June 9, 2011: In all honesty, this advisory could have been 3 or 4 times longer than it is. Such is the documented history of the people behind Forex International Trading Corp. (FXIT). This will be the first time we will concentrate almost exclusively on the people behind our subject company rather than elaborate on the scheme itself, except to say that the first Pump & Dump on the stock of this relatively new listing has already been conducted. And once you read this introduction to the inside players, you will realize that this has to be a scam. Not their first scam. Nor their second. Nor their third. Nor, is it likely (and unfortunately), their last.
The three main players behind FXIT are Darren Dunckel, Yossi Attia and Mosche Schnapp. These three have been involved in many a scam together and have yet to be involved in one where mayhem wasn't the result.
Moshe (Mosche) Schnapp is an Israeli national who left his native land to escape creditors, amongst them the Israeli Discount Bank from whom he and his co-conspirators absconded with the equivalent of about $13 million. Since then, the bank has made efforts to collect the judgment in California, including having the judgment domesticated. The case is ongoing on Los Angeles County Superior Court and the complaint can be viewed by clicking here. Since his arrival Mr. Schnapp has been a defendant in no less than a dozen lawsuits, almost all of which accuse him of having committed some sort of fraud in order to enrich himself. Click here to see the cases in which he is a party (occasionally a plaintiff, but usually a defendant) just in Los Angeles County. You can access any of these cases at the Los Angeles County Superior Court website. If you go the federal court house, you'll find more than a few cases against him there as well, but you get the idea.
Yossi Attia is also an Israeli national who has been a defendant in dozens of lawsuits alleging fraud and/or unjust enrichment. Click here to see a list of just some of the cases in which he is a Party (mostly as a defendant) in Los Angeles County alone. Attia has also been a defendant in several federal cases as well, including those which allege bankruptcy fraud. Mr. Attia is no stranger to the Las Vegas court system either and has been sued in that district several times.
Darren Dunckel, who is Schnapp's and Attia's squeaky clean (compared to his bosses), all-American boy, has been the face of many of the Israelis' schemes. Dunckel, who amusingly (because of his unusual first name) is married to actress Erin Murphy, of "Tabitha" fame in the old "Bewitched" series, has been sued twice for ripping off Capital One Bank. Recently, J.P. Morgan has filed a complaint against Dunckel for the same reason. It looks like Darren is learning a lot about business from his bosses Schnapp and Attia.
Schnapp and Attia have been co-defendants in numerous lawsuits most of which include a cause of action for fraud. As just one of many examples, a complaint filed by Wachovia Bank accuses the pair and their partners of defrauding the bank of over a million dollars in a fraudulent real estate scheme. Real estate schemes seem to be the favorite con game of these two along with the manipulation of stocks they control.
Before this new FXIT scheme, the trio manipulated an issue which changed names more often than the boys collectively changed underwear. This issue was the subject of several Pump & Dump schemes and in order to accommodate these schemes, the company name and lines of business were constantly in flux. Brilliantly (as most con men are), the trio rotated in and out of officer and director positions within this company, and all took turns as CEO and President. The rotation was disguised by the fact that most investors will not research the history of a company which appears to be new. In the space of 30 months, the company changed names 3 times and its stock symbol 4 times. It was at various times known as Euroweb International (EWEB), Emvelco International (EMVL), Vortex Resources (VXRC and VTEX), and Yasheng Eco-Trade Corporation (YASH). The company morphed from being a European Internet provider, to being a real estate developer, to being a gas well developer, to being a logistics company and Chinese importer. And at least 3 reverse splits of stock were executed. All in 30 months. Without a complete audit, we cannot tell you how much money the trio ripped off from the public in its Pump & Dump schemes, but from what we can decipher from various stock issuances, we conservatively estimate that at least $20 million was extracted from the public alone.
The Yasheng Eco-Trade Fiasco: Under the Vortex Resources name, the company purported to be producing natural gas wells in Texas, at one time comparing itself to Chesapeake Energy (CHK). So convincing was this con, that the boys were able to extract $2 million dollars in financing from Trafalgar Capital, a Luxembourg investor, through a series of convertible debentures. Under the agreement, proceeds from the producing wells were to be submitted to Trafalgar in repayment of the loan. While the boys were misrepresenting themselves to Trafalgar, they misrepresented themselves to the shareholders by announcing a never executed stock repurchase program. As they were promoting that fake out, the boys decided to execute a 1 for 100 reverse split of the stock stock without telling anyone. They had also negotiated a merger with billion dollar Chinese Company Yasheng Group (YHGG) in hopes that Yasheng would end up buying up the shares that the boys had not dumped into the market. The problem here was that under the merger, Vortex would become a logistics company even though it had recently extracted $2 million from Trafalgar to produce gas wells. According to Yasheng Group, they quickly realized what and with whom they were getting into bed, and ended the merger before it could be consummated.
Immediately after the name change to Yasheng Eco-Trade Corporation (YASH), the boys began a massive Pump & Dump campaign. To engage themselves in their pre-mediated deception, they retained renowned Pump & Dump promoter Corporate Evolutions. Corporate Evolutions had just completed a successful Pump & Dump on Kentucky USA Energy (KYUS) through a color brochure that had been mailed to thousands of unsuspecting dupes around the country. Another brochure had successfully touted and misrepresented Spongetech Delivery Systems (SPNG), for which the insiders of that company are now facing charges and litigation brought by the SEC. A similar color brochure was quickly produced for YASH and met with the same success. The boys reaped millions. The truly despicable element of this brochure was the invoking of Green Century Capital, a reputable investment firm, as the sponsor of the brochure with the claim that Green Century Capital had paid almost $2.4 million for the campaign. Green Century refuted the claim as soon as it was brought to their attention by well known stock analysts, The Motley Fool.
While the Yasheng scam was ongoing, two lawsuits were filed against the company and its insiders. The first was brought by a former shareholder who alleged that he had bought into the company on the premise of the purportedly producing gas wells which by now had disappeared into thin air. He alleged the obvious fraud created by the reverse split, the brochure and the Yasheng Group merger. That suit was eventually settled with a payment to the former shareholder, according to an 8-K filed by the company. This rare upfront revelation makes us wonder how there were not hundreds more shareholder lawsuits brought against the company, once it had announced a willingness to pay off.
The second lawsuit was brought by Trafalgar Capital, whose complaint described a fraud and a deception worthy of investigation by the regulators. We are not sure how the boys got away with this one, but knowing how slowly the SEC works, we can only hope that they haven't yet. In the meantime, using our new found credibility with the SEC regarding the UTOG suspension, we are forwarding a copy of this advisory to the regulators. Summarily, and by reading between the lines, we can glean that Trafalgar assumes that the boys got away with their $2 million, as no money was ever paid to Trafalgar from purported proceeds of purportedly producing gas wells. Trafalgar also claimed that the reverse split, the merger with Yasheng Group and the sale of stock which was supposed to be held as security for Trafalgar, all constituted breaches of contract and fraud. They were right and the boys settled with Trafalgar by handing over control of the public company. The complaint is worth reading in its entirety.
And now our heroes Schnapp, Attia and Dunckel are in the Forex trading business. Makes sense as it is the only one they haven't schemed until now.
Now we'll expect that FXIT will claim that Mr. Schnapp is no longer with the company, but don't you believe it. We got it directly from Investor Relations representative, Paul DeRiso, that he had met with Schnapp, Attia and Dunckel prior to being retained. It's just that it is now Mr. Dunckel's turn to play President and we expect that Mr. Attia will get his turn as well. Be assured that the three of them are the brains behind this scam. We'll also note that the initial stock sales were to Mr. Schnapp's sons back in July of 2009 @ 1/1000th of a penny. That's 80,000,000 shares for $800. Don't believe it? It's in the 10-Q. And that's the stock the street has been buying between 10 and 50 cents.
Getting the picture yet?