Thursday, 28 November 2013

The canker: new revaluation frauds launched

If corruption and crime is allowed to fester unchecked, by its very nature it will spread. For years ASIC has allowed revaluation fraud and share ramping in the Australian market. As a result, new investment companies engaging in revaluation fraud are now sprouting like mushrooms on the ASX, with every failed and chronically loss-making entity imaginable starting anew as an LIC. After all, it is much easier to manufacture imaginary unrealized profit than it is to generate real cash profit. The new investment companies all follow the same modus operandi; they buy (often related party) assets, revalue these upward, ramp the investment company share price, and then issue shares to granny investors based on its great new "assets" and "profits".

Australasian Wealth Investments (AWK.AX) is a new listed investment scam created from the shell of MEF.AX, which in turn sprung from FAT.AX. During its phoenixing, it performed a series of sham transactions between related parties, and acquired a 50% stake in unlisted van Eyk research, which it can now revalue at will. AWK's most recently reported net tangible asset backing was $0.3753. AWK is issuing 38m shares at $0.3705, increasing shares outstanding by two thirds. AWK's share price was then ramped to $0.495 by the scheme's operators and accomplices, allowing them to book unrealized profits in excess of 30% in a matter of weeks.

Ramping AWK to $0.495 allows Contango Asset Management (CTN.AX) and Leyland Asset Management to fraudulently book unrealized profits in excess of 30% on their holdings of AWK. CTN pays real cash fees to its management based on such fraudulent unrealized "profits", and issues CTN shares to granny investors based on books with inflated assets. Of course, according to ASIC, when a revaluation fraud ramp occurs, it is not a ramp at all, but rather a magical market mystery.

Allied Consolidated (ABQ.AX) is another new revaluation fraud. Recently called Allied Brands, perennially loss-making ABQ is now changing name again, to Disruptive Investment Group, like children painting stripes on a car to make it go faster. ABQ has bought a failed internet business for $35,000, which it can revalue at will. At its general meeting ABQ resolved to issue 120,000,000 shares at $0.0025, issue 190,000,000 shares at $0.01, issue 60,000,000 options at $0.000025, and issue 20,000,000 shares to previous noteholders, with sundry allotments to directors. ABQ's price was then ramped to trade around $0.03.

The shenanigans at ABQ was too much even for the auditor to unflinchingly stomach, with the auditor making a "disclaimer of auditor's opinion" in the 2013 annual report and refusing to sign off that ABQ is compliant with the Corporations Act.

Meanwhile, ASIC is giving its guarantee that ABQ is not ramped and manipulated, just like it does for every single revaluation fraud. For if ABQ were ramped and manipulated, ASIC would have to do something about it.


  1. So ABQ maintains its inflated price due to its low turnover on the ASX, then sells new shares to chumps, preferably, or should I say necessarily, the buy & hold types?

    1. Or an associated investment company can issue shares with the ramped company on its books, with the same end result

  2. And here's an example of my point

    This Ausenco is unprofitable & eyeballs deep in debt, & needs to pay some off quick smart. Nothing like a rising ASX to entice chumps to fork out for a new issue, which Ausenco never has to repay, like Manna from Heaven, unlike its debt to the bank.

    Abracadabra, Ausenco's balance sheet suddenly looks a lot better. Correct me if I'm wrong but I don't think outstanding shares are included on the liability side of the companies' books. It has Ponzi written all over it.

    1. Yeah, failing companies offering hugely discounted capital raisings put investors between Scylla and Charybdis, get diluted or throw good money after the bad