March 12, 2014: Rostock Ventures (ROSV) is an on again, off again Pump & Dump scheme that's been around for nearly ten years. Last fall the stock emerged from relative dormancy as trading picked up a little, despite the fact that no news of any kind came from the company until November. When it finally announced an intended forward split, mild interest was sparked. Two single day promotions in November and December brought a little attention to the stock.
ROSV has begun 2014 with a bang, though, chiefly due to two new business initiatives. It's one of the few stocks out there that greeted the new year by first shamelessly pitching itself as a bitcoin company, and then as a pot play. The latter has proved a more successful ploy than the former. Share price has been on the rise of late, thanks to a flurry of often incoherent press releases. After yesterday's promotion by Best Damn Penny Stocks' minor affiliates, which set off speculation that it might be the subject of a pump by the big man himself, we'd be wary of any upcoming promo that would surely be designed to take advantage of the company's effort to carpetbag into the hot sector of the moment.
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| ROSV Chart to March 11, 2014 |
ROSV was formed in Nevada in 2006. In the SB-2 initial registration statement it filed with the SEC on 30 July 2007, it described itself as an "exploration stage company engaged in the acquisition and exploration of mineral properties." At that time, it was physically located in Saskatoon, Saskatchewan, and owned a property known as the McVicar Claim. Collin D. Sinclair, a local, ran the show. The selling shareholders appear also to have been locals. The S-1 was deemed effective on 19 September 2008, and the company's stock became eligible to trade on the OTCBB in December.
For the next four years, it did very little, and made no money. In its most recent 10-K, for the period ended 31 December 2012, it disclosed that it did not have "any minerals or reserves whatsoever." It was not, however, officially defined as a shell company. Neither did it have significant debt.
In July 2009, ROSV underwent a change in control. Sinclair sold 4 million shares of stock, representing 9.83% ownership, to seven entities: Tucker Investment Corp., Paradisus Investment Corp., a British Columbia numbered company called 658111 BC Ltd., Takam International Ltd., HB International Ltd., Zander Investment Ltd., and Highlight Holdings Ltd.
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| Andrew Godfrey |
A series of Promissory Note Settlement Agreements for Nitro Petroleum Incorporated (NTRO) from December 2008 features the same group of international characters. It establishes Zander as a Leo Shull company. The signatory for HB International was Miguel Adolpo [sic?] de la Rosa; it isn't clear whether he controlled the entity or not. Highlight Holdings is a Robert Seeley company.
All or some of these people have had interests in a number of other penny stocks, most of them unsavory, over the years. The Shulls are a prominent British Columbia family who have been the targets of several biting articles by former Vancouver Sun reporter David Baines. The stock that was the subject of Baines's pieces was the notorious Sunpeaks Ventures (SNPK; now Pharmagen, Inc., PHRX), a highly successful Awesome Penny Stocks pump and dump.
The Shulls are without any doubt bad actors. In 1998, Robert and his brother Terry were indicted by a U.S. grand jury for manipulating the stock price of Fairmont Resources, Inc. The stock traded on the Alberta Stock Exchange, but the U.S. court had jurisdiction because the pair had paid secret "commissions" to brokers in the States to induce their clients to invest in Fairmont. The SEC had already brought suit against them in 1996, and settled, but the criminal case was not resolved until 2010, when Robert finally pled guilty and was sentenced to 168 days in a halfway house.
Enter Luis Carrillo
Once the change in control had taken place, Collin Sinclair, ROSV's original CEO, was free to leave. On 28 October 2009, an 8-K was filed announcing his departure. His positions--CEO, CFO, president, secretary, treasurer and director--were filled by Luis Carrillo, a San Diego attorney
Carrillo is a familiar figure to followers of the OTC market. He was one of the founding members of Carrillo Huettel LLP, a now-defunct firm well known for its work--all kinds of work, some of it alleged by the SEC to be illegal--for penny stock companies, their financiers, and their promoters. In 2010, the agency opened an investigation into his, Wade Huettel's, and the firm's activities that resulted in a subpoena being issued for Carillo Huettel's attorney-client trust accounts dating back to January 2009. Carrillo, appalled by the danger this posed, fought to quash the subpoena, but to no avail.
As the SEC investigation dragged slowly on, Carrillo and his partner began to feel the pressure. We announced on 29 November 2012 that they'd cleared out of their offices without notice (except to the landlord).
Carrillo appears to have played much the same role for Rostock, bringing in the Shull group and their financing, and, as we've seen, even serving as the company's sole officer. Not suprisingly, Wade Huettel took over as the company's counsel. From time to time, ROSV announced that it was "evaluating" mining properties in North America, but it didn't engage in any actual operations. Finally in mid-2010 it acquired the rights to an exploration license for a property in Nova Scotia; not exactly a thrilling development.
Gregory Rotelli
A year passed; nothing was accomplished. On 10 May 2011, Carrillo resigned all of his positions without explanation. He was replaced by Gregory Rotelli.
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| Gregory Rotelli |
Although at the time of this writing Carrillo Huettel is still listed as Rostock's legal counsel at its OTCMarkets Company Info page, the firm seems to have resigned as counsel shortly after Carrillo himself did; its name soon dropped out of company filings.
As Rotelli took over, a promotion began, taking to the stock to a short-lived high of $0.11. The Shull group seems to have dumped all or most of its shares into that pump. By the time the 10-K for fiscal 2011 was filed on 12 April 2012, they were no longer listed as beneficial owners. Rotelli wasted no time rounding up another financier, as noted in an 8-K from 15 June 2011. By the terms of the relative subscription agreement it sold 714,286 shares of restricted common to Enavest Internacional S.A. for $50,000; Enavest got its shares at $0.07. Although the agreement was signed in the Dominican Republic, Enavest has a Costa Rican address. Its principle is one Richard Smith.
With immediate expenses taken care of, Rotelli proceeded to do pretty much nothing with ROSV for the next year and a half.
By early 2013, when ROSV filed its 10-K for fiscal 2012, it still had no greater-than-5% owners. Rotelli had issued a few small notes, one of them to Robert Seeley, who had been one of the 2009 Shull financiers. The company's most recent financial report is a quarterly for the period ended 30 September 2013. It is depressing. Only $8,500 cash remained in the bank, and, as always, no revenues had been generated. Two $20,000 promissory notes had been issued to an entity called Aspir Corp.; that entity, if it really exists, was not further identified.
If it's hot, let's try it!
As 2013 drew to a close, ROSV wasn't making money for anyone; not for traders, not even for Rotelli. Perhaps it was time to attract a little attention.
On 11 December 2013, the company did something it hadn't done in years: it issued a press release. And that press release was a doozy. In it, Rotelli announced that ROSV "has engaged in discussions to look into the opportunities within the Bitcoin Industry from different aspects within this exciting area ranging from creating an exchange to trade Bitcoins to various Bitcoin mining opportunities. The company's board at this time has not secured a deal and may not find a viable opportunity going forward." What does that mean? Hard to say, but traders were soon to become accustomed to Rotelli's labored style, which he surely cannot have come by through his college Latin studies. Latin is an economical language.
But the PR did include what was then a magic word: "bitcoin." Perhaps even more exciting was the proposal of a 5:1 stock split. Ordinarily, penny stocks are not good candidates for forward splits, because they already have a great deal of shares outstanding. That is not the case with ROSV. Its outstanding was only 41.4 million shares as of 30 September 2013, and according to the press release that hasn't changed. It's popularly believed, though not always true, that a forward split will create buying pressure.
A month later, on 14 January 2014, Rotelli assured his public that he was "continuing" to explore the bitcoin opportunities he'd referenced earlier.
But by the end of the month he'd given up on all that. Oddly enough, he changed his mind before the Mt Gox meltdown occurred. Perhaps he simply saw that marijuana stocks were running even harder than bitcoin stocks, and decided to go with the flow. This second change of direction was heralded by a bizarre news release about a "report card" on Toronto schools, with the headline "Rostock Ventures Corp. to Focus on Next Generation Mobile Platform that Fuses Interactive Social Media & Local Marijuana Commerce." Readers must have been scratching their heads. A second iteration did little to clarify, with its promise to "launch the platform that takes social media and local e-commerce to a new level. In fact, we are taking social media/marijuana industry to more interactive levels which I feel is poised for success."
At any rate, Rotelli's change of heart was timely, as the collapse of Mt. Gox and Flexcoin, followed by FINRA's warning about bitcoin stocks, have taken the shine off the virtual currency.
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| Todd Ellison |
The new pump
ROSV has so far done nothing but register two website domains (iWeedz and iWeeds) and hire an adviser. But the pot circus being what it is, that's been enough to send the stock price soaring; it hasn't been this high since the early summer promotion of 2011.
And there is indeed a new promotion underway, financed by a "non-affiliated party" called Out Reach Holdings S.A. Although Out Reach has acted as payor for a number of promos in the past, it cannot be located, and its principals cannot be identified. The actual work is being performed by a number of related sites; each of which has declared compensation of $4000. Among them are Equities on the Rise, Get Rich Penny Stocks, Try Penny Stocks, and Bling Bling Penny Stocks, all affiliates of Best Damn Penny Stocks. The content of the email alerts is identical, so it's possible this is just an inexpensive campaign whose total budget is $4000.
That content consists of the usual hype about a marijuana market estimated at $45 billion, and statistics illustrating how much support legalization efforts enjoy. Oddly, though, the touts begin by stating that ROSV is a medical MJ company, which it is not. Maybe they'll catch that error in the next email blast.
Pot stocks have run enormously so far this year, given a tremendous boost by the beginning of legal sales of recreational weed in Colorado. New marijuana companies, most of them, like ROSV, run by people without prior experience in the business, are springing up like mushrooms after a rain shower. As of 19 February, 100 penny stock companies claimed to have be doing, or planning to do, marijuana-related business. By 8 March, that number had risen to nearly 150, as companies with nothing on their minds but selling paper rush to satisfy traders' marijuana induced stock munchies.
All this is like tulip bulbs you can smoke. Sooner or later the market and its more rational players will begin to distinguish between serious companies in the sector and those that are simply jumping on the bandwagon. When that happens, there will be a correction, and many of the wannabes, like ROSV, will fall by the wayside. In the meanwhile, though, efforts to push ROSV a few pennies higher will no doubt continue. Many will be left holding the bag when the hysteria dies down.