SHOM's Fraud: It's the Real Thing

For the second time in two and a half years, a phony company announces a phony relationship with a Coca Cola affiliate and shareholders take it on the chin

December 10, 2016: Southern Home Medical, Inc. (SHOM) a long time share selling scheme designed to defraud, has employed a new way of deceiving the public, straying from the traditional pump and dump method of engaging promoters to create temporary hype in their stock. Under new CEO, George Chang, SHOM, has taken to the tactic of lying in press releases. And traders have paid dearly for it.

   » Related: Southern Home Medical Equipment (SHOM) Sells Stock and Little Else

On December 1st, SHOM issued a press release claiming that it had received an order from Coca Cola East Japan, "for 3,000 vital monitoring wearable systems", whatever they are. The lie had the desired effect. Within days the share price had increased 400%, and pigeons who are foolish enough to believe that a Coca Cola affiliate would even be allowed to have anything to do with a company that has a history of nothing but schemes and no assets, jumped in with both feet. Insiders dumped stock with abandon.

But the jig was up on Friday, after SHOM was forced to issue a follow-up press release, disavowing the claims it had made a week earlier. According to that press release, Coca Cola East Japan "requested" a clarification.  What most likely had happened is that SHOM received a Cease and Desist letter.  The release goes on to state that, "The contract and subsequent order was not done directly between SHOM and Coca-Cola East Japan but enacted by an agent who was purchasing product for Coca-Cola East Japan."; and, "We are making this clarification because we did not sign the contract directly with Coca Cola East Japan but we continue working with agents." The latter admission should be damning for SHOM. It confirms that the December 1st press release, which claimed that the order came from Coca Cola, was deliberately misleading. Chang had to know that the order, if it actually exists, did not come from Coca Cola East Japan, because the contract did not have "Coca Cola" anywhere on it. The initial press release is purely and simply, FRAUD.

We are issuing a trading suspension watch for shares of SHOM.^*

SHOM Chart - December 1 - 8, 2016

Coca Cola East Japan Press Release
<click to enlarge>

In the aftermath of the announcement, buying of shares was frenzied and the week long span between the phony announcement and the forced admission enabled the wholesale dumping of SHOM stock. We estimate street losses as a direct result of the misrepresentation to be in the range of 4 - 5 million dollars. Inexplicably, shares rebounded somewhat on December 9, after the admission was made. Those buyers will probably regret those irrational purchases on Monday.

SHOM's fraudulent press release prompted Coca Cola East Japan to issue its own statement denying any relationship.

This latest SHOM scam is reminiscent of similar scheme employed by DNA Brands, Inc. (DNAX), a now dormant pump and dump subject. During the summer of 2014, DNAX also invoked the Coca Cola name in a scam designed to defraud the public. In that scheme, bottler Trenton Coca Cola was reported to have agreed to distribute the DNAX line of energy drinks. The next day, DNAX was forced to retract that claim by the Coca Cola Company itself and of course millions of dollars of investor money instantly evaporated.

   » Related: DNAX: Things Don't Go Better With Coke

More recently, trading in shares of Nu Tech Energy Resources (NERG) was suspended by the SEC on the heels of a ridiculous press release claiming that a Russian company had offer 2.5 cents for each of the company's 43 billion shares, a takeover that, not surprisingly, never materialized.

   » Related: NERG Suspend Over Preposterous Takeover Claim

* We have no information that a suspension in trading of SHOM shares is imminent.  It is our opinion that such a suspension will be enforced.