Friday, August 14, 2009

Mr Big Wells and the new faster SEC

I just received and filled out a customer satisfaction survey from the Securities Exchange Commission.  Its prompted me to take some time off from the mega-Fannie-and-Freddie series.  I wasn’t satisfied – and the questions did not allow me to spell out all the ways that I was dissatisfied – so I will do it here.  Especially as the SEC is promising to be more responsive – and quicker.

The Bronte Experience 

On the evidence presented I beg to differ about quicker.

Sometimes something so easy to prosecute and so charmingly banal comes across my desk that I wonder if there is any future in securities regulation in the US.

I point to a small but well promoted penny stock.  The name is Cobra Oil and Gas.

This stock was pitched (by email) to Bronte Capital by a promoter who I had never heard of.  [I have been around a while – and a broker/promoter that I have not heard of makes me pause for thought…]

Cobra – according to the pitch – has some very large shale-oil reserves in the lower 48.

That alone makes it worth 15 minutes of my time.  And that is all it took…

Cobra claims that it has secured the services (as a consultant) of Dr Dualat Mamora – a renowned professor in petroleum engineering.

Cobra Oil & Gas Company is pleased to announce that the company, along with its partner Enercor Inc., has secured the use of a proprietary oil extraction process for its Utah Oil Sands Prospect. The process, known as In-situ Combustion ('ISC'), will be overseen and carried out by Vernal, Utah-based Rocky Mountain Consulting, utilizing the expertise of renowned petroleum engineer Dr. Daulat Mamora, who is an expert in ISC methodology.

This was easy to check.  I emailed Dr Mamora and received the following reply:

Mr. Hempton:

I have never heard of Cobra Oil & Gas Company, nor am I consulting for this company. I conduct insitu combustion research and publish in this area.  I guess it is just too easy to "google" and obtain a persons' name whose expertise is in insitu combustion.

Thank you for pointing the article out to me.  I am going to write to the company requesting them to remove my name from the article and from all future communications from the company.

I sent all this to the local head of enforcement at the SEC.  Receipt was acknowledged.

Anyway claiming you have a consultant who is not your consultant is probably just a little trivial.  But then I am not sure it is just the consultant who is falsified.  The CEO of the company is Mr. Massimiliano (Max) Pozzoni.  Now my Italian is not very strong – but even I can see that this name translates roughly as Mr Big Wells – a name that is entirely appropriate for the CEO of a suspect oil and gas company.  Max Pozzoni has a rather thin CV – consisting of executive positions at other pump-and-dump oil and gas stocks.  My guess is that he does not exist – but he appears (at least in voice) in this video… 

We have a CEO whose existence is suspect (and who has a funny name) and a consultant who has never heard of the company he is consulting for. 

I can think of only one reason not to close this scam – which is that somehow you can find Mr Big Wells (whoever he might be) – and you are preserving it all for criminal action.  But the right action is not a suspension (though the SEC should do that too).  The right action is to suspend the stock, chase the seller of the big parcels and invite the Justice Department to press criminal charges.  If the CEO cannot be found the company should be wound up. 

For now however it seems that the new faster SEC will be too slow and the baddies will get away with the moolah…

That however is not the reason I am writing.  Mr Big Wells is probably better described as a small dip-stick. 

By contrast, I have thrown the SEC a very solid argument that a billion dollar plus New York Stock Exchange listed oil and gas company is largely fraudulent in its statements to the market.  I know the relevant regional head of enforcement (the same regional head) is informed as to the issues.  Unlike Cobra however this is a complex case – and I think I should give the SEC time to do its job before I go public.

After all, its a quicker more responsive SEC and I shouldn’t have to wait too long…

16 comments:

John Hempton said...

Someone guessed right...

But i do not want to reveal...

Anonymous said...

OOOh.. there's too many to make a single choice :)
I'm willing to bet money that at any time at least two 1B+ companies at NYSE have reports which have been modified in a way that could be reasonably successfully defined as fraudulent.

But What do I Know? said...

Nice work, Mr. Hempton. How in the heck did this company ever get registered in the first place? I guess I should take all of that stuff on the Series 66 with a grain of salt. . .

John Hempton said...

I am feeling far more need than usual to edit comments. One was a gratuitous advert for a documentary with a faulty conclusion. See stock shock and decide for yourself.

The second is someone sort of indicating that they knew the company (falsely I think).

J

Anonymous said...

I took a look at Cobra on Bloomberg and was surprised to see the "headquarters" is only a few miles from where I grew up. Using Google street view you see a non descript suburban home...It's not illegal per se to run a business out of a home, but at the very least we see that Mr. Big Wells is certainly no Mr. Deep Pockets

bean said...

How can you tell that the statements are fraudulent? What do you look out for?

John Hempton said...

In answer to Mr Bean - stuff that just doesn't make sense. You need however to think really critically.

Some stuff is simple. When Exxon needs a three person operation to do a major oil project - then - hey - no sense.

Some a little harder to spot than that... and some you will miss.

J

wtmhouston said...

Got a pump and dump email regarding this company today.

After a basic search, there is no one in Texas with the last name Possoni with a driver's license or voter registration. No one with that name owns any property in Houston.

There is another "Cobra Oil & Gas" in Wichita Falls Texas. http://www.cobraogc.com/. It is a privately held company who I doubt has any idea that someone else is using its name.

The company Enercor, who CGCA claims to have contracts with, does not appear to be in the oil and gas business.

I was going to drive by the "offices" just to satisfy my own curiosity, but I have to figure out where they are really located. The top of the 10K filed last week says "2100 North Loop South, Suite 400" and then Item 2 on page 7 says, "Our executive offices are located at 2100 West Look South, Suite 900, Houston, TX 77027 and cover an area of approximately 350 square feet. We utilize these offices pursuant to a lease that commenced on May 13, 2008 and continues through May 21, 2010 unless extended by mutual agreement of us and the landlord. Thereunder we pay base rent of $2,000 per month."

First, anyone paying $2K per month in Houston (at either of those locations) for 350 square feet is either nuts or fibbing.

Details are everything: there is no such place in Houston as "2100 North Loop South." The "2100 West Look South" also does not exist, though there is a 2100 West Loop South, Suite 900 address that is only a virtual office - executive office rentals. One other address associated with this "company" is "2100 West Loop South, Suite 400," thought his appears to be the campus of TechSkills. http://www.techskills.com/campuslocations/houston-tx/

A reverse lookup on its phone number (832) 476-8941 suggests that though it is a land line, it is an unlisted number. How many businesses have unlisted numbers?

The most recent 10-K ought to be a red flag to anyone: "As of August 20, 2009 our only employee is our sole executive officer." For a company with a $70+ million market cap? Not so bad if you can dump the shares.

Wish their was some way to short this dog.... ;)

Troy said...

A Follow Up....

Seems as though the real Cobra Oil & Gas was not thrilled with this group using its name.
http://finance.yahoo.com/news/Cobra-Oil-Gas-Company-bw-1418733361.html?x=0

This higher priced and now declining price and volume company (i.e., pump and dump) has now changed its name to Viper Resources, Inc., and now trades as VPRS.
http://www.viper-resources.com/

Predictably, the stock price has gone from a buck and change to two-bits as volume has dropped from over 6 million shares a day to under 200,000 shares per day.
http://finance.yahoo.com/q/hp?s=VPRS.OB

Anonymous said...

Mr. Hempton, I have been trying to research this person. Do you know if he really exists?

Many of the google hits showing his name turn up as no page.

Even the link someone posted above about the name change goes nowhere.

I did find this......

http://houston.citybizlist.com/yourcitybiznews/Detail.aspx?id=66918

and he is also listed as a financial adviser for a very small oil and gas company named True North who also trades stock. I am not researching him in regard to stocks. I am for other reasons.

True North only has the CEO, John Folnovic and Max Ponzzoni, chief financial advisor, there does appear to be a board of directors.

Can all these people be fictional? I have no clue.

Just thought I'd pass this info on to you.

http://www.tnecorp.com/
True North Energy Corp web site

Anonymous said...

Massimiliano Pozzoni resigned from Falcon, Jan. 07

In connection with the resignation of Mr. Massimiliano Pozzoni and Mr. Fred B. Zaziski as officers and directors of Falcon Natural Gas Corp., a Nevada corporation (the "Corporation") as described below in Item 5.02, the Corporation entered into a Mutual Release with each of Messrs. Pozzoni and Zaziski.


http://sec.edgar-online.com/falcon-natural-gas-corp/8-k-current-report-filing/2006/04/04/section6.aspx

Falcon Natural Gas Corp.
Westchase Center
2500 Citywest Blvd. - Suite 300
Houston, Texas 77019
Attn: Massimiliano Pozzoni

Re: Forbearance Agreement

Dear Mr. Pozzoni:

This forbearance agreement will confirm our understanding regarding Falcon Natural Gas Corp.'s ("Falcon") obligations owed to Cornell Capital Partners, LP ("Cornell"). Falcon hereby acknowledges, confirms and agrees that as of the close of business on March 28, 2006, Falcon is indebted (collectively, the "Existing Debentures") to Cornell in the amounts set forth below:


here is more info on him (and actually True North currently shows "Max" as Chief Financial Officer)

:

BOARD OF DIRECTORS MEMBERSHIPS*
2008-Present
Chief Executive Officer, President, Chief Financial Officer, Chief Accounting Officer, Secretary and Director
Viper Resources, Inc.

2008-2010
Former Independent Director, Member of Reserves Committee, Member of Audit Committee and Member of Corporate Governance Committee
Petro Vista Energy Corp.

2006-2006
Chief Financial Officer, Chief Accounting Officer, Secretary, Treasurer and Director
True North Energy Corporation

2004-2007
Former Principal Financial Officer, Principal Accounting Officer, Vice President of Business Development, Treasurer, Secretary and Director
Falcon Natural Gas Corp.

2003-2005
Former Chief Executive Officer, President and Prinicpal Financial Officer
Gulf Coast Oil & Gas Inc
Former Principal Accounting Officer, Vice President of Business Development, Secretary, Treasurer and Director
Countryside Review, Inc.

EDUCATION*
Bachelor's Degree 1998
University of Kansas
BS
University of Kansas
MBA
London Business School

(I don't know if there is anything hinky about this report, please check it out)

http://sec.edgar-online.com/true-north-energy-corp/10ksb-annual-report-small-business-issuers/2007/07/30/section16.aspx

Anonymous said...

I learned Max own True North Energy Corp in addition to Viper Resources, Inc, both small oil and gas companies and both selling as penny stocks.

rmorris said...

So 2 years later.... What's the $B+ NYSE oil and gas likely fraud? IOC? HUSA?

Joe said...

I'm curious too. Let's get the big reveal!

Anonymous said...

In a 2/05/11 comment postec by rmorris, there was mention of HUSA in a comment about fraud. This is a real company, with an enviable navigation thru the small public oil and gas company maze. The principals are real, as well as the apparent quality of their Columbian oil involvement. Their track record of raising and preserving capital is strong. I credit the success to Mr. John Terwilliger, CEO, whose years of experience have paid off handsomely, for shareholders as well.
mwiggins

John Hempton said...

Anon here is very sensitive.

I don't know enough about HUSA to have a strong opinon - but I confess to a small short position.


John

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The content contained in this blog represents the opinions of Mr. Hempton. Mr. Hempton may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Hempton's recommendations. The commentary in this blog in no way constitutes a solicitation of business or investment advice. In fact, it should not be relied upon in making investment decisions, ever. It is intended solely for the entertainment of the reader, and the author.  In particular this blog is not directed for investment purposes at US Persons.