Wednesday, 11 June 2014

Lionhub Group Limited launches new revaluation fraud

International criminals increasingly use the Australian stock exchange to perpetrate revaluation frauds, creating phantom collateral they can borrow against, with the loan proceeds used for further fraud. Most recently, Singaporean criminals backdoor listed LionHub Group Limited (LHB.AX) on the ASX, taking over a dormant shell company in order to create a fake "market" price. After various sham related party transactions and a fraudulent capital raising, LionHub now has 757m shares outstanding and $6.5m cash in the bank. Although LionHub issued less than 5% of shares in the capital raising, the issue price of $0.20 implied a "market" value of $151m for the company.

Magically, the $6.5m in cash has been revalued to a $151m ASX-listed asset, guaranteed by ASIC to be unmanipulated. This fraudulent asset can then be used as collateral for debt, or be dumped on unwitting grannies by associated criminal fund managers. The top 20 shareholders own 95% of LHB, and after reinstatement to listing on June 12 the share price will be controlled by this cartel, creating a fake "market" value.

Shell companies for revaluation frauds are openly marketed in Australia by criminal enterprises such as Wholesale Investors, which also offer to ramp share prices and supply local sham directors and company secretaries. LionHub has connections to Sino Australia Oil & Gas (SAO.AX) and other related party frauds, sharing the same criminal associates. These manipulated frauds follow the standard pattern of long-term shareholder value destruction interspersed with sharp ramps engineered to benefit insiders.

ASIC and media alike regard the fraudulent ramps as magical market mysteries, enigmatic and wonderful occurrences for which there just can be no explanation. New revaluation fraud Fifth Element Resources (FTH.AX) issued 21m shares at $0.20 in a fraudulent capital raising, after which the share price was ramped to $0.95 in a month. Prior to the capital raising and ramp, an insider had purchased 20m shares at $0.01.


According to ASIC, this is not a ramp and FTH is not an openly manipulated share, because if it were ASIC would have done something. According to ASIC, this is all just a magical market mystery, and so ASIC lets it continue trading freely and attract more victims.

2 comments:

  1. Sorry Dr Benway, you are a coward. Come out into the public eye so that we can judge better your dodgy bona fides. In classic Alan Jones technique, you use emotive, scaremongering phrases such as “Bigger Ponzi Scheme than Madoff” which are easy for readers to latch onto.
    The consequent difficulty for LICs is that the explanation of why the allegations are so blatantly false is a boring, long-winded technical refutation about asset prices, accounting and auditing.

    i.e.
    The claim of overstating asset prices due to cross holdings would only occur if the LIC shares traded materially and perpetually above asset backing, took the unrealised capital gains on those shares to income and then paid dividends out of the unrealised capital gain. Which doesn’t occur. While LIC shares may trade periodically above asset backing, they are generally tethered to their asset backing which consists of clear-cut, easily checkable, market prices of listed shares. Cross holdings are largely immaterial these days. I don’t think any of the LICs mentioned include unrealised gains in income and accordingly they don’t pay dividends from them. If you look closely you will see that dividends are only paid out of the income received so I find it extraordinary that you make the claims you do.

    The question I am left with is what your motivation?

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    Replies
    1. Nice trolling there. Every statement in that moronic post is provably false:

      1. Crossholdings inflate the asset base even if the criminal counterparty is valued at NTA. A company with $90m sundry shares and a $10m criminal crossholding will report and charge fees on a $100 million asset base. Ramping beyond NTA just makes it worse.

      2. Crossholdings are a clear breach of fiduciary duty - a criminal act. In other countries fund managers trying this would be jailed.

      3. The LICs are persistently and grotesquely inflated beyond their asset base. AFI is inflated 20-30% above asset base for years, a billion dollar hole.

      4. The deliberately deceptive use of "pre-tax" NTA is not an accounting issue - it is an act of fraud.

      Beyond that, it is somewhat amusing to have "Unknown" critize my anonymity. But I guess you trolled a reply out of me. Well done, Skankhunt.

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