15 Apr Awesome Penny Stocks named in FINRA complaint against John Thomas Financial – AWSR related
A 34 page Complaint was filed by FINRA today against John Thomas Financial Inc, its CEO, Anastasios "Tommy" P. Belesis, and 4 other employees of John Thomas Financial, Ronald Vincent Cantalupo, Joseph Louis Castellano, Michele Ann Misiti, and John Stephen Ward.
See a copy of that Complaint HERE
The Complaint alleges that on February 23, 2012, John Thomas Financial Inc at the instruction of its CEO, Anastasios "Tommy" P. Belesis engaged in an illegal share selling scheme involving American West Resources Inc (AWSR) which coincided with the 1 day paid promotion by Awesome Penny Stocks for the ticker.
During the Awesome Penny Stocks paid promotion, John Thomas Financial Inc reaped in proceeds of over $1,000,000 by selling 855,000 shares of AWSR stock all while the AWSR share price was temporarily spiked up over 600% or higher thanks to the Awesome Penny Stocks paid promotion.
While John Thomas Financial Inc was selling their own shares during the price spike, the brokerage firm received at least 15 customer orders to sell over 1 million shares of stock, but John Thomas Financial Inc only entered one of these orders that day before Belesis intervened to stop the sale of the customer shares.
Some of the customer orders not filled during the paid promotion were instead filled in the following days at prices that were grossly inferior to the stock price during the Awesome Penny Stock paid promotion. For the customer orders that were never filled, that stock is now nearly worthless since AWSR filed for bankruptcy earlier this year.
The FINRA Complaint alleges that JFT made fraudulent claims as to why they were unwilling to fill their customer's orders to sell AWSR stock on the day of the APS promotion even going as far as to say that the orders were temporarily lost. It has since been learned that Belesis intentionally ordered his registered representatives not to fill the orders and that this was not the first time that Belesis had done this to his customers. In June of 2011, Belesis also demanded that his brokers not fill orders for customers trying to sell AWSR stock.
On or about June 17, 2011, AB, who was a JTF registered representative, sold freely tradable AWSR shares for two of the firm's customers. After these sales, Belesis called AB and, in a threatening manner, instructed him to stop selling the shares since it would "crush [the price of] this thing".
In fact, these are just two examples of a long series of incidents where JTF, through Belesis, Castellano, and Cantalupo, improperly threatened, harassed, coerced, and intimiated JTF registered representatives who have questioned Belesis' instructions, disagreed with his business practices or attempted to leave the firm.
JTF's Relationship with AWSR
Between 2008 and 2011, John Thomas Financial Inc (JTF) served as the investment banker for certain private equity offerings that were conducted by AWSR and also acted as the exclusive placement agent for the company in connection with a bridge loan financing that it conducted. In connection with these financial transactions, at least $20 million was raised for AWSR from JTF's retail customers.
Also in connection with these transactions, JTF customers received AWSR stock and convertible promissory notes, some of which were converted into AWSR stock.
At various times prior to February 23, 2012, including June of 2011, certain of JTF's customers submitted the paperwork necessary to make their shares free trading.
The Awesome Penny Stock Promotion
Beginning prior to 2:32 pm on February 23, 2012, Awesome Penny stocks notified its subscribers via e-mail that it would soon be issuing its March 1, 2012 recommendation. The email sent by APS described the recommended company as being in the coal-mining industry. Further it appeared to "accidentally" identify the pick as AWSR. A surge of activity on various Internet message boards followed and the price and trading volume of AWSR stock began to dramatically rise.
The share price rose from $.28/share to a peak of $1.80/share at 3:04 pm before closing at $1.28/share. All total 7,861,000 shares of AWSR traded that day. Prior to the promotion AWSR averaged 12,000 shares traded per day. Awesome Penny Stock of course then called off the AWSR promotion.
Copies of the APS email announcing AWSR as their pick and the APS email cancelling the AWSR pick can be found here.
How John Thomas Financial Inc used the APS Promotion to dump their shares
On the day of the APS promotion, February 23, 2012, JTF held 1,170,811 free trading shares of AWSR stock in their PROP account. That afternoon, while the AWSR stock was approximately at its highest point of the day, Belesis instructed Michelle Ann Misiti to sell as much of the position as possible. This was an extremely unusual request since, as Branch Office Manager, Misiti almost never purchased or sold stock for JTF or its customers.
Upon receiving her orders from Belesis, Misiti immediatly called the Clearing Firm and during a one hour and 16 minutes phone call that lasted from 3:05 pm to 4:21 pm, she gave that firm 18 sell orders ranging from 10,000 to 500,000 shares each. All total JTF sold 855,000 AWSR shares at an average price of $1.26/share accounting for 11% of the total trading volume for AWSR stock on February 23, 2012. As a result JFT reaped proceeds of $1,080,135 from the Awesome Penny Stock promotion.
While Misiti was on the phone with the Clearing Firm, several registered representatives for JTF were getting orders and questions from their customers about selling their AWSR stock. Belesis prevented any of these registered representatives from approaching and interrupting Misiti and thus prevented them from placing sell orders for their customers instead threatening them and ordering them back to their seats.
The fall out
All total FINRA is bringing 10 causes of action against John Thomas Financial and the employees named in the complaint, but I have a feeling that disciplinary action will not end with just the FINRA litigation.
It will be interesting to see what other regulatory action comes against JTF, Anastasios "Tommy" P. Belesis, Ronald Vincent Cantalupo, Joseph Louis Castellano, Michele Ann Misiti, and John Stephen Ward, and if there will be any fall out against Awesome Penny Stocks if other regulators decide to investigate these matters further.
For Anastasios "Tommy" P. Belesis, this is not the first time he has shown up in the media for controversy. He also showed up in the media because of his involvement in the Liberty Silver Corp (LBSV) pump and dump scheme. See this link for more details. Last month, Belesis showed up in SEC litigation in which the SEC alleges that Belesis and George Jarkesy, a Houston radio host, deceived investors in two hedge funds Mr. Jarkesy managed in order to enrich themselves at the expense of the investors.