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TOPIC: interesting article. relevant

interesting article. relevant 11 years 2 months ago #1088

[Re: interesting article. relevant]
As a penny stock investor I am aware of fake stocks. A lot of the pink sheets are and even some on the OTC.

So it is really the same amount of risk. But I don't think anyone puts in $1,000 in a shell stock.

I rather buy several and put a little money in each.
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interesting article. relevant 11 years 2 months ago #1086

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[Re: interesting article. relevant]
Yes of course, I agree with you. There are dirty pink shells that are manipulated left and right and no public record to even find out who is behind them. On the other hand there are also legitimate companies that want to become publicly listed and do so by merging with a good clean fully filing otcbb or even nasdaq trading shell. Then there are probably some shades of gray in between those two extremes. I just thought I'd share the article in any case. I did not mean to shed a negative light on any of the shells profiled here. I know you do a great deal of due diligence to weed out the bad ones, and report on the ones that have promise and potential.
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interesting article. relevant 11 years 2 months ago #1082

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I believe they are talking about a different type of “shell” company. The ones that are followed on this website are SEC reporting, with all owners identified by SEC filing requirements. There are MANY “shell” companies on the pink sheets that are not required to file ANY SEC reports, which allows them to hide any ownership identities. Also, there are many NON-TRADING private “shell” companies that exist.
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interesting article. relevant 11 years 2 months ago #1080

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[interesting article. relevant]
DJ US GAO: Secret Ownership Of US Co's Hamper Law Enforcement

11/14/2006
Dow Jones News Services
(Copyright © 2006 Dow Jones & Company, Inc.)


WASHINGTON (AP)--Federal law enforcement efforts have been hampered by the absence of information on company ownership, allowing shell companies to be used to launder money and evade taxes, government officials told Congress Tuesday.

U.S. states grant incorporation to nearly 2 million new companies a year without identifying their owners - lenience that allows people to hide their identities and shell companies increasingly to be used for illicit activities, lawmakers and congressional investigators say.

Some $15 million in international aid for improving the safety of nuclear power plants in the former Soviet Union was diverted, according to the Government Accountability Office, Congress' investigative arm. Shell companies in the United States are used to launder as much as $36 billion from former Soviet republics. Millions in taxable income are hidden in bank accounts in the Caribbean.

Shell companies exist mainly on paper and lack real operations.

The fees that new companies pay to register bring in hundreds of millions of dollars a year for the states.

"Shell corporations provide an opportunity for criminals or terrorists to engage in criminal activity while concealing the identities of the persons involved in the illegal activity," Stuart Nash, an associate deputy attorney general at the Justice Department, said in testimony at a hearing of the Senate Homeland Security and Governmental Affairs' investigative panel.

Law enforcement efforts are impeded, Nash said, "both in our domestic investigations and in our ability to assist our foreign ... counterparts in investigating their case, as a consequence of the exponential increase in the formation of such domestic shell corporations."

Officials from the Internal Revenue Service and a financial crimes division of the Treasury Department voiced similar concerns.

A report by the Government Accountability Office found that none of the 50 states customarily requires disclosure of the owners of companies that are not publicly traded. Other countries do require ownership information to be provided.

"This lack of transparency not only creates obvious vulnerabilities in our financial system, it also threatens our homeland security," said Sen. Norm Coleman, R-Minn., the panel's chairman. "Clearly, our failure to identify the owners of U.S. shell companies is a significant deficiency in our anti-money-laundering and terrorist financing efforts."

Among examples cited by the GAO report:

-Officials of U.S. Immigration and Customs Enforcement reported that a Nevada-based company received more than 3,700 suspicious wire transfers totaling $81 million over two years, but the case wasn't prosecuted because the agency could not identify the company's owners.

-The Justice Department said Russian officials used shell companies incorporated in Pennsylvania and Delaware to illegally divert $15 million in international aid intended for improving the safety of nuclear power plants in the former Soviet Union.

-The FBI found that U.S. shell companies are being used to launder as much as $36 billion coming from the former Soviet Union.

-The IRS discovered a scheme in which three individuals established U.S. shell companies to conceal nearly $9 million in taxable income in secret accounts in the Turks and Caicos Islands and other countries.


(END) Dow Jones Newswires

11-14-06 2032ET

Copyright (c) 2006 Dow Jones & Company, Inc.
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