It’s not uncommon for shitty penny stock companies with virtually no revenues or a viable business, attaching themselves to celebrities. The celebrities they target obviously have terrible financial advisers and do very little research into these deals, associating themselves with tiny companies who can’t back-up their claims. These pumps are great for penny stock traders looking to bank easy money shorting these companies providing they can locate shares.
50 Cent is the most well-known case. He’s well known for making astute investments in the past, he made $100 million for his stake in VitaminWater that was bought out by Coca Cola. Curtis Jackson got himself into some hot water, tweeting out to his 3.8 million twitter followers multiple times, aggressively hyping H&H Imports, a tiny company in Florida that distributes headphones. He was the largest shareholder with 7.5 millions and warrants for another 22.5 million. The stock soared 290%, making 50 Cent $8.7 million in paper profits. The stock collapsed back over the next few days. He didn’t violate SEC law because he never actually sold any of his shares.
Altough Justin Bieber’s come out with some banging tunes lately you can’t excuse him for taking 121 million shares in a shady company, Options Media Group Holdings, Inc. They had some crappy app that disables texting while driving. Several news outlets covered the story, praising Bieber but failed to mention the sketchy details behind the deal. OPMG were on the brink of bankruptcy and leached onto a teenage star to keep the company afloat. To make matters worse the company it based in Boca Raton. Bieber posted a message on his facebook page with 27 million followers promoting the company. The share price jumped from 1 cent to 4 cent.
The fundamentals of the enterprise were awful. At the time they had $100,00 in the bank, annual loss of $10 million, declining sales of $800,000 and over half a billion shares outstanding. OPMG didn’t even own the technology, they were licensing it.
Former NBA star Shaquille O’Neal got involved with NXT Nutritionals Holdings Inc. (NXTH). It was a textbook definition of a pump and dump. Hard mailers were used to promote the stock, advertising itself as a get rich quick scheme. They used phrases such as “turn $10,000 into $60,000 in 9 months or less” and “even if I’m only partially right, you could see a 280% gain”. In stark contrast to what was claimed in the mailer, NXTH’s financial situation was dire. During the first nine months of 2009, sales had dropped 60% and recorded a $16 million loss for the that quarter. Shaq received millions of shares at discounted prices. In the end its share price crashed and is now delisted from the OTCBB With a net worth of $250 million why the hell would he want anything to do with this kind of company, pure greed! According to an interview with CNBC, Shaquille jokingly confessed he still likes to invest in penny stocks “because it’s fun”.
Back when the Tiger Woods cheating scandal erupted in 2011 all his sponsors dropped him like a fly. Fuse Science pounced and entered into a partnership to sponsor his bag for the PGA. Fuse (DROP:OTCQB) allegedly had a “ground breaking” technology that could be used to administer medication, minerals or vitamins by rubbing it onto your skin. In theory it sounded great but it was total bullshit and only had a market cap of $16 million. They went from $0.10 to $1.20’s then crashed back down to $0.10, leaving bag holders with massive losses. Fuse cleverly used Tiger Woods endorsement to add legitimacy and sucker in other famous athletes. It worked brilliantly! After wining Wimbledon Andy Murray Adidas, RBS and Rolex were lining up to sponsor him. Everyone was shocked when he announced a deal with a tiny penny stock with only $450,000 in revenue in 9 months. Other notable celebrities that were handed equity included: Daymond John from Shark Tank, Boxer Andre Word, MMA Fighter Anthony Johnson, Jonathan Cheban, Michael Vick and Arian Foster.
Back when Carmen Electra was relevant / still hot, she acted a spokesperson for three pumps – eFoodSafety.com (OTC BB: EFSF), Luvoo.com (OTC PK: LUVT) Payment Data Systems Inc. (OTC BB: PYDS). PYDS launched a Carmen Electra pre-paid mastercard and also hired Jon Lebed as part of the promotion.
Pamela Anderson, another Baywatch star was implicated in a stock scam without her knowledge. She featured in youtube videos promoting FrogAds, an online classified ad website. 14 people involved in the scheme were arrested for stock manipulation. 20,000 investors lost a combined total of $30 million.
Reality TV star Kim Kardashian promoted Boldface (BLBK) a celebrity beauty licensing company. She was handed a big chunk of equity and appeared on CNBC with Maria Bartiromo.
Daniel Ruettiger inspirational and scrappy football player in film “Rudy”, is a childhood hero to many. He was charged by the SEC for operating a scheme to deceptively convince investors to buy shares in his sports drink company, Rudy Nutrition. The scheme generated $11 million in profits obtained illegally.