From: anon Subject: Anatomy of a Pump & Dump stock spam scam (long) Date: 13 Mar 2000 00:00:00 GMT Message-ID: <8akla7$27br@edrn.newsguy.com> Newsgroups: news.admin.net-abuse.email,misc.invest.stocks Forgive me for posting anonymously, but I've been threatened with a lawsuite by the stock scammers and their sock puppets... These guys are malicious! Some of you might have received this spam, originating from a relay-rape in Hong Kong: > Subject: Stock Holders and Investors Alert - please read > > > Financial Analyst's Newsletter: ---Major News Announcement--- > STOCK ALERT/BUY ASAP. > For March 9, 2000 > Rumors of Microsoft Networks to take ownership > position in small, high-tech engineering company. > Notice to: 143 Investment Groups > ASDG (ASD GROUP INC. OTC-BB) > Small Company gets Major Deal w/ Microsoft: > ASDG forming a Strategic Alliance with Microsoft > for Real Time, TV quality Internet Video Delivery. > ASDG will manufacture the new hardware. > Share Price: $1.62 Stock Symbol: ASDG > Analyst's Target is $7 to $10. Takeover price > by MSN of $10/share for 60% ownership rumored. > Online Info at: > http://www.asdgroup.com/showcase/html/showcase.htm > > Multiple News Releases Next Week: > http://www.ragingbull.com/ This should have made everyone immediately suspicious. No legitimate stock tip ever comes through spam. Since the spam directs everyone to the ragingbull.com stock discussion boards, I decided to check them out. You can read them yourself at: http://www.ragingbull.com/mboard/boards.cgi?board=ASDG There are a few rational people who posted messages indicating that this is a pump&dump scam, but they are drowned out by the scammers and their sock puppets. There's an amazing conversation going on, its classic sock puppetry. Adding further confusion, the ASD Group website is down, and the scammer is claiming its because of a forthcoming announcement. The scammer is using classic FUD to confuse gullible buyers into believing a false rumor that Microsoft is about to invest in ASD. I decided to look a little deeper. Let's look at the stock charts, and see if we can determine when this little scam got started. Look at the bottom chart on this site, which tracks trading volume: http://www.bigcharts.com/quickchart/quickchart.asp?symb=asdg&sid=0&o_symb=asdg&freq=7&time=18 Note the first blip of trading activity, it occurred late in the day on Monday, 3/6/2000. This is when the plan was hatched. Someone accumulated a packet of ASDG, with more accumulation on tuesday 3/7, they bought at a price of 1/2. Yes, one half dollar per share. Now let's go to the Raging Bull chat board, and look at all the posts: http://www.ragingbull.com/mboard/boards.cgi?board=ASDG&startfrom=1&numposts=60 There is only minor activity until 5PM March 7, when someone posts a message with a strong buy recommendation, saying merely "Its about to pop!" The first seeds are planted by "marcoo." It starts slowly. There's a message to warm up the lusers witha reference to a stock tip newsletters that's about to be posted the NEXT day on Yahoo's stock board: http://www.ragingbull.com/mboard/boards.cgi?board=ASDG&read=8 > ASDG MOMO FOR TOMORROW!!!!!!!!!!!!........ > > STOCK ANALYSTS NEWSLETTER > For March 8, 2000 >This is being sent to 143 Newsletter and Investment Group List Owners and >Managers tp be Distributed >to their lists of investors totalling over 65,000 after market close Tuesday, >March 7, 2000 > OUR NEXT MOMOPLAY is > ASDG > ASD GROUP INC (OTC-BB) >Trading Currently in the $1 Range at 3:15 p.m. March 7--Under Accumulation -Low >Float > Analysts Target is $5 to $12 > This Stock, Upcoming News and Links will be Posted Wednesday, March 8 at: >clubs.yahoo.com/clubs/stockanalysts By: montana9 > Reply To: 12 by cashstacks > Wednesday, 8 Mar 2000 at 11:15 AM EST > Post # of 208 > > I too saw this posted on the YAHOO boards: > > STOCK ANALYSTS NEWSLETTER > For March 8, 2000 >This is being sent to 143 Newsletter and Investment Group List Owners and >Managers tp be Distributed to >their lists of investors totalling over 65,000 after market close Tuesday, March >7, 2000 > > OUR NEXT MOMOPLAY is > > ASDG > > ASD GROUP INC (OTC-BB) > >Trading Currently in the $1 Range at 3:15 p.m. March 7--Under Accumulation -Low >Float This is how the sock puppets are working. Plant a rumor on one site with some fluff headers to make it look like its a professional stock tip, then use another fake identity to post it to another site. This message is followed by a few sock puppets, like "The_Shadowen" that tries to "confirm" the reality of this "momo stockletter." Shadowmen is the skeptic, the sock puppets are playing good cop/bad cop, but eventually he's convinced. http://www.ragingbull.com/mboard/boards.cgi?board=ASDG&read=26 >That MOMO stockletter said it would be released to the general population >tomorrow. Thought I would play this >one will a little money since I've watched the last three MOMO's. Each time I >would have made money. Usually >it takes a day or two. Also notice the big spread. It's not going to take much >for this baby to double IMHO. 100K > and we are off to the races. JMHO!! Oh well, live and learn. >(Voluntary Disclosure: Position- Long; ST Rating- Strong Buy; LT Rating- Strong >Buy) So now we've got a triple circle jerk. Touts on one board are posted to another, which in turn is posted to another, and then to another. It looks like EVERYONE is talking about this stock. Everyone who bought it at 1/2, that is. The scamming continues on, and the stock is off to the races! The lusers who believe this crap are buying the stock in droves, its selling at 1 by the end of Mar 8, making a 100% profit for the pump&dump scammers who bought at 1/2. There are additional messages on Mar 9 onward, pointing people to other planted rumors on other sites (I'll let you read that yourself) http://www.ragingbull.com/mboard/boards.cgi?board=ASDG&read=49 One message by one of the ringleaders of this Pump&Dump, montana9, is worthy of exceptional note: http://www.ragingbull.com/mboard/boards.cgi?board=ASDG&read=56 >PRIMEXPO, ASDG has over a 400% volume increase over normal @ 11:00am - Something >is up >- I'm just trying to find out what. Company is definetly turning it around & has >IBM as their chief > customer! Well, if you read the EDGAR reports (which are official filings with the Securities and Exchange Commission), you will discover that IBM is not ASD's chief customer: http://www.bigcharts.com/news/articles.asp?newsid=733838&date=&orig=charting&time=18&symb=ASDG&sid=41449 >For Fiscal 1999, the Company's four largest customers accounted for >approximately >59% of net sales. Sales to Van Dam Machine Co., ENI Technologies, Aydin >Corporation and Karl Suiss America, Inc. accounted for approximately 19%, 19%, >11% >and 10%, respectively, of the Company's net sales. Hmm.. don't see IBM in there anywhere. The company does list IBM as a customer, but it must be less than 10% of their sales, a pretty minor customer. More lies from "Montana9" in an attempt to drive up the stock. It has SOME vague ring of truth, if you only skim through the EDGAR reports. I read the fine print. Well, the scam continues on like this on the ragingbull.com boards. Here's a notable first appearance of the text used in the spam, posted by "primexpo" http://www.ragingbull.com/mboard/boards.cgi?board=ASDG&read=93 Browse that one for yourself, its rather long. It starts the rumor that Microsoft is forming a "strategic alliance" using the same text that is repeated in the spam that will be posted a couple of days later. The boards are really heating up at this point, and heavy message traffic continues for the next couple of days. Its hard to keep track of who is a sock puppet and who is actually buying into this load of bullshit. However, one skeptic posted on Saturday that this is all a scam: >First time I have had a front row seat to watch a pump and dump from start to >finish. > This Microsoft thing was pure crap all along. NOW, the hooks are all baited, and its time to send the spam! The spam was sent from Hong Kong on Sunday local time (it was saturday in the US), and the results were amazing. In weekend trading, the stock peaked at 2, quadrupling the investment of the scammers who bought at 1/2. On monday, the stock returned to about 1 1/4, some people were catching on and were selling off, now that the scam has been revealed. And the scammers are STILL pumping just as hard, now they claim that the company's website is about to announce their deal with Microsoft, Real Soon Now. Its impossible to confirm, as the ASD website is offline. Another sock puppet speaks: http://www.ragingbull.com/mboard/boards.cgi?board=ASDG&read=188 >Don't count out Microsoft. My sources are very close to ASDG. Many of you don't >believe. I don't >blame you. But for myself, I'm sitting tight. I know what is about to happen. Yeah right. At this point, I received a confirmation of my report of this pump & dump to the SEC, and I reported this to the raging bull board. And BOY were they pissed! The scam is blown. The scammers hope to drive up the stock to about 5, but they're more likely to have a visit from Federal Agents. If only they hadn't gotten so greedy, they might have pulled off the scam. But they're still pumping hard. I hope they get stuck with tons of this nonperforming stock. The full scam hasn't played out completely, I'll keep watching it over the next few days. So let's recap how this classic Pump & Dump scam works. 1. Buy a bunch of a nonperforming stock. 2. Plant rumors that drive the stock upward. 3. Use the popular stock websites to create a buzz about the stock. Use sock puppets to create the illusion that people are buying the stock and are making money already. 4. Watch the misinformed investors latch on to the stock, pumping up the price of the stock you already own. 5. When the stock price starts to peak, dump it. The hordes of misinformed people will snap it up at the inflated price. With luck, you've made somewhere between 400% and 2000% profit. 6. Watch the stock fall back to its previous level. Laugh all the way to the bank. Oh, but there's a fly in the ointment: the United States Securities and Exchange Commission. Hope they don't hear about your illegal scam until you're comfortably relocated to Costa Rica with all your profits. I hope nobody gets too greedy and tries to drive the price even higher by spamming this stock tip all over the world, or surely someone will forward it to the SEC!