Sam Antar: Inside a white collar criminal's mind

Sam Antar is a site friend round here, as he runs the excellent scambusting website White Collar Fraud that is out there pointing the finger at dubious accounting practices and SEC filings in U.S. listed companies. And Antar should know, as he himself is a convicted felon for accounting fraud (check out his highly entertaining posts and disclaimers that tell you straight who he is right here).

So National Public Radio has, as part of its Planet Money series, interviewed Sam Antar and the result is out today right here in podcast form. If you want to know how the white collar criminal's mind works and just why people feel compelled to rip others off via dubious enterprises (and my stars, there's plenty to go around in our chosen field of junior miners), the Antar interview is well worth listening to. Here's the link again so no excuses, leave this humble corner of cyberspace immediately and do something worthwhile with your online time. Here's the blurb from NPR to get you in the mood:

In the seventies and eighties, the Antar family ran Crazy Eddie, a popular electronics chain known for its frenetic commercials.
The business was crooked from the start, but the fraud got more serious when the family took the company public in the 1984. In 1987, the Securities and Exchange Commission investigated the family and discovered years of inflated profits and overstated income.
On today's show, one of the masterminds of the fraud, Eddie's cousin Sam Antar, explains how they did it and why it worked for so long.

Mo' Richard Fifer

A lot of very interesting feedback and reaction to the post yesterday on Richard Fifer, chairman of Petaquilla Minerals (PTQ.to) so far, and for what it's worth I've spent a good chunk of this morning forwarding the original PDF to people (perhaps people with a slower download link speed are having the problems, because others get to download the 4.9Mb PDF without grief).

One point raised by a couple of mails has been "OK he did prison time for cocaine dealng but dude, it was 1975, he did his probation and may have turned over a whole new leaf" or words to that effect. Well maybe, as long as he had by then turned over a new leaf by and since then has been an upstanding member of the bizworld. Unfortuntely for the people who have had dealing with Fifer since his drug dealing days that's a crock, so next up we'll show you how he tried to defraud another member of the Panama mining community to the tune of nearly U$500,000 in the 1990's (with all the necessary documentary evidence, of course) and only got reeled in by the courts six years after the scam he pulled. New leaf my ass. Watch this space.

IKN Uncovers Gold Mining Fraudulent Scam

Peggy Dodson (for it is she); Welcome to your

house of pain, scumball scamster

Today IKN reveals a gold mining scam. Not a cheap-shot junior mining company trying to pull a fast one, nor a scummy newsletter writer skirting the edges of what's legal or illegal. No, this time we're talking about a full-on, no-holds-barred, dirty, criminal and illegal fraud operation that's designed to bilk people to the tune of THREE HUNDRED AND SEVENTY-MILLION DOLLARS (I put that last bit in capitals to catch your attention).

Ladies and gentlemen, let me present Peggy Dodson (photo above). She heads up the Urban Broadcasting Corporation TV station out of Harlem NYC, she describes herself as a "...professional speaker, visionary, creatress and business professional." And now to add to her career history of jazz singer and broadcasting entrepreneur, Peggy is branching in the gold mining business...in a big way.

All that preamble is to get you to download this PDF report. Do it now, download and read what Peggy is trying to offer to the world, because if it weren't so brazenly criminal and had the potential to rip off thousands of naive people it would be funny.

The basis of this fraud is a 160 acre gold mining claim in Kern, California called 'Gold Pan'. Peggy, along with her associate Jeff Magnuson and probably a whole team of fraudsters in the background, are pitching to raise U$370,000,000 to develop Gold Pan via the issuance of senior secured collaterized notes (i.e. bonds) that come in $100,000 sized packages. Or in other words, the minimum investment (however in this case, when you see the word 'invest', please read 'flush money down toilet') that Peggy Dodson is trying to get from you is U$100,000 per tranche of this debt issuance. The debt is pitched as coming with an 8% coupon that would be paid half yearly for 20 years, beginning in 2011. Debt maturity is in 2031.

When the money is raised, the pitch tells us that Gold Pan will be put into production and will make lots and lots of money. However, the numbers used are straight out of fairytale land and here are a few for your reading enjoyment. We are told that:

1) Gold Pan is a placer-type deposit that has 64.333m tons of mineralization (page 6)
2) That rock can be processed at the rate of 3.68 million tons per year over a mine life of 20 years (page 34).
3) The gold that comes from that throughput adds up to 1,711,200 ounces per year (page 34)
4) EBITDA is calculated at U$1.3Bn (yep, that says one point three billion) per year with gold priced at U$900/oz (p34)

The numbers are, quite simply, ridiculous. Just to pick one of those sets out the hat, to get 1.7m oz Au from 3.68mt throughput means that even at 100% recoveries the gold content would have to be at 14.5g/t! For a placer deposit! In California! And nobody's ever heard of it before! My name is Franz Kafka, welcome to my world.

And this is the business plan that Dodson, Jeffrey Magnuson and whoever else is behind this fraud is pitching to people in order for them to hand over cash in lumps of $100,000 at a time to a minimum of $35m and a maximum (God forbid it) of $370m, which according to the pitch would be collateralized on the property itself! There is of course some vague promise of buying insurance coverage for the bonds, but by the time that one becomes a questioned issue these scamsters will be in Tahiti.

Here, for example, is an image that Peggy Dodson is using in her fraudulent activity that tries to convince people the bonds offering is all on the level. I love that "not created by Bloomberg" bit!

Hmmm...I wonder whether the Mayor of
New York knows about this screenshot?

But if that isn't enough to convince you yet, there's even more evidence of fraudulent activity. Besides the fact that Peggy Dodson and Jeff Magnuson have refused on several occasions to hand over an mining engineer's report on the Gold Pan property that is supposed to exist, the person named as "Lead Mining Manager" is also falsified.

Your author has been in contact this weekend with the man named in the file. He is a bona fide, legitimate and professional mineral economist, geologist, minerals appraiser and valuer who we'll call 'TE' here, as I don't want his honest and good name appearing in Google searches concerning this fraud. When I mailed TE and asked him if he'd ever heard of Dodson a reply came quickly and read (extracted):

I have had a few brief exchanges with Ms Peggy Dobson (sic) by telephone and e-mail over the last few months about doing some work for her. These were about an association placer claim in Kern County, California. The discussions have not reached the stage of a contract for work being drafted. Some mention was made by her initially of having me be her mine manager, but as of yet, I have not been retained in any role by her.

I then sent TE the pitch PDF that you can download on that link above (or here if you like), explained a little about the highly dubious numbers being used by Peggy Dodson and pointed out that his name and professional biography was being used to sell the scam. He wrote back (excerpted):

Thank you for bringing this very unsettling use of my name to my attention and for sending me the entire document. I will forward your message with the attachment to my attorney today.

So the only other member of management aside from Peggy Dodson listed in the pitch for this debt raising has no idea he'd been named as 'Lead Mining Manager' and as soon as he'd heard about this immediately contacts his attorney to make sure his name isn't sullied!

We suspect that Peggy's plan is to offer this business opportunity to people that have little or no idea about mining, because if you take a look through the pitch sheet you'll note enormous gaping holes in correct disclosure all over the place. However, Peggy made a bad mistake last week and sent the pitch to somebody that actually knows about mining. Even worse for Peggy, that person happens to be a friend of IKN and forwarded the pitch to your humble author, already noting that it was the strangest scam he'd seen for quite a while. Therefore full kudos is deserved to the IKN friend who will be making sure the SEC and/or the Attorney General knows about Peggy Dodson and her bright ideas for wealth in the very near future.

So if you get approached by Peggy Dodson or Jeffrey (Jeff) Magnuson or anyone else offering you the deal of a lifetime tied to the Gold Pan placer gold deposit in Kern County California, run away fast. This is a scam, it's fraud, it's illegal and if you give them your money you will never, ever see it again. IKN, signing out.

Regarding voter fraud

Here's a question for you: Why does the USA get all hot and bothered about voter fraud in Iranian elections but totally ignores the most blatant vote rigging and number manipulation possible when it comes to the joke election in Honduras?

"Honduran coup regime's claims about 60% turnout at free and fair elections is revealed as fraud. Also implicated in the video are the wide array of media outlets and governments that have unquestioningly accepted the electoral data of a regime that overthrew the last elected president."

This Real News Network video blows the lid off the affair in this must watch 12 minute report. Hat tip delacour at LANR.

Capella Resources (KPS.v) and a Trip Down the Investor Relations Rabbit Hole

Our scamsters over at Capella Resources (KPS.v) came out with news last night. They've hired a firm of investor relations to help promote their rip-off by the name of Senergy Communications. Based in Vancouver (just across from the Hotel Vancouver in fact), Senergy provides (ahem..clear my throat):

"strategic investor relations, public relations, and (sic comma) marketing solutions that are customized to the needs of your organization".

Senergy also boast of having a 30,000 name database of North American investors.

In other words, they're a bucketshop pumphouse that are about to phone 30,000 houses in the next couple of weeks to see if they can dig out a patsy or two. However, by their fruits shall ye know them (Matthew 7:16 dude on a hill talking to a crowd 2,000 years ago) so let's see how Senergy clients have been getting on recently.

Let's kick off with Troymet Exploration (TYE.v) who hired Senergy in August last year to tell the world just how wonderful they really are. Let's check the chart, and.........
....hmmmm. I've seen better, has to be said.

Never mind, how about Senergy's previous client, Petro Vista Energy (PTV.v). When Senergy got the job of relaying to the world the stuff that PTV.v was made of the stock stood at $0.75.

Now it's at 20 cents. Time for a quick joke! Q: How do you make a small fortune in penny stocks? A: Start with a large fortune and believe what they tell you.

Then there's "True North Energy" (T8E.f), another client of Senergy's...
.......but you should be getting the picture by now.

However my fave story is that of Fox Petroleum (FXPT.ob) that hired Senergy to promote the company back in June 2007 (not July like wot I writted on the chart). Before getting fired by FXPT in September 2008, Senergy had overseen the stock price as it moved from $5.15 to $1.85.

Fox is now a $0.35 company. Death spiralz iz wot death spiralz duz and Fox were not happy bunnies with the service provided by Senergy. The telling phrase come in FXPT's filing on the matter that states;

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On September 1, 2008, we terminated an investor relations agreement with Senergy Communications Inc. whereby Senergy Communications Inc. provided investor relations services to us for US$10,000 per month

We terminated the agreement with Senergy Communications Inc. to improve the investor relations facility for new and old investors.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

You just can't the staff these days, can you? And those four were the only companies still in existence that have been mad enough to hire Senergy for IR work, according to my Google skills anyway (feel free to correct me if you know of any other suckers). So this is the cruddy IR firm just hired by the even cruddier Capella Resources to pump its BS to a bunch of greenhorns in the days to come. Just don't say I didn't try to warn you.

Capella Resources (KPS.v)

Well, it looks like the stock price has reacted nicely to this post last week...LOL!

As for that $5m placement the company was trying to scam at $0.73 a pop, as they say round these parts "sigue participando" :-)

But seriously, it's fine that the scam has been discovered and the PPS plummet, but really these people deserve to be in jail. The rats behind this scheme have done this kind of thing umpteen times and will just do it again if allowed to, but the supine OSC just sits backs and does nothing. And really, after all is said and done, the OSC is just a reflection of the nation in which it operates as Canadians don't kick up the fuss they should. For every Vancouver Sun David Baines (who gets them wrong ocasionally too...he was wrong on his recent take of Agapov imho) there are a hundred Brian Graceys, but you guys up there never weed them out. Those who don't learn from history are condemned to repeat it.

All Capella Resources scam posts linked here

Dalmady explains Stanford

My favourite type of blog, blogger or article comes when an expert in their corner of the world can explain tricky concepts in a way that most everybody can understand. It always reminds me of something that particle physicist Richard Feynman used to say about how it's perfectly possible to explain even the most difficult of concepts in his field to a class of freshmen. For the record, this is why I like and appreciate econobiz bloggers such as Brad Setser, Jurgen Schuldt, Felix Salmon, Yves Smith, Farid Matuk, Gary BiiWii, Paul Krugman and also why people like Tim do a great job on El Salvador, RG equally on Mexico, Plan Colombia & Beyond on its subject etc etc. All those people and many more gooduns are linked over there on the right.

Alex Dalmady (Quack!) shows today that, in my opinion and according to the same criteria, he's also a top blogger. Dalmady has written a post today that explains just how the internal structure of the Allen Stanford empire was set up, why the "tier 3" assets are so important and how much of a fraud Stanford really is. I really don't think this subject can be explained better than in Dalmady's post, as anyone with a modicum of financial knowledge and experience will 'get it' straight away. One of those things that, after you read it, makes you ask yourself "Why do people always make finance sound more complicated than it is?".

It's a wonderful piece of writing, edifying, entertaining and educational. Here's the link. Go read.

More on Capella Resources (KPS.v) and the scum behind the scam

This is an update to this morning's post which can be found below or on this link.

My oh my, what a company! Check out this link at one of my fave mineblogs, I Think Mining. Capella has a real reputation in the trade, as does the puppeteer behind the show, Brian Gracey.

Also unmissable is David Baines report on the ultra-shady Gracey, linked right here. Here's how the Baines report starts:

Brian Gracey's business doesn't look like a cash cow, but it is.

His office is located on the fourth floor of the tired Credit Foncier building at 850 West Hastings. The sign at the entrance says "apella Resources," a wounded vestige of Capella Resources, one of many TSX Venture Exchange-listed companies that he has controlled or managed during his two decades on Howe Street.

His office is, well, shabby. Some old steel filing cabinets, a couple of desks, no receptionist, just somebody who answers the door if you knock loudly enough. But appearances can be deceiving. Gracey has made a good living on Howe Street, good enough to afford to live in a $2.2-million home in the British Properties.

CONTINUES HERE

Also worth a quick look is this post from a blog back in 2006 that shows Capella Resources has been pumped and dumped previously....not a surprise, though.

The more you look, the more incredible it seems that the Canadian OSC regulators have never lifted a finger to protect innocent retail shareholders from these criminals. Now you know why I keep on calling the Canadian market one of the most corrupt in the world.

Related Post

Capella Resoures (KPS.v): A fraudulent scam for the ages

Capella Resources (KPS.v): A fraudulent scam for the ages

My jaded cynicism of Canadian junior miners, their scams and dubious managerial decisions designed to screw retail shareholders is well documented on this humble corner of cyberspace. However, every now and again a story comes along that leaves my jaw 100% dropped in amazement. Thus begins this post on Capella Resources (KPS.v) a company that has screwed its shareholders so far into the ground they're currently visiting the Mohorovicic discontinuity.

This story is so impressive it's difficult to know exactly where to start, so let's start here with the 12 month price chart

Yep, that's one helluva price jump recently, isn't it? The reason behind that jump is in this press release. The company hit a very nice drill return at its 'Lajitas' project in Chile (just a couple of clicks from XRC.v's Caspiche project, matter of fact). Here's the moneyline from the PR:

CAPELLA RESOURCES LTD. (TSX-V: KPS - News) (“Capella” or the “Company”) is pleased to announce drill results (drill hole LJ-08011) from the Company’s 100% own Lajitas gold project in northern Chile. The core drilling intersected a zone of continuous gold mineralization of 261 meters grading 0.91 grams per tonne (g/t) gold between 90 meters and 351 meters down the hole. Contained within the intersection is 104.7 meters grading 1.59 g/t gold

The PR comes with other bits of good news, but to cut a long story short KPS.v hit paydirt on this drillcore and the price shot up. Nothing wrong with that, of course. This is the whole reason behind the high risk high reward world of junior mining investment. Except that just before this sexy press release hit the wires, KPS.v took all the reward away from its shareholders and gave it to its own management team, gift-wrapped with a bow. You need to follow the time line here to get the full picture, so here are a few bullet points:

• On June 19th, KPS.v announced it had stopped drilling due to bad weather at Lajitas. Anyone who knows the region in question at that time of year will understand why. The drilling was stopped when the final hole reached 91m depth. It beats me why they were even attempting to drill there at that time of year, to be honest. 'Hostile environment' is putting it mildly.
  

• On October 30th drilling started on the 2008/2009 campaign. Note that the first drillcore that was taken from the 4,000m program is the one that had its results announced on April 2nd 2009 and made the stock fly. Don't you find it strange that it took KPS.v five months to drill 261m, log it, split it, send it down the hill to the SGS labs in Chile (SGS is a labtest company with an impeccable reputation, it must be said) and then finally get the news out in April 2009? Well it's even stranger when you find out what went on at the company between October 2008 and April 2009.
  

• On October 31st, the fun began. KPS.v decided to do a 10-to-1 reverse share split. Here's the moneyline from the PR:

The Company currently has 66,832,174 issued and outstanding common shares. If the Consolidation is conducted on a ten (10) for one (1) basis, the Company would have approximately 6,683,217 shares outstanding following the Consolidation.

Or in other words, if you were (just as one example) one of the shareholders who had participated in the $10m placement back in 2007 organized by Dundee, every 10 shares you owned at the time (that you bought at $1.10) were to be converted into just one share.

• On December 5th 2008, the deal went through.

• On December 24th, Capella began trading again at just three cents. Amazingly, it's the very same day that the CFO locked in that price by awarding herself stock options priced at 3c. Merry Christmas to you, Barbara Wolanski.

• On March 4th, the big switcherooney. Firstly, KPS.v quickly and quietly raised $1m in capital by offering a share at 6c and a warrant at 15c. This means that suddenly the share count that was slammed down from 68m to 6.8m was now back up to a fully diluted 40m or so (and those 15c warrants are now waaaaay in the money). Then KPS.v management decided to swap debt owed by the company to insiders for shares at 6c. (For future reference, the escrow period ends June '09). The deal, for example, handed two million shares over to the CEO, Richard Bachman. Plenty others got their slice, including the "43-101 independent qualified person".

• On March 24th, the transaction closed. Adding the debt-for-shares to the share count, we're now at 46m or so shares out. It's extremely suspicious that the company didn't want to have 68m shares outstanding to any old shareholder back in 2008, but suddenly it was cool about having 46m shares out when those shares had been sweethearted to friends and insiders.

• So we return to April's drill result announcement when that very same "qualified person" signed off on the five month delayed drill results that shot the share price from pennies to over a buck! More coincidence is that the paydirt drill return started at 91m below ground, exactly the same place where drilling was stopped in June 2008. Well, better said "supposedly" stopped, because if you believe in this many coincidences that bridge of mine is still for sale.

• And then two days later on April 3rd (last week) the company announces it's raising $5m with a $0.73 placement! Not only that, but KPS.v announces that it's going to give away nearly 2m stock options as "incentives" for management.

Ladies and gentlemen, these people belong in prison. This is fraud, quite plainly and simply. People like CEO Bachman should be arrested, locked away until tried, then stripped of assets, liberty and social standing by an honest day in court. On December 24th 2008, the company had a market cap of $204,000. At Friday's close, that market cap had shot up to around $38m, an increase of nearly 200X in a touch over three months and it's all suddenly in the majority hands of management and friends of management. So where is the OSC on this one? Who will stand up for the people screwed by KPS.v in 2008? Where is Dundee and why haven't they said a thing about this? Who were the "lucky ones" that so quickly bought in to the $1m share offering in March that added a cool 33m to the S/O total?. Canadian mining reporters at FP/NP, Globe&Mail etc, why aren't you on this case yet?

Related Post
More on Capella REsources (KPS.v) and the scum behind the scam

Alex Dalmady's blog now back up and working

Another Alex

Alex Dalmady has got his blog back up and running after yesterday's glitchy moment, which is wholly good news. Here's the link, so go now.

Meanwhile, a thought about James Donaldson, who got an airing with his rather emotional but also cherrypickingly well-informed rebuttal post of yesterday right here on this link. When I saw "James" come back again and post exactly the same comment on another IKN Stanford post I thought it was a little strange, so using sitemeter I tracked his ISP, and lo and behold he was writing from Memphis, Tennessee. I read today that the offices where Stanford's CFO James Davis worked (and that were raided today by the SEC) are also in Memphis. Also, I checked and filtered and crossed-filed and did all sorts on Google for about half an hour but I couldn't pin a James Donaldson with any connection (and I'm usually quite good at the Googling thing, too). Now I know that the home of Elvis music is a big town, but I can't help wondering. Can't help thinking about the coincidence of the "JD" initials, as well....

Finally, check out the latest at Devil's Excrement, as it shows just how mercenary the Stanford deposit collecting machine really was in Venezuela and gives one pause for thought. According to MO, it's the middle class sector that's going to be hit hardest, not some ultra-rich that might lose 10% of their net worth. The anger will come, unfortunately.

Click here for all IKN posts on Stanford (the series begins February 10th)

Stanford: A commenter questions its analysts and institutional coverage

A commenter has just left a longish note on one of the IKN posts regarding Stanford. Usually I reject anonymous comments but let's make an exception this time as the writer has some interesting points. I'm also devoting this post to his/her words. Here's the comment below and following that you can find a paste of the companies covered by the Stanford analysts. Take a look and make your own informed decision.

Just as a personal extra, I warn all again to keep well clear of the Colombian Stock Exchange, as Stanford was the fourth largest player by volumes traded there in 2008.

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The Comment Recently Received by an Unknown Reader

Now that the SEC has filed charges, the next question people will want answered is where did all of the money go. There's been some investigation into Stanford's role in penny stock investing, but I haven't seen anyone take a look at the companies that their "analysts" were covering.

http://www.stanfordgroup.com/institutional/coverage.aspx

A quick glance at some of the companies listed on their website reveal a large number of microcap stocks who've exhibited pump and dump behavior include spam campaigns around the time that Stanford initiated coverage.

If you take a look at the background of some of their "analysts" it also raises questions about the character of their employees. Their media analyst Frederick Moran for example began his career at Drexel Burnam (a known chop shop), was previous accused of sharing inside information with his father while working as an analyst at Saloman brothers and participated personally in a failed microcap company (VDC Communications) that was owned by his father and his brother Clay (who also happens to work at Stanford Research). A closer look at some of the other analysts will raise similar concerns as well as even more questionable buy ratings on companies that most financial savvy investors would know to steer clear of.

If Stanford was using proceeds from the CDs to manipulate penny stocks, then this could end up being an important piece of the puzzle. It would also go a long way towards explaining how they could have given such poor investment advice on what appear to be obvious scams.

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COVERAGE

Coverage as of September 10, 2008

Sectors:

Clean Technology
Clean Technology
Calgon Carbon Corp. Comverge, Inc Covanta Holding Corp. Emcore Corporation Energy Conversion Devices, Inc. EnerNOC, Inc	Evergreen Solar First Solar U.S. Geothermal Inc. Itron Inc. Ormat Technologies Inc. SunPower Corporation Synthesis Energy Systems
Water
American Water Works Aqua America, Inc. BioteQ Environmental
Energy
American Oil & Gas Anadarko Petroleum Corporation Apache Corporation Arena Resources, Inc. BG Group, Plc. Callon Petroleum Co. Cameron, Inc. Chicago Bridge & Iron Co. Denbury Resources, Inc. Encore Acquisition Company Encore Energy Partners ENSCO International, Inc. Fluor Corp. FMC Technologies, Inc. FX Energy Genesis Energy, L.P.	Golar LNG Ltd. Helix Energy Solutions Mariner Energy McMoRan Exploration Co. National Oilwell Varco, Inc. Noble Corporation Oceaneering International, Inc. Pioneer Natural Resources Range Resources Corporation St. Mary Land & Exploration Toreador Resources Corp. Transocean Inc. Ultra Petroleum Corp. Willbros Group Inc. XTO Energy
Health Care
Biotechnology Amylin Pharmaceuticals, Inc. ArQule, Inc. Cougar Biotechnology Inc. Cubist Pharmaceuticals Elan Corp. Exelixis, Inc. Genzyme Corp. Human Genome Sciences ImClone Systems, Inc. Maxygen Inc. Medivation Momenta Pharmaceuticals, Inc. Myriad Genetics Neurocrine Biosciences, Inc. OSI Pharmaceuticals Inc. Sepracor, Inc. Telik, Inc. Tercica, Inc. Theravance, Inc. United Therapeutics Corp. Viro Pharma Inc. ZymoGenetics	Health Care Services / Facilities Alliance Imaging Inc. Apria Healthcare Group Community Health Systems Da Vita, Inc. Dialysis Corporation of America Fresenius Medical Care AG & Co. Health Management Associates HealthSouth Corporation LifePoint Hospitals Lincare Holding, Inc. Psychiatric Solutions Inc. RadNet, Inc. Tenet Healthcare Corporation Universal Health Services Medical Technology Abbott Laboratories Atricure Inc. BioMimetic Therapeutics Inc. Boston Scientific Corporation Cytori Therapeutics, Inc. Edwards Lifesciences Corp. Johnson & Johnson Medtronic, Inc. Micrus Endovascular Corp. NeuroMetrix Inc. Northstar Neuroscience Inc. St. Jude Medical, Inc. Volcano Corporation
Technology / Media / Telecom
Enterprise Software BMC Software CA, Inc. Citrix Systems Guidance Software McAfee, Inc. Microsoft Corporation Pegasystems Red Hat Symantec Corp. Wind River Systems Homeland Security / Defense Aero Vironment, Inc. American Science & Engineering Analogic Corporation Ceradyne Inc. Force Protection iRobot OSI Systems, Inc. Identity Solutions Cogent Systems Digimarc Intermec, Inc. LaserCard L-1 Identity Solutions Zebra Technologies Corp. Infrastructure Software OPNET Technologies, Inc. Internet Software & Services Akamai Technologies, Inc. Art Technology Group Digital River, Inc. Equinix, Inc. Internap Network Services J2 Global Communications, Inc. Premiere Global Services, Inc. SAVVIS, Inc. Switch and Data Facilities VeriSign Semiconductors Techwell, Inc. Trident Microsystems Inc.	Media CBS Corporation Clear Channel Outdoor Holdings, Inc. Cox Radio, Inc. Cumulus Media, Inc. Emmis Communications Corp. Entercom Communications Corp. Lamar Advertising Company Napster, Inc. Priceline.com Inc. Radio One, Inc. Regent Communications, Inc. Salem Communications Sirius Satellite Radio Time Warner Inc. TiVo Inc. Viacom B Internet Media Google, Inc. Infospace, Inc. Local.com Marchex, Inc. SourceForge, Inc. The Knot, Inc. ValueClick, Inc. Yahoo!, Inc. Telecom Services Airspan Networks, Inc. CenturyTel, Inc. Clearwire Corp. Consolidated Communications Embarq Corp. Frontier Communications Iowa Telecomm Services, Inc. Leap Wireless International, Inc. MetroPCS Communications, Inc. NII Holdings, Inc. Sprint Nextel Corp. Virgin Mobile USA Windstream Corp. Communications — Towers American Tower Corp. Crown Castle international Corp. SBA Communications Corp. Communication — Telecom IDT Corp. Vonage Holdings Corp.

Click here for all IKN posts on Stanford (the series begins February 10th)

It's just not cricket! Allan Stanford, Stanford International Bank and the whole rotten empire is toast.

You're out, Allen

The ECB (guys in blazers that run cricket) has just broken off talks with Cur Allen Stanford over a new sponsorship deal. Apparently it just is not the right thing to do business with cads and bounders.

Felix Salmon has done a nice overview of the SEC complaint with a list of salient points. He calls it "quite astonishing" and after reading it through carefully your humble correspondent has to agree. Go take a look a Salmon's post and while you're there give him the kudos he deserves in the comment boxes. He was the only high traffic blogger with the balls to run with this, he chided MSM all week about being so wishy-washy and he got the story out there and noticed by the larger world. While you're reading Salmon, read the full SEC complaint which you can download right here.

Duck Tales, the excellent report that started all this ball rolling, can be found right here, so go download it now and read a piece of financial history. The SEC moves today would not have happened, repeat would NOT have happened without the initial momentum caused by this brave and insightful report. Alex Dalmady is the unsung (so far) hero of the hour. May his star rise in the firmament.

The Devil's Excrement deserves special mention, as blog owner MO made the Duck Tales report available and wrote an impressive post that allowed Dalmady's note to finally catch the attention of the wider world.

The power of quality econoblogging has been definitively vindicated.

Click here for all IKN posts on Stanford (the series begins February 10th)

Stanford International Bank: Check out the Bloomberg NewsTicker

Now there's a screenshot to remember!

(click to enlarge)

1) BN 11:31 *SEC ACCUSES ROBERT ALLEN STANFORD AND JAMES M. DAVIS OF FRAUD
2) BN 11:31 *SEC SAYS STANFORD ORCHESTRATED `MASSIVE, ONGOING FRAUD'
3) BN 11:29 *SEC SEEKS TEMPORARY RESTRAINING ORDER AGAINST STANFORD GROUP
4) BN 11:28 *SEC FILES MOTION FOR RESTRAINING ORDER AGAINST STANFORD IN TX.
5) BN 11:28 *SEC SEEKS TEMPORARY RESTRAINING ORDER AGAINST STANFORD GROUP
6) BN 11:28 *ROBERT STANFORD ACCUSED OF `MASSIVE FRAUD' BY SEC :142238Z US
7) BRF 11:25 US Marshals seen entering Houston office of Stanford Financial G
8) BN 11:21 *U.S. MARSHALS SEEN ENTERING STANFORD FINL HOUSTON OFFICE: CNBC

UPDATE: Below find the SEC website filing, with thanks to Felix Salmon for passing it on so quickly. And thanks to RD and MO at Devil's Excrement for the screenshot.

UPDATE 2: Here's the link to the 25 page SEC official complaint against Stanford. Thanks again to Felix Salmon for being sogenerous with his quick searches and mails.

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U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 20901 / February 17, 2009

Securities and Exchange Commission v. Stanford International Bank, et al., Case No. 3-09CV0298-L (N.D.TX.)

SEC Obtains Temporary Restraining Order, Asset Freeze, and Other Relief Against Defendants

The United States Securities and Exchange Commission announced that on February 16, 2009, the Honorable Judge Reed O’Connor, a federal judge in the Northern District of Texas, in response to the Commission's application for emergency preliminary relief, entered a temporary restraining order against Robert Allen Stanford and three of his companies, the Antiguan-based Stanford International Bank (SIB), Houston based broker-dealer and investment adviser, Stanford Group Company (SGC) and investment adviser, Stanford Capital Management. The court’s order also extends to SIB chief financial officer James Davis, and Laura Pendergest-Holt, chief investment officer of Stanford Financial Group. The temporary restraining order restrains the defendants from violating certain antifraud provisions of the federal securities laws, as well as provisions of the Investment Company and Investment Adviser Acts. Also, Judge O’Connor froze all assets of the defendants until further notice, ordered that assets outside the U.S. be returned to the court’s jurisdiction, appointed a receiver to marshal the defendants’ assets and granted other relief.

The SEC's complaint, filed in federal court in Dallas, alleges that the defendants have committed an $8 billion fraud and violated or aided and abetted violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Advisers Act of 1940, and Section 7(d) of the Investment Company Act of 1940. The complaint alleges that acting through a network of SGC financial advisers, SIB has sold approximately $8 billion of so-called “certificates of deposit” to investors by promising improbable and unsubstantiated high interest rates, supposedly earned through its unique investment strategy, which has purportedly allowed the bank to achieve double-digit returns on its investments over the past 15 years. According to the Complaint, the defendants have misrepresented to CD purchasers that their deposits are safe, falsely claiming that the bank re-invests client funds primarily in “liquid” financial instruments (the “portfolio”); monitors the portfolio through a team of 20-plus analysts; and is subject to yearly audits by Antiguan regulators. Recently, as the market absorbed the news of Bernard Madoff’s massive Ponzi scheme, SIB attempted to calm its own investors by falsely claiming the bank has no “direct or indirect” exposure to the Madoff scheme.

The Commission continues to seek, among other things, a permanent injunction, disgorgement of ill-gotten gains plus pre-judgment interest, and civil money penalties.

The Commission acknowledges the assistance and cooperation of the Financial Industry Regulatory Authority (FINRA) in connection with this matter.

http://www.sec.gov/litigation/litreleases/2009/lr20901.htm

Click here for all IKN posts on Stanford (the series begins February 10th)

Lime Slime's Brazil: Pyramids, scams and laundering

Our resident Brazil expert Lime Slime (who fills in for Otto's knowledge gap on the country so well he should take over the whole blog, frankly) is back with another dispatch from tudobemlandia. No further ado here, handing over to Lime Slime:

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Pyramids, scams and laundering

by Lime Slime

Edemar having a bad day

Come over to Brazil today for a little history lesson that might be useful in the context of the L'Affaire Madoff and the teetering Stanford International Bank. A few years ago, Edemar Cid Ferreira, a Brazilian financier who overnight turned a small bank into a big commercial lender and trading house, was arrested for fraud. What was never reported in the media was that he had ties to the port operators in Santos, who are sleazy, corrupt and cut corners on everything: from paying taxes, to moving contraband, to laundering money. And his bank had all the red flags of a scam: robust deposit growth during a period of economic stagnation, crap oversight, concentrated ownership structure, a couple of poorly explained offshore units. It fit, in other words, Alex Dalmady's definition of a financial duck.

But it gets worse. Edemar, usng phony accounting and dirty cash, insinuated himself into Brazil's cultural elite, bankrolling big art shows and expositions, to make himself look legit and upstanding. The truth is, according to somebody I know who was deeply involved in the investigation, he was stealing deposits and instead of buying financial assets, was buying art. Most of the art has never been recovered because, well, you can get people to paint fake replicas of the stuff you own to hand over to the police, or just roll up paintings, stick them in a suitcase and, voila, a traceless crime.

So, I ask you, how much of owner Allen Stanford's $1 billion in personal wealth was really just, hum-hum, taken from Stanford Bank's supposed $8 billion in assets? And was the $100 million odd slush fund for garish cricket matches, and a polo-focused lifestyle, financed by him or depositors? Just askin'. Edemar and Allen have something in common, ya see, an obsession with the high-brow life and the desire to appear respectable that just doesn't fit with garbage accounting, murky management and fast money.

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