Portage Resources (POTG.pk): Good to know the SEC is looking into this scam

IKN gets a fun visitor today, who used "potg scam" as their keyword search on Google and ended up at this post:

Domain Name		(Unknown)
IP Address		162.138.2.# (U.S. Securities & Exchange Commission)
ISP		U.S. Securities & Exchange Commission
Location		Continent  :  North America Country  :  United States  (Facts) State  :  District of Columbia City  :  Washington Lat/Long  :  38.8933, -77.0146 (Map) Distance  :  3,849 miles
Language		English (U.S.) en-us
Operating System		Microsoft WinXP
Browser		Firefox Mozilla/5.0 (Windows; U; Windows NT 5.1; en-US; rv:1.9.2.17) Gecko/20110420 Firefox/3.6.17 (.NET CLR 3.5.30729)
Javascript		version 1.5
Monitor		Resolution  :  1280 x 800 Color Depth  :  24 bits
Time of Visit		Jun 22 2011 1:06:53 pm
Last Page View		Jun 22 2011 1:06:53 pm
Visit Length		0 seconds
Page Views		1
Referring URL		http://www.google.co...TaTm-2_qCiF9yMcFogwQ
Search Engine		google.com
Search Words		potg scam
Visit Entry Page		http://incakolanews....k-pump-and-dump.html
Visit Exit Page		http://incakolanews....k-pump-and-dump.html
Out Click
Time Zone		UTC-5:00
Visitor's Time		Jun 22 2011 2:06:53 pm

Hey Belfiore, ready for the nice men and women of the SEC to come visit you in Lima?

Is this the most stupid mining analysis of 2010?

If it isn't I want to see the one that beats it.

Your author received the following mail from A Reader regarding the latest pump job from the über-scummy Jonathan Lebed (who's already been done by the SEC for his scamrunning). We received permission from A Reader to reproduce what you see and we also received a copy of the Lebed "analysis" (term used as loosely as possible) because it really is a case of 'seeing is believing on this one. The relevant excerpt is shown under the reader's mail. Enjoy

Otto, Thought you'd enjoy this. I'm subscribed to slimeball Jonathan Lebed's email pump list for purposes of knowing which stock he's pumping so I can know when a move is not legitimate. I've found these pumpers usually work together and they'll all buy up blocks ahead of time, then 3-5 email lists will all pump a stock, it makes a good-size move, and they get out with a 20-30% profit in a couple of days, leaving the public holding the bag.

The logic in his most recent note beats anything I've ever seen.

He writes about PC Gold. Now, PC Gold may or may not have anything worthwhile, I don't know. But it's Lebed's logic that is prison-worthy. He bases his valuation on the ounces of gold *that have previously been taken out of the ground*. That's right, he's determing value on the stuff that's no longer there.

Here's the key line copied and pasted: "This means PKL is currently being valued at only $15 per previously produced ounce of gold, when gold is currently $1,375 per ounce!"

What an analyst. If you ask me, that evaluation is worth two exclamation points!! If not three!!!

Here are Lebed's exact words:

"If you subtract PKL's cash position from its market cap, the Pickle Crow property is currently being valued at only $22 million when it previously produced 1.47 million ounces of gold. This means PKL is currently being valued at only $15 per previously produced ounce of gold, when gold is currently $1,375 per ounce"

What is it about mining companies that attracts so many crooks and idiots? Mark Twain noted it over 150 years ago and it's still the same now, so there must be something more going on here.

Bad news for Pan American Silver (PAAS)

This may be why Ross Beaty sold some of his PAAS shares this week. Here's the link, here's the text, thanks for the headsup, Setty

SEC Proposes Specialized Disclosure of Mine Safety Information Under Dodd-Frank Act

FOR IMMEDIATE RELEASE
2010-246

Washington, D.C., Dec. 15, 2010 — The Securities and Exchange Commission today voted to propose rules outlining the way in which mining companies must disclose to investors certain information about mine safety and health standards.

The proposed rules would implement Section 1503 of the Dodd-Frank Act, which requires mining companies to include information about mine safety and health standards in their annual and quarterly reports filed with the SEC. Mining companies also would be required to file a Form 8-K with the SEC when they receive certain notices from the Mine Safety and Health Administration.
"Congress has determined that investors will benefit from disclosure of the health and safety records of mining companies," said SEC Chairman Mary L. Schapiro. "We look forward to hearing from commenters as to whether these rules address the informational needs of investors."
Public comments on the proposed rules should be received by the Commission by Jan. 31, 2011.
# # #

FACT SHEET

Background

Section 1503 of the Dodd-Frank Act requires mining companies to include mine safety and health information in their annual and quarterly reports filed with the Commission. It also requires mining companies to file a Form 8-K when they receive certain notices from the Mine Safety and Health Administration (MSHA). The disclosure requirements in the Act are based on the safety and health requirements that apply to mines under the Federal Mine Safety and Health Act of 1977 (Mine Act).
The mine safety disclosure requirements are currently in effect. However, the Commission is proposing to add the requirements to its rules and forms and address the scope and application of the requirements.

Requirements of the Proposed Rules

Periodic Reporting Requirements

Under the proposed rules, mining companies would be required to provide, as an exhibit to their annual and quarterly reports, mine safety information listed in Section 1503 of the Dodd-Frank Act and certain additional disclosure designed to provide context to such information. The Dodd-Frank Act requires companies to disclose:

• The total number of significant and substantial violations of mandatory health or safety standards under section 104 of the Mine Act for which the operator received a citation from MSHA.
• The total number of orders issued under section 104(b) of the Mine Act.
• The total number of citations and orders for unwarrantable failure of the mine operator to comply with mandatory health and safety standards under section 104(d) of the Mine Act.
• The total number of flagrant violations under section 110(b)(2) of the Mine Act.
• The total number of imminent danger orders issued under section 107(a) of the Mine Act.
• The total dollar value of proposed assessments from MSHA.
• A list of the mines that have been notified by MSHA of a pattern of violations or a potential to have a pattern of violations under section 104(e) of the Mine Act.
• Pending legal actions before the Federal Mine Safety and Health Review Commission.
• The total number of mining-related fatalities.

The proposed rules would use the language used in Section 1503 of the Dodd-Frank Act to set forth the disclosure requirements, and also provide instructions to mining companies about the information required to be disclosed about penalty assessments and pending legal actions.
For example, in a quarterly report, mining companies would need to report the total amount of penalty assessments proposed during the quarter, and also the total of all assessments outstanding on the last day of the quarter, even if the company is contesting the assessment. Similarly, under the proposal, mining companies would report a pending legal action in the report for the quarter when the legal action began, and also update the information in later reports if there were material developments.
In addition to the Dodd-Frank Act required disclosure, the Commission is proposing that mining companies provide a brief description of each category of violations, orders and citations they are reporting, so that investors can understand the information provided without having to research the Mine Act and MSHA's rules.
As proposed, the periodic reporting requirements would apply to both U.S. companies and foreign private issuers.

Form 8-K Reporting Requirement

The Commission is also proposing to add a new item to Form 8-K, which would require domestic mining companies to file Form 8-K within four business days after receiving from MSHA three types of notices specified by the Dodd-Frank Act:

• An imminent danger order under section 107(a) of the Mine Act.
• Written notice of a pattern of violations under section 104(e) of the Mine Act.
• Written notice of the potential to have a pattern of such violations.

The proposed Form 8-K item would require a mining company to report the date it received the notice, the type of notice, and the name and location of the mine involved. Foreign private issuers would not be required to file current reports under the proposal. Finally, under the proposal a late filing of the Form 8-K would not affect a company's eligibility to use Form S-3 short-form registration.

What's Next?

The Commission is seeking public comments on the proposed rules that should be received by Jan. 31, 2011. The Commission will review the comments it receives and consider those comments in determining whether to adopt the proposed rules.

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.

The shock is not the scam....

Carol and Dan (for it is they)

....and the shock isn't that the accused are Canadians (I mean....like duh, dude). No, the shock is that the SEC has actually gotten off its butt and done something about it. Link here, full SEC complaint here, the top of the NR here:

SEC Charges Two Canadians With Fraudulently Touting Penny Stocks on a Website, Facebook and Twitter

FOR IMMEDIATE RELEASE
2010-114

Washington, D.C., June 29, 2010 — The Securities and Exchange Commission announced today that it has obtained an emergency asset freeze against a Canadian couple who fraudulently touted penny stocks through their website, Facebook and Twitter. The SEC also charged two companies the couple control and obtained an asset freeze against them.

According to the SEC's complaint, the defendants profited by selling penny stocks at or around the same time that they were touting them on www.pennystockchaser.com. The website invites investors to sign up for daily stock alerts through email, text messages, Facebook and Twitter.

The SEC alleges that since at least April 2009, Carol McKeown and Daniel F. Ryan, a couple residing in Montreal, Canada, have touted U.S. microcap companies. According to the SEC's complaint, McKeown and Ryan received millions of shares of touted companies through their two corporations, defendants Downshire Capital Inc., and Meadow Vista Financial Corp., as compensation for their touting. McKeown and Ryan sold the shares on the open market while PennyStockChaser simultaneously predicted massive price increases for the issuers, a practice known as "scalping."

"As alleged in our complaint, McKeown and Ryan used all the modern methods to communicate with investors including the PennyStockChaser website, e-mail, text messages, Facebook, and Twitter yet failed to adequately communicate that their rosy predictions for touted stocks were accompanied by their sales of those very same stocks." said Eric I. Bustillo, Director of the SEC's Miami Regional Office.

The SEC's complaint, filed in the U.S. District Court for the Southern District of Florida, also alleges McKeown, Ryan and one of their corporations failed to disclose the full amount of the compensation they received for touting stocks on PennyStockChaser. The SEC alleges that McKeown, Ryan and their corporations have realized at least $2.4 million in sales proceeds from their scalping scheme continues here.

This is precisely the same 'scalping' technique the Thom Calandra used when he illegally touted Ecometals, by the way. Meanwhile over at Pennystockchaser HQ today, we get a 404 instead of a lot of BS:

Not Found

The requested URL /tag/pennystockchasercom/ was not found on this server.

---

Apache/2.2.3 (CentOS) Server at pennystockchaser.com Port 80

Want to know what was going on? Here's one example of many from the full complaint:

37. Bluewave's trading volume increased significantly as a result of the Defendants' promotional campaign. Between January 1, 2010 and April 15,2010, immediately prior to the campaign, trading was almost non-existent with a total ofonly 57,100 shares traded.

38. By contrast, in the days following the promotional campaign, trading volume was almost two millions shares per day.

39. On March 19, 2010, a month prior to the promotional campaign, Meadow Vista received 1,000,000 shares of Bluewave. As the touting started, Meadow Vista sold 400,000 shares between Apri116, 2010 and April 19,2010 for net proceeds of approximately $184,000.

Thanks to SB for the headsup.

Now you know why John Paulson has been buying all that gold

It's called insurance.

This from Yves Smith's extended post on the SEC/Goldman headline-maker today. No better place than Yves' blog to get the inside track on this story:

"The SEC is now mounting a civil suit against Goldman against one of its Abacus trades, which was a series of synthetic CDOs used to take short positions in real estate. Interestingly, the deal in question was on behalf of John Paulson. Greg Zuckerman’s book on subprime shorts, The Greatest Trade Ever, indicated that Paulson wanted to take down the all the credit default swaps created through the CDO issuance process (which would typically leave him 95% short the par value of the CDO, since Paulson would put up the equity tranche, usually 4-5%). The SEC may have started with this transaction because the communications between Paulson and the SEC would make it easy to show the intent, that of putting crappy CDS in the CDO."

And by the way, if Paulson eventually has to liquidate holdings, today's $30/oz drop in gold is likely to be a mere hors d'oeuvre.
Not to mention Nadagold (NG).

UPDATE: Also recommended is Felix Salmon's take on the SEC charges, that gets to the heart of things and explains well.

UPDATE 2: The SEC complaint is here and it's explosive stuff. I'm on my second read-through and after a while it starts sinking in just how heavy this will be for GS. However I'm interested to know why Paulson is not a named defendant.

Alan von Altendorf on oil companies and the SEC (update)

Good news from yesterday's post.

Felix Salmon picked up on the story and wrote an article here. Then SinkingAlpha jumped on first Felix's post and then decided to run the AvA article on site (as a three parter). It's currently on the front page main headline, has been chosen as an editor's pick and is getting some smart comments from pretty knowledgeable oilheads.

It's also found its way to The Business Insider, where Joe W completely misses the point (he's usually better than this). Probably didn't bother to read the article. If you haven't read AvA's most excellent exposé of the oil industry, get your copy right here (in PDF from the author's website).

Must read on oil

If you only read one article about the oil industry this year, the report linked right here has to be it. Utterly, totally, completely and absolutely unmissable. Not only is it intelligent and über-insightful, but it's a highly entertaining read, too.

Alan von Altendorf is a smart guy when it comes to the oil industry. He runs an independent oil consultancy out of Houston called CWSX and knows his patch. Several moons ago, I got lucky and hooked up with AvA while covering the subject of Petrobras (PBR). At the time of the mega pre-salt hype PBR was plainly getting way expensive and I said so. When the idiot sheep screamed their denials, AvA stepped up with solid science and arguments that agreed with the overbought call. He was proved very very right.

Anyway, to the point. He's written a new, free access paper that blows the lid off the new SEC rules and eviscerates the oil industry, version 2009. I cannot praise this paper highly enough and have already learned a whole bucketload about the scams going on in the oil biz during my first couple of scans at the piece. I'll be sitting back and absorbing every word later. You should too.

Here's the intro section to AvA's note. Here's the link again, so go get your own copy.

This is a long article on the subject of oil & gas reserves and due diligence.

My purpose is to alert you to revision of SEC Regulation S-K and Regulation S-X effective January 1, 2010. Concealed in a handful of benign new regs is a financial truck bomb that's going to blow away "proved reserves" as a meaningful metric of oil company assets.

Old definition: Proved Reserves are those quantities which can be estimated with reasonable certainty to be commercially recoverable from known reservoirs under defined economic conditions. Proved quantities arelimited by the lowest known hydrocarbon as seen in a well penetration unless otherwise indicated by definitive geoscience, engineering, or performance data. Seismic data alone is not sufficient to define fluid contacts. Undeveloped locations may be classified as Proved in undrilled areas of a reservoir that can be judged with reasonable certainty to be commercially productive.

New definition: Industry is no longer constrained by the criterion of certainty. An operator can book incremental proved reserves from planned enhanced recovery projects (gas injection, acid fracturing) based on a pilot project. Coal seam gas, bitumen, oil shale and other unconventional resources can be booked as Proved Reserves. Estimated reservoir properties in the aggregate is a departure from the old rules. The new SEC definition does not require that an analogous reservoir has to be in the immediate area or in pressure communication. Seismic analysis and reservoir models are sufficient to book Proved Reserves.

Hold on to your shorts, it gets worse.

Under the new SEC rules you don't have to drill a well and actually produce oil. An operator can establish levels of lowest known hydrocarbons and highest known oil through "reliable technology" other than well penetrations. It doesn't have to be 90% reliable or widely accepted by industry peers... [more]

x

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.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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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)

More evidence that Stanford International Bank is in a tight spot

Howzat?

Two stories from two sides of The World According To Allen Stanford point to the same conclusion; the dude has money issues.

Firstly, Nasdaq quoted Emageon (EMAG) was supposed to merge with Health Systems Solutions (HSSO.ob) with the (already extended) deadline being today. This is connected directly to Stanford International Bank (SIB) because it was the financial entity that had to come up with U$62m to fund the purchase. Unfortunately for all concerned, SIB has failed to deliver the cash, the dealine passed today and there's no word on reasons why as yet. Now that's strange when you consider that SIB claimed over a billion in liquid equity in its last client update at end December. Can't find $62m when you're supposed to have $1,000m lying around? Hmmmmmmmmmm. Here's how the news crossed the wires this morning:

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9:02AM Emageon provides update regarding merger transaction; has been informed that Stanford Intl Bank will likely not provide financing necessary (EMAG) 2.51 : Co announces that it has been informed by Health Systems Solutions (HSSO:OB) that it does not expect that Stanford International Bank will provide the funding necessary to consummate the parties' merger transaction today. The merger was scheduled to close today, Feb 11, 2009, in accordance with the terms of the parties' amended merger agreement. EMAG is evaluating its options in response to this development.

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And the result is that EMAG is today down 47%, the day's worst performing stock on the Nasdaq. The other story that points the "got cash?" finger at Allen Stanford is the imminent decision to drastically cut back his headline-making personal sponsorship of international cricket (his beloved and preferred pastime). The UK Daily Telegraph today reports that

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"Stanford and the England & Wales Cricket Board are keen to make an announcement on the match's future before the start of Friday's second Test in Antigua.

Giles Clarke, the chairman of the ECB, arrived in Antigua on Tuesday evening. Antigua is Stanford's home island and it is there that he closed his cricket office at the end of last year.

Stanford's company have also laid construction workers off on the island and with the credit crunch squeezing the financial markets, he looks set to trim down his lavish outlay on cricket yada yada continues here"

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All this at a time when his bank is reneging on deals and the SEC is renewing its scrutiny of SIB. Gotta make you wonder, hasn't it?

If I were one of the Latinos with part of the U$3Bn apparently held by people in SIB down here (there's over $7Bn in total deposits from 131 countries, apparently), I'd be thinking long and hard about what I really want to do with my life savings right now. Not only that, but if I were part of the Colombian Stock Exchange I'd be worried about suddenly losing the volumes created by the 4th biggest player in that market. Just thinking out loud, y'know.....personal opinion and all that......

UPDATE: Check out this no-beating-around-the-bush quote from the author of the excellent original analysis that set off interest in SIB these last few days. English language blog Caracas Gringo has interviewed Alex Dalmady and has him as saying the following:

“It took me less than 30 minutes to confirm that Stanford International Bank is a scam,” financial adviser Alex Dalmady tells Caracas Gringo. “All the data I needed was posted in plain view on Stanford’s web site,” he adds.

“I have only one question for Stanford’s owner,” Dalmady says. “Where is Stanford’s $8 billion portfolio? Where are the $8 billion hidden? Nowhere; they don’t exist.”

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Alex Dalmady, blogger

Alex Dalmady guest blogs on IKN (February 14th)

As bad banks seem all the rage.....

Four more on Stanford International Bank

The Stanford Scandal: Alex Dalmady speaks

Stanford International: BusinessWeek and MSM getting busy now

Four more on Stanford International Bank

Anyone for cricket?

1) The story is getting traction. Felix Salmon over at his high traffic blog "Market Movers" has picked up on the story.

2) So far today this humble blog has had several visits from major newswires, three visits from the US Federal Reserve and one from the SEC, all using combos of "Alex Dalmady", "Stanford", "Madoff" etc as keyword entries*. Not to mention all those people from some island called Antigua and plenty from a company called "Stanford Eagle" in Houston. Hi guys, having a nice day?

3) The more I think about it, the better the original article written by Alex Dalmady that points to SIB bank looks. It's an excellently constructed note and deserves plenty of eyeballs. Here's the link again.

4) I can't help but be reminded of this post dated 25th October that quoted a large chunk of JK Galbraith work, The Great Depression. Here's part of the quote:

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At any given time, there exists an inventory of undiscovered embezzlement in, or more precisely not in, the country's businesses and banks. This inventory—perhaps it should be called the bezzle—varies in size with the business cycle. In good times, people are relaxed, trusting, and money is plentiful. And even though money is plentiful, there are always many people who need more. Under these circumstances, the rate of embezzlement grows. The rate of discovery falls off, and the bezzle increases sharply.

In Depression all this is reversed. Audits are penetrating and meticulous. Commercial morality is enormously improved. The bezzle shrinks."

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Related Post
Alex Dalmady, blogger
Alex Dalmady guest blogs on IKN (February 14th)
As bad banks seem all the rage......
More evidence that Stanford International Bank is in a tight spot
The Stanford Scandal: Alex Dalmady speaks
Stanford International: BusinessWeek and MSM getting busy now

* and by the way, the stats software cannot pick up on individuals, so rest easy. It can only tell me about companies or registered bodies such as gov't offices like the Fed. Big brother is not watching you.