It’s not uncommon for shitty penny stock companies with virtually no revenues or assets to use celebrities to increase their exposure. The celebrities they target obviously have terrible financial advisers and do very little research into these deals, associating themselves with awful companies only interested in dumping worthless shares onto gullible investors.
These pumps are perfect for penny stock traders looking to bank easy money shorting these stocks providing they have the right stockbroker. E.g. back in 2010, Clean Power Concepts Inc paid stock promoters to blast out millions of spam emails to attract suckers. The stock rose 400% and at one point had a market cap of $150 million, yet it only operated out of a barn.
Surprisingly, rapper 50 Cent has a solid track record of making astute investments. He made a staggering $100 million for his stake in Vitaminwater that was bought out by Coca Cola. Curtis Jackson got himself into some hot water, tweeting out to his 3.8 million Twitter followers multiple times, aggressively touting H&H Imports, a tiny company in Florida that distributes headphones.
He was the largest shareholder with 7.5 million shares and warrants for another 22.5 million. The stock soared 290%, making 50 Cent $8.7 million in paper profits. The stock collapsed back over the next few days. He didn’t violate SEC law because he never actually sold any of his shares.
Although Justin Bieber has released some mega-hits throughout his career, you can’t excuse him for taking 121 million shares in a shady penny stock, Options Media Group Holdings, Inc. They had some crappy app that disables texting while driving. Several news outlets covered the story, praising Bieber but failed to mention the sketchy details behind the deal.
OPMG were on the brink of bankruptcy and leached onto a teenage star to keep the company afloat. To make matters worse the company is based in Boca Raton, a hot spot for investment scams. Bieber posted a message on his Facebook page with 27 million followers promoting the company. The share price jumped from 1 cent to 4 cents.
The fundamentals of the business were awful. At the time they had $100,00 in the bank, an annual loss of $10 million, declining sales of $800,000 and over half a billion shares outstanding. OPMG didn’t even own the technology, they were licensing it.
Former NBA star Shaquille O’Neal got involved with NXT Nutritionals Holdings Inc. (NXTH). It was a textbook definition of a pump and dump. Hard mailers were used to promote the stock, advertising itself as a get rich quick scheme. They used phrases such as “turn $10,000 into $60,000 in 9 months or less” and “even if I’m only partially right, you could see a 280% gain”. In stark contrast to what the mailer advertised, NXTH’s financial situation was dire.
During the first nine months of 2009, sales had dropped 60% and recorded a $16 million loss for that quarter. Shaq received millions of shares at discounted prices. In the end, it’s stock price crashed and is now delisted from the OTCBB. With a net worth of $250 million why the hell would he want anything to do with this kind of company, pure greed! According to an interview with CNBC, Shaquille jokingly confessed he still likes to invest in penny stocks “because it’s fun.”
Back when the Tiger Woods cheating scandal erupted in 2011 all his sponsors dropped him like a fly. Fuse Science pounced and entered into a partnership to sponsor his bag for the PGA. Fuse (DROP: OTCQB) allegedly had a “groundbreaking” technology that could be used to administer medication, minerals or vitamins by rubbing it onto your skin. In theory, it sounded great, but it was total bullshit and only had a market cap of $16 million.
They went from $0.10 to $1.20’s then crashed back down to $0.10, leaving bag holders with massive losses. Fuse cleverly used Tiger Woods endorsement to add legitimacy and sucker in other famous athletes. It worked brilliantly! After winning Wimbledon Andy Murray had Adidas, RBS and Rolex lining up to sponsor him. Everyone was shocked when he announced a deal with a tiny penny stock with only $450,000 in revenue in 9 months. Other notable celebrities given equity included: Daymond John from Shark Tank, Boxer Andre Ward, MMA Fighter Anthony Johnson, Jonathan Cheban, Michael Vick and Arian Foster.
Back when Carmen Electra was still relevant/hot, she acted a spokesperson for three pumps – eFoodSafety.com (OTC BB: EFSF), Luvoo.com (OTC PK: LUVT) Payment Data Systems Inc. (OTC BB: PYDS). PYDS launched a Carmen Electra pre-paid MasterCard and they also hired Jon Lebed as part of the promotion.
Pamela Anderson, another Baywatch star was implicated in a stock scam without her knowledge. She featured in YouTube videos promoting FrogAds, an online classified ad website. 14 people involved in the scheme were arrested for stock manipulation. 20,000 investors lost a combined total of $30 million.
Reality TV star Kim Kardashian promoted Boldface (BLBK) a celebrity beauty licensing company. She was handed a big chunk of equity and appeared on CNBC with Maria Bartiromo.
Daniel Ruettiger inspirational and scrappy football player in the film “Rudy,” is a childhood hero to many. The SEC charged him with operating a scheme to deceptively convince investors to buy shares in his sports drink company, Rudy Nutrition. The scheme generated $11 million in profits obtained illegally.