If I can share from my experience, I never realized how rampant fraud was in penny stocks until around fifteen years ago. I saw a lot of stocks being pumped and it seemed like there was a disconnect between what was being PR'd and reality, but I chalked it up to inexperienced people trying to start companies who maybe didn't understand the business/math/chemistry.

Over time it's become clear to me that a large percentage of penny stocks are there for one purpose--to rip off investors. They almost invariably set up the incentives so they get rich based on people believing the story and not whether or not their stated 'plan' is successful. Some might think that's just smart business but these captains never sink or swim depending on the business and they never go down with the ship.

Sure Mr. Bordynuik said he wouldn't make a dime unless PTOI was successful, but he made at least a couple of million dollars based on available information and likely much, much more. Had he not defrauded investors with the media credits and a story of $10/bbl oil with offers of WTI-$3, he would not have seen any of that money currently bulging in his pockets. That's not an accident.

The best advice I can give is to stay away from penny stocks. There are many reputable small/mid cap companies which have never defrauded shareholders and which do very well.