April 11, 2011: It was a rough weekend for those taken in by Epic Stock Pick's (ESP) April 6 promotion of Cuba Beverage Company (CUBV), which we alerted to our subscriber's as a pump and dump just minutes after the promotion began. So rough in fact, that the touter recanted it's recommendation in a Friday email to its subscribers. We love the fact that ESP played the part of indignant analyst even though it was the one that enabled this raping of the public by selling its services to well-known P&Der Scott Wilding's Skyline Capital Investment. ESP knew full well what to expect and it was not the first
time that they facilitated Mr. Wilding's schemes. What most likely happened here is that Wilding got a bunch of very cheap paper in exchange for fronting CUBV some money, probably in some sort of death spiral financing scheme. Once that paper became free of Rule 144 restrictions, Wilding hired ESP to pump the stock to their subscriber list and left the dupes holding the bag. And if this is some sort of death spiral financing, then Wilding will be getting more and more paper which you can bet will end up in the street.
For all of their phony indignation, ESP might legitimately have some sort of bone to pick with Wilding since the massive and instantaneous dump and sudden 50%+ loss to the bag holders will make the street wary of buying into any more of ESP's "recommendations". This could potentially make ESP's services less valuable to the next P&Der.
The worse thing is that the CUBV insiders played the public for fools. Here's what gave away their scheme. Following a 3/12 year dormant period for the shell, reverse split of the stock (which pretty much eliminated all the shareholders of the old shell) and a reverse merger, CUBV started trading on November 8, 2010. Between then and the close on April 4, the stock traded about 934,000 shares total volume On the 5th, the volume was about 780,000 shares which were undoubtedly sold by the insiders to those who were let in on the secret that a promotion was pending. On the 6th, the volume was almost 545,000 shares which were presumably absorbed by those buying into ESP's promotion. Then on Thursday and Friday, the 7th and 8th, 6.25 million shares were dumped onto the street causing the share price to plummet 76% from Wednesday's high. Well it doesn't take a doctorate in mathematics to figure out that the stock had to have come from somewhere and the only place such stock existed were with the insiders. Even in the implausible scenario that all of the stock bought on 5th and 6th (most, if not all, of which was sold by the insiders) was sold back into the market on the 7th and 8th, that still leaves at least 5 million shares of fresh stock that was dumped into the street.
We expect more of this type of action, albeit with respites of illusionary buying in order to offer hope to the weary, so this is one reason we would stay as far away as possible from this one.
Then there's the issue of the CEO, Alex Procopio. If you study the lessons found in, "Anatomy of A Pump & Dump", you will see that we suggest looking at the background of those running the show. It took us all of 5 minutes to discredit Mr. Procopio. San Diego court records show that Mr. Procopio and his phantom American Trading Services, LLC, were defendants in a Breach of Contract litigation brought by JP Morgan Chase and concluded just a couple of months ago. We call American Trading Services, LLC a phantom because there is no such LLC ever registered with the California Secretary of State, and a company cannot be an LLC if the State has not deemed it so. Even if it were registered in another State, the company would still have to be registered in California as a foreign corporation, since it maintained its offices in San Diego. We believe it to be more likely a dba of Mr. Procopio in an attempt to garner legitimacy.
JP Morgan Chase was awarded a judgment of $106,136.49. What's particularly disturbing is that Procopio didn't even show up to defend himself. Proof of service filings show he knew about it, but apparently he didn't care enough to defend himself in this serious allegation. This doesn't mean that JP Morgan Chase didn't have to prove its case. A default judgment still requires the plaintiff to present his evidence to the court and illustrate why his claims are valid. And JP Morgan succeeded. The question that must be answered then is, would a sensible investor put his money into a company run by one who was found liable for breach of contract against a bank? Another other concern here is that JP Morgan Chase has filed an abstract and is entitled to grab Procopio's holdings in CUBV towards satisfaction of the judgment. And we can tell you, if they do get a hold of his stock, JP Morgan will not be looking to hold onto it it as a good investment.
On the positive side, we hear that Cuba's drinks are tasty. Instead of buying the stock, we would use the money to buy the product. At least you would get something for your money.