Friday, July 24, 2009

Why rob banks when you can sell penny stocks?

A Scam In Plain Sight
I don't know about you, but with the fresh new breeze blowing through Ms. Shapiro's SEC I can sleep better at night knowing that our tireless government watchdogs are busy protecting the public from con artists stealing tens of millions of dollars in penny stock scams.
Or not.
Spongetech is a crappy little OTC-BB company that has hired every stock promoter known to man (or woman) to hype its unlikely path to shareholder wealth-soap loaded sponges to wash your car, your pet, and your kid. While they have spent a fair amount of money advertising the product in unlikely venues such as baseball games, they have spent far more hiring an army of touts to spam and message board carpet-bomb the hype. IHub, scam promoter for the world, is front and center in the lineup of unisclosed paid shills despite the criminal indictment and arrest of its founder, Matt Brown, for just such manipulation.
Well, the SEC is busy with Madoff and Stanford, so maybe they overlooked this one, eh?
Or maybe they are the same torpid bureaucrats who were nurtured under Commissioner Cox.
The SEC has had in their possession since mid-May of this year the following damning documents related to Spongetech:
  1. A letter from an attorney claiming that his name had been fraudlently forged on scores of opinion letters avowing that Spongetech shares were free of restrictions and could be traded on the open market. In said letter the attorney also describes what any reasonable person would interpret as an attempt by Spongetech's CEO to bribe him.
  2. A letter from an attorney representing the company's former transfer agent, Old Monmouth, stating that they had relied upon opinion letters that were later found to be forged.
  3. A letter from a mythical New York law firm used to create "legal opinions" as to the lack of restrictions on shares.

In addition, the SEC has received documentation of a massive dilution of unregistered shares sold into the market in direct contradiction of company claims in its most recent SEC filings.

Despite having this documentation of blatant fraud for three months, your fearless regulators have taken no action, and during those three months over a billion unregistered shares of the company have been sold to the public at prices ranging from a dime to close to thirty cents. Do the math.
What is it those SEC folks do all day?


Moe Speeks said...

Excellent article on SPNG.
They are some dirty mutherfuckers that is for sure.
Keep the heat on them.
We will expose this scam for what it is sooner or later.

Ryan said...

Stop the lying!! SEC has repeatedly said over and over that they ARE NOT INVESTIGATING SPNG!

Furthermore, Old Monmouth has even stated that this is all a lie that they never received such letters.

Amazed by what lengths bashers will go through to bring down a stock.


SPNG is on track for $50million + in revune this year ALONE!

They are in the process of buying back shares, NOT DILUTING SHARES. This seems to be another lie that people like you love to claim.

Repeat sells on the sponges are HIGH.

Get a life please.

Slov said...

Interesting: the CC to SEC has an invalid address.

I've sent this on to the legal department for Sponge. Please keep it up until they can review for defamation. Thanks.

Slov said...

Interesting: The cc to SEC is not valid.

I've sent this on to the legal department at Sponge. Please keep it online so they can check it for defamation. Thanks

harvard homeboy said...

With respect to the news announcement earlier today that Spongetech will be partnering with Nxgen to distribute its products, all you can say is "Not looking good. Not looking good at all."

Interesting to see the management of Spongetech has latched on to a business partner at Nxgen who can teach them a thing or two about how to go about hosing the investing public. Before you Spongetech shareholders start flailing your arms and crying foul, note that the stock symbols for the two entities mentioned are the same -- NXGH in both cases.

From the site:

SEC Charges NXGEN Holdings, Inc. and Its CEO

The Securities and Exchange Commission announced that it obtained an emergency court order freezing the profits from an alleged $13 million international fraud involving a Seattle-area microcap company and a Barcelona stock promoter. The Commission charged Bremerton, Wash.-based NXGEN Holdings, Inc., and its CEO Gene Hew-Len with issuing a series of false press releases touting the company's business dealings. The Commission also charged Francisco Abellan of Barcelona, Spain with coordinating the scheme, sending glossy promotional mailers to over 2 million U.S. recipients and unloading over $13 million in GHL stock on unsuspecting investors. At the SEC's request, the federal district court in Tacoma, Wash. Thursday issued an order freezing Abellan's assets and prohibiting him from further dissipating the proceeds of the scheme. GHL is an installer of GPS-based navigation equipment. According to the Commission's complaint, in early 2006, President and CEO Hew-Len and stock promoter Abellan arranged for GHL to issue millions of shares of GHL stock to offshore entities designated by Abellan. In April 2006, the SEC alleges, Abellan caused the dissemination of 'The Street Stock Report,' a full-color glossy mailer sent to millions of U.S. addresses urging investors to purchase GHL stock quickly to see huge trading profits. Around the same time, Hew-Len issued nine press releases over a nine-week period hyping the company. Among other things, according to the SEC, the press releases made false claims about contracts with large customers, fraudulently touting millions of dollars in potential revenues. Following this concerted promotion campaign, GHL's stock price doubled and trading volume spiked nearly 1500%. Abellan and his entities sold their GHL stock holdings for profits in excess of $13 million. The stock, which reached a high of nearly $9 per share at the height of the scheme, now trades at under a penny. The SEC's complaint charges GHL, Hew-Len and Abellan with violating Sections 5(a) and 5(c) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and seeks preliminary and permanent injunctions, disgorgement, penalties, and other permanent and emergency relief. The complaint also names various entities associated with Abellan, including Vega Star Capital, EU Equity Holdings, and KLO Financial Services, as defendants or relief defendants. Pursuant to the court's order, a hearing will be held on August 27, 2008 to determine whether the asset freeze will remain in place during the remainder of the litigation.

You can find an original copy of the SEC's lawsuit here:

In the event the link doesn't work, just get on the SEC's website at and you can do a search for "Nxgen" (the Search box is at the top right hand corner of the SEC's homepage) and it will pop right to the top of the list.

You'll notice the name "Nxgen" appears in the section with the heading "defendants".

And here's a link to the news announcement about the partnership between Nxgen and Spongetech: