SEC Wakeup Call: How A Penny Stock Promoter Used $5.5 Million To Personally Profit $400 Million On A Pump Based In A Virtual Office

UPDATE: 48 hours after this report was published, RAYS’ stock is down 50%…subscribers of my 4 newsletters have profited 6 figures as you can see here, I personally profited nearly $5,000 on my puny position which I covered far too early, leaving $7,000 in profits on the table….and now there’s a new report out declaring RAYS technology is an outright fraud.

trading challenge students and PennyStocking Silver subscribers know that over the past few years I’ve been 100% DEAD ON EXPOSING dozens of penny stock pump and dumps, profiting via the short selling their stocks as EVERY time there’s a pump, there’s also the inevitable dump:

That’s why I have trading challenge students making $50,000 in a few months as I detailed HERE and why my students have now made $3+ million the past 3 years as I detailed here (more than I’ve made in 12 years of trading)

That’s why I have thousands of testimonials HERE and HERE…and I’m just getting warmed up as I’m refining my teaching methods just like how I introduced a whole new simplified 7-step framework for trading in this study guide that is 50% off until December 1st when we begin shipping.

Yah I hype up my products a ton, but its because they’re good, helpful and that’s how I answer the many repeated questions in the 2,000+ emails/day I currently receive.

I’ve also made several videos meant to explain how I’ve made millions both buying and shorting these pump and dumps, watch 3 free video lessons here or go more in depth and watch 20 free video lessons here…if you’re trading penny stocks, you should def. watch allll of them to give yourself better odds of profiting.

First, here’s LiveStock on demand where I discuss this latest and greatest pump and dump, that being RAYSTREAM INC (RAYS):

Watch live streaming video from livestock at livestream.com

But also def. watch these videos which showcase past pump and dumps, each of which has dropped 90%…whether I found shares to short or not:

If you want to research through dozens of my best blog posts on these true Supernova pump and dumps, click here or bookmark http://www.timothysykes.com/tag/penny-stock-pump-dumps/ which is a collection of all my in depth research reports on these carcasses.

The articles most related to RAYS are old multi-week Supernovas like:

Insiders dumped 6 million shares of Mesa Energy Holdings Inc. (MSEH) during its pump

RAYS has the same promoters as Lithium Exploration Group Inc (LEXG)

Enough background, I’m currently short 5,000 RAYS at $2.47 as 2 of my recommended brokers for short selling had shares available to short last week and at its current price of $2.43, I know there is 90%+ downside in the next few weeks and months, just like every other pump and dump I’ve written about the past few years.

But this one is done by the same promoters as LEXG so you must respect its power…I even sent a congratulatory note to RAYS promoter on Ihub “momo2011″ for he is willing to take on heavy fines, jail and his inevitable burning in hell for his lies and manipulation to bring us the most coordinated pump and dumps of the past few months.

Penny Stock Manipulation At Its Finest

Penny Stock Manipulation At Its Finest

Big ups to that scumbag, the finely manipulated 10-day chart of RAYS evokes the manipulation artistry of Fox news commentator/SEC busted (see proof) Charles Payne and alf-look-a-like Jarret Wollstein, who have succumbed/retired to all-you-can-eat-BBQ and death, respectively.

(compare RAYS 10-day chart to Charles Payne’s pre-BBQ gluttony penny stock manipulation/artistry)…all of which crashed 90%+ in the following days)

So why do I think RAYS, which is allegedly, as the corrupt SmallCapNetwork puts it “provides HD online video services to companies looking to get more efficiency (and reduce bandwidth) from any videos they host on the web” going to crash and burn?

After all, RAY has been heavily investing in its future as denoted in its most recent October SEC filing:

The Company purchased an automobile for $62,133 under a lease agreement during the period of three months ended July 31, 2011. This has been the only activity from investing activities since inception (December 8, 2009)

And as denoted on their company profile page, they are located at 219 Redfield Parkway #204 Reno, NV 89509…type that address into Google HERE and see what comes up first:

DaVinci Virtual Office Solutions

MANY infamous pump and dumps of the past have used virtual offices

-WLOC which I personally made $30,000 on as the stock collapsed 50% in one day used Regus

-CLRH collapsed 88% in 4 days after its shares became unrestricted just after a $400k+ mailer and used THIS UPS box and was previously connected to a Honey Baked Ham store

-AWSL also used a UPS store…and as you’ll red later in this post, they also canceled some of their shares :)

OK, enough with the “positives” here are some giant red flags on RAYS:

(in no specific order because this is far too easy to see that RAYS is a blatant pump and dump destined to act like every other pump and dump…don’t believe me, go look up charts on HHWW, MSEH, AENY, BGBR, SPNG, CRWG, LEXG, KNKT, KYUS THE LIST GOES ON AND ON, MY GOD IT’S RIDICULOUS MORE PEOPLE DON’T REALIZE THIS YET)

1. As I tweeted yesterday, RAYS “video demo” appears to be done by the same exact firm and deep voiced-male voiceover artist as KNKT’s “video demo”…a video demo by definition is supposed to show what the company’s product does, but since neither RAYS nor KNKT have had any $ to develop any actual working products, they produce these pie-in-the-sky generalized videos describing some multi-billion dollar problem, claiming they have the solution….unfortunately for RAYS, HD video compression is a highly competitive space, they have zero patents and the firm from which supposedly acquired some amazing technology does not show up ANYWHERE on Google except related to RAYS acquisition (same EXACT issue for companies “Acquired” by former pump and dumps THWI, RMCP)

And it’s funny that RAYS video is the done by the EXACT same firm as KNKT’s, which was a pump and dump from a few months back, on which subscribers of my 4 newsletters profited over $130,000 short selling the stock during its pump which was artificially created by a boiler room out in Long Island…look at KNKT’s longer term chart and you can see it barely got above $2.50 (RAYS current high) before its gradual descent into oblivion in just a few months:

Penny Stock Pump & Dump Played Out

Penny Stock Pump & Dump Played Out

2. Speaking of the RAYS acquisition of Raystream GmbH (RAYS was formerly just a shell company), this well-researched iHub message board post busts any concept that Raystream is an established or legitimate company as it was just formed in July of this year! Look at the confirmation from THIS German website

3. The ONLY reason why RAYS’s stock is up so much is due to a $3.25 million promotional mailing campaign which as trading challenge student Tim Lento points out here, was received on 10/10/11, the very day RAYS began spiking:

RAYS Mailer Manipulated Stock Price

RAYS Mailer Manipulated Stock Price

4. Read the disclaimer on this typical pump and dump mailer carefully:

IMPORTANT NOTICE AND DISCLAIMER: This featured company sponsored advertising issue of Stock Market Authority (SMA) does not purport to provide an analysis of any company’s financial position, operations or prospects and this is not to be construed as a recommendation by SMA or an offer or solicitation to buy or sell any security. Raystream, (RAYS), the company featured in this issue, appears as paid advertising, paid by Unlimited Trade to provide public awareness for RAYS. Unlimited Trade holds restricted shares of common stock of RAYS, *More information can be received from Raystream’s investor relations firm, or at Raystream’s website www.raystream.com. Unlimited Trade has approved and signed off as “approved for public dissemination” all statements made herein regarding Raystream’s history, assets, technologies, current as well as prospective business operations and industry information. SMA and Foresight Media (FM) have used outside research and writers using public information to create the advertisement coming from SMA about RAYS. Although the information contained in this advertisement is believed to be reliable, SMA and FM makes no warranties as to the accuracy of any of the content herein and accepts no liability for how readers may choose to utilize the content. Readers should perform their own due-diligence, including consulting with a licensed, qualified investment professional or analyst. Further, readers are strongly urged to independently verify all statements made in this advertisement and perform extensive due diligence on this or any other advertised company. SMA and FM is not offering securities for sale nor does it hold any stock positions of RAYS. An offer to buy or sell can be made only with accompanying disclosure documents and only in the states and provinces for which they are approved. Many states have established rules requiring the approval of a security by a state security administrator. Check with http://www.nasaa.org or call your state security administrator to determine whether a particular security is licensed for sale in your state. Many companies have information filed with state securities regulators and many will supply investors with additional information on request. FM has received and managed a total production budget of $3,250,000 for this advertising effort and will retain any amounts over and above the cost of production, copywriting services, mailing and other distribution expenses, as a fee for its services. SMA is paid $150,000 as an editorial fee from FM and also expects to receive new subscribers as a result of this advertising effort.

5. This is where it gets interesting and why the SEC probly should halt this stock and investigate EVERYONE involved…no different from when I posted how Omar John Ahmadzai was both the CEO of WSML and its promoter, Unlimited Trade isn’t just some random third party, THEY OWN THE VAST MAJORITY OF THE SHELL THAT IS RAYS!!!

As revealed in June 2011:

Shell Interdom Corp. Sold for $200K
Posted June 27, 2011 4:15PM PST
Unlimited Trade Inc. acquired 83.8% of the Reno, Nev.-based shell company Interdom Corp. for $200,000.
Roman Rumpf will assume all the executive roles at the shell. Rumpf is also the general manager at Raystream GMbH, a private technology company.

So Unlimited Trade Inc. gets 3.5 million shares for $200k, but it’s only an 83.8% stake because earlier in 2010, before RAYS was RAYS, it was ITRD and ITRD issued some shares to various people (probably stock promoters)

ITRD also issued 400,000 shares at $.03/share in November of 2010, December of 2010, and January of 2011 for proceeds of $12,000 to a group of various individuals. ITRD also issued 275,000 shares at $.03/share in February of 2011 for proceeds of $8,250 again to a group of various individuals.

6. But it gets better…in addition to Unlimited Trade Inc. both acquiring the shell for $200k and paying $3.25 million for the promotion of the shell RAYS, they are also the ones who funded the $2 million for RAYS as disclosed in this August SEC filing.

An early October RAYS press release does not mention Unlimited Trade Inc as their beneficiary, only that “this cash was injected into Raystream by a recent third party investment (disclosed on Raystream’s Form 8-K filed with the SEC on July 21, 2011).”

Making it seem like RAYS actually has an outside investor when in fact Unlimited Trade planned everything ahead of time, setting it all in motion when they spent $200k on the shell and $3.25 million on the paid promotion.

Later in August, Unlimited Trade used a VERY common stock promoter tactic: another SEC filing denotes Unlimited Trade doing a 37-1 split on RAYS so the $200k they invested in the shell for 3.5 million shares became 129.5 million shares

And as iHub mentions:

The 675,000 shares issued at $.03/share became 24,975,000. Now here is where we run into an issue with the authorized share count.
Raystream Inc is still only authorized to issue 75,000,000 shares. No amendment has ever been filed with the Nevada SOS to raise the authorized share count to 200,000,000 yet in the 10Q for the period ending August 31, 2011 RAYS says they have 200,000,000 authorized shares.

(probable stock promoter legal filing mistake, whoops!)

But wait there’s moreeee…taking the EXACT play from other pump and dumps such as BGBR and SPNG, Unlimited Trades then decides to cancel their 129.5 million shares and convert their $2 million investment into 5 million shares priced at 40 cents/share.

Hmmmm, now why would you pay $2 million for 5 million shares when you already have 129.5 million shares you acquired for $200k??!?!?!?!

Because to create the pump and dump, the promoters would not do their jobs knowing that Unlimited Trade could sell 129.5 million shares into the pump and dump at any time…

So now with allegedly 50 million shares outstanding, here’s the breakdown of who owns what:

24,975,000 free trading
5,000,000 shares owned by Unlimited Trade Inc
20,000,000 shares owned by the shareholders of Raystream GmbH

Remember those 25 million free trading shares were once just 675,000 shares acquired at 3 cents/share, before the 37-1 split, for a total cost of $20,250 so now whoever owns them — possibly Unlimited Trade or one of their friends…we’ll never know since Unlimited Trade is offshore, as are most likely those friends — are now greatly enjoying RAYS at $2.43/share given that their cost basis is .0008/share.

At $2.43/share, those 24.975 million FREE TRADING SHARES are worth a cool $60 million, a gain of whatever $60 million minus $20,250 is aka $59.98 million, and Unlimited Trade’s 5 million shares are worth $12 million, a combined profit of roughly $70 million….that is if the price remains this high and these pumpers can sell their shares :)

I hope for these promoters’ sakes, they’ve already begun selling because after last week’s mid-week 20% drop in just 20 minutes, the volume has steadily been declining, a possible sign the promotion is wearing thin (LEXG went further, but only because it trapped a ton of early shorts…RAYS promoters were greedier, not allowing any shorts thus removing the potential for a giant short squeeze).

Not to mention who knows if those 129.5 million shares were ever really canceled…the sneaky insiders at Spongetech Delivery Systems, Inc. (SPNGQ) who are now pleading guilty to a variety of crimes never canceled the shares the way their SEC filings claimed and they are alleged to have sold 2.5 BILLION shares of SPNG during its pump.

So let’s just play Devil’s Advocate and say Unlimited Trade still has those shares, at $2.43, they don’t just have a $70 million profit, their profit is closer to $386 million, call it $400 million in total pump and dump profit. given Monday’s probable continued pumping and higher pricing, in an attempt to “squeeze Sykes” as several promoters have already tweeted in reaction to my teasing them of this expose.

Meanwhile once this information gets out and becomes widespread, I wouldn’t be surprised if the promoters race to sell their shares, turning on each other, like classic criminals under interrogation.

…and if mysterious Unlimited Trade and friends could sell at these prices and when they do try to sell, I KNOW from past experience, RAYS will collapse and all the promotional mailers, boiler room telemarketing phone calls and corrupt newsletters and websites propaganda won’t mean shit.

And I’ll once again receive hundreds if not thousands of emails from naive investors contacting me here who will have lost most if not all of their life savings, not understanding they were just pawns in an intricate pump and dump scheme well designed and executed.

My job is to teach people how it works BEFORE they fall for these schemes and that’s WHY I promote my trading challenge and 4 newsletters so much in order to save people and ideally teach you how to profit from these schemes the way that my longer term students and I ALWAYS do when this house of cards comes tumbling down.

Posted in Basics, LiveStock On Demand, Penny Stock Scandals, Premium, Videos

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  • Dxx

    Tim is so selfish its sickening.

  • Killerfunpizza

    Tim why not short Lng. It has a good risk/reward.

  • Dxx

    Tim is so selfish its sickening.

  • Killerfunpizza

    Tim why not short Lng. It has a good risk/reward.

  • Anonymous

    My ears are bleeding from that damn alert noise.

  • mroddstock

    My ears are bleeding from that damn alert noise.

  • http://www.timothysykes.com Anonymous

    goooood

  • http://www.timothysykes.com Anonymous

    LNG is a potential buy not short, read my watchlist for http://www.timothysykes.com/plans gotta learn

  • http://www.timothysykes.com Anonymous

    shut your piehole, i didnt have to post this free, you’re welcome for my hard work u piece of shit ingrate :)

  • http://www.timothysykes.com timothysykes

    goooood

  • http://www.timothysykes.com timothysykes

    LNG is a potential buy not short, read my watchlist for http://www.timothysykes.com/pl… gotta learn

  • http://www.timothysykes.com timothysykes

    shut your piehole, i didnt have to post this free, you're welcome for my hard work u piece of shit ingrate :)

  • Carl

    Regarding MGN, the National Inflation Association says, “NIA’s suggestion of MGN is completely unbiased. NIA does NOT own a stake in MGN. NIA is NOT being compensated in any way for its suggestion of MGN.”  Is MGN still a viable short?

  • Carl

    Regarding MGN, the National Inflation Association says, “NIA's suggestion of MGN is completely unbiased. NIA does NOT own a stake in MGN. NIA is NOT being compensated in any way for its suggestion of MGN.”  Is MGN still a viable short?

  • John Smith

    Not “making a dime from the conference” ?  PRIVATE JET from CT to NV is $9-15k avg.  You are a scum bag, and a massive stock promoter.

  • John Smith

    Not “making a dime from the conference” ?  PRIVATE JET from CT to NV is $9-15k avg.  You are a scum bag, and a massive stock promoter.

  • http://www.timothysykes.com Anonymous

    haha your #s and assumptions are off, but nice try “john smith”…i love how my haters can’t even use real names, boring…also please do tell me where i get the massive compensation earned by “Stock promoters”…when exactly do i send out emails to millions of people that are BS…somehow my research reports are all SEC filing based and even more magically i’m right as these pumps ALWAYS crash…you’re welcome for my time and education, you dont deserve it

  • http://www.timothysykes.com timothysykes

    haha your #s and assumptions are off, but nice try “john smith”…i love how my haters can't even use real names, boring…also please do tell me where i get the massive compensation earned by “Stock promoters”…when exactly do i send out emails to millions of people that are BS…somehow my research reports are all SEC filing based and even more magically i'm right as these pumps ALWAYS crash…you're welcome for my time and education, you dont deserve it

  • Tony plow

    wow

  • Bob

    Thanks for the work on this piece!

  • Tony plow

    wow

  • Bob

    Thanks for the work on this piece!

  • http://www.mdwagner.com/blog Wag23

    You say you’re a bad timer, but you timed that one pretty damn well… Congrats!

  • http://www.timothysykes.com Anonymous

    blehhhh i covered at 2!

  • http://www.mdwagner.com/blog Wag23

    You’re trading of it was a bit mistimed (like I have any room to talk), but the research report was timed perfectly. 

  • http://www.mdwagner.com/blog Wag23

    You say you're a bad timer, but you timed that one pretty damn well… Congrats!

  • http://www.timothysykes.com timothysykes

    blehhhh i covered at 2!

  • http://www.mdwagner.com/blog Wag23

    You're trading of it was a bit mistimed (like I have any room to talk), but the research report was timed perfectly.

  • Irbyanthony

    Good work I almost got long this piece of shit.  How can people get away this without the SEC prosecuting them?  With such large sums of money being made its seems like they would get the attention of the federal government.  Oh yeah there too busy prosecuting welfare recipients.  You got ELEPHANT nuts shorting a two dollar stock on the rise.  I tryin to get the nerves but the closest I can get to shorting stocks is leveraged inverse ETFS. 

  • Irbyanthony

    Good work I almost got long this piece of shit.  How can people get away this without the SEC prosecuting them?  With such large sums of money being made its seems like they would get the attention of the federal government.  Oh yeah there too busy prosecuting welfare recipients.  You got ELEPHANT nuts shorting a two dollar stock on the rise.  I tryin to get the nerves but the closest I can get to shorting stocks is leveraged inverse ETFS.

  • Killerfunpizza

    Can’t access that because I’m not a subscriber but I don’t see why anyone would want to buy LNG in short term. It dropped 8% today, but hey you can make up or down on it. I have December 11 put options still on it =).

  • Killerfunpizza

    Can't access that because I'm not a subscriber but I don't see why anyone would want to buy LNG in short term. It dropped 8% today, but hey you can make up or down on it. I have December 11 put options still on it =).

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  • http://twitter.com/cloudjacker Cloud Jacker

    SEC will only pursue targets they can easily settle with. The funds go straight to South Florida’s skyline. The SEC isn’t full of saints mate.

  • http://twitter.com/cloudjacker Cloud Jacker

    SEC will only pursue targets they can easily settle with. The funds go straight to South Florida's skyline. The SEC isn't full of saints mate.

  • http://twitter.com/cloudjacker Cloud Jacker

    I appreciate the research work Tim, although the altruism is questionable because their gain is still greatly superior to yours. (solely because of # of shares to short & the size of your accounts to hold shares anyway)

    I simple do not see what the incentive is for you that rationalizes this degree of scrutiny. I know pennies are your niche, but Imagine if you did this for large cap companies.

  • http://twitter.com/cloudjacker Cloud Jacker

    I appreciate the research work Tim, although the altruism is questionable because their gain is still greatly superior to yours. (solely because of # of shares to short & the size of your accounts to hold shares anyway)

    I simple do not see what the incentive is for you that rationalizes this degree of scrutiny. I know pennies are your niche, but Imagine if you did this for large cap companies.

  • Stocktrader_954

    dont be a victim of your own success. You put penny stocking on government radar , penny stock trading will go away. 

  • Stocktrader_954

    dont be a victim of your own success. You put penny stocking on government radar , penny stock trading will go away.

  • RL1965

    I saw RAYS before I read this and you echo my sentiment exactly, though I did not do the depth of research you did and frankly do not need to – this thing is so obvious.  I have been on the other side doing sponsored research for 12 years and really like your style.  If you want to add some experienced, educated (CFA, MBA) to your team let me know.  I have seen this too many times and teh game is so obvious.  Oh the storieS I could tell…

  • RL1965

    I saw RAYS before I read this and you echo my sentiment exactly, though I did not do the depth of research you did and frankly do not need to – this thing is so obvious.  I have been on the other side doing sponsored research for 12 years and really like your style.  If you want to add some experienced, educated (CFA, MBA) to your team let me know.  I have seen this too many times and teh game is so obvious.  Oh the storieS I could tell…

  • RL1965

    It is already on the gov’t. radar.  They are unlikely to do anyhting about it.  But that does not mean that people like Tim can help protect people from pump and dumps.  I have been on the IR side and taken calls from oridnary folks all over the country (including older folks on fixed incomes) who have lost money on these scams.  i believe tim is on the money on this one.

  • RL1965

    It is already on the gov't. radar.  They are unlikely to do anyhting about it.  But that does not mean that people like Tim can help protect people from pump and dumps.  I have been on the IR side and taken calls from oridnary folks all over the country (including older folks on fixed incomes) who have lost money on these scams.  i believe tim is on the money on this one.

  • RL1965

    See what you have to say about that in 60-120 days.  I’m assuming by “their” you mean RAYS.  First, we all know that you have to be the first one in and first one out to make any money on these deals – and it is all smoke and mirrors.  Secondly, altruism is not measured by how much money one makes.  I would rather make less money espousing the truth than stealing from unsuspecting folks that cannot afford it with a pump and dump scam (my opinion only on what this is).

  • RL1965

    See what you have to say about that in 60-120 days.  I'm assuming by “their” you mean RAYS.  First, we all know that you have to be the first one in and first one out to make any money on these deals – and it is all smoke and mirrors.  Secondly, altruism is not measured by how much money one makes.  I would rather make less money espousing the truth than stealing from unsuspecting folks that cannot afford it with a pump and dump scam (my opinion only on what this is).