OMI Holdings (OMI.AX) is a failed investment company, headed by operators with unparalleled skill at shareholder value destruction. After unsuccessful ventures ranging from medical products to graphite mining, OMI reported accumulated losses of $41m in its latest half yearly report to December 2013. OMI was seemingly approaching the end of its misery. The same report revealed OMI had net assets of $281,917, most of it in cash. OMI had 14m near worthless shares outstanding, suspended from trading on the ASX.
But OMI still had value as a vehicle for securities fraud. Today OMI announced it was buying iSentric from Donaco International (DNA.AX), by issuing around 252m shares. This iSham transaction would price iSentric at $12m, and thus engineer a value for OMI of $14m out of thin air. The fraudulent transaction thus instantly turns less than $300K into $14m for the criminals running OMI.
For their part, the operators of DNA purchased iSentric for $8.5m in June 2013, naturally using inflated DNA shares. The sham transaction with OMI thus creates $3.5m in fake profits, constituting a 41% book gain for the criminals running DNA, as boasted in an ASX announcement. A single shareholder controls 66% of the 377m DNA shares outstanding. DNA's recent grotesque ramp, share issuing and scrip acquisitions are reminiscent of the Blumont scam.
According to ASIC this is not a ramp, but rather a magical mystery, in a market ASIC does a great job regulating. Meanwhile, the yawning chasm between ASIC's self-perception and reality continues to widen, making any meaningful reform yet more unlikely.