my trade thesis. According to Howard Ward, chief investment officer at Gamco Investors Inc., the company will outline what it plans to do with that HUGE pile of cash by next month.

He also said that, “We’re going to get an announcement from the company as to how they intend to reallocate some of their cash. They will put a floor under their stock at a higher price than it is today.”

That’s a highly likely outcome in our opinion.

So, why the decline? First, everyone and their mother was long the stock. There were literally no more buyers.

Add to that the negative press lately, mostly centered around Samsung and its competitive smart phone line. We think rumors of Apple’s demise are grossly exaggerated. Apple is an innovator, and to count them out is likely a mistake.

On top of the pending decision on the cash hoard, rumors abound that a new, lower-priced iPhone is in the works, with a complete redesign of the casing using composite materials.

Meanwhile, Apple laptops and desktops continue to sell strongly, and they are just FAR superior products to the competition. No matter where I am in the world, the Apple store is ALWAYS packed…always.

Technically speaking we see chart support at the $425 area, which has already been touched. Apple rallied $11 on Friday as I was penning this alert, which was further confirmation that we may get the bounce I’m anticipating to the $500 area, where a nice gap exists in the chart.

Gaps always get filled, it’s just a matter of when.

Also, we have some nice divergences in key technical indicators. See the chart below. MACD was making higher lows, while the stock was making 52 week lows. This is non-confirmation and a sign that we could be entering a trend change, which in this case would indicate a move back up. Friday’s bounce may be the kickoff to that trend change.

How to Play it

Traders could simply purchase Apple stock around $450. After Fridays small pop you may wish to wait a couple days and see if we get a slight pullback for a bit of a better entry, anticipating a move to $500 in the next couple of months. That’s a gain of roughly 11%, not too shabby.

OR, for more risk-tolerant traders you could look at the May 2013 $475 calls. On Friday those calls closed at $11.05. A move to $500 by expiration on May 17th will put these calls at $25, which would be an increase of approximately 125%, over 10 times the potential gain in the stock.

If the move to $500 happens quickly, volatility will create an even greater premium on these options.

As I’ve said before, options are risky – you have to get not only the direction correct, but also the timing. Buying the stock is a safer move, but at a price hovering around $450 per share, even 10 shares will set you back $4500.

A gain of 11% on that, after commissions will net you roughly $500. Buying 1 option contract will cost you less than one quarter the cost of 10 shares of stock, yet stands to net you close to 3x the return if we’re right. It’s your choice.

If you don’t understand options, or if you can’t watch a screen all day to be able to catch the quick moves you should just trade the common stock!

Conclusion

To summarize… We anticipate that Apple could trade up to $500 per share sometime between now and mid-May. There is a gap in the chart at $500, which is why we set our initial target at that price.

The stock could go higher, and depending on how it looks if/when we hit our initial target, I will update and reevaluate.

Good luck!

John Bell

***************

As a preliminary matter, I am starting to have very serious concerns about our mysterious “John Bell”, if the above quoted e-mail was actually sent by him. Historically, “John Bell” has sent his e-mails out in the 0400 hour range; this was sent at 0600h. Also, typically, he usually has hyperventilating e-mails leading up to the big announcement of his “magic stock pick”. In this case, we were met by a distinct lack of fanfare: the parade marches through town without the band and nobody notices.

Also, it is an anomaly for “John Bell” to be making pronouncements of such mainstream companies as AAPL. He could not possibly move the market sufficiently with his meager group of victims to actually make any money banging the drum for an S&P 100 company.

Further, “John Bell” has demonstrated very erratic methods of analysis for any of his “magic stock picks”. In December of 2010, he was touting the benefits and strengths of the “margin of error” method identified and described by Seth Klarman; then he went through a fundamentals phase including the work of Joel Greenblatt on the “magic formula investing”; then he careened between technical trading and momentum analysis. He has now returned to technical analysis in attempting to explain why AAPL will gain 10% in the next few months. Let me be perfectly clear: technical analysis is nothing more than pure gibberish that can be roughly translated as “how to lose a lot of money very quickly.” Technical analysis is based upon the hypothesis that the market exhibits long-term correlations in the price movements. A multitude of studies have been published, and it is quite simple for an individual to verify this, that demonstrate the markets are correlated only over very short time periods, on the order of 15 seconds or less. No rigorous studies exists that would suggest technical analysis is usable for anything other than making the stock brokers rich.

As I have stated before, perhaps our mysterious “John Bell” would be far better off, and the SEC would not be on his tail, if he turned his considerable talents to identifying a successful investment strategy and applied that strategy religiously over the next ten years or so.

I hope that this helps.

Nathan A. Busch

Christina and “John Bell”

Posted in Internet Frauds and SCAMS on 8, December 2012 by nathanbusch

Christina:

It pains me to hear about people, like yourself, who lost a lot of money chasing these “John Bell” penny-stock SCAMS. I take it as a given fact that whenever any promoter gets involved with a penny-stock company it is a pump-and-dump scam. Since I first called Jammin Java a penny-stock SCAM on 23rd December 2010, I have been following this “John Bell” character, who I am convinced is actually Shane Whittle, and his techniques. I do my best to warn people to stay away from these situations. However, the lure of a 2-fold, 5-fold, or 10-fold profit is powerful even for old hands such as myself and my friend Dan. If I were in your shoes, I would simply take the loss on all the penny stocks that you purchased and learn from the lesson that there is no such thing as a free lunch.

One does not need to follow the advice of SCAM artists such as “John Bell”. It is possible to obtain handsome returns in the market if one is patient, willing to spend the time to learn how to spot genuine bargains, and be prudent in investing. For instance, on 31st July 2012, I created a small portfolio with equal amounts dedicated to the following companies: PFIN, CRAI, GAI, MPAC, and REGI; each was purchased at, or close to, the closing price on that date. On 1st October 2012, I purchased an equal amount of DCIX and added it to the portfolio. The following table tells the rest of the story.

Table 1: The design of a real-money portfolio producing a modest rate of return.
Symbol   Quantity Price Total Cost Price Today Market Value Gain
PFIN   189 5.27 1,006.02 6.0516 1,143.75 13.69%
CRAI   65 15.49 1,016.84 18.27 1,187.55 16.79%
GAI   222 4.50 1,008.99 6.64 1,474.08 46.09%
MPAC   228 4.38 1,008.63 6.80 1,550.40 53.71%
REGI   202 4.95 1,009.89 6.15 1,242.30 23.01%
DCIX   176 5.61 997.35 5.67 997.92 0.06%
Total       $6,047.72   $7,596.00 25.60%

This is not some list that I made after the fact by careful selection of winning companies. This is a real-money portfolio built using a particular type of investment strategy and the shares were purchased on the day that the method identified the shares. You may check the numbers for yourself: the total yield of the portfolio as at the close of the markets on 7th December 2012 was 25.6%. Let us see if “John Bell” can come anywhere near that over the course of time.

The transaction costs were $9.99 per company purchased.

Of course, one will experience gut-wrenching volatility with these types of portfolios. This portfolio was created inside of a ROTH IRA for the following reasons: (1) there is no required minimum distribution so there is no chance of being required to liquidate part of the portfolio at an inconvenient time; (2) the investment strategy will have an opportunity to smooth out the volatility over time; (3) all capital gains and dividends accrue free of taxes; (4) after five years, distributions can be made from the IRA free of both state and federal taxes.

I have now designed an investment strategy that provides an average annualized yield in excess of 33.5%. This strategy has been backtested over 14 years of stock market data. This particular strategy will be launched within the week in my ROTH IRA.

I hope that this helps.

Nathan A. Busch

The Latest “John Bell” SCAM is a FLOP

Posted in Internet Frauds and SCAMS on 7, December 2012 by nathanbusch

NGRC: 4th December 2012; the closing price is 92¢ per share.

“John Bell”: 5th December 2012; issues his importunate, hyperventilating rhapsodic missive about NGRC.

NGRC: 5th December 2012; the closing price is 71¢ per share.

“John Bell”: 6th December 2012; issues a further aggressive load of rubbish about NGRC.

NGRC: 6th December 2012; the closing price is 59¢ per share.

NGRC: 7th December 2012, 1142h EDT; the price is 35.5¢ per share.

I wonder if “John Bell” is enjoying the conversation with his insiders.

PostScript: “John Bell” should start taking hints from this Web log. Since I called the USGT penny-stock SCAM, it is up from 48.5¢ per share to 65¢ per share.

Nathan A. Busch

“John Bell” and Wayne Yamamoto

Posted in Internet Frauds and SCAMS on 6, December 2012 by nathanbusch

Strange: a John Bell and a Wayne Yamamoto both appear on a data mining list owned by the University of New Mexico Computer Science Department, which apparently originated at the Carnegie Mellon University Computer Science Department.

Strange indeed!

Nathan A. Busch

The New “John Bell” SCAM is, most probably, USA Graphite (OTC:USGT).

Posted in Internet Frauds and SCAMS on 6, December 2012 by nathanbusch

One of my audience members has indicated that he received the “John Bell” research on 4th December 2012 and that that research report indicated that the “magic stock pick” is involved in mining graphite. That company is, most likely, USA Graphite (OTC: USGT).

Not surprisingly, USA Graphite claims graphite mines in … where else for a “John Bell” pick but … Nevada. So, we can simply interchange USGT for TFER and immediately see where this stock pick is going to end.

Before 9th November 2012, this company saw no trading activity and its shares were listed at a price of 67¢ per share. On 12th November, 2500 shares were traded and the closing price was 60¢ per share. By 21st November, the share price had dropped to 40¢ per share on trading volume of 32,900 shares. On 4th December, the trading volume was 13,200 and closing price was 49¢ per share. On 5th December, 2012, the trading volume exceeded 815,000 and the closing price was about 55¢ per share. It appears, then, that the earliest fools received the name of the company early on 5th December 2012 and decided that that day was a good day to start losing their money.

USA Grahite was, up until about 13th January 2012, Magnum Oil, Inc. and PTM Publications Incorporated before it was Magnum Oil. By 29th February 2012, the company had changed its name to USA Graphite, Inc. The company is organized in Nevada and has its principle place of business at 848 N. Rainbow Blvd., Suite 3550, Las Vegas, Nevada. The telephone number is 603.525.3380. In the annual report filed with the Securities and Exchange Commission, the company stated that:

Our management has decided to focus our business on acquiring or merging with one or more operating businesses. Our efforts to identify a target business are not limited to any particular industry. As of February 29, 2012, we have not yet identified a potential merger or acquisition target. There can be no assurance that our management will be successful in negotiating the merger or acquisition of this target business and as such we continue to search for opportunities for other mergers or acquisitions.

We intend to focus our search on businesses in North America, but we will also explore opportunities in international markets that are attractive to us. We will focus our efforts on seeking a business combination with a privately held business in the oil exploration sector. We believe that owners of privately held small or middle-market companies may seek to realize the value of their investments through a sale or recapitalization or through a merger with a public company to access capital to fund their growth.

There is no assurance that we will successfully identify a potential target business, enter into any definitive agreements with any target business, or finally consummate a business combination with any potential target business.

For the fiscal year ended 29th February 2012, the company reported a net loss of $54,722 and a working-capital deficit of $139,722. The total assets were valued at $8,847 and the total current liabilities were $148,619.

Also, the reported CEO, CFO, Treasurer, and one of the directors was Patrick DeBlois and the secretary of the company was Eden Clark. The biographies of each of these people is as follows:

Patrick DeBlois has been the president, chief executive officer, chief financial officer, treasurer and a director of our company since October 27, 2010. Since 1999, Mr. DeBlois has been a director and is the proprietor of the Minakwa Lodge located in Northern Ontario. Mr. DeBlois has grown his resort from a grassroots venture to a global success story. Mr. DeBlois holds a diploma in Wildlife Management and GIS mapping from Cambrian College. Mr. DeBlois devotes approximately 7-10 hours a week to our business.

Eden Clark has been our secretary since December 15, 2010. From 1997 to 2001, Ms. Clark was a founding team member of Onvia.com Inc., a publicly traded company on NASDAQ, assisting it in the growth from a small start-up to more than 300 employees and $140 million in revenue. From 2002 to 2008 she was founder and CEO of Be Jane, Inc., a media and web company focused on the niche segment of women’s home improvement and décor, leading breakthrough partnerships on new initiatives with such companies as MSN and Bank of America, and was featured in hundreds of national TV and print media such as TIME, Entrepreneur, People Magazine, Wall St Journal, CNN, The Today Show, and more. From 2008 until present, Ms. Clark became president of eDivvy.com Inc., a private payment technology company, leading the company’s strategic initiatives, branding, and business development efforts. Ms. Clark devotes approximately 3-5 hours a week to our business.

As at 29th February, Patrick DeBlois owned 77,000,000 shares of USA Graphite. Thus, if the share price rises from 65¢ per share to $1.65, and if he still owns the shares, he will have a capital gain of $77,000,000. Not bad for a few months worth of work.

By 31st August, the total assets amounted to $2,003 and the total current liabilities amounted to $170,206. The company executed a share split and, as at 31st August, the authorized share position was as follows: (1) 10,000,000 preferred shares that had not yet been issued; and, (2) 800,000,000 shares, of which 169,400,000 had been issued and are now outstanding. As at 31st August, Patrick DeBlois still owned the 77,000,000 of the common shares, which he apparently purchased for 0.1¢ per share and the 92,400,000 were purchased for 0.1¢ per share: however, it is not at all clear as to who purchased the 92,400,000 shares.

On 8th November 2012, Patrick DeBlois and Eden Clark resigned from the company and Wayne Yamamoto was appointed as the President, CEO, CFO, Treasurer, Secretary, and Director of of the company. Wayne Yamamoto has no experience in mining, graphite, or materials science. The available biography states that:

Wayne Y. Yamamoto, brings over 30 years of successful leadership and innovation in the area of information technology, software development and corporate financing. Mr. Yamamoto was the President of Call/Recall which is the first company to develop and patent terabyte optical storage technology. As the CTO of W&W, Mr. Yamamoto led a team to create the first interactive television system for the cable industry. At Quark, Mr. Yamamoto was a member of a 5 man executive management team that led Quark to worldwide expansion, while maintaining industry high profit margins. Mr. Yamamoto has also held executive positions or served as a board member of several startups including ResTech, Sierra Medical, Photonic Storage Systems, Clareos, Arbor Software, and Solutions Technology.

It is not at all clear as to who currently owns the 169,400,000 issued and outstanding common shares of the company. However, it is probably a safe bet that Patrick DeBlois is currently empty handed.

As of the time of writing this blog, it is not clear that USA Graphite has removed the first shovel of soil to start a mine for graphite. The 8-K filed on 19th November 2012 states that:

On November 19, 2012, USA Graphite, Inc. (the “Company”) entered into a Property Option Agreement (the “Option Agreement”) with Nevada Mineralss Holdings, Inc. (“NV Minerals”). Pursuant to the terms and conditions of the Option Agreement, NV Minerals shall grant the Company with the right and option (the “Option”) to acquire one hundred percent (100%) of the mining interests in that certain Property known as the Blue Wing Mountains Graphite Project (the “Property”) which is comprised of a total of one-thousand nine-hundred and eighty-five acres (1985 acres) and is located in the Churchill, Elko, Pershing, and Washoe Counties of the State of Nevada. In order to exercise the Option, the Company shall be required to: (i) pay an initial cash payment of fifty thousand dollars ($50,000) to NV Minerals; (ii) issue an aggregate of five million (5,000,000) restricted shares of the Company’s common stock to NV Minerals; (iii) pay an additional aggregate payment of four hundred fifty thousand dollars ($450,000) over a three (3) year period; and (iv) pay a production royalty (the “Royalty”) to NV Minerals equal to two percent (2%) of the net smelter returns, per the terms and conditions of the Option Agreement. The Company will also provide funds for the conduct of a program of work to be undertaken by NV Minerals for the benefit of the Property of not less than $1,000,000 over four years. The Option Agreement also provides that the Company shall have a one-time right to purchase fifty percent (50%) of the Royalty in the Property for five hundred thousand dollars ($500,000). Pursuant to the Option Agreement, NV Minerals has agreed to enter into an eighteen month voluntary lock up agreement for the initial 1,000,000 shares it will receive upon execution of the Option Agreement.

The above description of the Option Agreement is intended as a summary only and which is qualified in its entirety by the terms and conditions set forth therein, and may not contain all information that is of interest to the reader. For further information regarding the terms and conditions of the Option Agreement, this reference is made to such agreement, which is filed as Exhibit 10.1 hereto and is incorporated herein by this reference.

This company is almost a carbon-copy of TFER.

Like Jammin Java, this company has a few pennies in assets, huge liabilities, which means that it is technically bankrupt, no business plan, and apparently no operational graphite mine.

Tesla has been in business since about 2003 and has been using graphite in the batteries for its automobiles since long before USA Graphite was Magnum Oil, Inc. Thus, absolutely no basis exists to conclude that USA Graphite is supplying the graphite for the batteries used by Tesla in its automobiles. Also, it is almost a given certainty that USA Graphite does not have a contract with Tesla to supply any graphite. This appears to be a pure “penny-stock” SCAM.

Of course, the fools of subhuman intellect over at Motley Fools are touting USA Graphite as an up and coming investment opportunity. See http://beta.fool.com/jdhutche/2012/11/30/tesla-motors-rally-mode-ev-buzz-grows/17585/.

I hope that this helps.

Nathan A. Busch