PUMPs dumpS Red Flagging

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Nov 7, 2012 at 8:24 AM

PUMPs & dumpS

Red Flagging DANGERS In The Penny Market

Update: Hurricane GRPH: A New Pump & Dump

That Will Make Sandy Look Like a Warm Breeze

Update: After already creating a half million dollars in investor losses, the GRPH Pump & Dump is re-energizing today, probably with some more sleight of hand to make the stock look like there is buying coming in, when in reality, all you will see is wash trades. Be very careful. This will end up like ORYN .

Now that Hurricane Sandy is moving north and weakening, the touts are desperately trying to make up for lost revenues by pushing new schemes that will add to the destruction of wealth created by Sandy. Let's take a look at one of these ill-intended get-rich-schemes that might make a few of the shills (and their masters) money, while leaving the majority of suckers with pockets blown apart by the hot winds coming out of the mouths of the pimps.

GRPH (Graphite Corporation) - Yikes! There are so many red flags here that we wouldn't be surprised if search and rescue helicopters start landing.

We'll start with the fact that this thing is babysat by Carrillo Huettel LLP, perhaps the biggest incubator of Pump & Dump schemes, operating under the guise of a law firm. Every penny stock these guys have had a hand in has created millions of dollars in investor losses and they've had their hand in plenty, whether it be as acting legal counsel, or the attorneys who filed the initial S-1 statements during the birth of the scheme. They have been involved in so many Awesome Penny Stock P & D deals, that some wonder if they aren't one and the same, or at least joined at the hip. Currently live P & Ds these shysters represent or have represented in the past include GTCP , PRTN , SNPK , POWT , FEGR , SRGE , and RXAC . Pump & Dump campaigns that Carrillo Huettel LLP have admitted funding include KMAG , LDSI , and ARNH . We could on and on about the schemes this law firm has been involved in, but we would be here all day. If you don't get our point by now, you never will.

Look out! We've got Providence Media Strategies leading the promotion on this thing. This is the group that hypes garbage with newsletters titled Eastwind Research, Paragon Report, Bedford Report, Elite Penny Stock, Five Star Equities Report, Momentum Hunter and several other impressive sounding names. That fact that this group of pimps is pushing GRPH can only mean two things: 1) it is going to be a long term Pump & Dump and 2) except for brief spurts up and dives down, GRPH will mostly be a sideways Pump & Dump, designed to keep suckers in for the long term, while convincing new pigeons that they have not yet missed the boat. A good explanation of how sideways Pumps & Dumps work can be found within our article, Anatomy of a Pump & Dump , which is required reading for anyone playing Russian Roulette, penny stock style.

What the Providence Media group is good at doing is convincing its dupes that they need to jump in right away, all the while keeping the share price relatively steady so that it can spread the message that it is "not too late" and "about to explode". This is especially effective when the insiders own all of the stock prior to the start of the Pump & Dump, as is the case with GRPH (see below).

Want to preview the predictable trading pattern for GRPH ? Take a look at the trading on ORYN , Providence's most recent project, from late August to October 22. ORYN is in the process of heading into pennyville after flirting with (but never quite making) a dollar for two months. The pimps were very good at convincing pigeons that the stock was about to rocket through that level. On October 22, the touts abruptly ended their pimping of ORYN , with a final email daring to compare the company to CROCS. The actual difference between CROCS and ORYN ? In a few weeks, ORYN will be trading in the single pennies, while CROCS will most definitely not. Want to know where GRPH will inevitably end up? Watch ORYN from here on out.

As for GRPH stock itself, it traded its first 4.8 million shares over the last 3 trading days, of which we estimate represents a divestiture of about 2 million shares by the insiders. Prior to that, almost every single share of the 28.7 million shares issued and outstanding were held by insiders. Let's take a look at a couple of the stock issuances.

At the end of 2011, there were 12,700,000 shares issued and outstanding in the company, then known as First Resources Corporation. From January 5, 2012 to April 11, 2012, 10,000,000 shares of stock were issued in 13 transactions for a total of $500,000. The total issued and outstanding was then 22.7 million shares. The stock was sold at 5 cents per share and those purchasers are ahead of the game by better than 1600% over a period of 6 - 10 months. That was some shrewd investing wasn't it? Aren't you glad you were given the opportunity to get in on that ground floor? Oh! You say you weren't? Hmmmmm.

On June 1, 2012, the company, now known as Graphite Corporation, issued 1 million shares of stock as per the terms of an option agreement towards acquiring a 100% interest in a purported graphite property. This brought the total number of shares issued and outstanding to 23.7 million.

Then, on September 6, 2012, less than two months ago , the company issued 5 million shares (bringing the total issued and outstanding to 28.7 million shares) in consideration of $250,000. Again, t hat's 5 cents a share people! The stock closed at 86 cents on Friday. In less than two months , the value of the most recently issued stock has appreciated by better than 1600% ! Is it any wonder a Pump & Dump is underway?

Are you foolish enough to enrich these obvious schemers all in the name of maybe making a couple of bucks?

Millions of dollars will be made by a few insiders. Millions of dollars will be lost by thousands of unsuspecting people new to the penny stock game.

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