Has he said “No, I got this” when the time came to compensate the fellow who inked the words “Buy Low Sell High Never Die” in an old-timey font down the left side of your neck and “Mama’s Boy” down the right? Has he paid for the oil changes on your Harley? Has he helped you shop for the most luxurious of cat beds, as well as a set of duchess satin pillowcases to go with, for Mr. Whiskerson, and then winked at you and said “It’s on me” at the register? If you answered no to any of the above, you might want to fire your broker and get in touch with George Carris, who knows how to treat his clients right. Read more »
Today the Justice Department indicted nine people for operating “one of the largest international penny stock frauds and advance fee schemes in history” and as you’d expect from that description it was a very professional multinational operation.1 I mean, y’know, it was a penny-stock pump-and-dump scheme, one involving “distributing false press releases, announcing non-existent business ventures and fake mergers, posting false information on social media sites and bribing stock promoters and brokers,” but it was a penny stock pump-and-dump scheme that made $120 million, so that’s impressive.2
So, fine. Here you are having successfully executed a pump-and-dump scheme. You pumped, then you dumped. You have $120 million, other people have worthless stock. You could stop there and call yourself a pretty successful criminal. But then you get to thinking: the people you defrauded have something else, in addition to their worthless stock. They have something that is actually extremely valuable. They have: an abnormal willingness to piss away money on terrible ideas! They have a complete lack of common sense! And you know who they are!
So why not make some money off of that? A second-rate crook might think “well I’ll sell them some more penny stocks” but of course they’ve just been burned. They’re idiots, yes, but they’re idiots who’ve been put off penny stocks for a while. They’re still mad about the last penny stock. But what if there were some way to take advantage of exactly that fact? Read more »
If you wish to live like a lottery winner, you can take your roughly one in 175 million chance on Wednesday. Alternately, you can go into financial advisory, with much shorter odds of a very long prison sentence. Read more »
You’re going to have to try a lot harder than strippers, black jack, and a leased Mercedes to impress us. You’re competing with people who’ve spent millions on Caramel Macchiatos and priceless Teddy Bear collections. Think outside the box for once in your life. Read more »
Medical Device Company CEO Thought It Best Not To Be “100% Accurate” With Investors About Possibly-Exploding DeviceBy Matt Levine
Here’s a strange little SEC securities fraud case. Imaging3 is a small, now-bankrupt medical imaging device company that was developing a 3D scanner (pictured right, with CEO Dean Janes) that certain members of the medical establishment did not like, quite possibly because it didn’t work, hard to tell. Imaging3 sought FDA approval for its scanner and, in October 2010, the FDA rejected its application. On November 1 after the close, the company announced that it had received this rejection and held a conference call with investors. Janes, the CEO, was mad:
Janes informed shareholders and others on the call that the FDA’s rejection of the submission was not based on concerns regarding the device’s technology or image quality or the safety of the device. Instead, at numerous points during the call, he described the FDA’s denial as “ridiculous,” “administrative,” “not substantive,” and”nonsensical.”
During the November 1 call, Janes omitted any mention of the FDA’s specific and substantive concerns. For example, he never explained in any way that the FDA had determined that the use of certain sample images was “scientifically invalid and useless,” or that the FDA had expressed concerns about vibration hazards or overheating of the device.
So a difference of opinion then? Read more »
Let A Jury Decide Whether Hank Greenberg Is Fit To Still Be Running An Insurance Company (Into The Ground Or Otherwise)By Jon Shazar
It’s kind of old news but today’s SEC suit against MayfieldGentry Realty Advisors is still pretty amusing. Basically MayfieldGentry was a registered investment advisor with $750mm of AUM at its peak, something like $140mm of which belonged to its biggest client, the city of Detroit’s Police and Fire Retirement System. You get the sense that MayfieldGentry wasn’t a very good investment advisor; in particular it got the PFRS account through a massive bribery campaign directed at Detroit officials some of whom are now in prison for those and other massive bribery campaigns. Lotta bribery. But anyway against that backdrop what MayfieldGentry is now accused of doesn’t seem that bad:
In early 2008, [CEO Chauncey C.] Mayfield, on behalf of MGRA, secretly stole approximately $3.1 million from the PFRS to purchase two shopping malls in California. … Over the following months and years, as each of the other MGRA principals learned of the theft, they conspired with Mayfield to keep the theft a secret from the PFRS.
Ha well no of course that sounds bad. I mean, stealing. But actually “stole” and “theft” are perhaps slightly strong words for what happened. I can’t tell exactly what’s going on, and I suspect neither could anyone at MayfieldGentry, but from the complaint it sounds like they genuinely intended to invest client money in those strip malls, but were so used to being corrupt and/or inept that they couldn’t get it together to do that the right way, and so ended up (1) taking PFRS money without permission and (2) owning the California strip malls themselves. And you should have seen the look on their face etc.: Read more »