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Anatomy of Stock Fraud

This is a description of the largest penny stock pump and dump fraud in US history that I'm aware of: the people involved and how it was done.

Based on months of research and talking with many of the people involved in these stock promotions, 

here is my belief of how Bryan Kos and Jeremy Jaynes, Don Oehmke, Tom Heysek, Howell Woltz, Warren Hansen, Jere Ross, and others were involved in a scheme that defrauded hundreds of people out of over $20 million.

On October 4, 2006, the US Attorney filed these charges against former Judge Sam Currin which validates the information you can read below. In the US Attorney's charges, Mr. J=Jeremy Jaynes, O=Don Oehmke, Mr. K=Bryan Kos, Mr. R=Jere Ross, and Mr. H=Walter L. Hannen, Sr.

On April 23, 2008, this indictment against Bryan Kos and David Hagen was filed by the US Attorney.

On April 18, 2006 Howell Woltz got arrested by the FBI. He's currently in jail without bail. On September 5, 2006, the Virginia Court of Appeals upheld the nation's first felony conviction of illegal spamming against Jeremy Jaynes. He should shortly begin a 9 year prison term.

On December 17, 2008, new charges were filed against David Hagen and Bryan Kos.

This page started innocently enough. By late August 2004, I had received 18 "pump and dump" faxes from what appeared to me to be the same people, so I decided to find out who sent them so that I could bring legal action(s) against the perpetrators in court. That's in fact what I did and I've now won multiple judgments against Tom Heysek. I'm currently (as of March 21, 2006) involved in  three different law suits with certain people/entities named on this page.

This page documented what I found in my research for my cases as I sought to put together a case for legal liability of the person(s) responsible and understand how they did this so I could describe it to the court and submit this web page (both in printout form as well as the URL itself so the judge could more easily explore the backup information by clicking on the hyperlink) as my collection of evidence in my trials in small claims court. This is a much more digestible form for the court than the over 500 megabytes of computer files I accumulated during my research. So I used a web page for my own legal cases and for use of the court in inspecting the evidence. The most important audience for this web page is the small claims judge in Palo Alto, CA. 

Even though the contents of this page is privileged under CA CIV 47, because this is being done in a public forum, I have tried to author the page as if the privilege didn't exist, i.e., everything is accurate. If I have made a mistake, I am happy to correct legitimate errors that are pointed out.

But I also realized that my page may be useful to others  such as the FBI, SEC, and DOJ and anyone else who might have information to help me win my cases or who might be bringing litigation of their own. The web has proven to be invaluable for this as well as I have been contacted by many people who have contributed very useful information that has helped me understand what happened and who is liable and win my cases. In return for the help I've received, I've added additional information that might be useful to others contemplating legal action.

Millions of junk faxes were sent out, lots of people lost a lot of money, and I believe this is among the largest penny stock scams in US history, which makes the research I have done in my case a matter of significant public interest as well.

Note: The people involved changed throughout the promotion period. The term "they" normally refers to the masterminds and legally liable co-conspirators behind the fraud, e.g., "they made $20M."   Most of the people mentioned on this page are players, i.e., they were involved in some way, but were not responsible or criminally liable for the fraud.

If you are a victim of the fraud described here,  you can join this Yahoo group. This is a moderator-post only group so you will only receive a small number of critical emails a month regarding legal actions that are being taken (if any):

Yahoo! Groups cnddStockFraud

If you lost funds, it is critical that you register the amount that you lost here:

How much did you lose CNDD, AHFI, TWTN, BDYS, SGNJ, BHLL

so that you can be contacted in the event someone can help you or you can help someone else bring legal actions.

Note: One of the players told me he thought the total take was close to $100 million.

Jaynes was sentenced to 9 years in prison, but that was for spamming; he's never been arrested for stock fraud and he's never served any time in jail since his case is being appealed. The people who were charged by the SEC, even if they lose their SEC case, will spend no time in jail for that action and then may just do it again, hoping not to get caught. Why? Because the worst the SEC can do is just force you to return the profits that they can locate. Some people believe that it's just smart business to keep doing the scam over and over again since the worst that can happen is that you get reset back to zero, but the best outcome is that the SEC can't find the money and you get to keep it all, even if you lost the suit.

Most recently calling themselves:
PrimePennyStock aka Penny Stock Investment Advisor – Penny Stock Guide
and promoting BHLL. But no longer (as of 5/16/05).

Were (for a while after Tom Heysek stopped being involved) calling themselves
Penny Stock Investment
www.pennystockinvestment.com
www.shesahoe.com
www.efficientleads.com
(these sites are defunct as of 1/10/05, just days after I posted this)

with a sister site:
www.pennystockpro.com
Penny Stock Investment Advisor

Previous websites associated with one or more of the people mentioned here include:
www.WinningStockPicks.net
www.uspennystocks.com
www.hotstockfinder.com
www.hotstockpicks.net
Fire Your Broker! Stock Picks (FYBSP)
www.thepennystockpicker.com
Micro-Cap Hot Stock Picks! (MCHSP)
The Micro-caps News
Wall Street Stock$ (WSS)
Hot Stock Picks (HSP)
The BEST Penny Stock Picks! (BPSP)
PowerHouse Stock Picks (PSP)
Big Profits Stock Picks (BPSP)
Winning Stock Picks (WSP)
Hot Penny Stocks! (HPS)
The Penny Stock Investor
The $tock Insider
The$tockInsider
The Stock Insider
TheStockInsider
The Street Insider
streetinsiderstockpicks.com
TheHeysekReport
TheHey$ekReport
"
Meatloaf" (on Raging Bull)
www.greatstock.net
hotstockcenter.com
Newsletter: The Optimist (TO)
Investor Letter: Market Cents (MC)
Hot Stock Finder.com
Worldwide Picks LTD
The Stock Profit: 
 

From their former www.winningstockpicks.net website:

Tom Heysek, the Editor of the WSP newsletter and our financial guru, has extensive experience in stock investment analysis and financial forecasts. His stock tips and financial expertise help WSP members to make informed investments! 

I don't believe that. Nor do I believe that their criteria to be "selected" by them for profiling is true either. The website was part of the scam.

This page explains who was involved, how they probably did it (educated guess based on the evidence I uncovered), and how they illegally made tens of millions of dollars in full view of the public without getting arrested or stopped. 

Here's the evidence of heysek's liability I prepared and submitted to the court in my cases against him. I recommend you not sue him. I believe he is no longer involved in illegal activities.

Note to law enforcement: There is more information posted on a secret website if you are a government agency investigating this case. Use the contact link.

Note to all readers: If you believe any of the information below is incorrect (false or misleading), please use the contact link and let us know exactly what is incorrect and how you know that (e.g., objective evidence supporting your claim) and a way to contact you to discuss the matter.

 

UPDATES

11/28/06: The Securities and Exchange Commission announced that on November 28, 2006, Chief Judge William J. Zloch, United States District Judge for the Southern District of Florida, entered a Final Judgment of Permanent Injunction and Other Relief against Defendants Bryan Kos and Donald Oehmke. The Final Judgment entered with the consent of Kos and Oehmke, enjoins them from violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Additionally, the Final Judgment permanently enjoins Kos and Oehmke from participating in an offering of penny stock and from participating in an unregistered offering of securities while acting as, or on behalf of, or in association with an issuer, underwriter, broker or dealer of securities. The Final Judgment orders Kos to pay disgorgement in the amount of $499,573.00, prejudgment interest of $29,573.00 and a civil penalty of $120,000 and orders Oehmke to pay disgorgement in the amount of $1,095,177.00, prejudgment interest of $109,307.00 and a civil penalty of $250,000.00.

The Commission commenced this action by filing its complaint on February 14, 2005, against Kos and Oehmke, among others. The complaint alleged that Kos and Oehmke defrauded investors by artificially creating demand for stock they owned in Concorde America and Absolute Health through unauthorized and false press releases, facsimile and e-mail spams, internet websites, promotional videos, and automatic voice-mail messages since approximately 2004.

For more information, see Concorde America, Inc., et al. Lit. Rel. No. 19948 - December 18, 2006.

4/24/06: Hearing is held to determine bail for Howell and Vernice Woltz. See WoltzBailObjection.pdf. Judge says no bail. It appears they may be spending the rest of their life in prison.

4/20/06: I find out that I'm not the only person Howell has sued. I reported that David Hagen of GTXC used Woltz. This article solidifies that connection since it references a court case where Sterling is suing GTXC.

4/18/06: Howell and his wife Vernice are arrested by the FBI at their home in Advance, NC. See:

3/24/06: SEC files new documents in the Bio-Heal case. The wire transfers info beginning on page 103 connects Sterling Trust (Anguilla) LTD with BELA Enterprise LTD. Bela caused money to be wired to Hansen, Currin law firm (Jaynes' attorney), and I-Max Direct, a media firm used by Jaynes and Kos.

3/1/06: Howell Woltz, Vernice Woltz, and Sterling ACS file a libel lawsuit against me in the Bahamas.

1/20/06: Warren Hansen's lawyer contacts me complaining that the info about Hansen is false and malicious. I re-validate the information with various sources and update the section on Hansen to add even more material. It is now quite a bit more extensive than it was and more people are implicated. I ask Hansen's attorney for specific statements that are erroneous so that they can be corrected. They are unable to cite any factual errors. I have the conversation on tape.

7/19/05: Tom fails to show for the contempt hearing. Judge issues a warrant for the arrest of Thomas M. Heysek. I later let him off the hook in exchange for some documents that I turn over to the SEC.

5/12/05: Tom fails to show for his contempt hearing in Palo Alto today at 2pm.  I applied ex parte for a civil bench warrant for his arrest today. Also, I noted that the Penny Stock Investment Advisor site is now kaput.

4/25/05: Bio-Heal Laboratories, Inc. (BHLL) complaint filed by the SEC. Many of the same key players (e.g., Kos, Jaynes, Oemke, Woltz, Hansen) appear to be involved in this one as well (see entry above at 3/24/06)

3/28/05: Now calling themselves: PrimePennyStock aka Penny Stock Investment Advisor – Penny Stock Guide and promoting BHLL. For more on BHLL and Kos, see the lead story at The Our Street Report as well as StockLemon.com. It's the same cast of characters promoting this stock according to the BHLL complaint filed by the SEC  on April 25, 2005. Note that the stock went to Ventana Consultants (Don Oehmke) again.

3/17/05: SEC takes action against BDYS and it's CEO. They were a Heysek-promoted company. See Bodyscan Corporation and Anthony Sciuto Lit. Rel. No. 19141 - March 17, 2005

2/16/05: SEC takes action against the main players listed below with a very extensive amount of evidence filed; they found they made nearly $28M on CNDD and AHFI alone!

1/3/05: Heysek showed up and contested the case but I won all 8 cases in Palo Alto Small Claims Court (1pm at 270 Grant Av). So Heysek now owes me about $47,000 plus interest for the 18 faxes that he asked him to sue him over.

12/15/04 UPDATE: Heysek is definitely a man who just can't seem to stay in one place for very long. Heysek normally rents, rather than owns. This makes it harder to collect judgments. He apparently hasn't been a very good tenant though. According to Marin County Superior Court records (you have to actually go to the courthouse to look these up on the computer there; it isn't available on the Internet), Heysek has had 7 unlawful detainers filed against him since 1997 (he's averaging about one a year). In addition to the unlawful detainer suits, there is also a case in Marin of Heysek's own attorney suing him! Heysek is currently suing his previous landlord. Heysek was living at 41 CONSTITUTION DR, CORTE MADERA CA 94925. No longer. He's gone as of September 30, 2004. And he also cleaned out his office at 50 California Street Suite 1500 in San Francisco and disconnected his phone with no forwarding number.  Heysek is using Brian F. Kram (California attorney) on his case against his former landlord, just as he did on mine. The attorney representing Heysek's former landlord is Mary Casserly (510-913-6986).

12/9/04 UPDATE: Heysek didn't show up for my 10 small claims cases against him for sending me the junk faxes. I won a default judgment for $25,000. As far as I know, other than my $25K judgment against him for sending junk faxes, and Mayflower's $35K judgment (present value with interest) because he stiffed them (case citation is below; Norman S. Marshall is the attorney at 626 449 1732 x17), there aren't any other judgments against him. Just goes to show how you can scam people out of millions and walk away (relatively) unscathed. His next chance to defend himself is January 3, 2004 at 1pm in the Palo Alto, CA courthouse.

Typing in the URL for AHFI (www.ahfi.net) used to bring up the uspennystocks.com site! Here it is preserved for posterity showing the link between AHFI and Kos: ahfiWhois.pdf

Other sites discussing the AHFI scam are here:

11/22/04 UPDATE: The winningstockpicks.net and uspennystocks.com sites have been shut down. Fortunately, I created a PDF file of every page of USPennyStocks.com at uspennystocksSpider.pdf so you can find the criteria page above as well as other pages in this PDF. I also spidered their website in HTML form before they took it down, but this isn't posted on the web (let me know if you need it). Also, they've changed their identity yet again. They are now called www.pennystockpro.com aka Penny Stock Investment Advisor - Penny Stock Guide and are currently pumping AHFI where they recently (12/3/04) moved as many as 10 million shares at $3/share. 

The disclaimer on the www.pennystockpro.com site used to say (e.g., on December 5, 2004): "PennyStockPro.com is not affiliated in any way with Tom Heysek or Winningstockpicks.net." They removed it a few days later... since it certainly raises a lot more questions than it answers! Of course it's still probably Bryan Kos and crew. Just putting a Disclaimer saying it isn't doesn't make it true.

Also, www.hotstockfinder.com used to promote AHFI, but they pulled the website. Here's the cache of the www.hotstockfinder.com site before they did that: HotStockFinder.pdf

 

These guys made a big mistake: they sent me a unsolicited fax. I'm the last person on the planet you want to send a junk fax to.

Here are 18 faxes I got from Winningstock picks: wsp18faxes.pdf. It appears that some of these were sent by Protus IP Solutions. But we also know they used fax.com, e.g., see page 5 of VerifiedSamplesJul04 which promoted TWTN, another WSP stock. I also verified this with former employees at fax.com and there is extensive evidence that proves that fax.com sent out these promos.

I've never lost a junk fax case because I'm always super careful to only sue people I can prove are liable. 

This case was intriguing because of the sheer volume of spam they've sent out as well as the incredible lengths they've gone to in order to make themselves "invisible." They tried to hide behind a company manufactured in Anguilla (where it's illegal to disclose who formed the company), used an address in the Bahamas (out of reach of US law), and used their Florida legal firm's bank account to make vendor payments in order to hide behind attorney-client privilege so that there is no person nor company to sue. 

When I called Heysek, he denied sending the faxes and dared me to sue him. Tom said I was a "chicken" if I didn't sue him. He said he was counting on my suing him and would be really disappointed if I didn't.

Well, to be honest, that ticked me off. Chicken eh? So I took this as a personal challenge. I have never found any spammer I couldn't uncover and these guys are no exception to the rule. 

In fact, after I figured it out, Tom changed his mind and told me not to sue him!!! Unfortunately for Tom (and his gang) his request came too late. He's not calling me a chicken anymore.

It was quite an adventure. I've spent several hundred hours over two months (July and August 2004) trying to figure out exactly who these guys are and how they do it. There were hundreds of pieces to this puzzle and I was able to piece just about all of them together.

This page is published to help aid those people (including myself) who are investigating this matter as part of a legal action. It is also posted as an aid to people who are thinking about suing those people who are truly responsible for sending the faxes and/or the stock fraud. Or even if you are merely curious as to how e-mail spammers make money, you'll find the story a fascinating read; how people can illegally make tens of millions without anybody in law enforcement stopping them until just recently when one of the core players, Jeremy Jaynes, was sentenced to 9 years in prison by a Virginia jury; but that was for spamming, not for illegal stock promotions.

So in what follows, I will explain what the all evidence I got indicates. While the stuff done here is obviously criminal, I am not accusing anyone of a crime here. I am just reporting the facts based on my first-hand research (Internet primarily but using both public and proprietary databases), personal contact with the people involved (including personal conversations with Heysek, Kline, Ross, Rutkowski, Katz, Lord, the Woltz family, the Paulson brothers, Frappier, Cuadra, and several former employees of fax.com) and with evidence which I have been able to uncover through a large number of subpoenas.

This information has been shared with my contacts in the Attorney General's offices, the SEC, the FCC, the FBI, and the DOJ.

 

 

DEFINITIONS

"WSP" when used below means www.winningstockpicks.net  aka Worldwide Picks LTD (the company behind the websites). See the full list of former names at the top of the page. They changed the names they used often.

 

YOUR GUIDE TO THE PLAYERS

First, we introduce to you the cast of characters in our incredible-but-true real-life saga. The following people are covered here:

Jeremy Jaynes aka Jeremy Dagan Jaynes aka Jeremy O Jaynes aka Gaven Stubberfield (Cary, North Carolina)
A top 10 ROKSO e-mail spammer (see ROKSO page on Jaynes and Rutkowski). Hangs out mostly around the Raleigh and Cary, North Carolina area. Partners with Bryan Kos to engage in stock scam pump and dumps for due to high return on investment. Gets personally involved in the execution of promotions. 

Jaynes reportedly paid Ted Sampson $500K in cash to purchase 50% of Beyond Fitness/AHFI. Reportedly, Woltz was involved with this transaction.

Jaynes is kind of in a little trouble right now in Virginia. He was arrested and faced up to 20 years in prison for spamming: Raleigh businessman arrested on felony spam charges - 2003-12-11 - Triangle Business Journal and 12-11-03 - Spam Arrest. He got lucky and was sentenced to only 9 years by the jury

I spoke to the lead prosecutor on the case, Russell E. McGuire, and the following facts came out at trial (and reported in the press): Jeremy lists his net worth at $24 million and he was making at least $500K/mo in his spamming business before being arrested. 

Jeremy used to own Vinnie's Steakhouse & Tavern which is a real restaurant in Raleigh, NC, but he sold it in 2003. Food quality at Vinnie's has reportedly declined under the new management so perhaps this was a bad move. 

As noted in news articles, Jaynes also is a part owner of Beyond Fitness aka AHFI aka Sampsons' Gyms (919-816-9853), which is one of the stocks promoted by WSP. So it wasn't just two email spammers joining forces... Jaynes was a stock promo client of Kos and, in turn, Jaynes helped Kos with the promotion. Crooks helping crooks you might say. For more info, see Raleigh spammer faces prison time (Nov 14, 2004).

Moral of the story: Jeremy should have stuck to the restaurant business.

In the SEC's depo of Randall Rohm, Rohm said that in early 2004, Jaynes boasted of owning 10 shell companies and doing approximately 100 reverse mergers in the past four years and admitted that Kos was his business partner.

Jaynes used Howell Woltz for asset protection (concealing money transfers).

Attorneys used by Jaynes include: Sam Currin, Robert Shawn Wellons, both of whom have been indicted on criminal charges themselves (see Sterling entities information).

Bryan Kos (Quebec, Canada): Promotional top dog
Like Jaynes, Kos is also a top ROKSO e-mail spammer (see ROKSO page on Kos). However, he wasn't as successful as Jaynes. In early 2003, he didn't have much available cash.

Born and lived in the US (Sunnyvale CA, Scottsdale AZ, and Chicago IL). Went to high school at St. Viator High in Arlington Heights, IL. He's now based in Quebec partly because he thinks he'd be harder to get there and partly because his wife Caroline is from there. Kos and Jaynes hooked up in 2000 and are the top people which is consistent with their psych profile as well (i.e., they don't take orders from anyone). According to one of Kos' former associates I spoke with, Kos, like Kevin Katz (of fax.com), is very charming and charismatic in person. People want to like him and help him. Just like Katz, his charisma creates a huge sense of loyalty to him that transcends their better judgment. 

Kos is co-founder of SGNJ, a heavily promoted WSP stock. Not really surprising because the profit margins are much higher on a pump and dump when you own the whole company, rather than do it for someone else.

Kos' ROKSO page says this: "Another long time spammer. Normally spams for hire using free websites or "fake free websites" that either he, or a spamming partner run. Normally spams porn and illegal stock hyping schemes." 

Kos's main company is Internet Opportunities aka IOPS Inc aka www.i-ops.com aka Internet Promos LLC aka BK Ventures aka XTR Capital Resources, LLC based in Canada (see the ROKSO page for more info). He started IOPS around 1996. IOPS actually stands for "Internet Optimized Promotion Services." 

Kos is quite diversified as he describes in this e-mail excerpt from 2001 where he is recruiting for talent:

Internet Promos is an Internet company that owns an ever-growing number of Internet Properties. We own a Financial Education Center including many Financial Newsletters, Dating Services, as well as many additional Free Newsletters on diverse topics (such as: Health, Travel, Credit, Taxation, etc.) as well as an Internet Public Relations Firm specializing in the promotion of Public companies.

Note that he forgot to mention his porn business. Here's just one of the websites he created to promote the I-OPS turnkey porn business:  Koss porn promo.pdf. Kos will supply the porn expertise and marketing guidance; you run it.

As noted in the writeup, IOPS provides "investor relations services" as one of their core businesses. Investor Relations (IR) is the euphemism that they use to describe their illegal "pump and dump" stock promo business. For example, they provided "investor relations service" to Advanced Optics Electronics Inc. according to their SEC Form SB-S/A Filing of 9/21/01

He's been involved with promoting a lot of stocks including the WSP stocks as well as the stocks listed in the next paragraph.  

In 2000, Kos, started with Steve Reid (THE WIZZ KID) using the names "MOEBIUS-Emerging Company Reporter", Moebius "STOCK PICKS." In 2001, Kos switched to Heysek as  "The Penny Stock Picker" and The Heysek Report and Micro-Caps News. From April 2001 to April 2003, Kos and crew promoted the following roster companies: Wasatch Pharmaceutical (WSPH), Ziasun (ZSUN), UICO, ARSN, ESPB, ZABC, FASI, TELI, DDD, First Aid Direct (FADI) in 2001, Thaon Communications Inc. (THAO) in April 2001, VisualMED Clinical Systems (VSMD), Regency Group Limited (RGNC), MLM World News Today, Inc. (MLMS), Biomerica Inc. (BMRA), HouseHold Direct, Inc. (BYIT), CastPro.com (KPRC), Internet Venture Group, Inc. (ITVI), NanoPierce Technologies, Inc (NPCT.OB), KCS Energy, Inc. (KCS), Parallel Petroleum Corporation (PLLL), Contango Oil & Gas Company (MCF), American Bio Medica Corporation (ABMC), Bradley Pharmaceuticals, Inc. (BPRX), Lynx Therapeutics, Inc. (LYNX), Questcor Pharmaceuticals, Inc. (QSC), Align Technology, Inc. (ALGN), Derma Sciences, Inc. (DSCI.OB), Endocardial Solutions Inc. (ECSI), I-trax.com, Inc. (IMTX.OB), inTEST Corporation (INTT), MDSI Mobile Data Solutions Inc. (MDSI), Vital Images, Inc. (VTAL), EP MedSystems, Inc (EPMD), eUniverse, Inc. (EUNI), Ostex International, Inc. (OSTX), Carroll Shelby International Inc. (OTC BB:CSBI), and Genius Products, Inc. (GNPI).

Kos also promoted Geoffrey Eiten's OTCFN.com aka OTC Financial Network (OTCFN) a full-service financial communications and investor relations firm that specializes in emerging micro-cap companies listed on the OTC Bulletin Board (see Stock Profit About Us showing Kos' promotion). More about Geoffrey Eiten can be found here, Eiten posting on Silicon Investor, but the article is incorrect as I only found that Kos promoted OTCFN.

Here's more on Geoffrey Eiten aka Geoffrey J. Eiten:

  • From New York Post Online Edition, Geoffrey J. Eiten: Arrested, convicted and sentenced to prison in 1984 for cocaine possession with intent to distribute, Eiten was dismissed by his next six post-incarceration employers, and thereafter opened a Web-based penny-stock touting firm called OTC Financial Network. The Web site lists none of his previous brokerage-industry employers, though it speaks of the "high esteem" in which he is held in the investment community and the fact that he has appeared as a "guest analyst" on CNBC's "Squawk Box" cable TV show.

  • for more info, do a SiteSearch on Investrend.com for articles about Eiten, and the services he allegedly uses to hype LocatePLUS Holdings Corp (OTCBB: LPLHA), including TheSubway.com.

I obtained a copy of the Genius Products, Inc. contract with Kos, for example. The short story is that he gets paid based on a fixed dollar value of the stock calculated right before the promo starts. Specifically, in this particular case, the payments are:

  • $50,000 in shares - price per share to be that on the day that the Company gives the "go-ahead"
  • $25,000 in stock due the day the Company gives the "go-ahead"
  • $25,000 due 30 days after "go-ahead" date

Therefore, Kos is incentivized to blow up the price as high as he can so he (and the company that hired him) can sell their shares at the inflated price.

Here's some more info on NanoPierce, for example, which Kos promoted sometime around April 2002:

The CEO of NanoPierce has been sued by the SEC three times for fraud. Their current stock promoter and past stock promoter is currently being sued for securities fraud for illegally promoting the scam stock.

See Nanopierce Technologies Inc., NPCT Paul Metzinger CEO, potential securities fraud NPCT.ob

Note: the author of that page is being sued by the current stock promoter for libel, but has won the first 5 rounds.

Here's a screenshot of the i-ops home page on April 18, 2001, showing The Penny Stock Picker and The Heysek Report: i-opsHeysekReport4-18-01.pdf

Here's a writeup on THAO on i-ops.com in April 2001: Thaon Communications Inc. (THAO)

Here's the pitch i-ops.com used to solicit "investor relations" (IR) business: i-ops.com Investor Relations "pitch"

Here is Bryan Kos management team. Caroline (who is listed on that page) is his wife, Caroline Kos aka Caroline Archambault. The key thing here is that the two top executives are Kos and Heysek.

In his SEC deposition, Bryan (like Oehmke) basically answered "Fifth Amendment" to most of the questions. In his answer to the SEC complaint, he denied everything.

His attorneys are William Nortman (based in Florida), and his long-time counsel, David J. Levenson (Potomac, Maryland).

Thomas M. Heysek aka Tom Heysek aka Milton Thomas Heysek aka "Meatloaf" (San Francisco, CA): The editor of WSP
The editor of winningstockpicks.net aka USPennystocks.com aka www.thepennystockpicker.com aka Fire Your Broker Stock Picks aka The Heysek Report aka Micro-Cap Report aka Micro-cap News aka Heysek Research Corp aka the Penny Stock Picker aka PennyStockPicker. Other newsletter names include "Exit Wounds" It's the same Tom Heysek behind all these entities. He's the "candyman" here, or should I say the CNDD man? He can take a company with no revenue and package it with his writeups (with the appropriate illegal fax and spam advertising) to a $2 billion dollar market cap (like he did with CNDD). He uses his real name probably to make things look more credible. 

He's one of the people liable under the TCPA for sending those junk faxes to you. See evidence of Tom Heysek liability for sending junk faxes which contains links to copies of the original documents that were used in the scam. 

Heysek's resume on the USPennystocks.com site (or look at p. 6 and 322 and 323 4MB archive of his past WSP issues) of is missing critical details of places of employment that have been expunged (like that he learned his craft under Ray Dirks at Security Capital in 1999 and that he worked at Med Gen) and other things have been "inflated" just like his stock writeups.

The "company that was re-named Asian-American Capital in 1993" mentioned in his resume was registered in Florida on May 2, 1990. It is Inactive, the Registered Agent resigned October 11, 1990, and the only officer listed is Thomas M. Heysek, 9887 N. GANDY BLVD., ST. PETERSBURG FL. His registered agent was Max C. Tanner of Las Vegas, Nevada. Max is currently serving an 8 year prison term for evading $2M on profits from an illegal stock swindle (NY Times, November 9, 2002).

More fascinating is Heysek's real resume, his broker file: Thomas Milton Heysek CRD#: 2375660 showing his real jobs and disciplinary action against him for entering into contracts that were not authorized, not telling the truth when confronted by management, placing stocks into accounts without their permission, mishandling customer funds, etc. Compare his Central Registration Depository (CRD) history with his self-proclaimed "resume" and it doesn't seem like you could possibly be talking about the same person since there is nothing in common other than it is absolutely the same guy (even the social security numbers match up; Tom uses at least 4 of them).

Heysek and his current wife, while still working for Securities Research and Analysis, Inc., moved from Florida to Santa Cruz, California in September 1996. We know that because Tom didn't pay the moving company. OK, it wasn't like he forgot or anything... According the Mayflower attorney, Heysek actually defrauded the movers with phoney papers. Mayflower filed suit against the Heyseks and won a default judgment of $21,980 on April 9, 1998 (1998 WL 184328 (N.D.Cal.)) which Heysek never paid. Are you surprised?

Heysek was very tight with Kos until I blew his cover and had been since around 2001. For example, a spam of  2/28/01 promoting CHWT and "The Heysek Report" is from stockfinder5@i-ops.com (see StockTalk Discuss ATEL - ACCESSTEL INC (#62-127)). Whoopsie! That was a mistake. i-ops.com is Kos. So we have proof that Heysek and Kos go way back to the beginning of 2001! There was a lot more. For example, http://www.i-ops.com/pennystockpicker/ used to host Tom's newsletter. See stuff below for more about Heysek and his training under Ray Dirks in 1999 (they have since parted ways).

According to his employment record on file with the National Association of Securities Dealers (CRD history), Heysek has held five jobs on Wall Street over the past decade, and has been fired from three of them, for offenses ranging from "unsatisfactory sales practices" to "improper handling of customer funds." That is neglected from his resume on his website. I'm sure that is probably just an inadvertent oversight that Tom forgot to mention. Also, Tom forgot to mention that in the midst of working for Kos, he also did double duty as VP Finance and Chief Compliance Officer at Med Gen Inc, according to the Med Gen Inc 10KSB filed on 12/20/01 (symbol: MDGN.OB) and then was VP Investor Relations and Compliance according to a Med Gen press release on January 14, 2002. That's the same company that brought you Snorenz where on March 29, 2001, the FTC found that the advertising was full of unsubstantiated claims and that they failed to disclose that a purported expert endorser featured in some of the infomercials for the product had an investment in Med Gen, giving him a financial interest in promoting sales of the product. Remember, Tom was in charge of Compliance at the company. 

Also, Tom fails to mention the name of the third party that paid for the promotions he does. That is a violation of SEC rules. SEC Regulation 17(b) as interpreted by the SEC requires the full compensation to be disclosed, and if from a third party, the specific source of the compensation and the relationship of the payer to the issuer (see the SEC statement at Investrend.com, for example).

And his track record of picks in his newsletter? Well, all I can say is that I could find the buy recommendations, but not the sell recommendations! Try for yourself. 

Here's his claimed buy/sell "track record": NewsletterTrackRecord.pdf

Here's what he actually wrote at the time: 4MB archive of his past WSP newsletters. Note: None of the magically timed sell orders listed on the track record can be found; just the buy orders. What a surprise!!!

I spoke to Heysek on 9/24/04. Heysek claims he has no clue who sent the faxes and who made the $40M+. He says he only gets paid $10K to $20K per month via wire transfer from the Bush Ross account that is set up to pay everyone. He said he talked to Hartley and got 14 pages of notes, had Hartley initial every page, and he then boiled it down to 2.5 pages. He asked me what I wanted. I said I wanted to know who sent the faxes. He said he hired a detective and he knows where they are coming from and he said it was all in-state so the federal laws don't apply (which of course he is completely wrong about). He refused to tell me the numbers the faxes were from saying I would have to pay for that information. He said he had no idea how anyone could make $40M+ on Concorde and had no idea who did it. He admitted he's talked to Kos, Oehmke, and Lord. In his court filing against me, he claimed his real name is Milton Thomas Heysek, but his real name (which I verified with his ex-wife) is Thomas M. Heysek.

For a guy who is so innocent, one has to wonder: 1) why did he want so desperately to quash the subpoena for his financial records? 2) why did he tell me he's closing all the accounts I discovered? Innocent people wouldn't have to do any of that.

Heysek tried filing Chapter 13 bankruptcy on 1/22/93 in Florida but then he requested his dismissed. Case 93-00712 if you have a pacer account.

See evidence of Tom Heysek liability for sending junk faxes which contains links to copies of the original documents that were used in the scam. I have more information on Heysek and if you have a need to know, you can contact me about that.

Andrew M. Kline (San Rafael, CA): STOCK FRAUD ASSISTANT
Heysek's "partner" in creating fraudulent stock writeups. The two of them constitute the editorial staff for WSP. After I pointed out to Kline that Heysek's report on CNDD can't possibly be reasonable and was so outrageously false, Kline hung up on me. I must have really gotten to him because five minutes later Heysek makes a threatening phone call to me to back off my cases against him (which confirms he was served). Tom didn't say "please" so I ignored his "request." It could be that Tom never saw any of the Barney tapes about "please and thank you are the magic words" when he was a kid. 

The only possible explanation for Kline's reaction I can think of for this is that Kline knows exactly what he is doing. That fits the facts since anyone honest with half a brain (and Kline is a member of Mensa) would immediately figure out what Heysek is doing; they wouldn't need me to point this out. The CNDD profile is just a mind blower...full of impossible assertions like 0 to $600M in revenues (and $400M in profit) in 4 months from a standing start. Anyone with basic financial analysis skills could see the fraud. The fact that Kline had no interest in the facts suggests he's like a mini-Heysek, a "Heysek wannabe," learning the tricks of the trade from the master. I'll bet he is paid pretty well...maybe he even gets a cut of the action. Kline worked at the family business Noe Valley Cyclery just a few years ago (on or about 2000). I called over there at around 10:20am on 8/17/04 at (415) 647-0886 and spoke with the owner, Lawrence E. Kline, Andrew's brother. He refused to say anything about his brother, not even verify dates of employment. It's a bicycle shop. Impressive credentials. That seems like the perfect background for evaluating complex speculative investments.

Kline spent 5 years in jail in Bolivia for possession of marijuana and 18 months in jail in the US for intent to distribute hashish. Other than that, he's clean as a whistle!

From Drug Trafficking on the Great Silk Road: The Security Environment in Central Asia:

Uzbek security arrested Andrew Kline, who was a citizen of the United States living in Bolivia. He wasreportedly a coordinator of activities between the Afghan and South American drug dealers

Kline got paid by Heysek (wire transfers from Thomas Heysek Associates and checks). Kline never made any big money on this.

Dan Hartal (Montreal, Quebec, Canada)
Dan, who is lives on Queen Mary Rd in Montreal, Canada, collected checks (the few there were) and handled upsells to premium packages for winningstockpicks.net. When we talked to him Hartal claimed he was just a "consultant" but that isn't true. He's a team member and this isn't the only Kos venture he's been proven to associate with. For example, at Ericware Technologies, Dan is the "Investor Relations Department" and Tom Heysek wrote the research report. You can talk to Dan at 514 293 7660, but he's probably not going to want to say very much. 

Don Oehmke aka Donald Edward Oehmke aka Doc Oehmke (Kalamazoo, MI)
According to Lord, Oehmke was the purchaser of all of CNDD's stock that was traded (a WSP promoted stock) as well as Chairman of SGNJ (another WSP promoted stock) and Ventana Consultants LTD, Kalamazoo, MI. Oehmke arranges the stock transactions since he's "experienced" in this area (see Rel. No. 41755 - August 18, 1999 for his credentials). Oehmke and Kos incorporated SGNJ, for example. Even though the Nevada Secretary of State record for Storate Innovation Technologies Inc shows the name "Scott Wilson," that's just a dummy name. I was able to find a paper trail that proves that it was actually Kos and Oehmke that set up this company. Heysek conveniently neglects to mention how Kos, a well known e-mail spammer, fits into the company in his writeup on SGNJ. In fact, he doesn't mention Kos's involvement at all. Gee, I wonder why? Heysek and Kos talk just about every day. Heysek is normally so thorough in his research. How could he have missed that one? Could it be that if he did, that his readers would realize they were being set up...a company founded by two people of "questionable" reputations with a track record of breaking the law, none of whom appear to have any experience in the line of business they are in? 

Also, Heysek neglects to mention that Oehmke ran a brokerage business that was expelled from the NASD in 1991 and involved in selling unregistered securities to the public at manipulated prices. Check out his Oehmke's NASD sanctions. Oversight, no doubt. 

Don and his third wife live in an estimated $500,000 home in Kalamazoo. He reportedly throws a terrific 4th of July party. Approximately 20 years ago, Don was a policeman. He's 55 years old today. He's used several company names and he's been sued in several states including Louisiana and Texas. He has a history of pump and dumps. Very charismatic according to people who know him. Hires really expensive attorneys. He used to live in Ventana Canyon (in Tucson, AZ) which is presumably where he got the idea for the name Ventana Consultants.

In his SEC deposition, Don (like Kos) basically answered "Fifth Amendment" to most of the questions. Don approved the phony press releases that went out per emails in the SEC case.

His broker CRD is #1449840 (see copy starting on page 241 of ExhibitsI.pdf).

Oehmke's lawyer claimed the SEC got it wrong and his client isn't liable. I sent him an email on April 6, 2006 with the following questions:

If that is true that the SEC got it wrong, I wonder if you can comment on the following:

1. Why did Oehmke (as Ventana) directly wire money to Camelot Promotions (Javier Cuadra) to send out illegal faxes promoting these stocks? 

2. Bush Ross wouldn't turn over the trust account records because Fertina Turnquest (who made the bulk of transfers) was an agent for their clients and Ross was instructed by his CLIENTS (plural) not to release the records. Since Jaynes wasn't a client, the only other person Fertina could be the agent of is Kos. And since he said it was CLIENTS plural, the only other client could be Oehmke/Ventana. This appears to be an implicit admission that Fertina was the agent for Oehmke and Kos. Is there any other possibility that I'm missing? 

3. If Oehmke isn't one of the perpetrators, then how do you explain the millions in profits transferred to him by Fertina from the Bush Ross Trust account? Why would she do that if she was, as you imply in your court filing, the mastermind?

I never got a response to my questions.

Don's wife Shannon Oehmke (who also uses the name Shannon Payne) was a secretary and director of the corporate shell that merged with GTX Global earlier this year. GTX Global has been written about by Stocklemon who noted that they used similar promotion to the promotions in this case. 

More info on Shannon Oehmke: 

More on GTX Global:

Hartley Lord (Boca Raton, FL)
The 75 year old head of  CNDD (a WSP promoted stock). Concorde's official phone number is Hartley's home phone. The official address is his home address. Unlike all the other suspects here, Hartley actually wanted to talk when I called him! Based on what I heard, I thought he was innocent of any wrong doing, but I didn't spend a lot of time on this and probing into his background. He was completely cooperative and all his answers made sense. My initial guess was he's just being played by these guys. 

However, I could be wrong. He has a history of having been involved in securities fraud and market manipulation. Also, Lord has been barred for life from association with any member of the NASD in any capacity. So that was a huge red flag too. That is quite an achievement. I can't say I know anyone else who has achieved such an honor. See the Hartley Lord follow section below for more details. Also, I couldn't find anyone at the SEC who knows of a pump and dump case where the company being pumped was determined to be an innocent victim. If you know of any such cases, please let me know and I'll post it here. 

Also, per emails in the SEC case, Lord approved the inflated write-ups that Heysek did. It's possible he was just being overly optimistic about this business opportunity, but Heysek's financial projections were pretty outrageous.

Another factor is that a major shareholder of CNDD was Mauricio Madero O'Brien who Hartley has known for some time. For example,  in 1994 they were both board members of Pace American Group, Inc and they were both sued in a lawsuit in 1995 (Pace American Group Inc. v. Lord, Madero, et al. in state court in Delaware 
Civil Action No. 14215 and 14040). According to a July 18, 1996 Bloomberg article, Madero spent time in a Mexican jail in July 1996 awaiting trial and Mauricio was a partner of Cabal Peniche who reportedly stole $53.7 million dollars from Banco Union in Mexico City. Mauricio spent approximately 8 years in prison and was released in May 2004 and couldn't travel to the US until June.

Jere Ross aka Jeremy Ross (Tampa, FL)
Ross is a co-founder and partner at Bush Ross Bush Ross Gardner Warren & Rudy PA in Tampa Florida (see Bush Ross Gardner Warren & Rudy, P.A. - Jeremy P. Ross Bio).

Ross provided legal counsel for Kos, Oehmke, and Lord. I've been told he's provided legal advice for Oehmke (as Ventana) for approximately 10 years. Both Lord and Oehmke are heads of companies featured in WSP. Lord told me he didn't have a current lawyer when Oehmke contacted him.

Ross is representing Lord and Concorde in the SEC suit.

It appears he was more trusting of his clients than I think he should have been and he did some things he shouldn't have done and he may have subjected himself and his firm to liability for those mistakes. See Jere Ross and the stock scammers for a lot more detail.

I learned from someone who worked at Bush Ross that Ross and Kos talked often prior to mid-August 2004.  

There is evidence that supports the contention that Ross didn't know exactly what was going on (even though I believe that he should have), but there is also evidence that supports the opposite contention. Jere Ross has no "history" of doing illegal stuff.

For example,  the representation of Oehmke, although over a long elapsed time, involved very little work over that long time frame. In the SEC depo of Rohm, Rohm mentioned that the reverse merger contract was prepared by Jere Ross and Rohm's lawyer advised him not to do it and it was "substandard."  But I have not found any evidence that Ross had anything to do with that contract and I don't believe he was involved with it at all.

All of the vendors I talked to were paid out of the Bush Ross bank account (Spreadbury admitted it in the SEC depo, Vault Studios admitted it to me, and Fry Hammond Barr provided evidence under subpoena of the transfer, and Tom Heysek's bank records show he was paid from the same account. In addition, the funds to pay Camelot Promotions were mostly provided from the Bush Ross account, with some funds coming directly from Ventana Consultants (Oehmke).

According to the SEC lawsuit, over $5M of illegal trading profits from the Ryzcek and Chiang Ze accounts (which I believe were set up by Woltz) were sent through the same Bush Ross Sun Trust Banks Account # 41001143506 according to documents the SEC got (page 11 of the ExhibitWitnessList.pdf which is Docket #35 in the SEC case). $1,172,876 went to Bush Ross from Ryzcek Investments between June 29 and August 5, 2004. $4,134,865 was transferred from Chiang Ze Capital, AVV between July 28 and August 11, 2004. 

Heysek's Asian American Capital Management LLC account at B of A was paid by Bush Ross too. I subpoenaed these records from B of A and found out that Heysek got $24K on 8/03/04 and $23K on 7/7/04 from the Bush Ross account.

Also, Bush Ross wired funds to Spreadbury to pay for press releases. Ross subsequently authored a retraction which was sent out under CNDD's name.  

Jere Ross wrote me in an email on August 15, 2004 at 2:50pm which included the following (emphasis is mine):

"Generally the SEC staff conducts an informal or, with Commission approval (which won't be difficult to obtain in this case), formal investigation. If they determine the likelihood of criminal activity (which, unfortunately, appears to be present in the current case), they will refer..."

"As an aside, I give you credit for your efforts and hope that they are successful. There are few worse actions than market manipulation of the sort being practiced by whomever is behind the recent activity. They prey on the small investor who looks for the big hit. Good luck." 

At first I was surprised that they would use a law firm's trust account instead of creating some bogus bank account somewhere. I guess they probably used the Bush Ross account for at least two reasons:

  • Hide behind attorney-client privilege: The SEC tried asking for their records. Bush Ross objected citing attorney-client privilege. So there you go. That's why they used the attorney. So anyone tracing them runs into a brick wall. There are three ways around that. 1) There is no attorney-client privilege for trust account funds (which these were) as the SEC pointed out to the court in their motion to compel and 2) in a criminal case, prosecutors can invoke the crime-fraud exemption (applying only to that communication relating to the continuing or future commission of a crime) if there is a reasonable basis for a reasonable man to conclude a crime has occurred (the judge normally does an in camera review to determine whether the exception is granted and the documents that it is specifically granted for), and 3) Only attorney-client communications are exempted, not the transactions with third party vendors. Bottom line: If the judge follows the law, they won't be able to protect the transaction history from discovery. Indeed, on March 29, 2006, the federal judge ordered the client trust account records turned over to the SEC and Bush Ross has complied with that order.

  • Hide behind the mass of transactions: Since Bush Ross is a big firm there might be a LOT of transactions and most people wouldn't have the time to investigate every one and even if you did, you'd probably find nothing without Bush Ross's cooperation. Unless you knew specifically what you were looking for, it would be like trying to find a needle in a haystack. For example, instead of hiring of the fax broadcasters directly, they paid a third party (Camelot Promotions) to do that. Therefore, transactions with Camelot Promotions would appear in their account and most Plaintiff's wouldn't know what it is for. Bush Ross would claim attorney client privilege and Javier (at Camelot) would probably "not remember" who paid him and probably is so bad at record keeping that he wouldn't be able to find anything. Therefore, unless you are really good at detective work, it's hard to figure out what is going on.

We also know from reading the SEC case that there are other people at Bush Ross (not attorneys) who have knowledge about what was going on including:

  • Barbara Rowe: she handled the wire transfers when Kos made a request to Jere

  • Jessi Horrnik: her computer has the software that was used for the automatic funds transfer. 

For more information, see Jere Ross and the stock scammers

Richard E. Rutkowski (Cary, NC)
The technical computer guru for Jaynes. Hangs out in Raleigh and Cary, NC (see ROKSO page on Jaynes and Rutkowski). Sets up technical infrastructure. Was involved in setting up the WSP technical infrastructure. 

I've talked to him on his cell phone and wanted to ask him some questions. He said he'd have to talk to his lawyer first. He never called me back. Guess he forgot. I warned him if he didn't call me back, I'd have to do a lot of digging to prove my case. I had no choice. So you can thank Richard for providing me the incentive to dig out all this stuff since he wouldn't tell me who hired him on this job. 

Richard was quite pleasant to talk to on the phone, not rude at all...quite unlike Heysek who comes across as really arrogant and impolite. Richard faced 20 years in prison and was been arrested: 12-12-03 - Kilgore Announces Second Criminal Spammer Surrenders to Authorities, but he was acquitted because, for some reason, the judge didn't allow key pieces of evidence (like a video tape of him doing it) because the judge thought it would be prejudicial. Hard to believe, but absolutely true (a matter of public record)

Jessica Jaynes aka Jessica DeGroot (Cary, NC)
Jeremy's sister. A bit player. Works for Jaynes. Does Internet related stuff for them. The nice folks in the Virginia AG's office know her well. She's also sort of in trouble with the law too. Here's a nice article about her indictment on criminal charges: 04-07-04 - Kilgore Announces Indictment of Sister of World's Eight-Worst Spammer. She was found guilty of spamming and fined a paltry amount. She created some of the stock touts that went out (see Paul Spreadbury writeup below). Graphics quality isn't nearly as nice as Spreadbury's, but Spreadbury probably wanted out when he realized he had been conned by these people. 

Jessica had a role in the faxes that were sent out. After Spreadbury did his magic on the faxes, they'd be sent to both Bryan and Jessica (and Jeremy too if they involved AHFI).

Chad DeGroot (Cary, NC)
Works for Jaynes too. He does some graphic design work. He's Jessica's husband. Some of the WSP website is Chad's work, we can prove that so it is yet another piece of evidence that ties Jaynes directly in with the WSP site.

 

Kevin Katz (Laguna Beach, CA, Aliso Viejo, CA)
CEO of fax.com (aka Impact Marketing aka Access Sales Inc). They also sent out junk faxes for WSP on a cash deal. They got paid by Javier at Camelot Promotions who in turned was paid from the Bush Ross account. 

One of my fax.com insiders says that they ABSOLUTELY know this stuff is fraudulent. Frank Frappier (top sales person for fax.com) handles faxes in this area. I've heard that revenue from pump and dumps are pretty high; maybe approaching a million dollars a month! According to their records, fax.com alone sent out over 10M of these promos.  Fax.com rarely complies with discovery. The California Attorney General spent 6 months to get some questions answered and after 6 months got 20 boxes of removal requests; nothing of value.  See also the fax.com page.

The sales person at fax.com who actually took the orders from Javier Cuadra for these faxes is Lou Gaudio who used to work for Impact Marketing Solutions (aka fax.com).

Paul Spreadbury (Pensacola, Florida)
An freelance marketing consultant. His name (and phone numbers associated with him) were on the phony press releases.  Currently located in Pensacola, Florida. 

I've checked him out thoroughly. He's a 100% honest guy that was duped in the same way that people who read the stock touts got duped. Once that press release came out, Spreadbury figured out what was happening and got out. That's why the CNDD stock touts (after the first two) were subsequently created by Jeremy Jayne's organization rather than Spreadbury. 

I have the highest respect for Paul's integrity. He was 100% honest in his SEC depo. He's an excellent marketing guy. His only mistake was being too trusting and believing what he was told (that the faxes were just going to subscribers, etc.). I don't hold him responsible for what happened because Paul was defrauded just like the investors.

Fax.com source data shows he created some of the stock touts that were sent out, e.g., the first two CNDD stock touts from fax.com on 8-4-04 and 8-9-04 (The BEST Penny Stock Picks!) were created by Paul. The ones after August 19 (i.e., entitled MICRO-CAP HOT STOCK PICKS) were created by Jeremy Jaynes' sister Jessica.

Heysek's annotated phone records prove Spreadbury called Heysek numerous times just before the CNDD stock tout came out.

Spreadbury designed and managed the website using material supplied to him by Kos (who got it from Heysek and Kline). Spreadbury admitted in deposition with the SEC (p. 64) that he spoke with Heysek and Kos in connection with the material on the website.

Spreadbury also created the content for the faxes with direction from Kos who in turn used the writeups prepared by Heysek and Kline. We know that to be true since (a) he admitted it on p. 72 of his SEC deposition and (b) his electronic fingerprints were on the files submitted to fax.com. Spreadbury gave the faxes back to Bryan after he wrote them (per his SEC deposition p. 77).

Spreadbury got direction in his marketing efforts (faxes, etc.) from Kos, Heysek, and Kline. We know that from his email in Exhibit 55 (see HeysekEmail.pdf).

I got mentioned (Spreadbury SEC depo p. 81) as having first informed him of the fraud.

Spreadbury got paid by wire transfer from the Bush Ross bank account (SEC depo p. 118).

Spreadbury originally interfaced with Eric Gordon (who worked for Kos), then with Kos directly (see p. 157).

Spreadbury also wrote the Google ads, with input from Kos and Jaynes (p. 250).

Doug Paulson (Toronto, Ontario, Canada)
Does audio and video work featured on the WSP site through their company Vault Studios www.vaultstudios.com in Ontario, Canada. At first I thought they were just innocent pawns in this, but they sure don't act like it. They act like they are hiding something big. They refused to comply with my subpoena. They send "send me the subpoena" but then never even bothered to call to discuss any issues that they might have had with it. It was basically a trick so they could find out what I was fishing for. Most honest people don't act that way. The Paulson's treated me like I'm the criminal and Kos is a whitehat. Gotta be a reason for this...I haven't figured this out yet, but it makes me very suspicious that they are still obstructing justice even after I've pointed out to them exactly who Kos is. I gave them a final chance to pick sides. They just ignored the email. Guess the Paulson's are rooting for the blackhats to win. This was not so surprising after I found out that Vault Studios is a client of Kos' firm (and vice-versa)! So it seems quite probable that if they turned Kos in, that Kos would turn them in. That explains the silence and lack of co-operation.

Jon Paulson (Toronto, Ontario, Canada)
Works for Doug. He's Doug's son (Spreadbury depo p. 204). Also is refusing to talk. Not surprising after I learned that they've employed Kos in the past. However, when I first called Jon, I caught him off guard and he admitted to me that Kos and Heysek direct their activities. That was a very helpful admission at the time.

The Paulson's not only did the video for the website, but they also did the creation of the voice mail scams (see p. 204 of Spreadbury's depo). That's why they don't want to talk to anyone.

Howell Woltz (Advance, NC): Asset Protection and Investments
Howell Way Woltz is head of the Sterling Group of companies. I know that through various sources including Internet directory listings, an article he wrote, and his own admission in his deposition.

See Sterling Group information for more details on the Woltzes and Sterling. That page covers their arrest in North Carolina on criminal charges on April 18, 2006 and the admission by Woltz (referenced on p. 45 of Shasta Decision 9-2-05) that "a small group of people control and own all the Sterling entities: Howell and Vernice Woltz, Fertina Turnquest, Samuel Currin, Joseph Brice, Hiram Martin, Thom Goolsby, Walt Hannen, Wendell Skeete and Lewis Borsellino."

The photo above was taken before Howell was arrested. He appears to be happy. The photo on Sterling Group information was taken after his arrested. Howell does not appear to be so happy.

There is consistent evidence supporting the allegation that Jaynes was a client of his: (1) Rohm testified in the SEC case that Howell admitted this to him, (2) Jaynes and Woltz both lived in NC at the time, (3) Jaynes associate Rutkowski is listed on the same form as Dicienzo Storr who has an email address at sterlinggroup.bs, and (4) a Jaynes associate (Chad DeGroot) created a form that was posted on the WSP website containing an address that matches the address of Sterling as noted below and (5) Jaynes' lawyer is the same Samuel Currin that Woltz admitted is an owner of Sterling.

Furthermore, the most recent SEC filing in the Bio-Heal case shows that the Registered Agent for Bela Enterprises, LLC and Gibson Island Enterprises, LLC was Sterling Trust Ltd. Gibson also used the Sterling Trust address on bank wires as shown on pages 103 through 112 pf that filing. What's cool is that on p. 104, 105, 108 and 111, we find four $200K wires (a total of $800K) to I-Max Direct, Inc. (formerly www.imaxdirect.com), located at 51 JFK Parkway 1st floor West, Short Hills, New Jersey 07078 (phone 1-973-218-2459), a legitimate marketing company run by Andrew Witty. This media firm was used by Jaynes and also by Kos. On page 106, we find a wire transfer for $175K from Gibson to the Currin Law Firm PLLC IOLTA. That's a client trust account designation. We know from documents in this case and his spam case, that Sam Currin is Jayne's lawyer (and Currin is shown as the way to contact Jaynes in line (ff) of Oehmke's filing). Then on page 107, we see a wire for $150K to Warren Hansen (who is profiled elsewhere on this page), a person who traded AHFI stock, which is a company that Jaynes held shares in. So all of these facts in this paragraph and the previous paragraph also connect Howell's company Sterling with Jaynes.

There is even more evidence that Howell Woltz, Vernice Woltz, and Fertina Turnquest all had some knowledge of what transpired here because Oehmke admitted this in a court filing in the SEC's case against CNDD (see line (aa) through (cc)).

Also, check out the table of the trading entities used to trade these stocks. All of these trading entities had one or more ties to Sterling or people associated with Sterling.

Because of these ties, and because all of these entities were set up in locations associated with Sterling, I would not be surprised at all if Woltz or Sterling was involved in setting up some or all of the trading entities (Gibson, Bela, DaSilva, SA, Vanderlip Holdings NV, Chiang Ze Capital AVV, Ryzcek Investments GMBH, Barranquilla Holdings, SA) that were used to trade these stocks. One of the possible reasons that they used strange sounding names for these companies would be to conceal who really owns the companies and controls the accounts that were set up. As the table shows, companies with ostensibly nothing in common look similar once you dig a little deeper. Therefore, it is reasonable to make the allegation that these trading entities were used to trade the shares so that it would be hard to find out who was really responsible. However, if there are criminal charges that are brought and the people who submitted affidavits (see p. 23 and p. 39ff of OemkeOpposition) don't want to talk to the authorities as to how they came upon these shares, then they could be charged as co-conspirators.

According to Spreadbury's emails obtained by the SEC, Fertina Turnquest was the contact person at the Sterling Group. A web search I did confirms she worked there as well. Oehmke admitted he had contact with with Fertina in his court filing (see page 20). Fertina had power of attorney over many of the trading accounts that were used; Oehmke had trading authority on some of the accounts, replacing Jaynes. See the section on Fertina Turnquest for more information.

When the Bush Ross trust records are finally revealed in court, I have reason to believe that they will show that Fertina also directed Jere Ross as to where to wire the funds in the Bush Ross client trust account so that contractors could be paid for the services that they provided to help carry out the scheme. This is quite important as I suspect that the trust account records will reveal that it was Fertina who ordered that the illegal faxes were to be sent. Why would she do that if Sterling just incorporates companies as Howell has told me? Why would Fertina be authorizing the sending of illegal faxes out of a client trust account at Bush Ross? That has nothing to do with the incorporation of companies. The most logical explanation that fits the evidence I found is that Fertina was acting as an agent for either Jaynes, Kos, and/or Oehmke. 

I received confirmation of that allegation that Oehmke, Kos, or Jaynes told Fertina what to do when I tried asking Jere Ross what Fertina told him. I said "Fertina isn't a client, so she's not covered by the attorney-client privilege." Ross refused to answer the question on the grounds that Fertina was acting an agent for one of his clients. Since Oehmke and Kos were clients, that helps us narrow down our search as to who instructed Fertina. Unfortunately for Howell, agents don't escape liability for their actions just because they were told to do something illegal by someone else. If Howell knew what was going on (and I believe there is sufficient evidence to convince a court of that since he clearly had read this web page in August), and he failed to stop it, then he can be held liable for the illegal activity.

In his letter to me of July 23, 2004, Howell wrote that, "For the record, Sterling ACS, LTD is a financial and corporate service provider... [and]... Sterling Trust (Anguilla), Ltd. ... [are]  "not in the business of faxing or e-mailing, or supporting those that do so." I would agree that that may not be Sterling's primary business, but based on the evidence I uncovered it seems that they do in fact support people (such as Jaynes) who engage in one or more of the illegal activities he enumerated.

A big problem for Woltz and Sterling is that after it was clear that Howell was aware of the illegal activities that I pointed out to him in July, and after that  letter to me of July 23, 2004 where he said he didn't support such people, he continued to do business with the same people. The legal term for that is ratification.

Since mid-August 2004, this page has had a paragraph inviting anyone with a correction to let me know. Howell's August 26, 2004 e-mail to  me showed he had read the web page. His email wasn't solicited by me. It happened after Howell read this web page and read its request for corrections. That's really bad for him from a legal standpoint because his continuing to do business with Jaynes, Oehmke, and Kos after that point would again likely be considered by a court to be ratification. And it just so happens that Fertina Turnquest had power of attorney on almost all the accounts at Electronic Access Direct and had trading authority on some of the accounts (Oehmke had trading authority on others) until approximately late November 2004. That's 3 months after Woltz clearly had notice what was going on. I can imagine that that's not going to play well in court if Woltz claims he had no idea what was going on.

When I talked to Woltz, I found him evasive. I asked him simple yes-no questions (like "have you ever heard of Worldwide Picks LTD?" and "did you incorporate them?"). I've still not gotten a straight yes or no answer from him on those simple questions, even though his lawyer, Martin Russo, admitted to me that they might have registered that name.

Also, he's made statements to me and given answers that I considered to be unreliable such as in his email when he wrote that "nothing regarding myself that you have said is true, other than the references to sites that  show me speaking to S.T.E.P...."

I spent several days trying to ask him a simple question: "Did you set up Worldwide Picks LTD, yes or no?" Woltz completely danced around the question for days. Why, if he didn't do it, wouldn't he just say "No I didn't"? He told me in his e-mail from Howell that he can't answer "yes" or "no" because his client's identity is confidential. That makes sense to me since otherwise it turns into a game of 20 questions. But I had asked him if he incorporated World Wide Picks, not who his clients were. Even though that question is a matter of public record, he refused to answer that question.

In an  E-mail from Howell Woltz July 25, 2004, Woltz told me "I do not remember incorporating such a company." But the previous day, he wrote, "Sterling does not control, own shares in, or run a company named Worldwide Stock Picks, Ltd." Funny. I never told him the name had the word "Stock" in it because it doesn't. So by contorting the name by inserting "Stock," he can truthfully answer that he had nothing to do with that company. I don' t know if he was just confused about the name or deliberately trying to mislead me. Also, his insertion of the word "Stock" in the company name was interesting. Even though he can't recall whether he incorporated them or not, he seemed to be able to recall what business they were in.

I later learned that it is a matter of public record that Woltz's organization was involved in creating the company in Anguilla (Worldwide Picks Ltd is Anguilla Corp #2036475). I believe he did it for Jaynes and his associates so they could hide their identity from being discovered. I concluded this because 1) WSP was the identity that they used on their website and 2) both the servers used and one document published on the site can be traced to people who worked for Jaynes and Woltz (see subpoena to Rackspace, 3) The domain registration for WSP didn't list any names of any real people, 4) the website itself didn't list the names of the people who ran WSP (except for Heysek as the editor), 5) in Anguilla it is very hard to determine the officers and directors (e.g., one web page touts Anguilla as "Tiny British Overseas Territory with a Big Offshore Confidentiality and 100% Secrecy Reputation"), and 6) Rohm testified in the SEC case that Woltz told him that "he was helping Jaynes send his money offshore to protect it from the authorities."

It's likely that Woltz or Sterling was involved in setting up the Chiang Ze Capital company to accept the trading profits for trades placed for these guys. For example, Oehmke filed a document in the SEC case showing Mavis Chaitan as President and Secretary of Chiang Ze. However, Mavis Chaitan is the name of the mother of Woltz's wife Vernice whose maiden name is Vernice Chaitan. Also, the same document pointed out that Mavis gave the power of attorney for the trading account at Sunstate to Fertina Turnquest who worked for Sterling. See the table of the trading entities for more coincidences like that that connect these seemingly unrelated companies together.

Howell admitted in his e-mail from Howell to me that Vernice is from Trinidad. Chiang Ze is a Trinidadian corporation. And Ryzak Investments GmbH which held 6 million shares of AHFI is in Trinidad too. So things are not inconsistent with my hypothesis.

Like Jaynes, Woltz maintained a residence in North Carolina at the time. While in the US, he can make it appear he's offshore by bouncing his email off a Bahamas based mail server. He's also used a 714 area code cell phone even though the only US residence I could find for him was in North Carolina. At one point, he told me "I'm done with my vacation in North Carolina." I called his home in North Carolina and talked to his son. I asked "is Howell there?" The son passed me to Vernice, his wife, who asked me why I was interrogating her son!!! Interrogating?!? Vernice is an officer of the Sterling companies. Anyway, they were nice enough to confirm to me that my info was correct; that he lives there. Howell later told me that the NC home is his vacation home. I must confess that I don't know anyone with a vacation home that is on a street that matches their name. Very cool.

At the time I first checked it, the domain registration info for WSP showed contact information (such as the phone number) that matched his Sterling Trust in Bahamas. In fact, the primary contact for the website at rackspace was Dicienzo Storr who has an email of dstorr@sterlinggroup.bs. So the email address of the primary contact for the WSP website is at Sterling Group. 

Also, the WSP membership form (which appears to have been created by Jeremy Jaynes's sister's husband, Chad DeGroot), instructed you to send your money to an address that at the time appears to match Howell's other offshore branch office in Anguilla (Sterling Trust (Anguilla), Ltd). where they presumably did the incorporation of Worldwide Picks Ltd.

Also interesting is that the PO Box Storr gave for his address (PO Box CR-56766 Miami, FL 33131) matches the same PO Box number that was listed on the website domain registration for the WSP website, but on the domain registration, they listed the location as the Bahamas, rather than Miami. The reality is this is a Mail Boxes, Etc. PO Box number that is also used by Sterling. Check out the address on page 16 of ShastaFourthStatus: Sterling Trust Anguilla LTD, PO Box CR-56766, Suite 1202, Nassau, Bahamas. 

Also really interesting is the contact phone number listed on the WSP domain registration: 242-325-7573. Compare that to the phone number of the Sterling Group that was listed at the end of an article written by Howell Woltz. It's identical! Also note that a web search revealed that Sterling also used 242-325-7574, which is one digit away (the last digit).

When I called down there and asked what they do, I couldn't get a straight answer. I asked Howell the same question and he appeared flustered trying to explain what he does for a living. 

Howell stopped talking to me shortly after I started cc: US government agencies on my emails to him, e.g., when I asked him: "who did you recall talking to on the day you incorporated Worldwide Picks LTD?"  Perhaps his phone records would help answer that question. 

Howell's firm has been involved in at least one financial fraud before, Shasta Capital, but Howell implied in an email to me (see point #2) that he was a victim of dishonest people that worked for him. See Sterling Group for more information on the Shasta case. I found it interesting that Woltz fought the production of information the government wanted and some people believe he has still not fully complied with court orders to produce documents in that case. For example, if Woltz were to have erased the backup tape before turning it over to the CFTC, that might be considered by some people as not fully complying with the court's order.

After reading this web page in 2004, Howell sent me an e-mail. I responded with some questions to clarify his statements. Here's the August 26, 2004 e-mail thread with Howell Woltz. I never heard back from him since then. When he wrote that nothing I said about him was true (with the STEP exception), that was too generic for me to deal with since I knew that wasn't true. Therefore, I asked him for specifics which I never got.

However, on March 20, 2006, he served me with a lawsuit for libel. The lawsuit was devoid of any libelous statement that was false so I sent an email to his attorney in the Bahamas asking which information is false. I also sent an email to Howell with the same request. Why, if the information was false and harming him, would he (or his lawyer) not bring that information to my attention so that the false information could be removed? Why did he wait almost 2 years? He knows how to contact me.

Also, I've talked to at least one other person who said Howell represented to him that he was in the "asset protection" business.

The following statement also indicates that Woltz and Jaynes were associated (Randall Rohm's testimony in the SEC case):

7. Also in connection with the merger discussions, sometime in mid 2004 I met Howell Woltz once, whom Jaynes introduced as his money manager. At this meeting, Woltz told Ted Sampson and me that he was helping Jaynes send his money offshore to protect it from the authorities in Jaynes's spamming case and tried to convince us to start sending our money offshore as well. I have not seen or spoken to Woltz since this meeting.

Howell told me that it was illegal for him to disclose who his clients are. 

He wrote an email on July 25, 2004: "Under the quite strict privacy laws, I am not allowed to disclose information about clients. The laws provide for a $500,000 fine, and imprisonment up to 10 years, per occurrence of such disclosure, and a suspension of licence [sic]."

He said the same thing again in his Aug 26, 2004 e-mail to me: "As for information about anyone I deal with, the Privacy Act of 1971 requires jail time of up to 10 years, and as much as $500,000 per offence in fines. When you seek to have us discuss who we may or may not deal with, I'm not sure you know what you're asking. We can't and  won't do so. No "yes", no "no". You'll continue to get nothing."

Nothing?!?! I'm sorry, but I just find that way too hard to believe. 

Howell has repeatedly violated these "rules" about what he can disclose. For example:

  • How can he possibly bring a libel suit against me? In order to do that, he'd have to cite and attest to specific statements here that are false. But according to his own principles, he's not allowed to confirm or deny anything with respect to his clients. He can't even get a default judgment if you believe what he said that he can't confirm or deny anything about who his clients are or aren't.

  • Similarly, he wrote (with reference to this page) that " So far, nothing regarding myself that you have said is true, ..." which means he's implicitly denying all associations I mentioned in this page. Again, a violation as he's telling us who is not a client.

  • Rohm testified that Howell admitted that Jaynes was a client (see above).

  • Howell told me that Heysek wasn't a client (email on July 25, 2004).

  • Howell told me that "Sterling does not control, own shares in, or run a company named Worldwide Stock [sic] Picks, Ltd"  (email on July 25, 2004). That's interesting since I asked him for information about Worldwide Picks LTD, not Worldwide Stock Picks LTD. But again, he's telling us Worldwide Stock Picks, Ltd wasn't a client (even though we never asked about that company).

The bottom line is that Howell seems to be able to disclose who he knows and doesn't know, and who is or is not a client when it is convenient for him to do so. 

For more info, Sterling Group information.

John R. Rooney (Jupiter, Florida)
Rooney's name was quoted in a press release from WSP (see Abe Goes Tommy in New Campaign for USPennyStocks.com), but I'm convinced that he has nothing whatsoever to do with this.

Rooney, with his wife Natalie, moved from New York to Jupiter, Florida at the end of 2003. Both Rooney and father Patrick J. Rooney have a history of stock manipulation as noted in the citations below. John was head of HORNBLOWER & WEEKS INC INVESTMENT BANKING 110 WALL ST FL 24, NEW YORK NY 10005-3806 before moving to Florida. John is quite a guy. Here are a few choice articles about John:

I don't have any evidence that Rooney is involved in this fraud other than his name popping up on a WSP press release. It appears he isn't. It was just a interesting coincidence.

John Richey
Random name Spreadbury made up (see his SEC depo p. 109).

Eric Gordon aka Eric Leighton Gordon (Spring Valley Lake, CA and Las Vegas, NV)
Eric Gordon was the marketing consultant used by Kos. He helped direct Spreadbury in the creation of the faxes, e.g., his email to Spreadbury of May 30, 2004 entitled "faxes...". Gordon's website is sonicmlm.com, phone: 760.955.9541. YahooIM: sonicmlm. He's also associated with Big Action Media (BigActionMedia.net) and Ericware Technologies, Inc. 13745 Spring Valley PKWY, Spring Valley Lake CA 92395. He's been involved in the Network Marketing business since 1995 and full time since 1997. He's 33 years old. He splits his time between California and his home in Las Vegas, NV.

Kos contacted Eric to do the marketing for the site and it was Eric who asked Spreadbury to get involved in this. 

Eric wouldn't return any of my phone calls to him. I found nothing to indicate that Eric did anything illegal.

Warren Hansen aka Warren Karl Hansen (Boca Raton, FL)
In the second half of 2005, we received information from an anonymous source who was knowledgeable about Warren Hansen and others that implicate them as key players in this fraud. Believing that information to be credible (since it matched other facts we knew), we published that information on this page.

On January 20, 2006, we were advised via letter from the attorney for the Hansens, Jan Douglas Atlas of the law firm of Adorno & Yoss in Fort Lauderdale, FL, that the information that we published "contains reckless and maliciously false and defamatory statements" regarding the Hansens and demanded that we immediately remove the information. The letter did not identify a single statement that was false nor did it provide any evidence that the information on our site was false.

We believe that the information we received was credible since information from several independent sources was consistent with what we were told by our source. Therefore, we do not believe we were reckless in posting this information and believe it serves the public interest to air this controversy.

We have asked Mr. Atlas for (1) specific statements that are false, (2) the Hansen's version of what transpired, (3) all civil and criminal complaints that the Hansens (or their companies Trader Support Services) have either been served upon them or they served others regarding these issues since 2004 (4) any court orders involving the Hansens since 2004, and (5) whether Hansen would be available for an interview. We will publish that information here so that the reader can get a neutral and balanced view. In addition, if Mr. Atlas produces any credible proof that any statement on this site is false, we will immediately remove that statement.

Because Atlas's letter requested immediate action and he could not provide any details on what statements were inaccurate, we also attempted to reach Mr. Hansen at his home on January 22, 2006. We left messages to return the call twice with a woman who identified herself as Hansen's mother-in-law but did not receive a call back. 

Repeated attempts to reach Hansen directly on January 23 were also unsuccessful.

However, Hansen has reportedly sued at least one person for defamation. His position is that any illegal acts were done by others, not by him, i.e., that he is simply the "fall guy" set up to take the heat. That's an interesting defense. I wish I could talk to him to have him explain it to me directly. I'd love to have him explain why Gibson Island Enterprises wired him $150K from their account in the Netherlands Antilles (see page 107). Usually the "fall guy" doesn't get a windfall like this.

Also, when his attorney contacted me about the information I published about Hansen, he was unable to cite a single factual error. Here is audio tape of my conversation with Jan Atlas... it's a doozie).

So if Hansen is the victim here, how come he can't point out any errors? So I have all these unanswered questions and Hansen won't talk to me. 

Failing to reach them, Hansen's profile has been re-written (and expanded) and fact checked with multiple sources.

Here are a few abbreviations we'll use below:

  • Sunstate refers Sunstate Equity Trading, Inc. (CRD #43571), a firm owned by Jim Kelly

  • EAD refers to Electronic Access Direct (CRD #36975), Inc, a firm owned by Don Edwards and Richard L Barret located in Sarasota, FL

  • SIPC refers to Securities & Investment Planning Company (CRD #36538), a company controlled by Daryl Scott Hersch (CRD #1255474)  located in Chatham, NJ

  • Rockhouse refers to Rockhouse Securities LLC (CRD #104477), a brokerage in St. Louis, MO.

  • TSS refers to Trader Support Services. There are actually two firms with the same name. The LLC in Texas is controlled by Warren Hansen and the Florida corporation, Trader Support Services, Inc. (FEIN 753155635) is controlled by Hansen's wife, Erica, but Warren is the Registered Agent and the address is their home address.

  • Daylight refers to Daylight Online Brokerage, LLC (CRD #47897) located in Dalton, GA

  • FRF refers to First Research Financial (CRD #27915) located in Dallas TX. But there is a First Research Finance, Inc. located in Boca Raton, FL at the home address of Warren Hansen (and he is or was the registered agent) and his CRD record indicates that he was employed in the Boca Raton office of this firm. These could be completely separate entities, but the names are nearly identical and both associated with Hansen that they are likely the same.

Warren Hansen, age 35, lives in Boca Raton, FL. His Broker CRD #3014245 (note that the public CRDs are abridged and omits information such as cause of dismissal).

Warren's wife is Erica Hansen aka Erica Beth Hansen aka Erica Beth Dembski  (broker CRD #2634633). Dembski is her maiden name. Four brokerages she has worked for (EAD, Sunstate, FRF, and Daylight) were all ones that Warren worked for in the same timeframe. In addition, she worked at 2 of the firms involved in trading the stocks involved in this scam at the time the stocks were been scammed (Sunstate and EAD). Also, her name showed up in the SEC subpoena to Bush Ross. Also, at least one source told us that she accumulated 100,000 shares of NEXR several months before it became BHLL and was pumped. 

Erica's mother is Ellen Dembski. She is not a broker, but provided various support services, e.g., when she worked at EAD. So for example, on December 30, it was Ellen who sent an email to Vince Lijoi instructing him to change the mailing address for all returned mail to the Sterling Group in the Bahamas. When I called Warren's house on January 22, 2006, a woman who identified herself as Erica's mother answered.

Another person who has followed Hansen from work place to work place is Gary Hayes aka Gary Thomas Hayes, CRD # 1006988. He's overlapped with Hansen at 4 firms: Daylight, FRF, Sunstate, EAD. In addition he was employed at Rockhouse in April and May 2005 where Hansen was trying to land after he left SIPC in March 2005.

Database research showed that Hansen has been with FRF, TSS, and Heritage Holdings Group, Inc. An NASD enforcement document dated November 16, 2004 indicates he was formerly president of broker-dealer Daylight. But it's his role as President of Sunstate  that is of interest to us. 

According to his CRD file, Hansen started working for Sunstate in June 2003. Hansen was named President in December 2003. Shortly thereafter, Hansen named Gary Hayes as the compliance officer. This seems to me to be a very interesting appointment since if Hansen is doing illegal things and he is allowed to pick his own compliance officer, it could make doing illegal things a lot easier. 

According to our source, Hansen (partnering with HBR, a company controlled by Chad Robbins and employer of Ian Stanko both traders at Sunstate) offered to buy Sunstate from James Kelly for approximately $300K in June 2004. Kelly accepted the offer and started negotiating terms but the transaction never closed (although Hansen was successful in convincing Sunstate's bank and clearing firm that it did).

According to this Dow Jones article written by Carol Remond about Sunstate ("DJ IN THE MONEY:Search Warrant Executed In SEC Vicemail Scam"), Hansen blamed the vicemail scam on Kelly. I have not researched the vicemail scam at all. Soley based upon my research into the backgrounds of both Kelly and Hansen, I believe that it is more likely that Hansen was involved in this than Kelly. 

According to the source, Hansen was introduced to Oehmke through Kerr (see below for Kerr's profile). Both Oehmke and Kerr were Sunstate clients. Oehmke provided stock (through Chiang Ze, Vanderlip, Da Silva entities created in Anguilla or Trinidad (most likely by Sterling); see  the exhibits in BushRossMotionToCompel.pdf) that was traded by Sunstate. According to the source, Hansen spoke with Oehmke quite often and used Sunstate as a vehicle for manipulating the stocks BDYS, TWTN, CNDD. 

I learned from a broker-dealer that without support from a dishonest broker dealer, it would be hard to pull off a scam of this magnitude. You need someone to push the bid up and box the stock. For example, using Regulation SHO, you can force the shorts to buy in within 5 days, further driving the price up. In short, crooks can use this SHO regulation to their benefit. 

Most of the action in CNDD happened in August 2004 when Kelly was away from the firm (on vacation).

According to the source, Sunstate reportedly wired between $5M to $10M in trading profits from trading trading BDYS, TWTN, CNDD into the Bush Ross trust account. Certainly we know that Sunstate was one of the 3 brokers these people used and that over $4M was wired from just one account at Sunstate to the Bush Ross trust account (e.g., see  the exhibits in BushRossMotionToCompel.pdf). 

What the law says is this: if it can be shown that someone at Sunstate had knowledge that those funds were derived through fraudulent means such as pumping the stock through fraudulent promotions and manipulating the trading of the stock, then transactions involving those funds would be a crime punishable by up to 10 years in prison for violation of 18 USC 1957

According to our source, Kelly never got paid the money Hansen promised him. After Kelly got back from vacation and realized what had happened, he got a court order to kick Hansen out. But in the meantime, according to our source, Hansen took over $1M out of the firm for himself (reportedly he transferred it to an account in Sunstate's name but that money was never seen by the firm again), and then shut down the firm in early October 2004 reportedly telling everyone to leave claiming that the Feds were going to shut the firm down. He also removed critical records so that it would be hard for anyone (such as the regulators) to figure out what happened. 

While Hansen was still at Sunstate, he was negotiating a landing for himself and his crew (Erica, Ellen, and Gary) at EAD. He told EAD that Sunstate was going to be shutdown and wanted to know if they wanted to get Sunstate's client base.

Erica's license was moved over first from Sunstate to EAD in September, 2004. 

Warren BDW'ed (Broker Dealer Withdrawl) Sunstate in early October approximately a week before a scheduled NASD audit. He moved his license to EAD right after that. Our source believes he did that so that he could retain control of the firm's CRD records so that it couldn't be accessed by Kelly and the truth would remain hidden. So when it was BDW'ed by Hansen, Sunstate went from around 20 employees down to one in about a week. Letters went out to all 2,600 clients that Sunstate was no longer in business. All of the accounts were transferred to EAD.

According to his CRD, Hansen worked at EAD from October 2004 to January 2005. The source said Hansen traded a little CNDD but mostly AHFI  for Oehmke (using the accounts Barranquilla and Chiang Ze which were likely set up by Sterling). In fact there were 6 to 8 offshore accounts with funny names that Hansen brought with him to EAD from Sunstate. All these accounts had similar trading patterns and similar power of attorney and trading authorizations with the same names popping up: Oehmke,  Sterling, etc.

EAD retained and sought advice from Adorno and the same Jan Atlas of Adorno who represents Hansen (both now and at the time) advised EAD to file appropriate paperwork about this. I find this rather odd that the law firm wouldn't conflict out of a situation like this since it was Adorno's other client (Hansen) that brought this questionable business to EAD.

The very next day Hansen sells 800,000 shares of AHFI out of an account where a 6M share certificate had not cleared the transfer agent. When Don Edwards, one of the owners of EAD, found out about this trade, he bought back the shares. Hansen complained that it was the client's trade and not to do that.

According to the source, Hansen used TSS (the Florida one controlled by Erica) to make a $200K deposit with EAD so that a new clearing firm can be used for Hansen's trades because EAD's normal clearing firm (Penson Financial Services, Inc.) refused to clear any trades for Hansen (e.g., his AHFI trades).

EAD fires Hansen for cause in January 2005 and puts it on his broker record. TSS then sues EAD to get the $200K back, claiming it was a loan, and not equity.

In March 2005, Hansen worked at Securities & Investment Planning Company (SIPC) where we were told that he was involved in the trading of Bio-Heal (BHLL) formerly Nexar Technologies (NEXR). That stock came from Kess Associates, Inc (a Texas corporation that doesn't exist) which transferred it on February 16, 2005 to Gibson Island Enterprises, LLC which deposited the shares with SIPC which began trading the shares as early as March 11, 2005. Hansen was reportedly the contact for Gibson Island Enterprises LLC. 

On April 4, 2005, Gibson Island Enterprises wired Hansen $150K from their bank account in the Netherlands Antilles at First Curacao International Bank N.V. (see page 107). I was wondering how that could be justified. Here's one possible explanation:

When warren went to SIPC, he he told them he wanted to buy the firm, sound familiar? SIPC was seduced by the prospect of selling their firm for big dollars, as a result they let warren open an account prior to his license transferring over. This account was Gibson Island Enterprises. Warren's license could not transfer because Don Edwards (president of EAD) had dismissed him with cause. At this point warren had Gibson give him trading authorization on the acct. this in effect made warren a customer not an employee. subsequently warren has testified in open court that he sat on the trading desk at SIPC and directed trading in BHLL. This is a clear violation. but it gets better, he was also paid by SIPC, presumably as a consultant in order to skirt the laws re paying a commission to an unregistered person. and then to top it off Gibson pays him $150k, again presumably another consulting fee.

Check out the Bio-Heal Laboratories, Inc. (BHLL) complaint filed by the SEC and According to the SEC complaint, Bela Enterprises, LLC and Gibson Island Enterprises, LLC both have a principal place of business in Nassau, Bahamas which is where Howell Woltz is located so it's quite possible that Woltz may have been involved here as well. I confirmed this when I noted on the SEC proof of service (CASE NUMBER: 05-21116-CIV-SEITZ/McALILEY) that the Registered Agent for both Bela and Gibson was Sterling Trust LTD in Anguilla (see Sterling entities information). 

According to the SEC complaint, BHLL used an opinion letter from a non-existent attorney (Michael Smith, Esq.) to fool the transfer agent.

George Minto (Bio-Heal's secretary, treasurer, director) admitted that Ventana Consultants was calling the shots (see pgf 24 in the SEC complaint). Ventana is Don Oehmke. 

According to Hansen's CRD record, he only lasted a month at SIPC.

Subsequently, we were told that Hansen tried to move on to Rockhouse in Missouri, where he attempted to do the same thing he did at the other firms (offer to buy the firm and get trading authorization in the meantime) but failed. Too much of a track record on his broker CRD presumably. Hayes actually transferred there and worked there in April and May 2005 while Hansen was negotiating with Rockhouse. We have heard that Rockhouse is now suing Hansen.

So the Hansens, Hayes, Oehmke, Kerr, and Woltz are all common elements with the stocks that were traded and the firms that traded them. While this could be just an unfortunate coincidence, I believe that it is likely that they are in on the scam together.

Fertina Turnquest (Sterling Group, Bahamas)
Fertina and her husband Mark (who also participated; see Stromberti on Sterling entities information) both live in the Bahamas and have since at least 1997 and probably earlier. According to immigration records, she has never been to Anguilla. That she's based in the Bahamas makes sense since she appears to do a lot of work for Sterling and Howell Woltz is based in the Bahamas as well. So it fits.

Fertina had the power of attorney (POA) over several of the foreign trading accounts. See for example page 11, 12, and 20 of Oemke Opposition To Asset Freeze.

At EAD, Fertina had POA on almost all the accounts and trading authority on some of the accounts. This was true until late November 2004 when EAD was told that she was fired. Oehmke had the trading authority on many of the accounts at EAD (the ones Fertina did not).

Fertina was reachable at 242-325-7573 which probably means she worked for Howell Woltz at the Sterling Group of companies in the Bahamas (see Sterling Group). You can also tell that from her email address on the messages in the Spreadbury email archive. She basically is the contact person for the Anguillan companies they used to hide the funds. For example, Kos's plan, as he indicated in an email to Fry Hammond Barr on June 21, 2004, was to use an Anguillan entity to pay for the TV ads. Presumably, that way the source of the funds would not be traceable back to Kos (well, other than reading this web page).

Fertina told Jere Ross where to wire the funds in the Bush Ross client trust account. 

Since Fertina is a resident of a foreign jurisdiction, she can't easily be compelled to testify. So if Kos or Oehmke tell Fertina what to do, she does it, and people can trace it to Fertina, presumably it would be difficult to compel Fertina to talk about who gave her the orders. So it's like money laundering...in this case they could "launder" their instructions through Fertina so nobody would be able to figure out where the instruction really originated. While seemingly clever, the problem is that based on the evidence (including Oehmke's implications on page 20) if Fertina doesn't talk she could be held personally liable for her actions and extradited and spend a long time in a US jail. This provides an excellent incentive to tell the truth. If she was not the source of the orders, then she'll need to testify who gave her the instructions.

Fertina no longer works for Sterling. She left near the end of 2004. Sterling claimed she was terminated for embezzlement, but I could find no evidence of that. I've asked Sterling's attorney for where they filed the police report.

From Phage Therapeutics International Inc report in 2001, we learn Fertina is the 100% owner of Prostar Limited PO Box N, 3615 Hurricane Hole Place Paradise Island, Bahamas which owns 5% of Phage. So it appears that Fertina has a sizable investment portfolio.

Steve Kerr aka Stephen M Kerr (Scottsdale, AZ)
Kerr, was a client of Sunstate and also a client of Electronic Access Direct. At Sunstate, he worked with Hansen to sell his TWTN and BDYS stock. It was Kerr who introduced Oehmke to Hansen. Kerr and Hansen reportedly vacationed together in Europe while this was happening.

Kerr has a history of securities law violations. Check out this disciplinary action against Stephen M Kerr in 1991. Kerr was fined $125,000 and barred from association with any member of the NASD in any capacity. Kerr was accused of creating and implementing a scheme to manipulate a stock so that they could sell shares of the stock acquired by them at a substantial profit. Sound familiar?? You betcha. Compare it to Oehmke's citation.

Kerr is now located in Scottsdale, AZ. Companies he's associated with include Corporate Communications Network, Corporate Communications Inc, CCN Worldwide, Los Verdes Golf, LLC, Lahinch Capital Group, Sundance Golf Club LLC, Global E Investments, Inc. (Jamie Kerr is the president), Text 2 Win International Worldwide (TWXN.PK), Performance Recovery & Investigations, Charles Marinello, Trans Am Investments, Inc. He worked with John Shaffer on TWXN at 7025 East 1st Avenue which is the same address for Corporate Communications. He's linked with Global Diversified Acquisition Corp (same address as TWXN), formerly known as Sutton Trading Solutions Inc. which provides online trading solutions to individuals, broker dealers and financial institutions worldwide. Also with Caring Products International (CPRD.OB) and Mailkey Corp (MAKY.OB) which again has the same address as TWXN. Jaguar Investments, Inc (Ian Rice, President) has the same address and phone as TWXN. And Ikon Ventures Inc (Ian Rice President) also has the same location. Green Environmental Technologie (GEI.V) is located at 2925 North 67th Place which is a common place for Kerr's companies and the officers are Jamie Kerr (age 38) and John Shaffer (age 65) who we saw before at TWXN, but this time he's Secretary, Treasurer.  The best way to reach Kerr is to call (480) 945-2232.

Javier A Cuadra (Key Biscayne, FL)
Javier is the faxing contractor for these guys. He was paid from the Bush Ross bank account which is how they paid all their vendors. Javier then takes that money and pays the fax broadcasters (in advance) and other vendors related to faxing (such as the fax back service). He is also based in Florida. Javier is a busy guy and runs several companies such as Oncall Telecom, LLC, Camelot Promotions LLC,  and a whole bunch more out of his home in Key Biscayne FL. Cuadra has experience with junk faxes. He was working at VeloFAX LLC (formerly Visionlab Miami). I know that because I called him there. Javier (as Camelot Promotions) does the actual dealing with the fax vendors; I was able to confirm that with one of the fax broadcasters (fax.com) as well as the fax-back service he used (myFaxOnDemand.com aka RealtyHosting.com). For example, we know from fax.com's records that Javier used fax.com to send faxes between 6/7/2004 - 8/19/2004.

Javier even confirmed that he did work for Winningstockpicks when I called him, but then started denying just about everything (including stuff I knew were facts) so he was clearly hiding a bunch of things. I'm sure he has an interesting story to tell. 

I have the records from fax.com that PROVE that Javier contracted with them and I have copies of all the faxes that fax.com sent out on their behalf. 

For more info on Javier's liability, see proof of Tom Heysek liability for sending junk faxes

 

David J. Levenson, Esq. (attorney for Oehmke and Kos)
Levenson is a lawyer located in Potomac, MD. He has represented Oehmke for many years, and Kos also uses him to provide legal advice (he's co-counsel for Kos in the SEC complaint). He can be reached at (301) 299-8092.

When Stocklemon pointed out the promotions for GTX Global Corp. (GTXC.PK) looked similar to those done for the stocks in this case, it was Levenson who contacted stocklemon to ask him to retract the info. See StockLemon.com's first report on GTXC and StockLemon.com's second report on GTXC. Stocklemon refused so GTXC hired Barry K. Rothman in Los Angeles to bring suit against Stocklemon (check out Rothman's reputation). I read that lawsuit and it didn't name a single sentence that was incorrect.

Stocklemon repeatedly asked Levenson to name a single statement that was incorrect. Levenson just danced around the question and never answered it. I asked both Levenson and GTXC's in-house General Counsel, Edward Ovsenik, for any statements that were in error. I got nothing. Dow Jones subsequently printed an article written by Carol Remond on December 20, 2005 tying Oehmke to GTXC "GTX GLobal, A Promoter's Wife and the Felon." The article starts off with "GTX Global Corp. (GTXC) has no current financial statements, no apparent revenues and its founder and former president [David Hagen] is a convicted felon" and then points out it has a $250M market cap. Remond tried to contact David Gust, Curtis Garth (President) and Edward Ovsenik all to no avail. You'd think these guys would want to set the record straight based on all the press releases they've been issuing. 

In addition, I found out that David Hagen, who despite the press reports to the contrary, who had been calling the shots at GTXC (and last I heard owned 92% of the stock) had been working with Howell Woltz. 

So the GTXC case shares many common elements: similar promotions, Don Oehmke (through his wife), David Levenson, and Howell Woltz. I just thought I'd point out these amazing coincidences. 

At any rate, since Levenson had been counseling certain people involved in this scam not to talk to me, I thought I'd try talking to Levenson directly. After about one e-mail, he clammed up. I got a whole one sentence out of him. 

 

Additional info that the SEC found out (highlights)

Barranquila Holdings listed on account form from Penson Financial . The home phone number that is Howell Woltz's. No name but a dob of Dec 3 1967.

Mauricio Madero was involved on the CNDD side of the Hoax

Kos started paying Kline but Heysek eventually took over that role

Kline has been convicted by US of importing hashish into the US, for which he served time

One of the nominee accounts in Trinidad (where Howell Woltz's wife is from), Chiang Ze Capital, Kos AND Jaynes are on power of attorney documents.

The setup

Here's the story as best as I can piece together. If there are any errors, please use the contact link to let me know about them.

What follows is MY BEST GUESS as to what really happened based on the evidence.

Jeremy Jaynes and Bryan Kos are well known e-mail spammers (on the ROKSO list). But the profit margins have eroded in  their chosen profession due to a combination of factors:

  • Effective spam filters cut their margins and their response rates making it harder to make money
  • Increased competition from other spammers has driven down the prices they can charge advertisers
  • Increased volume from other spammers makes it harder for their spams to get above the "noise level" and thus affects the "click thru" rate which in turn means they have to charge lower prices than in the past
  • Fewer advertisers are willing to engage in sending out spam due to the laws
  • They now risk criminal prosecution and 20 or more years in prison if spams end up in Virginia. That risk is not hypothetical. It is very real. In fact, Jaynes just got sentenced in November 2004 to 9 years in prison in Virginia on spamming charges. That's a good incentive to change your business plan.

But the main reason is this: You can make a lot more money doing illegal stock pump and dumps via junk fax than you can doing spam. You make 10 times more money and there is virtually no chance you'll get jail time. So it's a smart business decision....if you are going to break the law, you might as well pick something with maximum return and no jail time.

For all these reasons, they do a little "career development" training and end up getting into the much more profitable business of "pump and dump" of securities (buy low, promote, and sell high) or just "dump" (create or print the shares yourself, sometimes illegally, and sell them since it is so unregulated nobody notices). Kos has figured this out by 2000. 

Kos hooked up with Jaynes by mid-2000, and possibly before that. We know that because Internet Promos LLC has two founders: BK Ventures, Inc (i.e., "Bryan Kos Ventures") and Jeremy Jaynes and was incorporated in Nevada on June 26, 2000 (LLC6129-2000). Similarly, Bryan and Jeremy are the principals of INVESTMENT PROFILES, LLC (a Nevada company they incorporated on July 30, 2003; LLC11400-2003).

The focus is on the DOLLAR-VOLUME of the stock (i.e., the volume of stock multiplied by the price, not the price itself. This is because they get their shares for either "free" or nearly free so that the only thing that matters is how many shares they can move (dollar volume). For example, in CNDD they moved 5M shares at $8 in a single day. They "paid" 10 cents for those shares from CNDD (although in reality they probably didn't pay a dime). So they probably made close to $40M in a single day on August 11, 2004. Profit. More than likely, it was also tax free (they aren't worried about the IRS going after them...the IRS is too short staffed).

So who says crime doesn't pay? It's now 1 year later as this is being written and none of these people has been charged with a crime.

In our current situation, it's early 2004 and Jaynes and Kos connect up with Oehmke (the stock expert) who has "experience" in the stock tout area, having been cited by the SEC for his company Ventana Consultants for similar work (See Rel. No. 41755 - August 18, 1999) and later earned his stripes by running a company (Boucher, Oehmke & Co) that had been involved in selling unregistered securities to the public at manipulated prices and expelled by the NASD on or about August 23, 1991 (see Complaint U.S. Enviromental, Inc.). 

Oehmke, who lives in Kalamazoo, MI, is a client of Jere Ross, a prominent attorney in Tampa, Florida. Oemke's job is to find the shell corporations that they can pump.

Interestingly, people in this line of work are known as "IR promoters," i.e., Investor Relations Promoters. That makes it sound legit. Cool eh?

Jaynes employs Rutkowski (who does technical work like websites and servers) and Jessica DeGroot aka Jessica Jaynes (Jeremy's sister) and Chad DeGroot. There are a whole bunch more people who work for Jaynes. I have their complete employee roster (and list of company names they hide behind) if you are in law enforcement.

Kos has a long-standing (since 2000) relationship with with Heysek promoting penny stocks that he brings to the partnership with Jaynes. Heysek employs Kline. 

Heysek is a specialist in providing convincing looking company writeups and managing the promotion of that information and Kline appears to be a Heysek "wannabe." Both Kline and Heysek know fully well that they are wildly distorting the truth in their company writeups.

Jaynes also works out a deal with Howell Woltz to set up Worldwide Picks LTD in Anguilla where it is against the law to reveal who the officers of a corporation are (however, all confidentiality goes away if there is a criminal investigation). That way, if winningstockpicks.net is sued, Howell can just claim he can't tell you who to sue or how to collect from them even if you win. That's what he told me. He said it was against the law to tell people who is behind a company. I've never done service on a company in Anguilla and trying to collect on a shell would be pretty hard. 

Howell's company in the Bahamas is called Sterling ACS, Ltd. So I asked Howell, "on the day you set up Worldwide Picks LTD do you recall who you spoke to?" That is not illegal for him to answer. At that point, he stopped talking to me. 

Howell lives on Woltz Lane in Advance, NC. When you have a street named after you, you are probably a bigwig. Howell acts like he has a lot to hide. Also, WSP says to send your membership fee to an address matching Howell Woltz's company in Anguilla, B.W.I. which has a slightly different name, Sterling Trust (Anguilla), Ltd (it's their other "branch office"). And there are other connections with Woltz's company and Jeremy Jaynes that I found that could not have happened by chance. if Jaynes isn't a client of Woltz I'd be very surprised. 

The promotional activities (website, memberships, videos, faxing, etc.) are directed by Heysek and Kos and to a lesser extent, Jaynes. They utilize people like Spreadbury, the Paulsons, DeGroot, etc. to create their websites (winningstockpicks.net and it's successor, uspennystocks.com) and they contract with fax broadcasters fax.com and Protus IP solutions to send out faxes using Javier A Cuadra in Florida who has experience in fax promotion.

The memberships on the web is just a come-on to get your email address. They make all their money on the stock trades. The membership fee income stream is peanuts, and are just there to make them look like they are a legit newsletters. The goal is to get your email address and get you to sign up for the free membership so that they can push the latest "hot tip" to you via email since you're not going to remember to come back to the website. If you are stupid enough to sign up for one of the premium packages that you have to pay for, that's just fine with them...they'll take your money, but the real value is getting you to enter your email address so they can market to you on a regular basis with their latest tips.

So now they have the core team to execute their new profession of IR promotion.

That's the setup. Now here's how it operates.

The Concorde America Story (CNDD)

Hartley Lord, 75 years old, has an interesting history of securities violations (see stuff below). Among other things, Mr. Lord is the subject of a permanent injunction entered on consent in a Federal Court action brought by the SEC charging him with securities fraud and market manipulation. Mr. Lord has been barred from association with any member of the NASD in any capacity.

Somehow, Oehmke connects up with Lord. I'm not sure how they know each other. Lord told me Oehmke called him out of the blue and claimed to have met him at an investor conference. However, Oehmke knew Mauricio, so that is probably how Oehmke got in touch with Lord. This probably happens in early to mid June 2004. Heysek gets involved too at this stage and talks with Hartley about the story they are going to use to promote the new company.

Lord claims Oehmke's attorney, Jere Ross, impresses him, so Lord hires him to represent CNDD. My notes say this was in April 2004 which is of course very interesting that they are talking even before they have acquired a shell. In short, it seems impossible to believe that Oehmke is going to call Lord out of the blue like that and he gets "lucky" to find someone who is planning on starting a company exactly at the same time he calls. It would be one thing if Lord's company had already been formed...Oehmke could have done a search on that. But months before the company is formed??!?! That's a little too hard to swallow that story.

With Ross' help, Hartley does a reverse merger in June 2004 with MBC Foods to form Concorde America. He authorizes 213M shares (an interesting number to say the least) and registers 10M of those shares to sell to the public on Rule 504 offering (limited to $1M raised) with 209.2M shares issued and outstanding.

Lord claims that Oehmke is a promoter and offers to buy the entire Rule 504 offering of 10M shares for 10 cents a share on or about June 30, 2004. Which means Oehmke valued a company with zero revenues and no employees and no contracts at $20M. 

Man, I wish he'd do that for my company!! Don...if you are listening...please use the contact link and I'll give you a great deal on my company!

Anyway, Lord can now tell the SEC he just sold 10M shares to a promoter at 10 cents and he is happy he got his financing done and he goes about his business. So he's got a good cover. Oehmke however, has a lot of explaining to do on why he supposedly paid $1M for a 5% stake in a company with nothing of value. That's impossible to justify unless you are going to promote a fictitious story about the company (which is what they did).

That's exactly what happens. Oehmke tells Kos he got 10M shares of CNDD at 10 cents. Kos and Heysek arrange for a profile of CNDD to be promoted via fax, email, and web advertising.

Heysek had already gotten the basic facts from Lord in mid June. Heysek blows the whole CNDD story completely out of proportion. So a company with zero revenue as of June, 2004 is expected to do $630M in revenue in 2004 (and over $400M in Net Income!!!!!) according to Heysek and Kline. 

Here's the report they published preserved as a PDF on August 13, 2004 so they can't change it: CNDDProfile on USPennyStocks.pdf. And this company is going to supply hundreds of thousands of workers under a contract with the Spanish government (later changed to an unnamed firm in Spain that employs less than 10 times that number now)!?! I don't think so!!! And according to Lord, even the CNDD officers listed in the writeup are wrong (Lord says that one is a shareholder and doesn't even work for the company).

As of November 7, 2004, it looks like my analysis was right. I see that CNDD now has a website (www.concordeamericainc.com) and they posted their SEC 15c-211 Quarterly Report of September 30, 2004 (here's a copy in case they move it: CNDD_SEC_10.12.04.pdf). Here are some highlights:

  • They have had ZERO revenue since inception!
  • If everything goes well, they expect to supply 50 workers to Spain from Costa Rica by the end of the year (but that's only if EVERYTHING goes well).
  • Hartley Lord is the only executive and the only board member.
  • There are no contracts in place.
  • If they sign a contract in December, it will only bring in $250,000.
  • They have only $16,000 in cash left!! 
  • The company they are trying to get a contract with, Almeridor, S.A., doesn't even appear in a Google search of the entire web or Internet newsgroups.

Bottom line:

  • Even with CNDD's most optimistic projections, Heysek's $630M revenue projection is off by an astounding $630M!!
  • Our own Archer Daniels Midland (ADM) is the largest agricultural company in the entire planet. ADM only employs 25,000 people. So how could an agricultural company in Spain, which by definition must be smaller than ADM, enter into a contract with CNDD to supply 350,000 workers over the next 3 years??? Answer: They can't. That's completely impossible. Is is preposterous.
  • The largest employer (in any category) in Spain is the phone company with 95,000 workers. So once again, it's impossible that an agricultural company in Spain could sign a contract for 350,000 workers.
  • Growing revenue from 0 to $630M in 6 months is impossible. This has never been done in history. Nobody has ever been close to doing this. The company doesn't even have a website and no employees we could verify.
  • A net income of $400M on revenues of $630M is an absurdly high profit margin. That sort of margin could ONLY be achieved if you had protected intellectual property, like a patent, that everyone needed and there are no alternatives. That isn't the case here. Nothing they are doing can't easily be duplicated. Know of any public companies with a profit margin this high in a commodity business? I don't. It doesn't make any sense at all.
  • Spain doesn't have a labor shortage as indicated in the report.  It's exactly the opposite...they have chronically high unemployment; one of the highest of any EU country. "Spain’s 11.4% remained the EU’s highest rate." (see Eurostat). "Although Spanish unemployment has descended to levels unseen since 1980, Spain still holds the unattractive distinction of having the highest unemployment rate in the eurozone. According to European Union statistics, Spanish unemployment in the second quarter was 14.2%, while the eurozone averaged 9.1%." according to THE SPAIN - U.S. CHAMBER OF COMMERCE.
  • The CNDD business model makes no sense. When you add the average wage of a worker in Spain and compare it to the cost of the Latin American workers plus the CNDD profit margin, it turns out its cheaper for a company to hire locally than pay CNDD for these workers.
  • The business model is simply preposterous anyway. If it were true, we'd simply transport low cost workers from India into the US and pay them 1/10 the salary of American workers. It simply doesn't pass a basic smell test
  • The authors of the report are proven liars
  • The company won't provide any information about the "contract"
  • The authors talked to the company even before it was formed...how could they have even found out about it?
  • Virtually all the top people involved in the promotion have a track record of securities fraud

But it looks credible to people without any investment experience since Heysek is so skillful, so investors buy the story and the stock. They promote the shit out of CNDD using various means (varies with each stock but a combo of Google ads, spam, junk fax, TV ads, etc).  I did a Google search of "Concorde America"  on August 31, 2004 and got over 16,000 pages of results; virtually every one telling you how much you'll make on CNDD and to buy it now. This is an extensive web promotion campaign.

According to statements made to me by Jon Paulson, Kos and Heysek probably direct Spreadbury to send out a phony press release talking about this monster deal with the Spanish government that was in the Heysek writeup. Spreadbury apparently does as they request and financial records obtained from the wire services show he pays the invoice from the wire services so there is no money trail to them.

Result: on a good day, 5M shares of CNDD trade at $8. In short, the bad guys net close to $40M in profit in ONE DAY.  Now that's where the REAL money to be made in penny stocks is!!! But Heysek never writes about that aspect.

Put it this way:

CNDD with zero revenue and no "monster contract" that anyone has independently verified that I'm aware of (or that they even claim to have in their SEC filing), has a market capitalization that is more than Delta Airlines!

It first traded as a stock on July 28 with a $660M market cap and issued it's "Monster" press release later that same day. Remember, there are no revenues.

Here are the press releases:

Company News and Press Releases From Other Sources:

Concorde America, Inc. Disclaims Prior Information Releases
Aug 11 2004 5:09PM ET PRNewswire-FirstCall via COMTEX/
(
this link doesn't work anymore: Concorde America Disclaimer)
note that the link to this press release is a link to the scanned fax that Hartley Lord faxed to me. He told me that Jere Ross, his attorney, wrote it. Here's a link to the press release off the wire which is identical: CNDD Disclaims Prior Information Releases

Concorde America Revises Press Release
Aug 9 2004 6:32PM ET PRNewswire-FirstCall via COMTEX/

/C O R R E C T I O N -- Concorde America/
Aug 9 2004 3:34PM ET PRNewswire-FirstCall via COMTEX/

First Global 'Monster' Employment Placement Service Launched
Jul 28 2004 2:30PM ET PRNewswire-FirstCall via COMTEX/

Lord claimed he gets wind of what is going on, so Kos and Heysek get Spreadbury to issue a correction. But they just change the name of who the contract is with: from the government of Spain to an unnamed company in Spain. At no time, is there a mention of the name of the company or a quote from the mystery company! Pure fabrication.

So now Lord claims he is really pissed because none of these press releases was from him so Lord has Ross draft a real press release that is really from CNDD and explains what is going on. He claims he has trouble getting the wire services to take it initially because of all that has just happened (this one is actually true; I verified it myself). He is finally able to get it run and the stock immediately tanks to $2.50 a share.

But even at that price, Jaynes, Kos, Oehmke, Heysek et al. stake is still worth $25M!!! But they've already sold close to $40M.

Of course, this whole story is hard to believe. Lord is conveniently out of the country when his company goes public and the monster press release is released by Kos's people on the first day of CNDD trading. Are we to believe that  Lord didn't know about the press release at that time and the market cap of the company. Why didn't he immediately issue a correction press release? What was his lawyer Jere Ross doing? He was in the country and saw what was going on, wasn't he? And wouldn't he know how to contact Hartley? Or some other officer of this company that just signed this monster contract?

The most likely scenario is that Lord is in on the scam and the trip out of the country is the excuse for the slow response from the company. That would give Kos enough time (i.e., stock volume) to inflate the company and sell their shares without getting Lord in trouble with the SEC.

The bottom line is that after the hype, they needed enough volume of the stock to sell their original 10M shares before Lord issues the press release intended to give Lord a clean alibi and also deflate the stock so Kos can make money on taking a short position in the stock just before the press release.

Interestingly, the most active brokers in Concorde stock on Friday included Newbridge, Sunstate and Intercoastal, all Florida-based.  Either NewBridge Securities Corporation (Miami, FL) or Sunstate is located approximately 3 miles from Lord's home/headquarters. NewBridge is an ethical company that cooperates with investigations so if you know of any scams in the future involving them, please let their General Counsel know so that they can investigate.

Despite the bad press, Kos and company continued to hype CNDD in August 2004 In Heysek's letter to his subscribers, he completely forgets to mention the devastating press release that the real company issued that the previous press releases were bogus. Instead, the newsletter claims they are being attacked by shorts (which was true) and that this is a GREAT buying opportunity. 

From: newsletter@USPennyStocks.com 
To: [snip] 
Sent: Thursday, August 12, 2004 3:18 PM 
Subject: USPennyStocks.com Update

CNDD: Attack of the Short-Sellers Today, the common stock of Concorde America, Inc. was attacked by a group of short-sellers. For those of you who are not familiar with short selling, it occurs when individuals or groups get together to FORCE the price of a stock down in the hope that they can pick up those same shares at a cheaper price. In other words, they want to buy your shares cheap! We view this as a tremendous buying opportunity. Our recommendations are still in place, and we feel that CNDD will see a price of $38.00 per share over the next 6 months. If you are already invested in the stock, we see this as an opportunity to add to your positions. If you are new to CNDD, this is a great chance to accumulate shares at a price we won't see again. We will update you more on CNDD this weekend in our "Weekly Update" section. News Release Disclaimer - None of the views expressed in this email are of the Company, and NO company officials have been contacted regarding this information. Click here to read our full Disclaimer

$38/share?!?! You've got to be kidding. As I write this paragraph less than 3 months after they sent that email, CNDD's stock price is less than 50 cents (it was $4 in September 2004 and was under 20 cents on November 1, 2004).

You gotta admire their tenacity. And, by the way, in general, it is very difficult to short sell any volume of a pink sheet stock as far as I know. On 8/13/04, I asked my broker if he could short 1 share of CNDD. He talked to his pink sheets desk and they couldn't because they couldn't find even a single share to borrow to do this (they had 30 calls today wanting to do the same thing). So I couldn't short a single share!!! 

Prior to 8/13/04, "locates" for short sales were available in larger quantities. I know one person who shorted 25,000 shares on 8/11/04. I received the following e-mail on 8/15/04:

After the press release disavowal, everyone wanted to borrow and it became impossible to get a "locate." When I called Goldman Sachs' stock loan desk on Thursday, I was told "everyone wants that one today," which may be the first time in the history of Goldman Sachs that so many people cared about a pink sheet stock. I am not sure what statistics regarding short sellers are required to be kept for pink sheet stocks, but I can tell you with certainty that by now every share that is available to be shorted is shorted. Insiders take special precautions (like taking physical delivery of their stock certificates or prohibiting their broker from lending) so that their shares can not be loaned. As a result, inventory for short sellers is limited to the public float less any public shareholders who take anti-short seller precautions.

Fool me twice? I guess you can do it. The net result of the "attack by shorts/great buying opportunity" e-mailing is the stock price on 8/13/04 is up over $4 and has traded over 2.3M shares today. So that's another $9M in "tax free" income for our spammer friends today alone even after supposedly being exposed by the company.

What's really cool though is that Jaynes, Kos, and crew, if they are smart, would be making money on every swing. 

We might imagine that this was probably carefully thought out; that every swing is planned in advance. So they have the 10M shares and pump it up to $8 and sell the 10M shares. Then they take a short position in the stock just prior to the Lord "we didn't issue those press releases" press release in order to (a) give Lord a cover story that he is innocent and (b) deflate the stock so that they can cover their short position at a profit. That might be why there were no locates on the stock; because Kos and crew had already shorted everything they could find. They use the Lord press release as the opportunity to cover their short, and then take a long position, and start the promotion again, claiming this is an ideal time to buy and they were just attacked by the shorts. 

If you are wondering why CNDD just doesn't register more shares and make a fortune, here's why: under reg 504, the company is limited to raising $1,000, 000 or less, by the sale of common stock, in a 12 month period. That was done by the current 504 exclusion on or about June 25, 2004.

Final note: In Heysek's newsletter to his subscribers, he noted this amazing fact:

In the final two trading days of last week, CNDD exhibited a swing in Market Value for both days of $1.4 Billion. Remember, the OTC Bulletin Board has a total Market Value of only about $2 Billion --- a statistic we present to ensure the average individual investor has a perspective on how visible CNDD has now become among the Penny Stocks, and in a relatively brief period of time.

Note that at its peak on August 12, 2004, CNDD had a market cap of $1.9 billion.

For more info, see the excellent article on CNDD on StockPatrol.

Scam#2: Storage Innovation Technologies, Inc (SGNJ)

Let's start with the management team on this WSP promoted stock. 

Don Oehmke is the Chairman (and co-founder) of Storage Innovations Technologies. Previously, Mr. Oehmke was the Chairman & CEO of Ventana Consultants (1991-2004), a business consulting and venture capital firm. As its CEO, Mr. Oehmke operated at the highest organizational levels, for both domestic and international companies.

From 1985 to 1990, he was Chairman & CEO of Boucher, Oehmke $ Company, a securities broker / dealer with 26 offices in the USA and 5 in Europe.

Does that name sound familiar. You bet!! He bought Lord's shares on the CNDD deal! Our friend Don keeps popping up!

And you gotta love Tom's writeup on Don. On August 16, 2004,I did a Google web search for Ventana Consultants LTD. I got two hits: this page and a link to Ventana Consultants, Ltd. Zero hits in Google Groups. So for a firm around for 13 years Don sure has kept a low-profile for someone who "operated at the highest organizational levels, for both domestic and international companies."

Even more cool is this tidbit I stumbled across on the SEC website: Complaint U.S. Enviromental, Inc.. Here's an excerpt:

Beginning in or about January 1990, the D'Onofrio group began selling its holdings in USE stock to the public in an unregistered offering and at manipulated prices. The stock was sold to the public primarily through two broker-dealers, Freeland Co. and Boucher, Oehmke & Co. ("Boucher Oehmke"), a defunct broker-dealer that was expelled from membership in the NASD on or about August 23, 1991.

Damn!!! Tom forgot to mention that little gem in his write-up on Oehmke!! He probably didn't think it was material I guess.

On to the deal. On this deal it's even better. Don can buy the shares for nothin' because it's his company (along with Kos)! So unlike the CNDD deal where they supposedly "risked" $1M (they bought 10M shares at 10cents), on this deal there is no downside since they probably paid virtually $0 for the stock.

Actually, SGNJ came about via a reverse merger (sound familiar?) with NATIONAL BOSTON MEDICAL INC. This was an entity run by Daniel J.  Hoyng. He was President and CEO. Hoyng has an interesting history. See for example:

However, the "story" they (Kos and Oehmke) put together isn't as sexy as the big contract with the Spanish government billion dollar story of CNDD. So they can't get the volume up.  They make only $100K a day on a good day. Although that is great money by most measures, it's peanuts compared to CNDD. However, the benefit is that they don't attract attention of law enforcement by keeping the scams small like this.

So that's two examples of a real pump and dump (CNDD), and an example of a "dump" (SGNJ). Those are the principal methods. It's all about the volume, not the price.

But wait....There's more to this story!!!!

But that's not the end of the story... I've learned a lot more about these folks since publishing the above information. That new information is included below (see More Information below). But first, a slight digression on how these guys can get away with this without any fear of being stopped by anyone; how they can completely violate the law right out in the open, be exposed on this page, and still promote with impunity.

Who sent me the fax? Who do I sue?

So who do you sue for your junk faxes? Well, it looks like Rutkowski and Jaynes and a few more will be living in state housing for a long time so suing them may not be very productive. If you sue in small claims, you can get a quick judgment, but then you have to collect. So it's really risky suing these guys because they may not be around to enable you to collect.

I've personally decided to sue Heysek because (1) it is Heysek's analysis that is being promoted in the fax (2) Heysek and Kos direct the promotion of the site and control it and (3) Kos' website shows Heysek is an officer and shares in the upside. Also, he's not going to comply with my subpoena (see Heysek suggested discovery questions), so he'll probably lose.

I prepared this page and submitted it into evidence in my case against Heysek: Proof of Tom Heysek liability for sending junk faxes.

I have subpoenaed Heysek's financial records. I should have these by September 10 (the timeframes are regulated by statute to allow him time to object). I believe it is extremely unlikely that Heysek would be able to quash the subpoena; since Heysek says he isn't Worldwide Picks but just a writer, this is central to my case and it won't be quashed. After September 20, I will be able to share this information with anyone filing a case against Heysek where this information is relevant.

Heysek's receptionist at his HQ rent-an-office (Gloria Valerio) appears to have been specially trained in "process server avoidance techniques" by the "Heysek Legal Academy" aka Tom Heysek. Therefore, I used a process server who has been doing this for 30 years: Jeff Cunningham at 408-395-6778. He knows the proper drill to obtain legal service in these situations. 

It's extremely unlikely that Heysek will comply with discovery since it would expose his business associates, so it's an easy case to win. 

See Heysek suggested discovery questions for some ideas for your subpoena/document requests. Let me know using the contact link if I missed anything obvious.

In the unlikely event he does comply, please contact me and I'll be able to discredit any phony information he might supply the court. 

Also, if he does comply with any of the requests, kindly have the judge hold it in the court file so that you can make a copy of anything he produces and send it to me using the contact link so that it can be analyzed.

Junk faxes promoting TWTN, CNDD, BDYS, AHFI, SGNJ, GBEB aka APNJ are likely suspects for including in a lawsuit naming Heysek.

Sterling Trust and/or Howell Woltz may also be liable for sending the faxes.  For example, (1) the phone number on the WSP domain registration matches the phone number Howell uses for Sterling (2) the primary contact for the website has a Sterling email address (3) you are supposed to send your membership fee to join to an address matching Howell's company (4) he apparently incorporated Worldwide Picks LTD which is the company listed as controlling the WSP site, and (5) and he told me he can't disclose who is involved (so you can get him on discovery sanctions if sticks to his story and he fails to tell you in court since US laws don't recognize foreign protective statutes), (6) I believe the Bush Ross trust account records, once made public, will reveal that Sterling's employee Fertina Turnquest authorized the sending of the faxes, (7) Woltz (and thus Sterling) knew of the conspiracy in August 25, 2004 when Howell wrote to "correct" what I wrote on this page; yet until late November, Fertina had power of attorney over the trading accounts as well as trading authority on some of them so that ratifies the allegation that Woltz is a co-conspirator since he allowed the illegal acts to continue (a co-conspirator is liable for all torts committed by the conspiracy), and (8) Sterling continued to be involved with Bio-Heal and again using different names and address that still lead back to Sterling, which could be construed not only as even more ratification of their actions (since they continued to participate), but more circumstantial evidence confirming that Sterling knew that what it was doing was illegal and therefore knowingly chose a path of trying to do a better job hiding their involvement (instead of terminating it). If what they was doing was legal, why would they take all the steps that they did to obscure their identity? It would be interesting to hear Howell's answer to that. Also, reason (9) is that OemkeOppositionToAssetFreeze shows that Turnquest (a Sterling employee) had power of attorney and trading authority over the accounts involved (see p. 11 and 12) and argues on page 20 that Oehmke wasn't calling the shots and it was Fertina that knew everything and had the power to act (both POA and trading authority). 

Sterling Trust LTD has been successfully served in other lawsuits (see  p. 13 of the Bio-Heal default).

The bottom line on Howell and WSP is this: the only thing I could find on Worldwide Picks LTD, which is the company behind the website and is thus the company that sent the faxes, is associations to Howell's organization. So lacking any better evidence or evidence to the contrary (such as that provided by Woltz), Howell's Sterling entities are either responsible, or they know who is. That's what the evidence shows. And Howell can't dispute that due to his privacy policy, according to his emails.

Here's the whole e-mail thread with Howell Woltz. I never heard back from him after I sent my response to his e-mail.

Howell's address in NC was:

Howell Way Woltz
255 Woltz Ln
Advance, NC 27006-7644

Sterling Trust LTD is located at the same address. Howell's wife Vernice was an officer at when I last checked in 2004.

Note that Howell has a street named after him. I think that's pretty cool. I'd like a street named after me someday too.

Jack Vernon Abernethy who is located in Belmont, NC, a former North Carolina state assemblyman and Republican candidate for state auditor. He was the former president of Sterling Group's insurance company - that is, until he was fired on May 6, 2004 by Vernice Woltz. Remarkably, at the same time, he was also the CPA for Tech Traders which was used the Shasta hedge fund. I called  Jack on August 17, 2004 at his home in the evening. I identified myself and told him I wanted to ask him a few questions about Howell Woltz. He immediately hung up on me without saying a word.  

See Sterling Group for additional info on Jack and Howell. There is some pretty amazing stuff there like how Sterling can withdraw $100,000 from Tech Traders without having made a cash investment. And how Howell admitted he signed a claim form on behalf of a company that doesn't exist.

I'll identify additional people that I might consider suing here as soon as I am confident they are liable.

For collection work in California, I highly recommend Bryan Sampson at (619) 557-9420. He is by far the best collection attorney I'm aware of. He's one of the few collection attorneys who knows how to break off-shore trusts (and has done it). Another off-shore collection expert is David Marchant of www.offshorebusiness.com (he's a journalist with extensive knowledge of the area).

Why they can get away with doing this

Why do stock scammers do this stuff which appears that it might be pretty illegal? well, they make a shitload of money, that's why. It's the money, stupid, as they say. Like may $40M in profit (tax free probably) in one day! Get it. It's a lot more profitable than spam!!!

They aren't worried about law enforcement either. They can do it all in full public view with impunity.

Here's why... because of the Disclaimer that they emphasize, it's hard to get even a civil conviction on them. So individuals are not going to risk the $500,000 in litigation costs to recover their loss (even if they won). And class action attorneys aren't going to take the case either because there are no legitimate businesses or people involved to collect from at the end of the day so the attorneys can't recover their fee. So they can't afford to take this. An SEC case would take a year to investigate, take 2 years to try, and, if the SEC wins, the worst that can happen to these guys is they have to return the money (if the SEC can find it 3 years later) and get them to promise not to do it again. But the SEC is so busy with other things, this may not even get assigned to a prosecutor. For example, the SEC didn't even stop trading on CNDD after the fraud was revealed! If the SEC didn't do that, the chance of this getting on the SEC radar is small. 

So they don't worry about the SEC either. The company CNDD still has an absurdly high market cap for a company with ZERO revenue (this is written 8-13-04). The SEC is doing nothing about it.

Criminal cases are even harder to get anyone to pursue; the threshold for proof is much higher, the $ amount must be in the billions to get someone at the FBI assigned to investigate. Therefore, the US Attorney won't take the case unless the evidence is a slam dunk. The FBI is too busy chasing terrorists and crooked CEOs to bother with these guys even if there was a case. And that's really unlikely since if you can't easily win a civil case, winning a criminal case against these guys is virtually impossible.

The SEC is short of manpower so doesn't have the resources to go after them. Nobody contacts the DOJ so they won't do anything. So these guys basically rip off a lot of people and get away scott free. And if you try to sue them, they have PLENTY of MONEY to outlast you in court (and counter sue on trumped up charges) and even if you win, the most you get to recover is the $ you lost on the stock making a case against them uneconomical. So they walk away free. It's a great scam.

Think I'm kidding about the SEC? Check this out from someone who used to work there: Gary Goodenow Presents Reality At The SEC. His whole website is worth reading if you have time. Here's an excerpt:

The bad news is that it seems to me that it is more likely the fraudster in Florida will be killed by lightening then be hauled into court on a contempt hearing and sent to jail. In the six years I was at the SEC in Miami, it happened once. I did the case, and the fraudster did a week or so in the can for failing to account for the proceeds of the fraud. Investors got no money back anyway, so the whole effort ended up being an exercise in futility. But at least the guy had to assume the position in jail. And the reality was, that the whole time I was going to court hearing after court hearing in an effort to get this guy held in contempt, management at the Commission thought I was wasting time. They wanted me to move another case, so the Commission could report to Congress another statistic for the year (called: “a stat”) to make it look like we’d brought another successful anti-fraud civil action.

...

With civil remedies being as they are, the punishment and deterrence that comes from collecting the fraudster’s ill-gotten money just is not there. The money is usually hidden or gone, or so the fraudster claims, and as far as money being returned to defrauded investors, the present system is not getting the job done.

Here's a great example of exactly this. An article from the Wall St. Journal May 12, 1995:

Easy Pickings: How Career Swindlers Run Rings Around SEC and Prosecutors --- White-Collar Crooks Serve Little Jail Time, Leave Billions in Fines Unpaid --- `The Bad Guys Are Winning'

By John R. Emshwiller Staff Reporter of The Wall Street Journal

05/12/1995 The Wall Street Journal

SANTA MONICA, Calif. -- For more than a quarter century, Ramon D'Onofrio has been playing games with the law -- and mostly winning. The 67-year-old Mr. D'Onofrio, operating out of a modest office suite at the airport here, is a master stock swindler. He is responsible for fleecing the public out of tens of millions of dollars in the course of numerous stock manipulations, say officials who have tangled with him in about 20 civil and criminal investigations. A federal appeals court once referred to him as "ubiquitously criminal."

Mr. D'Onofrio has been convicted of fraud-related crimes five times and is once again under investigation, people familiar with the case say. Yet he hasn't spent a day in prison in the past 20 years -- and he served only about a year behind bars before that. His most recent criminal conviction came in 1991; he received probation. While the Securities and Exchange Commission has "permanently" enjoined Mr. D'Onofrio from future violations of securities laws, it has done so seven different times. Meanwhile, he has left unpaid about $11.5 million in fines and civil judgments. Mr. D'Onofrio isn't alone. Hundreds of career swindlers, many of whom have infiltrated legitimate industries ranging from securities to health care, are laughing all the way to the bank -- with other people's money. "If you have the aptitude and you're enough of a sociopath, there are few places where the pickings are as easy" as swindling, says Scott Stapf, investor-education adviser for the North American Securities Administrators Association, a group of state regulators.

Data gathered from government agencies show that it takes far longer to bring white-collar criminals to justice than perpetrators of other crimes. Once apprehended and convicted, swindlers generally receive light sentences -- frequently nothing more than probation and a fine. Often, as with Mr. D'Onofrio, they aren't compelled to pay back what they have stolen; extraordinarily, about $4.48 billion in uncollected federal criminal fines and restitution payments is currently outstanding.

So as long as they stay away from e-mail spam (violation of Virginia law) and unsolicited faxes, they can avoid civil litigation and get away with this. The dumb ones take the bait of the cheap advertising costs of spam and/or junk faxes and then they can get clobbered in lawsuits. But heck, those lawsuit are just a minor "business expense" compared to the profits so even with the lawsuits, junk faxing is simply smart business.

So great money, no downside (worst that can happen is that they only have to return the money that the government can prove they got AND that the government can locate), no risk of jail time. That's why they do it.

Why they won't go after me

Conversely, while our system "protects" them from any downside, it also protects anyone who knows how our legal system works (like me) and is rich enough to outlast them in court, so we have sort of a Mexican standoff here. If they have more brains than arrogance (which is true of Kos and Jaynes), they aren't likely to sue me for this writeup to try to scare me off. First, I'd re-open my investigation on them, but this time with a passion and a full-time staff of investigators. Secondly, they would be subject to the most massive document requests and most intensive depositions that they (or their attorneys) have ever been through. I am more thorough in prepping the attorneys as I am in the write-ups here. I am  legally entitled to do this. 

So suing me is not something that they are going want to do, no matter how badly they want to get back at me. That has not prevented Tom Heysek (who certainly appears to have more arrogance than brains) from threatening me with a lawsuit for extortion. That clearly was done before he talked with competent legal counsel. If they are arrogant enough to sue me, that would suggest I was wrong about them and that they have more arrogance than brains and they are really going to be surprised at what happens to them. They've already seen what happens to them after 8 junk faxes sent to me. That was just a cake-walk compared to what will happen to them if any of them try to file a frivolous lawsuit against me. 

Right now, I'm like a little beehive in their backyard. I'm done building my beehive and I sit there waiting for them to make a mistake. If they are foolish to attack the beehive, they face a steep decline in their revenue stream and some very unpredictable consequences all with no upside for them. Only an idiot would do it, and they aren't idiots.

Here's a TINY sample of what would happen if they sued me:

  • I'll file a cross-complaint seeking a TRO and then a preliminary injunction and then permanent injunction to bar Heysek and Kline from writing any more stock reports and for Jaynes, Kos, and Rutkowski from sending out any spam, faxes, or otherwise advertising for any stocks whatsoever. This is called "raining on their parade."
  • My new "placeholder" website (which is currently a parody), www.LosingStockPicks.com, will become live, with a real staff, a professional look, and real promotion. It will do for stock frauds what junkfax.org does for junkfaxes.
  • "WinningStockPicks.net sues LosingStockPicks.com" makes a GREAT hook for PR. We'll get extensive press coverage which will totally blow their "business." And it will have all been instigated by them! 
  • I'll be prompted to spend $120,000 to promote LosingStockPicks.com. Right now, it gets a few page views a day. With the promotion, my hits will skyrocket. And guess how I'll promote? Yup, using the same fax broadcasters and fax list they did so I'll hit directly to their subscribers. Unlike their faxes, my faxes are not illegal since they are public service faxes (not commercial advertisements). The faxes will be formatted to look like the traditional "pump and dump" faxes, but the content will be refreshingly honest about who is promoting the stock and what the real story is. It will be so funny (because it is being honest) that people will show it to their friends which will increase my reach (see www.LosingStockPicks.com for an example). For example, it will have copy like "this stock is heading rapidly toward $0... Our 3 month price target: 5 cents.... Don't buy this stock ever... only a moron would touch this stock at this price...you are virtually guaranteed to lose every dime you invest in this..." with a Disclaimer like: "LosingStockPicks.com ("LSP") hasn't been paid shit by anybody but we thought it was time that somebody told you the truth how a bunch of former e-mail spammers put a team together to wildly inflate a few basic facts to make a company with zero revenue worth over a billion dollars."
  • For every new stock they try to promote, we'll issue a press release from LosingStockPicks.com exposing the fraud. The press release will have the company ticker symbol on it so it will show up whenever anyone researches the stock in Yahoo, pinksheets.com, etc. It will have a link to the website. The website will document what really happened with earlier "picks" from Tom and Andrew.
  • General press coverage of their lawsuit. They'd essentially be advertising to everyone who they are and how they do it. So by bringing their suit, they'd be trashing their "business."

Of course, that won't necessarily stop them from trying. What happens is 6 months after they file, they lose. For example, see how the bad guys attack the good guys and lose every time: Hall of Shame. You can easily tell the bad guys from the good guys because they never want to answer any questions and they threaten to sue and the media for printing anything negative about them.

So it all boils down to this: it's simply an incredibly bad business decision for them to raise their profile; they will have gained nothing from the suit even if they won since the reality is that this site isn't causing them any grief. But if they attack me, I'll launch the activities above and their business will be impacted and they risk other unforeseen consequences like free coverage on 60 Minutes and other major media. So no upside and unpredictable downside...simply a really bad business decision. While Heysek would be arrogant and stupid enough to try such a stunt, Jaynes and Kos are smarter than that. 

So that's why we have a detente. 

More information

Since posting this web page, I've received a lot of useful information from a variety of sources including the editors at StockLemon.com and StockPatrol as well as several individuals. Here's the new data.

Harley Lord follow-up information

After reading Karen Richardson's article on CNDD in the Wall Street Journal on August 16, 2004: WSJ.com - Tracking the Numbers. I sent an e-mail to Hartley on August 16, 2004, who up till now had been fully cooperative, and asked the following questions:

  • how many people does CNDD employ?
  • where are they located?
  • what was the name of the company you did the contract with? 
  • who at CNDD closed the deal?
  • who was the decision maker at the company that signed the deal?
  • how long did it take to close the contract from first contact?
  • do you have records of plane trips and phone calls to back that up?
  • did Jere Ross do the contract legal work on this contract? if not, who did?
  • Can you send me a copy of the contract that was signed?
  • did you do the reverse merger on MBC Foods before Oehmke called you or after?
  • Who was the attorney that handled that reverse merger?
  • what date did Oemke first contact you?
  • how long after that did Heysek contact you?
  • what documents did you provide Heysek?
  • Is there a business plan? Can I see it?
  • can you provide an employee roster and org chart?
  • when did development of the software to do this begin?
  • how many people worked on the software?
  • how did you fund the company?
  • who are the shareholders of CNDD?
  • provide resumes of the management team and where each person can be contacted?
  • who was your attorney before Jere Ross? 
  • when did appoint Jere Ross to be your attorney?
  • have you ever talked with Bryan Kos or Jeremy Jaynes? about what?

Hartley never replied. Instead, I got a reply on August 17 from his attorney, Jere Ross, explaining why they would not answer, saying (this is an excerpt):

The company recognizes that you are performing a public service, but I trust you will acknowledge that it is not being undertaken solely for a public purpose. There is a commercial or economic foundation to your activity, and while you have every right to pursue the story as you have, the company is not in a position to assist you in that endeavor.

I explained it was only for my website since I haven't traded a share of CNDD and he replied that whatever the company chooses to disclose to the press, it would also do in a press release. And that's it.

From readers, I received the following information about Hartley Lord:

SEC CHARGES CAPITAL ENERGY WITH FRAUD IN GAMBLING VENTURE
544 words 13 May 1981
The Wall Street Journal English (Copyright (c) 1981, Dow Jones & Co., Inc.).

Excerpts:

THE SEC SAID FOUR PEOPLE, INCLUDING LIEDERMAN, TWO LONGTIME LIEDERMAN ASSOCIATES AND A DUNES CONSULTANT, PROFITED FROM THEIR INFORMATION BY BUYING CAPITAL ENERGY'S STOCK DURING THIS TIME AND SELECTIVELY TELLING OUTSIDERS ABOUT THE COMPANY'S PLANS, THUS MANIPULATING THE MARKET IN THE STOCK. THIS GROUP INCLUDED HARTLEY LORD OF LAS VEGAS, A FORMER PRESIDENT OF A CAPITAL ENRGY SUBSIDIARY; RICHARD J. WERDESHEIM OF WOODLAND HILLS, CALIFORNIA, WHO SERVED AS A CONSULTANT TO CAPITAL ENERGY; AND MICHAEL SAVAGE OF LOS ANGELES, A DUNES FINANCIAL CONSULTANT WHO THE SEC SAYS BROUGHT LIEDERMAN AND DUNES TOGETHER. LORD AND WERDESHEIM ARE FORMER BROKER-DEALERS WHO PREVIOUSLY WERE PERMANENTLY BARRED FROM WORKING AS BROKERS, THE SEC SAID.

....

THE SEC ASKED THE COURT TO BAR THE COMPANY AND ALL EIGHT PEOPLE PERMANENTLY FROM ENGAGING IN FRAUDULENT SECURITIES TRANSACTIONS. THE SEC ALSO WANTS THE COURT TO ORDER EVERY MEMBER OF THE GROUP AND CAPITAL ENERGY ITSELF, TO ACCOUNT FOR PROFIT MADE FROM THE CAPITAL ENERGY STOCK TRANSACTIONS AND TO GIVE THAT MONEY TO THE COURT.

Another reader pointed out this interesting fact, that an entire two weeks elapsed before the real CNDD issued a "correction" press release:

My sincere belief is that Hartley Lord is not innocent in this case. He waited until Concorde was worth more than $1.5 billion before issuing any press release. Alarm bells should ring, in my opinion, when the company you run out of your home surpasses Delta Air Lines in market value.

That's a good point. The press release came out the same day as the first day of trading in his company. There would be no possible way he wouldn't know about that press release. It should have been immediately disclaimed.

Another reader pointed this out:

Hartley Lord of CNDD fame has a rap sheet. Barred from securities industry for life. Ran a swindler's paradise in Union N.J. and was shut down in 1971.

Another reader sent this in on August 17, 2004:

Hats off to you.....you did an amazing job dissecting this CNDD.  Although I warn you, Hartley Lord is not as innocent as you may think.  Hartley has been charged by a federal court in the past for securities fraud and market manipulation.  He is banned from membership with any NASD firm as well.  He was definitely in on the whole thing and his trip out of the country was done purposely at the time the faxs went out. 
 
He plays a good role as the innocent guy but he is a recidivist who has done this many times before.

I received a copy of this article:

Pace American Group reports opposition of institutional shareholder services to dissident group solicitation; ISS questions group's "backgrounds, actions and motivations"

937 words 31 May 1994 Business Wire English (Copyright (c) 1994, Business Wire)

Excerpts:

In sworn testimony in May 1994, Hartley Lord, a Committee member explained the 1992 operating loss: `There were several large paintings and pieces of jade that were bought for Mauricio's house ..."

The statement also acknowledges that Mr. Lord is the subject of a permanent injunction entered on consent in a Federal Court action brought by the SEC charging him with securities fraud and market manipulation. Mr. Lord has been barred from association with any member of the NASD in any capacity..." 

Tom Heysek follow-up information

Floyd Schneider, a mortgage broker in New Jersey, who ran truthseeker.com, has tracked Heysek for 4 years. Heysek had promoted Ziasun (ZSUN) with Ray Dirks.

A little diversion for a second and let's talk about Ray since Tom trained under Ray.

Ray Dirks aka Raymond L Dirks aka Raymond Louis Dirks (CRD Number: 601699) has worked for the following companies (you can see this at NASD BrokerCheck [File Contents]):

  • RAS Securities Corp (CEO of RAS is Robert A Schneider). Dirks reportedly worked there in the mid-90's but this doesn't show up at nasdr.com. But a Business Week, August 1, 1994 article says he would be leaving a few weeks after the article. In Business Week, July 11, 1994, it said: "Dirks may put his name on reports -- but it does not appear on the firm's corporate filings with the SEC. Schneider and Dirks acknowledge that, as head of Ray Dirks Research -- all of whose employees work at RAS -- Dirks functions as head of research at RAS. According to Dirks, 70 of the 90 RAS employees report to him at Ray Dirks Research, which, he says, generates 80% of RAS's revenues."

  • Director of Research at Security Capital Trading, Inc (3/98-1/00): 520 Madison Avenue, 10th floor, New York, New York 10022-4213, 212-339-2000. Ron Heineman is the actual owner of Security Capital Trading Inc and hired Dirks. His division was known as Ray Dirks Research, A Division of Security Capital Trading, Inc, email: info@raydirks.com

  • Dirks & Company, Inc. (2/00 - 8/02). Cited by NASD for rules violation on 12/10/03.

  • Sky Capital LLC (8/02 - 4/04) Brokerage Firm CRD Number: 114657 Office of Employment Address: 110 WALL STREET 8TH FLOOR NEW YORK, NY 10005) until 4/16/04 when he resigned

  • Brookstreet Securities Corporation (6/16/04 to present).  50 1/2 BARROW STREET NEW YORK, NY 10014, 212-604-0282

Interestingly, John R. Rooney (of Hornblower & Weeks) was also located at the same street address as Sky Capital (John Rooney's possible involvement in this is described above).

Heysek trained under Dirks at Security Capital Trading, Inc. He used the title "CIO, Investment Strategist" according to a letter dated 2/99 received by the Wall St. Journal. You were supposed to send your check to Heysek Holdings/Security Capital Trading.

Promoting FUSA, we have the byline:

Monday, November 08, 1999 2:33 PM EST

SECURITY CAPITAL TRADING, INC. UPDATES RECENT ANALYST REPORT AFTER FOTOBALL USA ISSUES THIRD QUARTER RESULTS

Contributing Analysts: Leo Murphy and Tom Heysek For a copy of the report, contact Raymond L. Dirks of Security Capital Trading, Inc., 520 Madison Avenue, 10th floor, New York, New York 10022-4213, 212-339-2000 or 888-305-0050, or fax, 212-339-2020.

SOURCE Security Capital Trading, Inc. (C) 1999 PR Newswire. All rights reserved
CONTACT: Raymond L. Dirks of Security Capital Trading, Inc.,
212-339-2000 or 888-305-0050, fax, 212-339-2020

There's a huge thread a Silicon Investor devoted to Ray Dirks: RAYMOND L. DIRKS INTERNET RESEARCH TRIBUNAL THREAD.

Here are some excerpts from an article in BusinessWeek, July 11, 1994 , p. 128 in the Finance section:

Championing Conseco, which brought him into conflict with short-sellers who doubted the stock's virtues, was Ray Dirks at his best: a smart, often courageous stock-picker. His views about Conseco and other stocks -- mostly of small companies -- are frequently aired in the financial press, including BUSINESS WEEK. But there is another side to Dirks that is apparently not so favorable. In recent weeks, more than a dozen analysts, traders, and brokers have parted company with Dirks's firm -- some voluntarily, some not. These former Dirks associates are raising troubling questions about the Dirks stock picks widely promoted in the media, in advertisements, and in research published by Dirks and his boutique, Ray Dirks Research. Some also question the trading practices of Dirks's employer, RAS Securities Corp., a Manhattan underwriter of new issues with a mainly institutional clientele. Ray Dirks Research is a division of RAS.

Speaking to BUSINESS WEEK on condition of anonymity, former employees have maintained that Dirks and Dirks Research aggressively pitch stocks in which he and RAS have substantial unpublicized positions. And unlike Conseco, not all of Dirks's stock picks have turned out to be enduring successes. Many have tumbled in recent months (chart) -- something RAS sources attribute to investor backlash once RAS's lofty predictions failed to materialize. Among the RAS initial public offerings to fall sharply are Clinicorp, Standish Care, Nationsmart, National Wireless Holdings, Greenwich Air Services, Penn America Group, and Dynagen. RAS sources say one RAS-underwritten biotech company that climbed until recently, OXiGENE, was misleadingly promoted by Dirks as a direct result of his ownership of the stock. That is vigorously denied by Dirks and RAS Chief Executive Officer Robert A. Schneider (the RAS in RAS Securities).

MERE VICTIMS.

The allegations go beyond aggressive stock-pitching. One former high RAS official says the brokerage routinely boosted prices by placing orders at the close of trading on the American Stock Exchange, thus inflating closing prices. Also, this former official says, RAS last year owned more than 10% of the outstanding shares of one of its underwritings, Standish Care Co., without disclosing to investors as required by Securities & Exchange Commission rules. Schneider denies RAS ever engaged in either practice.

Heysek was an assistant analyst for Dirks and they put a price target on Ziasun of 4 billion dollars. Note that Kos was also involved in ZSUN promotion. Heyesek also promoted stock frauds Great White MARINE & RECREATION, INC (JAWS), China World Trade and New Tel.

ZiaSun Technologies Inc., a little-known Internet holding company in California, sued Schneider and seven other Internet posters in federal court in 1999, saying they made false allegations as part of a conspiracy to drive down its stock price.

Both Ziasun and Bryant D. Cragun, who had been ZiaSun's CEO, sued Schneider. ZiaSun and Cragun won court orders in early 2000 that barred Schneider from making further "false or defamatory" statements and required him to retract some information he had put on the message boards and a personal Internet site.

Isn't it great how the bad guys use our legal system to silence the good guys? I talked to Schneider and it turned out he didn't have legal representation because they told him they were going to settle. Instead, they sought and got an injunction, and, according to Schneider, neither Schneider nor his attorney was there to defend him. So that's how you can lose even if you are telling the truth...gotta show up in court!

Heysek was involved at JAWS:

Title: GREAT WHITE MARINE & RECREATION, INC. ANNOUNCES THE APPOINTMENT OF RAY DIRKS AS FINANCIAL ADVISOR
Summary: WACO, Texas, Jul 22, 1999 /PRNewswire via COMTEX/ -- Colin Smith, President and CEO of Great White Marine and Recreation, Inc. (OTC Bulletin Board: JAWS), is pleased to announce the appointment of Ray Dirks as Financial Advisor to the company. 

Tom Heysek

Initiating Research Coverage: Strong Buy Great White Marine & Recreation (OTC BB: JAWS) March 18, 1999
Contact: Tom Heysek @ 212-339-2035
Recent Price: $2.25
52 Week High-Low: 4.50 - 0.71
Shares Outstg: 17.9 million (fully diluted) Insiders Own: 55%
Market Cap: $40.3 million Institutions Own: 21%
Net Income Book Market Cap To:
Sales Amt Mgn EPS* P/E Value* Sales BVPS
(mm) (mm) (PS)
1997 $14.3 $1.7 12% $0.29 8 x $0.33 3 x 7 x
1998 25.6 3.3 13% 0.26 9 x 0.51 2 x 4 x
1999 (e) 40.0 5.5 14% 0.30 8 x 0.82 1 x 3 x
2000 (e) 60.0 9.0 15% 0.50 5 x 1.32

So then I find this post by Meatloaf originally on Raging Bull, but re-posted on Silicon Investor: StockTalk Investment Chat Board Lawsuits (#429-6339):

Now onto your message. Sometime in March of last year, the meatloaf crowd was quite keen on JAWS. Bought alot of stock around $2. The bloody company emerged as some sort of cult...never saw anything like it, except at a "Trekkie" convention my third wife lampooned me into.

Then, one day, I decided to "drop" in in JAWS headquraters in Waco, Texas. That day was July 23, 1999...a Thursday as I recall.

The Chairman of JAWS wasn't in, however, his son was. I attended that meeting with another independent analyst. After the requisite 45 minits of Texas horse-feathers, I asked this kid to see a copy of the company's last bank statement (JAWS was supposed to have $6 mil in da' bank at the time).

One hour goes by (calling his Dad, I suspect). He says here's the March Statement...but nothing more current. We ask for April or May...nothing. Basically, we conclude, the Company is broke.

That's when the stock was at $2.50. Anybody that was part of that cult bailed out...and why in the world you would still be owning that stock at 10 cents is a mystery.

Now there is some belief that meatloaf is an AKA for Heysek:

So why would Heysek as Meatloaf deflate his own stock you ask? Simple....once you are done promoting the crap out of it and selling all your shares, what you do is then borrow shares and short the stock. Then you issue either another phoney story (or a true one, who knows) to deflate the shares. After the stock drops, you cover your short.

Therefore, you could make money both promoting the stock (as Heysek) and then deflating the same stock (as Meatloaf)! Pretty cool, isn't it?

So when you go to the NASDR site and try to lookup Tom's records, nothing comes up. That's because they only let the public access records for 2 years. There are two ways to get his CRD file: (1) ask someone who has it or (2) subpoena the information from the NASDR (see NASD - Regulation - BrokerCheck Hotline for more info).

Attorney Walter Oney posted on the Junk fax mailing list on Jul 2, 2004:

Tom Heysek called me concerning my demand letter. He was essentially incoherent, but managed to make a few, not very illuminating statements. He says is a free-lance writer who charges $250 per hour (and he wanted to charge for talking to me!). He says he has no connection with winningstockpicks but would not point-blank say whether he knew how his name and picture came to be plastered all over the web site. He claims that any writing he did for winningstockpicks was done for the New York law firm of Milbank Tweed. Since I didn't know who that was, he decided that I must be a fake attorney and hung up.

He apparently lied about doing writing for Milbank, Tweed, Hadley & McCloy LLP 1 Chase Manhattan Plaza New York, New York 10005-1413 (New York Co.) Telephone: 212-530-5000. Fax: 212-530-5219. The partner who handled Thomas M Heysek is no longer at the law firm. Nobody there remembers him, but he was client # 27625-00000. 

Therefore, Oney couldn't have made up that phone conversation with Heysek since there is no possible way for Oney to have known that Heysek was a former client of Milbank Tweed.

Howell Woltz follow-up information

Woltz turns up again in another investment fraud scheme. See CFTC v. Equity, et al. Equity Information Page where he tried (unsuccessfully) to unfreeze his assets. See also Sterling Group and investment fraud.

More on Vinnie's of the Carolinas (8/20/04)

Vinnie's Steak House & Tavern aka VINNIE'S OF THE CAROLINAS LLC (7440 Six Forks Road, Raleigh, NC 27615, Phone 919-847-7319) is also associated with 6404 PLEASANT CREEK CT, RALEIGH NC 27613-3104. There is some evidence that people associated with Vinnie's include Scott Burkhead, Michael Winslow, Paul Boehling, Howard Rockett, Lanny Bynum, Lissah Edwards, Guy Meacham, Scott Campbell. On August 20, 2004 at 1pm PST, I called Howard Rockett at (919) 848-2600. Rockett is is head of www.rbw-advertising.com aka www.dynamicbranding.com. The receptionist asked "what's this in reference to?" I said "Jeremy Jaynes." She refused to put through the call. So I said it's also regarding "Vinnie's of the Carolinas." Rockett took the call at that point. He said he doesn't know who Jeremy Jaynes is and had never heard of him. He said he knows of Vinnie's Steakhouse. I offered to explain who Jeremy Jaynes is, but he wasn't interested. He said, "I think you're full of shit" and hung up on me. He was increasingly agitated and rude throughout the call, presumably because that anyone was able to link him with Jeremy Jaynes. But since he claimed he didn't know who Jaynes was, why would he be so agitated unless he really did know who Jaynes was? Also, the address of Rockett Burkhead & Winslow is 8601 Six Forks Road which is just down the road from Vinnie's on the exact same street.

 

Websites that I believe were set up by Jeremy Jayne's tech guy Richard Rutkowski

 

IMPORTANT: If you are a victim of these folks, please join this Yahoo group and wait for an announcement

Yahoo! Groups cnddStockFraud

Also, there is more information posted on a secret website if you are a government agency. Use the contact link.

Recommended reading on pump and dump fraud if you liked this:

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