The Midam Touch

Can Midam Ventures Survive the Perception of Infidelity Towards Its Clients?

February 26, 2017: Adam Heimann and Jason Spatafora have not had a good couple of weeks. The partners run Midam Ventures, one of the largest investor relations firms catering to the pump and dump crowd. As well as disseminating newsletters under their Midam and MAPH Enterprises umbrella, the pair also run EGM Firm, a near daily promoter of tickers that are regurgitated and passed around from tout to tout. Spatafora has dubbed himself as "The Wolf of Weed Street", a nod to his penchant for pushing marijuana related penny stocks through social media.

   » Related: EGM Firm Past Performances

Midam often takes stock in payment for its services. Usually that stock is restricted, which would seem strange considering that by the time that stock would be freed up, shares would likely be trading at a deep discount from the price they were issued at, especially if promotions had been undertaken. Furthermore, there would be the very real risk of a trading halt which would render the compensatory shares worthless.

   » Related: Midam Ventures Past Performances

Midam's business model and the reason they accept restricted stock in payment of their services may have been revealed by recent events.

On February 21st, Progressive Care, Inc. (RXMD)  issued a press release announcing that it had initiated litigation against Midam for Breach of Contract. According to RXMD, it had issued Midam 20 million restricted shares during 2015 for services rendered. Another 3 million shares were issued in October 2016,  While the restriction has since been removed from the shares issued in 2015, RXMD claims that Midam was barred under its contract from selling more than 50,000 shares per day. The company claims that Midam breached that provision in its agreement by selling one million shares on February 13th and three to four hundred thousand shares between February 8th and 10th.  A review of trading on these dates shows increased volume, but not really much of an affect on the share price.  Still, the accusation of infidelity by Midam against one of its clients does not look good.

According to penny stock fraud activist, George Sharp, who has filed many civil complaints against microcap companies as a self-represented litigant, RXMD is unlikely to gain much satisfaction from the courts. "While any breach of the contract, if proven, could effect Midam's ability to acquire new clients for its investors relations services, it will be difficult for Progressive Care to prove damages since the share price was not really effected by the stock sales.  Proof of damages is a prerequisite for monetary recovery. It is more likely that the court would bar Midam from further breaches and perhaps award Progressive Care reimbursement of its attorney fees."

RXMD's own dicey history as the subject of pump and dump campaigns and dubious relationships could make damages even more difficult to prove.

Midam's legal troubles come on the heels of last week's trading suspension slapped on the shares of Platinum Pari-Mutul Holdings, Inc. (PPMH) by the SEC.  PPMH was in the midst of an extensive promotion by Midam, which utilized several of its newsletters in creating hype, including new publication, Awesome Penny Tips. Midam was paid in restricted stock for its services by PPMH who subsequently claimed massive short selling in its shares.

   » Related: Awesome Penny Tips Past Performances

The recent litigation brought by RXMD, could lead to speculation that Midam itself short sold PPMH shares against its restricted certificate. Some have even speculated that Midam could have passed damning information to the SEC to encourage the suspension in trading, and lock in profits on any short position as once PPMH resumes trading, it will find itself relegated to the Grey Market and a likely disintegrated share price. Such speculation is further fueled by Midam's last email before the imposition of the trading suspension. That email surmised that PPMH's share price could fall by as much as 27%, an odd statement from a newsletter designed to generate buying in its client's stock.

   » Related: SAGD Shareholders Have Good Reason to Be Nervous After SEC Suspends PPMH

The recent developments with RXMD and PPMH could explain Heimann and Spatafora's otherwise risky willingness to provide services on the come. If PPMH management's claim of short selling in their stock can be substantiated, it will be interesting to see if they turn to Midam for an explanation.