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Investment Killed In Cord Blood (CBAI)

April 8, 2011-Addendum:  Over the last 18 hours or we have received several emails from our subscribers/readers relaying Cord Blood's denial of our allegations and accusations of misrepresentation by us. This was clearly expressed through Matthew Schissler's evening posting on Facebook, which appears below.
"As to the article posted on IHub, legal action was taken against Mr. Welsome, and a judgment was rendered against him and his associates and corporations. As to the article itself, we are pursuing
discussions with counsel regarding many factual inaccuracies in the article and are considering our legal options. At this point in time, it is our intent to pursue every legal avenue available. Because of that discussion and our intent, we will not comment further." - Matthew Schissler
PUMPs and dumpS is serious about its responsibility for accurate relaying of the information gleaned from exhaustive research. We stand by our article of April 6, 2011 and in support of it have made Stephanie Schissler and Sandra Flinn's court filed and stamped complaint available to our readers, so that they may evaluate the integrity of our reporting for themselves. This document is available for view or downloading by clicking here.

As for the evaluations we make of Stephanie Schissler's trading in CBAI stock, her properly reported (we assume) trades can be retrieved from the SEC website at www.secinfo.gov

While we understand Mr. Schissler's frustrations with the revelation of the actions of 2006, we will not tolerate an attempt to cover up or excuse these actions by impuning our integrity or the accuracy of our reporting. We trust that we have supported our article to the satisfaction of Cord Blood America, its shareholders and Mr. Schissler.

www.pumpsanddumps.com


April 6, 2011: One of the most actively traded stocks on the Bulletin Board (OTCBB) markets these days is Cord Blood America (CBAI) run by CEO and founder Matthew Schissler.  This company, which is in the cord blood storage business, claims (and we don't dispute) revenues and profits, so naturally anyone taking a first look at the company wonders why it is trading at two-tenths of a penny.  We decided to take a five year look.

Yuck!  We offer our condolences to anybody who has been in this 5 years because that person has lost pretty much all of his investment.  From a high of about 28 cents to a low of...well...pretty close to zero, nobody has made a lot of money on this stock.  Or have they? More about that in a minute.
 
Over the last 5 years this stock went from a float of about 40 million shares to a current float approaching 6 billion. That's right billion with a B.  And if you were a shareholder 5 years ago, you are about to get zeroed out because a reverse split of 1 for 100 (down from 1 for 500) is imminent.  Expect the printing presses to start up again though because a 350% increase in the authorized number of shares is also coming.

OK, so there's no sense rehashing over the "growing pains" of this company that purportedly resulted in the increase of the float and coinciding price per share drop.  We are more concerned with the perception offered by a "legitimate" company being the subject of email spam stock promotions, as this company has been in the past.  Equally damaging to our comfort level with any microcap stock is the need of an appearance on that moronic MoneyTV with Donald Baillargeon program which tries to pass itself off as a CNBC-type television show, when it is actually just another form of fee based pumping on the internet.  

Mostly, we are also concerned with the disposition of stock by Matthew's wife and former President and COO of CBAI, Stephanie Schissler during the years 2005 and 2006.  Let's have a look.

SEC filings show that Stephanie held  11,174,313 shares of stock on February 28, 2005. On June 2, 2005 she started selling and didn't stop selling until December 15, 2006.  During that period, SEC reports show her disposing of approximately 3,040,000 shares (about 8% of the float at that time) for proceeds of approximately $800,000.  This is the President and COO and wife of the CEO folks and she is selling $800,000 worth of a stock in the pennies to you over a period of 18 months.  Hold on, there's more.

We can't account for about 2.3 million shares which seem to have disappeared from her ownership and that includes 500K shares he transferred for no apparent remuneration.  She started with 11,174,313 shares, sold off approximately 3,040,000 shares, transferred 500,000 shares which should have left her with about 7.63 million shares.  And yet she reports owning only 5,368,290 shares after her last reported transaction.  But, we'll assume we missed something and go on because it gets more interesting.

Within the 3,040,000 shares sold are two 1,000,000 sales reportedly transacted in 2006 on June 23 @ 16.5 cents and June 26 @ 13 cents respectively.  The thing is that on June 23, 2006 reported trading volume was 116,599 shares and on June 26, 2006 only 34,500 shares traded.  Hmmmmmm.

We found court records in the San Diego County District of the Superior Court of California which detail a lawsuit brought on by one Stephanie Schissler and her mother Sandra Flinn against her own company, Cord Blood as well as a lineup of other defendants including con artist William Welsome, Vic Marville and Scott Burnham.  The complaint, which was filed on August 2, 2006, details a scheme, concocted by Welsome and to which Matthew Schissler was complicit, whereby Welsome would arrange for the private purchase of 6 million shares of Stephanie's stock.  Court records show that the agreement called for Matthew (not Stephanie) to pay Welsome a commission for the sale of the stock.

Upon execution of the agreement between Welsome and Matthew (on behalf of Stephanie), Stephanie transferred the first tranche of 2,000,000 shares of her own stock to her mother, a transaction that we can only assume was conducted to obtain some mode of transparency.   The stock was then transferred out of Sandra's account to two different brokerage accounts in amounts of 1,000,000 shares each.  The expected payments of $97,500 (9.75 cents/share) and $76,060 (7.606 cents/share) which were due to be wired by the defendants, was never received by the Schisslers or Sandra Flinn and the stock was sold into the market for the defendant's benefit.  Hence the lawsuit.

We are loathe to ask the following questions:
  1. Why did Matthew Schissler, the CEO of a public company, choose to sell stock under a scheme that could be perceived as cloak and dagger?
  2. Why did Matthew Schissler, who as the CEO of a public company should have some common business sense, not incorporate some sort of escrow vehicle within this transaction.
  3. Our research finds that William Welsome is an accomplished con artist and a minimum of investigation would have revealed this.  Why wasn't this done?
  4. A minimum of legal advice should have prevented this transaction from proceeding along these lines.  Did the Schisslers seek legal counsel, and if not, why not?
  5. The complaint claims that the 2,000,000 shares lost were valued in excess of $200,000.  If this is the case (and according to the closing prices on those days, it is), then why did the Schisslers agree to accept a total of $173,560.  Surely the trade did not call for a commission in excess of 15% and if it did, shouldn't that have been a clue as to the questionable nature of the transaction?
  6. Since Stephanie and Sandra named Cord Blood as defendants in the lawsuit for its participation (through Matthew) in the transaction, why wasn't Matthew sued as well?  And why hasn't this lawsuit ever been recognized under Legal Proceedings in any of the quarterly or annual filings with the SEC?
Yes, this was all long ago and it is very possible that the Schisslers' efforts in this project may yet bear fruit.  Still, we find it difficult to express our confidence in management that has participated in questionable transactions, no matter when they occurred.  Just our humble opinion.