Directly from the SEC.gov site

SEC Charges Eight Participants in Penny Stock Manipulation Ring

The Securities and Exchange Commission (“Commission”) announced today that it filed a complaint in the United States District Court for the District of Delaware against Pawel P. Dynkowski, Matthew W. Brown, Jacob Canceli, Gerard J. D’Amaro, Joseph Mangiapane Jr., Nathan M. Michaud, Marc J. Riviello and Adam S. Rosengard. The complaint alleges that in 2006 and 2007, Dynkowski, a Polish citizen who resided in the U.S., engaged in market manipulation schemes with at least four separate stocks: GH3 International, Inc., Asia Global Holdings, Inc., Playstar Corp., and Xtreme Motorsports of California, Inc. As alleged in the complaint, Dynkowski’s co-defendants each participated in one or more of these schemes, which together generated more than $6.2 million in illicit profits.

The SEC’s complaint alleges that these fraudulent schemes generally followed the same pattern: Dynkowski and his accomplices agreed to sell large blocks of shares for penny stock companies in exchange for a portion of the proceeds. The companies put these shares in nominee accounts that Dynkowski and his accomplices controlled. The defendants pumped the market price of the stocks using wash sales, matched orders and other manipulative trading, often timed to coincide with false or touting press releases by the companies, to give the market the false impression that there was real demand for these stocks. After artificially inflating the market price of the stocks, Dynkowski and his accomplices then dumped the shares obtained from the issuers and divided the illicit proceeds.

The SEC’s complaint further alleges that:

* The pump-and-dump scheme involving GH3 International, Inc. stock occurred between October and December 2006. Dynkowski orchestrated this fraud with Matthew W. Brown, who operates a penny stock website called InvestorsHub.com. Brown introduced Dynkowski to a representative of GH3 and to Jacob Canceli, a penny stock promoter who participated in the scheme. Brown acted as a liaison between Dynkowski, Canceli and the issuer. Dynkowski and his associates used wash sales, matched orders, and other manipulative trading, timed to coincide with false, misleading and touting press releases by the company, to inflate the price of GH3 stock. Canceli provided the accounts from which Dynkowski subsequently sold purportedly unrestricted shares received from the issuer. The scheme culminated in mid-December 2006, with Dynkowski dumping 312 million shares of GH3 stock for total illicit proceeds of $747,609.

* Brown planned the Asia Global pump-and-dump scheme with Joseph Mangiapane Jr. and Marc J. Riviello, who were both registered representatives at a small broker-dealer in California. Dynkowski and Nathan M. Michaud, who met through InvestorsHub.com, pumped the price of Asia Global stock using wash sales, matched orders and other manipulative trading, coordinated with false, misleading, and touting press releases by the company. The scheme occurred in three cycles: August-September 2006, November-December 2006, and January-February 2007. After manipulating the price of stock, Dynkowski, Brown, Mangiapane and Riviello dumped more than 54 million shares that had been improperly registered on SEC Form S-8 and held in nominee accounts. The illicit proceeds from this scheme totaled at least $4,050,529.

* Dynkowski and Gerard J. D’Amaro carried out the Playstar pump-and-dump scheme. The two of them met through InvestorsHub.com. D’Amaro acted as the liaison with the issuer as well as the nominee account holder for the purportedly unrestricted shares received from the company. In this scheme, which occurred during October and November 2006, Dynkowski pumped Playstar’s stock through wash sales, matched orders and other manipulative trading. Dynkowski and D’Amaro sold 11.5 million shares for total illicit proceeds of $1,180,294.

* Dynkowski and an accomplice carried out the Xtreme Motorsports pump-and-dump scheme. The two of them, who met through InvestorsHub.com, pumped Xtreme Motorsports stock through wash sales, matched orders and other manipulative trading during January and February 2007. Dynkowski’s friend, Adam S. Rosengard, served as the nominee account holder who facilitated the dump of 13 million purportedly unrestricted shares of Xtreme Motorsports stock. After pumping the stock, Dynkowski sold the shares from Rosengard’s account generating illicit proceeds of $257,646.

The SEC’s complaint alleges that Dynkowski and Brown violated Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 (“Securities Act”), Sections 10(b) and 13(d) of the Securities Exchange Act of 1934 (“Exchange Act”), and Rules 10b-5, 13d-1 and 13d-2 thereunder; that Canceli, D’Amaro, Mangiapane, and Riviello violated Sections 5(a), 5(c), and 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and Rule 10b-5; that Michaud violated Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and Rule 10b-5; and that Rosengard violated Sections 5(a) and 5(c) of the Securities Act. The complaint seeks against each defendant a permanent injunction against future violations, disgorgement of ill-gotten gains with prejudgment interest, and civil monetary penalties, and, as to certain defendants, orders barring them from participating in penny stock offerings.

The U.S. Attorney’s Office for the District of Delaware also announced today felony criminal charges against Dynkowski, Brown, Canceli, D’Amaro, Mangiapane, and Riviello.

The SEC thanks the U.S. Attorney’s Office for the District of Delaware; the Department of Homeland Security, Immigration and Customs Enforcement; the Internal Revenue Service – Criminal Investigations; and the Delaware State Police for their assistance in this matter.

The SEC’s investigation is continuing.

Indictments were also handed down to everyone sued by the SEC except for Nathan Michaud and Adam Rosengard.

I was surprised to see Matthew Brown’s name come up in this penny stock manipulation ring. As some of you know he is the operator of the popular penny stock message board Investors Hub. Most some of the message boards there have become a frickin’ playground for manipulation over the past several years and I would not be surprised to see some more bad come out of that place.

Bill Panetta, who was not sued by the SEC like the others were, was though, indicted on one count of perjury and one count of obstruction of justice. Panetta allegedly gave false testimony about knowledge of another individual involved.

Bill Panetta operates BreakOutTrading.net and even has his own little home away from home @ his board on investors hub. Go Figure!

If convicted, all face up to 20 years in prison for each count…except Panetta faces a maximum of 5 years.

If these allegations are true, I hope all involved get what they deserve. This is a perfect example of a penny stock manipulation scheme getting undercovered. Unfortunately many manipulation schemes today still go undiscovered and undetected.

I’ve also heard some rumors of another individual mentioned that may very well on his own penny stock site.

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Sorry for the lack of a penny stock watchlist yesterday as I was very busy, and same for this morning. I probably won’t be able to trade today, but goodluck to you!

Gonna make this quick cause I gotta leave in a sec!

Potential Shorts

BIOF

CMZ

LEE

COOP

PSOF

Potential Buys

COT

Monday is shaping up to be a great start of the week and month for trading! There are tons of penny stocks to watch, but I give you the best 8 based on risk/reward, tradeability, and predictability. Lets make money, shall we?

INSM hello breakout! A Very nice breakout this penny stock saw on Friday on legit volume, too! Has all the characteristics of a potential classic 2-3 day run- off the initial breakout: increase in volume, break of resistance, and the Relative Strength Index is in the power zone (70). I’m definitely going to consider buying this penny stock first thing..if and only if it opens @ 1.50 or above.

TGIC big spiking penny stock on Friday going up over 100%+ on the day……on NO news a.k.a awesome. great. fantastic. potentional short. Although it did give back a chunk of change from the highs on a common Friday afternoon fade, it probably has more to give back. Looking at the 5 min chart there is no defined support, just a bunch of stair-stepping…which is the only thing I don’t like about this penny stock. I like clear support lines to short into, but nonetheless keep this on watch!

ABR wrote about this penny stock in THIS post…maybe it is about time this thing cool down? Solid sideways price action from late morning to the closing bell on Friday so this penny stock should be about to make a bigger move somewhere. Watch for a green-to-red short or a short on a solid break on 3.17.

TPGI is a penny stock up over 90%+ in 3 days on zero news. Balance sheet doesn’t look too bad, but the earnings are definitely not what you would call “earnings”. Maybe try to short this penny stock on a break of 2.00 but, not my favorite potential short though.

RUTH has been on my radar since the middle of last week and has always been a good penny stock to short on its run-ups. Hopefully this one isn’t any different..problem is we just need to figure out when this sucker is going to drop. Considering its counter-part MRT was in the red on Friday I think it’s time for this one to have a negative move of its own. It is actually setting up to be a triple top, and as you know from A Chart Pattern That Will Make You Money Shorting Penny Stocks….it’s one of my favorite patterns to short. Key support price to break for a great short will be 3.94. Watch It!

ECPG probably a penny stock comming up on many of your scans or other blogs. Nice run of 60%-70% past few days but,  I wouldn’t consider shorting this penny stock as the books and the fundamentals of this company are pretty damn good.

CITP penny stock has rocketed up over 100% on 8 consecutive green days…all for earnings expectations. Well, earnings came out and they’re quite poor but what else can you expect from this company? CEO said that their huge debt line will be reduced even slower than it was in 2008..not good considering how much debt they have stocked up. Taking the dismal earnings and over-inflated price I’m possibly thinking about shorting this sucker.

COT will this be another penny stock earnings runner like we’ve seen lately? (i.e. DDRX, LNET). Definitely a potential buy only if there’s a big presence of buyers from 10:30am and on! Many are thinking about shorting this but people….they reported a 1st quarter profit.

Let me refresh your memory on what the last 2 penny stocks did that reported profit-turning earnings.

Will COT act the same?