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Monday, November 28, 2011
Today's PUMPs & dumpS

Another Pump & Dump De-VELA-ping

Insiders at Velatel Global Communications (VELA) are at it again, as this week marks the start of another one of their Pump & Dump campaigns. Past campaigns have resulted in tremendous losses for investors.  Those who jumped in during the most recent PnD, which began at the end of August, are currently enjoying 50% losses, but are not quite as ecstatic as those who have seen 75% of their money disappear since last January.

A sure sign of the evil intentions of this VELA campaign, is that the services of criminal tout have been retained. If you'll recall, this is the crook who likes to pimp the
empty shells of bankrupt companies after he front loads them.  In the past, the self proclaimed "Psycho" at has accumulated shares of CAPB, and then pumped them for his own gain, in a scheme we detailed in an August advisory. The Psycho has also accumulated and then pumped another defunct bank, IBFL, and just last week, GSEN, a shell that has been dormant for three years and prompted the owners of the shell to disavow the Psycho's criminal intent.  Total losses suffered by dupes who fell under the Psycho's spell are estimated to be close to $ 1 million. This money now lines the pockets of the Psycho. 

VELA, on the other hand, is a very real company, headed up by CEO George Alvarez, a bombastic buffoon who is quick to blast anybody who questions his motives and the losses he has created for investors and his company, all the while providing himself with a comfortable living.

Several things bother us about the fundamentals of VELA.  For one thing the company seems to have a habit of getting sued for defaulting on its notes.  A company that has to be chased in order to uphold its obligations is never good.  Why all the lawsuits?  Put simply, the company just cannot pay its bills.  It owes $21 million but has only $250K in the bank.  You do the math.  And with revenues of $488K reported for the last nine months, resulting in a loss of $78K, the prospects of VELA digging itself out of this pit seem remote at best.

Secondly, this thing is a sinkhole.  Since its inception in 2008, VELA has lost about $212 million on revenues of only about $2 million. And that loss cannot be attributed to any asset gains as a total of only $11.5 million is listed as assets in it's just released, latest quarterly financials.

Then there's the matter of dilution.  During the last quarter, the number of shares of VELA issued and outstanding increased from 448.8 million to 625.4 million, an increase of 39% in just 3 months and increasing the market cap of the company to a ridiculous $65 million.  We note with particular interest that about 19 million shares were issued in May of this year and of that 17 million shares were "in exchange for services".  Under the 144 rules, that stock seemingly just became free trading and could be the prelude to this Pump & Dump campaign.  If so, that's an awful lot of new stock that's going to be coming out into the street in the next few days.  The coming weeks will also see the maturation of additional, currently restricted stock and we could see 100s of millions of shares of new paper available at a discount.

Pass. Pass.  Oh for goodness sake, just pass.

Since Friday's close: and at least 6 other paid touts have been promoting VELA in conjunction with a new, but repeat Pump & Dump campaign. has been promoting CFGX in conjunction with an new promotion. has been promoting ERFB in conjunction with an new promotion. and at least 1 other paid tout have been promoting AMWI in conjunction with an ongoing Pump & Dump campaign. has been promoting LYFE in conjunction with an new, but repeat promotion. has been promoting FLMC in conjunction with an ongoing Pump & Dump campaign. has been promoting ITNS in conjunction with an ongoing Pump & Dump campaign. has been promoting LSTG in conjunction with an ongoing, long term Pump & Dump campaign.

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