My Response To Shaquille O’Neal’s Cease & Desist Letter: “Shaq vs. The Truth”

On February 12th I received a cease and desist letter from Shaquille O’Neal’s attorney thanks to my February 7th, 2010 post exposing the paid promotional mailer that cost more than $300,000 which used Shaq’s name and image to get readers excited about the prospects of NXT Nutrtionals Holdings Inc. (NXTH)…I said the stock looked very much like a pump & dump…which are my stock and trade as I have 4 newsletters and 10 instructional DVD packages teaching roughly 3,000 DVD customers and TIMalert subscribers in over 36 countries how to identify and profit from them, legally, mainly by short selling their stocks when their prices are “pumped” higher by promotional mailers exactly like the one sent out on NXTH.

Furthermore, as I detail in my bestselling book An American Hedge Fund, using this exact strategy, I have turned $12,415 into $1.65 million while still in college, become the #1 ranked short bias hedge fund manager 2003-2006 and now have been the #1 ranked trader out of 45,000 on Covestor the past 2 years by turning $12,415 into $120,000, detailing every single trade/step of the way even as I spend most of my time blogging and teach others.

In short, I know this shit inside and out and Shaq, whether he knows it or not, just stepped in this big pile of shit. My pile of shit. Welcome to the gutter big boy.

In an attempt to be fair, I even took a poll asking you readers whether NXTH looked like a pump & dump and out of 289 votes, 249 agreed with me…

One day after raising $5.6 million, NXTH’s stock is collapsing another 29% today to just 77 cents/share…an astounding 76% drop from the $3.22 highs created by the promotional mailer just under one month ago…take a look at the chart and see EXACTLY when the volume and stock price began perking up on the first day of February 2010, when the mailer went out…coincidentally the very day Shaq COULD start selling 20,000 shares per day…very questionable:

shaq

We don’t know, nor will we probly ever know (unless Shaq brings this to court…I dare you to do it you big bully) whether he sold any of the million of shares which he was compensated to be spokesperson for NXTH, but the term “pump & dump” doesn’t necessarily refer to individual selling into runups, often times companies use their inflated stock price to do financings EXACTLY like this so while I won’t go so far as to say this is definitely a pump & dump (I changed the old blog post to “alleged” and just put alleged in front of everything I’ve ever said about this company), yesterday’s financing and today’s stock price collapse continues to fit the mold of every other pump & dump of the past 20 years.

Anyway, here’s my response letter to Shaq’s cease and desist request…I could’ve easily taken down my posts and went onto exposing other paid promotional mailer stocks, but when I have sourced all my material and it’s all factual and it’s Shaq’s fault for getting involved with such a questionable company, I will not back down.

Shaq I ain’t afraid of you, I DARE you to bring this to court, I’ll blog and LiveStream the entire proceedings in a series I’ll call “Shaq vs. The Truth”…and I’ll probly win every publishing award available….so please do it.

Enjoy the education Shaq, Shaq’s lawyers and you readers:

PS Shaq, time to get better lawyers, my 5 month old Yorkie puppy knows egregious is not spelled “aggredious”

Dennis A. Roach., Esq.

9200 Sunset Blvd, Suite 525

Los Angeles, CA 90069

RE: Cease and Desist Letter to Timothy Sykes regarding NXT Nutritional Holdings, Inc.

Dear Mr. Roach:

I serve as counsel to Timothy Sykes and Bullship Press LLC. As you know, on his blog (http://www.timothysykes.com), Mr. Sykes has engaged in criticism of your client Mr. Shaquille O’Neal for his role as a promoter and stockholder of NXT Nutritional Holdings, Inc. (“NXT”). Specifically, Mr. Sykes’ blog article states that Mr. O’Neal is involved in an alleged “pump and dump” scheme and Mr. Sykes provides facts to support that conclusion.

I write in response to your letter of February 9, 2010, sent on behalf of Mr. O’Neal regarding Mr. Sykes’ blog. In your letter you allege that “’pump and dump’ by definition is a fraudulent activity, consequently your public statements are false and defamatory, and greatly damage to Mr. O’Neal’s reputation [sic]” and you demand immediate removal of the blog entries. You are hereby advised that Mr. Sykes will not be removing any content from his blog as his blog entries contain only true statements of fact and his characterization of recent NXT activity as a “pump and dump” and your client’s involvement therewith is protected as fair comment on a matter of public interest under the First Amendment of the United States Constitution.

The right to speak guaranteed by the First Amendment includes the right to voice opinions, criticize others, and comment on matters of public interest. As further evidence that the blog articles of Mr. Sykes are fair comment on a matter of public interest, please refer to Mr. Sykes’ more recent post located at http://www.timothysykes.com/2010/02/is-this-shaquille-oneal-promoted-penny-stock-a-pump-dump-help-me-decide/ in which Mr. Sykes presents numerous facts (which were also contained in the first article which was the subject of your cease and desist letter) supporting his characterization of NXT as a “pump and dump”. Therein, Mr. Sykes again presents the facts to his readers and provides a poll in which they can vote on whether they believe this is or is not a “pump and dump”.

The phrase “pump and dump” describes a fraudulent investment scenario in which certain elements are present. Mr. Sykes clearly asserts facts that satisfy each of the elements of a “pump and dump” and thus the words fairly characterize the available facts. Moreover, Mr. Sykes is not alone in his evaluation of the recent activity of NXT as a pump and dump as public response to his poll and comments on the blog demonstrate- this is an important matter of public interest on which many people are of the opinion that NXT is, in fact, a pump and dump scheme.

After careful review of my client’s blog entries, I was unable to find a single statement on Mr. Sykes’ blog that was actionably defamatory. In order to sustain a cause of action for defamation, the plaintiff must allege that there were false statements of fact, published to a third person, which caused damage to the plaintiff. Without these essential elements, there is no defamation. See Dillon v. City of New York, 261 A.D.2d 34, 38 (N.Y.A.D. 1 Dept. 1999); see also Cal. Civ. Code §§ 44, 45a, and 46. Even if there were isolated false facts, under the “substantial truth doctrine,” isolated and cherry-picked errors or falsehoods will not sustain a cause of action for libel. See Masson v. New Yorker Magazine, 501 U.S. 496, 517, 111 S.Ct. 2419, 115 L.Ed.2d 447 (1991). Additionally, Mr. O’Neal, as a celebrity, is a public figure and as such must not only demonstrate actual damages but prove that there was actual malice on the part of my client. Where a public figure attempts to bring an action for defamation, the public figure must prove this additional element. See Gertz v. Robert Welch, Inc., 418 U.S. 323, 345 (1972) (establishing that celebrities like movie stars and professional athletes are public figures requiring that the defendant made the statement with actual malice toward the subject). That means that the person making the statement knew the statement to be false, or issued the statement with reckless disregard as to its truth. As evidenced by the extensive factors my client puts forth in the blog entries supporting his conclusion that this is a pump and dump, my client followed all protocols of responsible journalism and truth in reporting1 and was primarily concerned with exposing such pump and dumps, not maliciously targeting your client.

You also state in your letter that because “pump and dump” is “by definition a fraudulent activity, consequently your public statements are false and defamatory” however, you provide no facts supporting this claim. We contend that there has been no measurable damage to your client from Mr. Sykes’ blog. Quite to the contrary, as you can see in the comments to the blog, it appears that the general opinion of NXT is not very positive and that much of the public already had an independent opinion that this is in fact a “pump and dump”. Accordingly, your client’s reputation was not diminished by Mr. Sykes’ statements. In order to sustain a claim for defamation, the plaintiff needs to show that even if there was an actionable falsehood, the falsity of the statement must have caused injury to the plaintiff.

As you are also undoubtedly aware, there can be no defamation where the facts put forth supporting the criticism are true. Truth is an absolute defense to any defamation claim and aside from your conclusory claim that the statements are false, nowhere in your letter do you substantively contend that the facts asserted by Mr. Sykes that lead him to characterize recent activity of NXT as a pump and dump are false.

Additionally, I draw your attention to NXT’s own published materials in which it states that “As the company’s newest spokesman, NBA all-star and world champion Shaquille O’Neal is committed to helping this company pump up its product sales in the coming months.” Clearly, your client approved the language choice “pump” and therefore cannot complain when it is used in the form of criticism protected by the First Amendment.

Consequently, far from being grounded in law, Mr. O’Neal’s complaint amounts to nothing more than an attempt to silence an effective critic. Because those threats are legally baseless, they should not have been made in the first place. They have, however, caused Mr. Sykes harm and may continue to do so should they remain. In order to prevent any further harm to Mr. Sykes, we demand that you retract them immediately and do so in the same way the original claim was made: in a letter to Mr. Sykes and Bullship Press LLC, with a copy to my office. Moreover, please be aware that further misrepresentation aimed at silencing Mr. Sykes’ protected speech online may subject Mr. O’Neal to liability under California’s anti-SLAPP statute CAL. CIV. PROC. CODE § 425.16 which bars meritless lawsuits filed for the purposes of keeping someone from exercising their First Amendment rights on a matter of public interest as well as California’s Business & Professions Code § 17200 which prohibits unlawful, unfair or fraudulent business practices or other comparable laws in the applicable jurisdiction.

To reiterate, it is our position that a lawsuit based on these facts would be factually and legally unsupportable. Accordingly, it would be my unfortunate duty to respond to any such frivolous lawsuit with a motion for sanctions, a counterclaim for abuse of process and violations of the anti-SLAPP statute or similar protections, and once the action is dismissed in his favor; my client will file a malicious prosecution claim. Rather than governing our actions according to the demands in your letter, we will govern them by the principle of murum aries attigit. To be clear, we will vigorously defend Mr. Sykes against misguided efforts to limit his First Amendment rights.

Please direct all future communication regarding Mr. Sykes or Bullship Press to me at the address appearing on this letter.

This letter is not intended to constitute a complete or exhaustive statement of all rights and claims relating to this matter and is without prejudice to any of Mr. Sykes’ rights and remedies, at law or in equity, all of which are specifically reserved.

Very truly yours,

Teresa F. Santos, Esq.

cc :Timothy Sykes

Posted in Celebrities, Stock Promoters

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  • Anonymous

    I called Comcast this morning as my connection was out, and the announcement now goes something like this::

    “This is Shaquille O’Niel..”

    “And this is Ben Stein. Thank you for calling comcast”

    Shaq must be up to his neck in debt or something. Payin the bills! haha

  • Anonymous

    This is very entertaining!

  • http://www.reapertrades.com/ Michael Goode (aka Reaper)

    I don’t understand how California SLAPP could apply. Sykes is located in NY and Shaq isn’t in LA anymore. Still, very nice!

  • Anonymous

    the principle of murum aries attigit –> take no prisoners!

  • Guest

    I don’t even get the “alleged” bit. You know what it is, I know what it is, even the big dumb moron Shaq knows that it is.

  • Gene

    Awesome letter and response Tim… but isn’t shaq’s lawyers point that the usage of “pump and dump” as a term can only be used where there is fraudulent activity involved. To use the term where there is no proven fraud would be libellous. A pump and dump is fraud is the company and/or its promoters make false or misleading statements right? Just getting shaq involved was what pumped the price up, so not false statements, just PR and crazy people willing to buy the stock based on his involvement…

  • http://www.reapertrades.com/ Michael Goode (aka Reaper)

    I don’t know any reasonable person who could read the NXTH mailer and not conclude that the statements in it are highly misleading.

  • Gene

    Any choice quotes you can share as examples?

  • Anonymous

    Stock promotion is LAME and NXT Nutritional and Shaq know they’ll never have a valid case due to what is obvious promotion and an attempt to raise capital to pay off their exec bonuses, plus maybe fund some company operations, buy a new water cooler,… Who knows! The fear tactics are apparent and I will gladly join in on shorting this POS when the time is right. It’s actually looking like a decent long in here.. maybe a little lower.

    I’m sure there will be a press release soon to let all shareholders know that this drop (for the last 16 days!) was due to evil shorts killing their p.p.s, and that the company’s fundamentals remain as they did weeks ago (what fundamentals?)

  • Mike Hawk

    shaq is bein a bitch, go twiddle your thumbs shaq, oh wait you can’t cause ones broke

  • http://hailmanagementgroup.com/ Corey Kindhart

    This is good stuff Tim!!!! Keep us updated.

  • John Tocker

    Tim, do you hire a counsel to repond to those stupid mails? I mean, that’s a lot of work and it costs you money.

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  • Anonymous

    That legal response was awesome! Go get em boys!

  • Guest

    And then we wonder why insurance premiums are so high in the US (one of many examples): suing for everything is just another money making hobby.

  • Anonymous

    Tim, post the original “cease and desist letter.”

  • http://www.moldremoval.net/ Mold Removal

    i think there are more good working which is help each one!

  • http://vostde.com Josef Higgins

    I would love to see the original “cease and desist” level. Tim you should post it once this legal matter is over. :)

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  • Thomasgallen

    ROFL! Zing!

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  • alex

    I despise your style and the hate that goes along with you and the haters, BUT  that NXTH;  Wow, quite the sham that turned out to be!  Good of you to stick it to those who truly run over retail investors!

  • Rskelley

    do you not think shaq is qualified to sell the hell out of a nutrition product? Dude has a 20 year pro basketball career.  hmmm.

  • http://www.timothysykes.com Anonymous

    well considering the company and the product both failed, no i dont think shaq is qualified to pitch products, he only does it for the $ and his track record, like your intelligence, is lacking

  • Ron

    …does that make him a chemist/doctor??  no.

  • http://twitter.com/hb7of9 hb7of9

    “I know this shit inside and out and Shaq, whether he knows it or not, just stepped in this big pile of shit. My pile of shit” lol, well put Tim

  • Johnny G Benitez Jr

    OOOO TROUBLE BREWING.. YOU USED HIS NAME

  • Jason Britt

    I need this Lawyer.

  • Rich

    Timothey Sykes never misses an opportunity to market his products to potential “students” (more like customers). Dude talks about how much money he has but never says how much money he is making off his “students”.

  • Gianflavio

    its up on his website, there’s a membership fee. Awkward.

    You think he’d do all of this for free? Nobody would.

  • http://www.timothysykes.com timothysykes

    actually i’ve done several posts and interviews about my newsletter business, go fetch ya little lazy bitch

  • Guest

    You still have NOT disclosed how much money you make of your customers…err students. You brag about all this money but lets see some stats on how much money you make off subscriptions, DVD’s, etc. It’s called FULL DISCLOSURE-bitch.

  • Rich

    You still have NOT disclosed how much money you make off your customers…err students. You brag about all this money but lets see some stats on how much money you make off subscriptions, DVD’s, etc. It’s called FULL DISCLOSURE. You can throw insults and block people on your Facebook all you want, but any educated person knows you are a terrible person for “helping” your “students”. $$$$$$$$$$$ #FRAUD

  • Rich

    If he is going to flash all this money, then he should disclose not just his trades but other income from “students”. He gets all aggressive with anybody who criticizes or doesn’t agree with him. Right now he is dodging and deflecting. You don’t need a pump and dump king to learn how to trade.

  • Rich

    Just like how you “help” your “students”….you do it for the $ AND you use them to pump and dump. Kill 2 birds with 1 stone.

  • http://www.timothysykes.com timothysykes

    actually i have, you’re just a shitty researcher…i’ve given no less than 5 interviews on how much my teaching business does, go fetch ya fucken moron lol

  • Gianflavio

    ha he deleted all of his comments

  • Angelin

    As a third year Law student I have got to say this is something for me to learn from lol I love how this lawyer is clear and direct unlike some wordy ones that bore to the brain. Tim, I think you will not be receiving any reply of apology but nonetheless they won’t be trying any more tactics.

  • Kevin Heard

    LOL – so good to see truth winning out!