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Amazonas Florestal Ltd (AZFL) – fraud report

13 Apr Amazonas Florestal Ltd (AZFL) – fraud report

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This report is an attempt to document all the various fraud related issues surrounding Amazonas Florestal Ltd (AZFL).

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The list of fraudulent activity done by AZFL

  1. AZFL was used as an illegal share selling scheme by Edward Withrow III much like EDVP was.  The SEC confirmed that Edward Withrow lied about his share ownership in AZFL.
  2. AZFL operations were set up by banned, convicted fraudster Ramiro R Fernandez
  3. AZFL misstated the value of their Fazenda Jataurana property in Brazil (assuming they actually owned the title to the land in the first place) by giving it an asset value on their balance sheet of $47m which was way over the cost paid for the property of $3.35m in stock at the alleged time of the acquisition.
  4. AZFL lied about their hemp related operations
  5. AZFL was used to run an illegal 3(A)10 dilution scam through IBC Funds LLC to enrich insiders (mostly Ramiro R Fernandez)

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The Set-up

Amazonas Florestal Ltd was incorporated in the state of Nevada on December 16, 2008 as Ecologic Rentals Inc by Edward W Withrow III, William Nesbitt, and Calli Bucci.  

On July 7, 2009, Ecologic Rentals Inc changed its name to Ecologic Systems, Inc.

Earlier in April of 2009, Edward W Withrow III and his associates had taken control of publicly traded USR Technology Inc (USRT) via a reverse merger with another company they controlled called Ecologic Transportation, Inc.   After taking control, Withrow did a 1:2 reverse split and name/symbol change for the Issuer to Ecologic Transportation, Inc (EGCT).  Withrow also did acquisitions with several of his private companies including Ecologic Systems Inc making Ecologic Systems Inc a wholly owned subsidiary of EGCT.

On March 16, 2012, Ecologic Transportation Inc (EGCT) entered into a share exchange with Amazonas Florestal Inc (a Florida business entity).  EGCT purchased 100% of the outstanding Amazonas Florestal Inc shares in exchange for 70,000,000 shares of Ecologic Systems Inc stock merging Amazonas Florestal Inc into its wholly owned subsidiary, Ecologic Systems Inc.  The attorneys helping with the agreement were W. L. MacDonald of MacDonald Tuskey and James G. Dodrill.

Here is a list of the Amazonas Florestal Inc shareholders that split the 70,000,000 Ecologic Systems Inc shares.

Michael Ibar - 4,200,000 shares
Reny De Oliveira - 11,200,000 shares
Pedro De Oliveira - 11,200,000 shares
Keitiane Da Gama - 11,200,000 shares
Candido Ibar - 18,200,000 shares
Stephen Wayner - 2,800,000 shares
Ricardo Cortez - 11,200,000 shares

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Subsequent to the closing, EGCT spun off the Ecologic Systems Inc entity.  Ecologic Systems Inc ceased to operate as a wholly owned subsidiary of EGCT and became its own publicly traded Issuer quoted on the OTC markets as Amazonas Florestal Ltd (AZFL).   AZFL allegedly obtained its public trading status and trading symbol using a Rule 15c2-11 Exemption Request Form.

As part of the share exchange agreement, 4,020,618 shares were issued to Ecologic Transportation Inc (EGCT) to honor an anti-dilution clause which required them to own 3% of the outstanding AZFL share count.  The agreement required AZFL to file an S-1 registration statement to register the 4,020,618 shares with the SEC after which time EGCT would distribute the shares to the EGCT shareholders in the form of a dividend, but AZFL never ended up doing the S-1 filing and some time during the 3rd quarter 2014 around the time that EGCT was doing a name/symbol change to Peartrack Security Systems Inc (PTSS), EGCT wrote off the investment as a total loss removing those shares from the asset section of their balance sheet never to be mentioned again in any more EGCT filings.

Also as part of the share exchange agreement, the Amazonas Florestal Inc shareholders agreed to take on a $60,000 debt Note owed by EGCT to an anonymous "non-affiliated" 3rd party.   The Amazonas merger filing discloses that the $60,000 Note was a combination of debt owed to Gloria Bravo (aka Gloria Broavo) and Samuel Brown. The $60,000 debt Note was convertible into shares of AZFL at $.001/share.

On March 29, 2012 the $60,000 Note was converted into 60,000,000 free trading shares of AZFL stock.   An OTC filing done later by AZFL discloses that the Note was split up between 6 different parties and converted as follows:

Deepak Bhaturia - $2,600 in debt = 2,600,000 shares
Samuel R Brown - $6,600 in debt = 6,600,000 shares
The Kasper Group Ltd (controlled by Kyle Withrow and Gardner Williams) - $6,500 in debt  = 6,500,000 shares
Gloria Bravo (aka Gloria Broavo) - $32,050 in debt = 32,050,000 shares
Carlos Conreras - $5,750 in debt = 5,750,000 shares
Robert Thomas Hynes Jr - $6,500 in debt = 6,500,000 shares

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A later AZFL OTC filing discloses that Gloria Bravo is the aunt of Michael Ibar, the AZFL CEO.  This makes Gloria Bravo an affiliate.  It also puts into questions who really profited off the free trading shares she was said to control.  Despite being a relative of the CEO and an affiliate, Gloria Bravo got the largest chunk of free trading stock.

On April 19, 2012, Amazonas Florestal Ltd (AZFL) effected a 3:1 forward split giving the Note holders 180,000,000 free trading shares for the $60,000 in debt and raising the overall Outstanding share count to 402,061,854 shares split up as follows:

The 4,200,000 shares owned by Michael Ibar became 12,600,000 shares
The 11,200,000 shares owned by Reny De Oliveira became 33,600,000 shares
The 11,200,000 shares owned by Pedro De Oliveira - 33,600,000 shares
The 11,200,000 shares owned by Keitiane Da Gama - 33,600,000 shares
The 18,200,000 shares owned by Candido Ibar - 54,600,000 shares
The 2,800,000 shares owned by Stephen Wayner - 8,400,000 shares
The 11,200,000 shares owned by Ricardo Cortez - 33,600,000 shares
The 2,600,000 shares issued to Deepak Bhaturia for $2,600 in debt became 7,800,000 shares at $.00033/share (free trading)
The 6,600,000 shares issued to Samuel R Brown for $6,600 in debt became 19,800,000 shares at $.00033/share (free trading)
The 6,500,000 shares issued to The Kasper Group Ltd (Kyle Withrow and Gardner Williams) for $6,500 in debt became  19,500,000 shares at $.00033/share (free trading)
The 32,050,000 shares issued to Gloria Bravo (aka Gloria Broavo) for $37,050 in debt became 96,150,000 shares at $.00033/share (free trading)
The 5,750,000 shares issued to Carlos Conreras for $5,750 in debt became 17,250,000 shares at $.00033/share (free trading)
The 19,500,000 shares issued to Robert Thomas Hynes Jr for $6,500 in debt became 19,500,000 shares at $.00033/share (free trading)
The 4,020,618 shares owned by EGCT became 12,061,854 shares.

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Filings done by AZFL after it started publicly trading in April of 2012 confirm a float of 180,000,000 shares which would be the 180,000,000 shares created through the $60,000 debt Note.

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Those 180,000,000 free trading shares issued for $60,000 in debt at $.00033/share became a key part of the initial pump&dump activity run on AZFL starting in October of 2012.

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Some Background on the Edward Withrow group

Prior to getting involved with AZFL, Edward Withrow III (who founded Huntington Chase Financial Group, LLC in 2000) and his associates were involved in several other tickers almost all of which saw pump&dump activity - CMG Holdings Group Inc (CMGO), AudioEye Inc (AEYE), and Pristine Solutions Inc (PRTN) which became a major stock promotion in 2012 (see some of my pre promo PRTN research here), Endeavor Power Corp (EDVP) which became a stock promotion in early 2013 (see some of my pre promo EDVP research here), and Reward Enterprises Inc (RWRD) which got revoked in 2009.

Many of the same names that showed up owning free trading stock in AZFL after the share exchange/debt conversion were also shareholders in PTRN and EDVP including Gardner Williams, Kyle Withrow, Calli Bucci, and Samuel Brown.

EDVP ended up getting suspended by the SEC almost immediately after it became a newsletter promotion in March of 2013.  It turns out that EDVP which was controlled by Richard Weed before control was sold to Edward Withrow and his group in 2012 was part of a much larger FBI undercover sting operation.   The FBI undercover operation was run out of the Boston office and involved Coleman Flaherty who became a Cooperating Individual for the FBI after he was busted along with Richard Weed for the CitySide Tickets Inc (CIST) scam in 2012.  The regulators held off on releasing the litigation from the CIST bust until after the stings run against Amogear (AMOG) and Endeavor Power Corp (EDVP) [two other Boston linked companies] were over.   In July of 2014, the DOJ brought charges against a group of promoters they set-up and busted in the AMOG sting and in September of 2015, the DOJ announced charges against Edward Withrow III, Samuel Brown, and Marco Babini for their EDVP illegal share selling scheme.

According to the Complaint:

"Babini, Brown and Withrow took a variety steps designed to acquire and hide their ownership or control over the vast majority of Endeavor’s purportedly unrestricted stock, to artificially increase the apparent trading volume of Endeavor’s stock, to entice investors to purchase the stock that they secretly controlled by hiring others to promote Endeavor, and ultimately to sell shares they owned or controlled to unsuspecting investors in the public securities markets at the artificially high prices they had created".

Like what was done with AZFL, EDVP had a very suspicious debt Note on the books (in this case $826,541.38 owed to Regal Capital Development Inc).  Part of that Note was converted into a very large chunk of free trading stock (140,000,000 shares) at well below the market price just ahead of the paid promotion.   The Complaint says that Withrow III and Babini secretly controlled tens of millions of shares of EDVP stock in foreign accounts signed for by a Swiss nominee.   The plan was to sell those shares into the market during the paid promotion.   EDVP ran a lower level email spam promotion through January and February of 2013, but when the bigger paid promotion was scheduled to kick off in March of 2013, the SEC shut down the ticker.

Considering the circumstances surrounding the EDVP suspension (an undercover FBI bust), it is more than a little strange that in August of 2013, the regulators allowed EDVP to become the first ticker to come off the grey sheets following a suspension in over 2 1/2.  To this day, Withrow and his group still control the EDVP shell which now trades as Parallax Health Sciences Inc (PRLX).

According to the once Sealed Indictment against Edward Withrow and Marco Babini in the ongoing case, Withrow also hid ownership of free trading stock he secretly controlled in AZFL. 

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So we know that the regulators were aware that Withrow used AZFL for a share selling scheme, but to date have taken no action against AZFL.    Edward Withrow III remained listed as the Chairman of the Board for AZFL at least through December 31, 2012.

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Amazonas Florestal Inc

The 8k filing done by EGCT for the merger of Amazonas Florestal Inc into their subsidiary, Ecologic Systems Inc, on March 16, 2012 gives us quite a bit of information about Amazonas Florestal Inc.

As mentioned above the 70,000,000 shares of Ecologic Systems Inc stock issued in the share exchange went to the following Amazonas Florestal Inc shareholders:

Michael Ibar - 4,200,000 shares
Reny De Oliveira - 11,200,000 shares
Pedro De Oliveira - 11,200,000 shares
Keitiane Da Gama - 11,200,000 shares
Candido Ibar - 18,200,000 shares
Stephen Wayner - 2,800,000 shares
Ricardo Cortez - 11,200,000 shares

The 8K describes the business operations of Amazonas Florestal Inc as follows:

Amazonas Florestal Inc., (“AMZO”), is a Florida corporation founded in 2010 as a diversified timber company focused on sustainable forestry practices in the management of its forestry holdings in the Brazilian state of Amazonas.  AMZO management and principal stakeholders have been owners of large forest tracks in the Amazon Rain Forest for over fifty years and are committed to sustainable management of the biodiversity of their property.  AMZO currently owns 90,108 acres of virgin rainforest land located in the state of Amazonas, Brazil.  This is the equivalent of approximately 141 sq. miles of land. AMZO intends on pursuing a strategy that will allow it to develop into a profitable enterprise while managing its properties.

Headquartered in Miami, Florida at 1110 Brickell Avenue, Miami, Florida 33131 and with operations in Amazonas Brazil at Rua Sao Salvador 120 Andar Vierialves, Business Center Manaus, Amazonas, Brazil, AMZO works under sustainable forest management practices which are focused on the development, production and marketing of sustainable wood products such as lumber, flooring and decking and the preservation of large tracks of its land to benefit preservation incentives. AMZO's sustainable inter-cropping of its agro-forestry products will provide shorter-term additional and sustainable sources of revenue.  In the longer-term sustainable low impact harvesting of timber is projected.   In addition to this land, AMZO owns two forest management projects approved for the licensed harvest of approximately (U.S.) $4MM worth of timber from a separate 5,000 acre parcel.  The ninety thousand one hundred and eight (90,108) acre property is owned outright by AMZO, with no debt, has been valued and audited under US GAAP as having a standing value of over forty-seven million (U.S.) $47,000,000 dollars.

 

90,108 acres of land owned out right by AZFL valued and audited under US GAAP to be worth $47,000,000.

The accountant providing the audit for the property valuation was Douglas A Labrozzi of Labrozzi & Co., P.A. of Miami, Florida.

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In February 2014, Labrozzi had his CPA license revoked by the PCAOB. The PCAOB issued an Order of Formal Investigation against Labrozzi related to potential audit failures involving the Firm's audits of the June 30, 2011 financial statements of one Issuer and the December 31, 2010 financial  statements of a second Issuer for which Labrozzi was the sole auditor involved in those audits.   Labrozzi refused to cooperate with the investigation failing to provide the documentation requested by the PCAOB so in February of 2014, the PCAOB revoked Labrozzi's CPA license.

A later amended 8K for the merger agreement from August of 2012 gives us more information about Amazonas Florestal Inc including:

1) the the name of the land that they claimed to own - Fazenda Jataurana.

2) a list of staff members with Pepper Stebbins misspelled as Pepper Stevens.

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3) A plan of operation

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4) an evaluation for their Fazenda Jataurana property provided by Edson Ferreira Braga and Diana Rodrigues Braga in June of 2010.  The valuation was done for Amazonas, Industria Comercio E Exportacao De Produtos De Madeira Ltda - the alleged owners of the property at that time. 

Another amended 8K filing for the acquisition filed by EGCT in January of 2013 included a deed of purchase for the Fazenda Jataurana property by Amazonas, Industria Comercio E Exportacao De Produtos De Madeira Ltda in 2008 for $1,500,000 Brazilian Reals (approximately $450,000), but what was still missing was proof that title and permits were put into the name of Amazonas Florestal Inc.

According to the AZFL filings, Amazones Florestal allegedly acquired the Amazonas properties in exchange for 49% of its membership interests which would have amounted to 34,300,000 of the 70,000,000 shares in the share exchange (102,900,000 shares after the 3:1 forward split).   Three of the Amazonas Florestal Inc shareholders did list previous work experience with Amazonas, Industria Comercio E Exportacao De Produtos De Madeira Ltda - Keitiane Da Gama who received 33,600,000 post-split shares, Reny De Oliveira who received 33,600,000 post-split shares, and Pedro De Oliveira who received 33,600,000 post-split shares.  That adds up to 100,800,000 shares - only 2,100,000 shares short of the 49% interest they claimed was paid for the property.

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A deeper look at Amazonas Florestal Inc and its true founder - Ramiro R Fernandez

Amazonas Florestal Inc was a Florida business entity when it was acquired by EGCT through its subsidiary, Ecologic Systems Inc.

Prior to becoming Amazonas Florestal Inc, Amazonas Florestal was a limited liability entity incorporated in the state of Florida as Amazonas Florestal LLC on July 9, 2010.  The original incorporation document shown here lists the incorporator of the entity as Ramiro R Fernandez.

The managing members of the LLC were Reny De Oliveira, Pedro De Oliveira, Sandoval F Cardoso de Freitas (all of Amazonas, Industria Comercio E Exportacao De Produtos De Madeira Ltda), and Ramiro R Fernandez.

 

 

On February 16, 2011, Amazonas Florestal LLC filed documents with the Florida SOS to convert the entity from a limited liability company to a corporation thus becoming Amazonas Florestal Inc.   Again signing the document for the conversion to Amazonas Florestal Inc was Ramiro R Fernandez.

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This wasn't Ramiro R Fernandez' first go around with a public traded company claiming to own rain forest property. From 1994 - 2000, Fernandez acted as an officer of Madera International Inc (WOOD) including serving as the CEO and Chairman of the Board.  Through WOOD, Fernandez claimed to own several rain forest properties spread out through South America (Nicaragua, Venezuela, Peru, and Brazil).

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Madera International + the Amazonas property.

According to the Madera International Inc (WOOD) filings, the properties in Brazil were located in Amazonas (same general location as the AZFL properties).

Registrant specializes in the harvesting and exportation of timber products from South America
to buyers throughout the world. Registrant owns approximately 707,000 acres of prime timber
property in the State of Amazonas, Brazil. This property has abundant species of commercial
value, including Spanish Cedar, Banak and Marupa. Harvest is seasonal.

Madera International Inc placed an asset value of $42,230,000 for the Amazonas properties.

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SEC charges Madera International (WOOD) and Ramiro R. Fernandez with Fraud

On September 19, 2001, the SEC charged Madera International Inc (WOOD) and Ramon M Fernandez (father of Ramiro R Fernandez) with fraud. The Complaint found here is full of allegations of fraud including the following:

During the period since its inception in February 1994 until 2000, Madera has recorded as assets various purported timber producing properties for which it cannot establish clear title; assigned and recorded arbitrary values for those timber producing properties; recorded revenues from phony sales transactions; failed to disclose significant related party transactions; and caused false sales invoices, shipping documents, cash receipts records and audit confirmations to be furnished to Madera's independent auditors. Madera also issued false press releases concerning, among other things, the company's operations and profit forecasts.

Madera had no reasonable basis for recording this transaction as a $12 million investment in timber producing property. At the time Madera recorded the Nicaraguan Property as an asset, Madera was unable to show that the seller of the Nicaraguan Property, Imexsa, possessed clear title to the property. In fact, the Nicaraguan government had at most conveyed to Imexsa a permit for exploration and development of the property. On or about July 29, 1994, the Nicaraguan government withdrew the extraction rights to the property.

On or about October 10, 1994, Madera cancelled the stock that had been issued to Imexsa because the Nicaraguan Property had "now proven of questionable value as a result of government action in Nicaragua." Nevertheless, Lezak continued to include the Nicaraguan Property at a value of $12 million in Madera's September 30, 1994 quarterly report, filed on November 14, 1994, and Madera's December 31, 1994 quarterly report. Madera did not write-off its purported $12 million investment in the Nicaraguan Property until February 1995.

At the time of recording the Venezuelan concession as an asset, Madera had no reasonable basis for recording it as a $3 million asset and could not establish whether Inselinca owned the concession or that the concession had the value ascribed to it.

Madera had no reasonable basis for recording the First Brazilian Properties as assets valued at over $30 million. Lezak did not ascertain when the Brazilian Properties were originally acquired by FEROA or Fernandez-Moris, nor did he determine their original cost. Lezak also failed to take adequate steps to determine whether Fernandez-Moris and FEROA had clear title to the Brazilian Properties, and whether the $30 million valuation of the properties represented by Fernandez-Moris was valid.

By 1995, Lezak knew that no significant amounts of timber had been harvested from the property because it was uneconomical to do so. Lezak knew that Fernandez-Moris was instead purchasing timber for resale from third parties. Despite knowing that it was not economical to harvest timber from the Brazilian Properties, Lezak and Fernandez-Moris nevertheless continued to value the 478,000 acres of timber producing property in the Brazilian rain forest at $27 million in Madera's financial statements filed with the SEC.

Madera included the Second Brazilian Property at a value of $12 million in its financial statements contained in its March 31, 1995 annual report on Form 10-K and its quarterly reports on Form 10-Q for the quarters ended June 30, 1995 and September 30, 1995.

Madera had no evidence that Ralph Financial had ever owned the Second Brazilian Property or that legal title to the property had been conveyed to Madera. The Second Brazilian Property was written off as an asset by Madera at the quarter ended December 31, 1995 because, according to Lezak, Skluth was unable to demonstrate that he had actually owned the property and could not transfer proper title to Madera.

Lezak and Fernandez-Moris knew, or were reckless in not knowing, that Madera should not have recorded or reported the Second Brazilian Property as an asset because Madera lacked clear title to the property and the valuation for the property was arbitrarily established.

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That is only a small portion of the allegations. It is well worth the time to read the whole Complaint here.

In January of 2003, Ramiro R Fernandez was added as a Defendant in the litigation. See the January 2003 litigation release here.

The Securities and Exchange Commission today announced that, on January 3, 2003, it filed an amended complaint in the United States District Court for the District of Columbia joining Ramiro Rafael ("Ray") Fernandez as an additional defendant in its action against former executives of timber company Madera International, Inc. The amended complaint also alleges additional facts concerning the falsification of Madera's financial statements from 1994 through 2000.

Ray Fernandez was Madera's Executive Vice President in charge of sales and marketing and Chief Executive Officer of Madera International Environmental, Inc., a wholly-owned subsidiary of Madera. In December 1998, he was additionally elected Chairman of the Board of Directors of Madera, and later, in November 2000, also became its Chief Executive Officer, replacing his father, Ramiro M. Fernandez-Moris. The amended complaint alleges that

Fernandez signed, in his capacities as Director and Chairman of the Board, Madera's fiscal year 1999 annual report on Form 10-K that was filed with the SEC on March 8, 2000 and that contained numerous false statements.

Fernandez posted numerous false statements concerning Madera on an Internet message board during the period April through September 19, 2001.

At the same time he inflated the share price of Madera through these fraudulent public disclosures about Madera's assets, operations, and revenues, Fernandez sold personal holdings of Madera common stock. Specifically, from May 2000 through July 2001, Fernandez sold at least 7,939,200 shares of Madera common stock and obtained proceeds of at least $68,791.65.

The amended complaint also alleges additional facts concerning Madera's purported acquisitions totaling nearly 730,000 acres of timber property located in the Brazilian rain forest in July 1994 and May 1997. It alleges that, under Brazilian law, Madera never acquired valid legal title to any of this property.

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As a result of the Complaint, on May 8, 2003, the SEC entered a judgment of permanent injunction against Ramiro Rafael ("Ray") Fernandez.  The judgment enjoins Fernandez from violating the antifraud provisions of the federal securities laws (specifically, Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Exchange Act Rule 10b-5) and from aiding and abetting violations of the reporting provisions (Section 13(a) of the Exchange Act and Rules 12b-20 and 13a-1 thereunder). The judgment also permanently prohibits Fernandez from acting as an officer or director of any publicly-held company. See the litigation release here.

Despite the permanent injunction, Raymond Fernandez became the key figure behind Amazonas Florestal Inc and now AZFL.

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Further thoughts about the Amazonas property

Research definitely suggests that AZFL may be involved with the same properties that WOOD once claimed ownership of back in the late 1990s.

If they are indeed the same properties then the SEC once said of that properties that they are

"not economical to harvest timber from the Brazilian Properties"

and that the properties were not actually owned by Ramiro R. Fernandez and his family. That under Brazilian law the Fernandez family

"never acquired valid legal title to any of this property"

Whether or not they are the same property (which I am pretty certain they are). The SEC also said that the valuation Fernandez placed on the properties was arbitrary and not based on the actual purchase price of the properties.

"Generally Accepted Accounting Principles ("GAAP") do not permit a long-lived asset to be written-up in value above its original cost."

A complete explanation of all the fraudulent accounting used by Fernandez in the Madera International scam as provided by an expert accounting witness for the SEC can be read here.  Especially interesting is the information on pages 9 - 11 which mentions the extremely strict regulations against foreign corporations owning land in Brazil or harvesting timber from land in Brazil (parts of which are included below).

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There is no question that AZFL also over-stated the value of their Brazilian property.   The company that AZFL allegedly acquired the property from (Amazonas, Industria Comercio E Exportacao De Produtos De Madeira Ltda) paid approximately $450,000 ($1,500,000 Brazilian Reals)  for the property according to their 2008 deed of ownership.    AZFL allegedly acquired the property in exchange for $3.35m worth of AZFL stock yet Fernandez assigned an arbitrary value to the AZFL property of $47m on the AZFL balance sheet starting in 2012.  This is exactly the same thing Fernandez did with the WOOD scam many years earlier.

AZFL continued to value the property on the balance sheet and in press releases and other investor relation material at between $46m - $47m over the next 2 1/2 years then during the second quarter of 2015 they announced that the acquisition of the property was being rescinded by its original owners.   The explanation given was that the stock issued for the acquisition of the property had depreciated to only around $7,000 thanks to the AZFL share price falling to $.0001/share by the time.  The other reason given is that AZFL failed to stay current with the property taxes and other fees due to the Brazilian government for the property.   The property that AZFL touted as a $47m asset while dumping billions of shares into the market was theirs no more.

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How Ramiro Fernandez has stayed involved with AZFL since 2012

Besides being the founder of Amazonas Florestal Inc, Ramiro Fernandez has remained actively involved with AZFL since it went public in 2012.

Through a company that Ramiro Fernandez controlled called K.R.P. FLORESTAL LTDA. L.L.C, Ramiro Fernandez loaned money or provided services in exchange for debt to AZFL.  Those debt Notes became convertible debt Notes then later free trading stock.  Ramiro Fernandez used his daughter Raquel X Fernandez to set up KRP Florestal Ltda LLC in 2014, but Ramiro Fernandez maintained a presence in KRP Florestal LTDA LLC through his corporate alter ego - Canaway Inc.

By 2014, AZFL had allegedly become indebted to KRP Florestal LTDA LLC for a total of either $307,500 or $550,000 (filings are inconsistent in how they disclose the amount due).   According to the filings KRP Florestal was an important supplier of wood products essential to the company's operations in Brazil.    On November 4, 2014, AZFL did a filing disclosing that they were going to use IBC Funds LLC to sell stock in order to pay back $307,500 of that balance owed to KRP Florestal LTDA LLC.    IBC Funds LLC would rely on a Section 3(a)10 exemption to make the shares free trading.    IBC Funds LLC was a Nevada entity established on May 22, 2012 by Samuel Oshana and Bryan Collins.  The entity also established a corporate standing in the state of Florida where its main office was located.

Prior to using IBC Funds LLC to dilute stock in order to pay back debt owed to KRP Florestal LTDA LLC, AZFL issued IBC Funds LLC 93,600,000 shares of free trading stock between June 30, 2014 and September 30, 2014 to pay back debt owed to Mezzomo and Co using the 3(a)10 exemption.   Mezzomo and Co was also described in the AZFL filings as an important supplier of wood products for the Brazil operations.

On September 30, 2014 before the KRP Florestal/IBC Funds transaction, AZFL had 509,000,000 shares outstanding.  By December 31, 2014, thanks to the KRP Florestal/IBC Funds transaction, the outstanding share count had grown to 1,068,000,000 shares.   559,000,000 shares were diluted into the market through IBC Funds LLC during this quarter using exemption 3(A)10 to pay back debt to company insiders.

During the quarter from January 1, 2015 - March 31, 2015, another 1,096,471,000 shares were sold into the market through IBC Funds LLC using exemption 3(A)10 to pay back the remaining debt owed to KRP Florestal LTDA LLC as well as debt owed to a relative of one of the officers, Carmen Ubieto.

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That's a total of 1,749,071,000 shares that were diluted into the market through IBC Funds LLC between June 2014 and March 31, 2015.  The result of all the dilution was the AZFL share price falling from over $.01/share in June of 2014 to $.0001/share by the end of March 2015. 

During the middle of their huge dilution scam, AZFL tried to create more interest in the stock by announcing in a press release in January of 2015 they were entering the ever popular marijuana industry through a newly created subsidiary company called Amazonas Hemp Ltd in Colorado.  The new subsidiary would be dedicated to "gaining licensing to plant Hemp on properties that are available for leasing in the vicinity around the city of Pueblo beginning with a pilot project on a 100 acre tract".  

AZFL frequently mentions hemp on their twitter page and have continued to tout itself as being involved in "research and development of Industrial Hemp and related products in the U.S." in every press release since January of 2015, but to date, AZFL has not started any real hemp related operations under its wholly owned subsidiary.   Amazonas Hemp Ltd is now in bad status with the Colorado SOS after missing its required annual filings and fees for this past year.

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The dilution of 1,749,071,000 shares between June 2014 and March 31, 2015 also led to AZFL losing their over-valued Brazilian property during the 2nd quarter of 2015.   During the second quarter of 2015 AZFL announced that the acquisition of the Fazenda Jataurana property that they had been valuing at $47m over the last 3 years was being rescinded by its original owners.   The explanation given was that the stock issued for the acquisition of the property that was originally worth $3.35m at the time of the aquisition had depreciated to only around $7,000 thanks to the AZFL share price falling to $.0001/share.  The other reason given is that AZFL failed to stay current with the property taxes and other fees due to the Brazilian government for the property.   The property that AZFL touted as a $47m asset while dumping billions of shares into the market was theirs no more.

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The last sentence of that paragraph stated that AZFL would use the stock that was returned when the property acquisition was rescinded to put towards the acquisition of Ramiro R Fernandez' company, KR Producao Florestal Ltd (aka KRP Florestal Ltda LLC). 

The rest of 2015 consisted of AZFL announcing they were going to do an S-1 offering to register stock for an equity line provided by Premier Venture Partners LLC (Bo Linton) and a promise of audited financials for the year ending 2015 (which is ludicrous statement since AZFL was not an SEC flier).   It might be possible that AZFL did research the possibility of doing an S-1 filing to use for the equity line from Premier Venture Partners LLC and in the process found out that their Brazil property had been overvalued in all their financial reports since 2012 leading to the decision to drop the properties.  One statement from the paragraph above about the terminated property acquisition agreement suggests this might be a possible:

"The boards final decision was compounded by the fact that the company meanwhile has also been unable to maintain the property completely under Brazilian Law and overdue taxes and other fees could impede the companys present direction of getting audited and going fully reporting by the end of October 2015".  

That statement also suggests that AZFL never had full control of the property to begin with.

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AZFL resets its operations in 2016

With the bulk of its former operations now lost (the $47m Brazilian property), and the share price diluted to worthless (no bid), AZFL had to reset their whole operation at the start of 2016.  This included a new acquisition and a reverse split.

On January 12, 2016, AZFL announced a new acquisition of a company called Earth Pass LLC.   Earth Pass LLC was just another company recently set-up and controlled by Ramiro R Fernandez.   Ramiro's daughter, Raquel X Fernandez, incorporated the entity on October 5, 2015 and Ramiro's corporate ego, Canaway Inc, was once again listed as one of the managers of the entity.   According to the January 2016 press release for the acquisition, despite Earth Pass LLC only just being registered as a new entity in October of 2015, the new subsidiary already owned:

"a fully licensed division in Brazil that has been producing wood products with their land holdings since 2007 under the name Amazon Sustainable Development Corp and 64,000 acres of native forest properties eligible for the certification of Carbon Credits through the United Nations REDD+ program"

While AZFL was working out the details of their new business operations they were also working with FINRA to get a 1:1000 reverse split approved.  FINRA would end up approving the 1:1000 reverse split on March 2, 2016.  The 1:1000 reverse split reduced the outstanding share count down to 17,515,996 shares allowing AZFL insiders the opportunity to start all over again using AZFL as an insider enrichment scheme.

On April 5, 2016, AZFL put out another press release announcing that they were finally able to complete the audit they needed to file an S-1 registration (which has yet to be submitted).   The press release also included forward statements touting a goal for AZFL to achieve revenues in the $6m - $8m range for the up coming year.

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IBC Funds LLC gets busted for exemption 3(A)10 abuse

On February 19, 2016, the SEC announced sanctions against IBC Funds LLC for misusing the 3(A)10 exemption to liquidate discounted free trading stock through more than 50 different transactions done with 40 different public companies between June 2013 and March 2015.  Through those 50 different transactions, IBC Funds LLC received 20.5 billion discounted free trading shares in exchange for $8m in debt and liquidated more than 19.5 billion of those shares into the market for a total of $17m in proceeds.   The Complaint also contained accusations of fabricated invoices and kickbacks. 

Obviously AFLZ was one of the 40 different issuers that IBC Funds LLC did their illegal 3(A)10 exemption transactions with.

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Other Players involved in AZFL

Attorneys used by AZFL

2012 - Lawrence I Washor (an Edward Withrow III favorite)
2012 - James Dodrill
2013 - 2015 - Frederick M Lehrer
2015 - 2016 - Laura Anthony

Auditor used by AZFL

2012 - 2013 Douglas A Labrozzi (provided original audit)
2014 - 2015 Antonio Valcarcel
2015 - 2016 Monte C. Waldman

CEOs used by AZFL

2012 - 2014 Michael Ibar
2014 Bruce W Barren
2014 - 2015 Peter "Pepper" Stebbins
2015 - 2016 Ricardo R Cortez
2016 Nitin Amersey

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More about Peter "Pepper" Stebbins

Peter Stebbins first shows up in the filings as Peter Stevens with the title COO and director of timber operations and sales in Brazil in 2012.

Screen Shot 2016-04-12 at 9.05.39 PM

According to information provided by Peter Stebbins to various investors in emails and through information available online, Stebbins background in the Brazil lumber industry started some time in the early 1990s when he took a job down in Brazil at some plywood veneer mill recovering logs at bottom of the Amazon.  From there Stebbins took a job at Precious Woods which is a forestry company in Brazil.  Some time while doing his work with the lumber stuff he met his wife Joanna and they got married and had two girls (both born in Brazil).  His wife and he started some Bed & Breakfast called PepJo Amazon B&B but it never really took off.  They moved back to his home town of Madison, Wisconsin where in 2012 he and Keith Symonds started Next Door Brewing which ended up taking off pretty well. 

It seems like it would be difficult for Peter Stebbins to head the Brazil operations for AZFL in 2012 if he was living in Madison, Wisconsin opening a brewery company.   Despite having his hands full with his brewery company which still exists today, Stebbins had time for his name to show up in the filings for AZFL again starting in 2014 first as the Director of Operations Brazil then as the CEO over a 6 month span from late 2014 through early 2015.  I've seen some posts on the IHUB message board where Stebbins claimed that he was involved with AZFL but left because he didn't like the direction things were going.  After leaving he claimed that AZFL continued to use his name on corporate documents and on their website for several weeks after he was no longer involved.

Apparently Stebbins and AZFL patched things up because in early 2016 he returned to AZFL as their COO and became involved in their new subsidiary Earth Pass Inc.

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The list of fraudulent activity done by AZFL

  1. AZFL was used as an illegal share selling scheme by Edward Withrow III much like EDVP was.  The SEC confirmed that Edward Withrow lied about his share ownership in AZFL.
  2. AZFL operations were set up by banned, convicted fraudster Ramiro R Fernandez
  3. AZFL misstated the value of their Fazenda Jataurana property in Brazil (assuming they actually owned the title to the land in the first place) by giving it an asset value on their balance sheet of $47m which was way over the cost paid for the property of $3.35m in stock at the alleged time of the acquisition.
  4. AZFL lied about their hemp related operations
  5. AZFL was used to run an illegal 3(A)10 dilution scam through IBC Funds LLC to enrich insiders (mostly Ramiro R Fernandez)

 

 

 

 

 

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1Comment
  • Truth&Justice
    Posted at 08:47h, 03 August Reply

    The lynchpin in the fraud thought he hid this fraud, but it is starting to unravel. Great start to the research! Thanks for sharing!

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