subject: Evil Pump And Dump Stocks Email Scam [print this page] Pump and dump stocks are normally penny stocks, OTCBB stocks, but in reality any low liquidity stock could be used. This is why I do not purchase low liquidity stocks and definitely never pink sheet stocks. Those of you long time readers who know me on a more private level are aware that I was scammed out of approximately $10,000 in just such a pump and dump stocks scam in a company called Plasticon that traded on the pink sheets.
It is a extremely treacherous world out there folks and you should be knowledgeable and ready for the time when a scammer eventually comes knocking at your door.
I was looking at recent SEC litigation and one such pump and dump stocks swindle gave me terrifying flashbacks from the scam I was a injured party of.
On July 9, 2010, the Securities and Exchange Commission filed a civil action against a Huntington Beach-based penny stock advertiser, Songkram Roy Sahachaisere, and his company, InvestSource, Inc. for committing fraud while promoting stock of their clients through vast electronic mail campaigns.
In its complaint filed in the United States District Court for the Central District of California, the SEC alleges that Sahachaisere, age 40, and InvestSource provide "investor relations services" by touting numerous penny stocks in its daily email newsletter, called the "Daily Digest," and by posting company profiles on its website. From January 2008 to March 2009, InvestSource sent nearly 450 email messages pitching these penny stocks to over 24 million recipients, receiving clients' stock as compensation.
There is a good possibility you got one of their penny stock spam email messages.
The complaint focuses on seven certain penny stocks that defendants hyped in which, the SEC alleges, defendants made ambiguous statements regarding the nature of their compensation on InvestSource's website and in the hype emails. The defendants also failed to disclose that they were getting rid of the very securities they were recommending investors buy. According to the complaint, between April 2008 and March 2009, defendants dumped over 5 million shares of these seven clients through one or more of their approximately 36 brokerage accounts, illegally reaping profits of at least $276,000.
InvestSource varied the layout of its Daily Digest, varying the number of penny stocks pumped or the kind of information presented, such as a company profile, press release, or alerts about the price or volume of stock trading. InvestSource's theme, however, did not change: it described its clients and their business forecast in positive terms and explicitly or implicitly suggested that stock traders purchase the penny stocks of the featured companies.
InvestSource's promotions normally correlated with increases in the penny stock's trading volume. For instance, five of the seven securities at question in this action (China Forestry, Inc., FIMA, Inc., Heart Health, Inc., New Asia Gold Corp., and Praebius Communications, Inc.) had considerable increases in trading volume during InvestSource's hyping. Its pumping of PureSpectrum, Inc. correlated with a enormous increase in price, from $0.14 to $0.42 per share, with a high of $0.77 per share during the hyping.
InvestSource and Sahachaisere did not divulge the compensation received or their securities trading in any of InvestSource's email newsletters. In its place, each email included the word "disclaimer" and a link to InvestSource's website. The link took investors to InvestSource's "main disclaimer" website page, which stated in pertinent part: "The companies listed on the 'Featured Companies' section of our website MAY have compensated the Company [InvestSource] to be profiled on this website."
This "main disclaimer" was materially false and misleading because it stated that: InvestSource "may" have been compensated for its services when, in fact, InvestSource or its principal, Sahachaisere, was always compensated.
The "main disclaimer" webpage continued, "Such compensation has been or will be made in cash and or issuance of securities of the profiled company. The specific compensation type and amounts that the company has been paid from each respective company is set forth on the transcript box accessible from each respective company page within our site. We may liquidate any securities that we receive as compensation when deemed appropriate to do so, however, we attempt to liquidate such securities upon receipt thereof PRIOR to performing any services for such company."
The SEC argues that this main disclaimer was substantially false and misleading for the reason that it declared that InvestSource attempted to liquidate securities it received as compensation for its services upon receipt thereof "PRIOR" to performing any services, when, in fact, InvestSource sold the penny stocks after several pumps recommending their purchase, and profited thereby; and the statement that InvestSource planned to sell securities before promoting them was considerably false because its practice was to sell securities while promoting them.
