As InterOil tumbles, actor Shia LaBeouf and John Thomas Financial CEO Thomas Belesis have egg on their faces

Updated 10/03/11

Today, shares of InterOil Corporation (NYSE: IOC) tumbled down $9.27 per share to close at $45.82 per share, a drop of 16.83% in market value. The stock lost over $300 million in market value in a single day!

Back on March 24, 2010, InterOil shares closed at $67.95 per share. At that time, actor Shia Labeouf and John Thomas Financial CEO Thomas Belesis were busy hyping InterOil shares to investors. Shia LaBeouf trained at John Thomas Financial to study for his role in the motion picture "Wall Street 2: Money Never Sleeps." LaBeouf claimed that he turned an initial investment of $20,000 into $489,000 by trading various securities while training for his role in the movie.

A day later, on March 25, 2010, Kaja Whitehouse from the New York Post reported:

After preparing for his turn as a hedge-fund trader by visiting trading floors of small brokerage houses, LaBeouf in the April issue of GQ talked up the stock of an oil and natural gas exploration company that has yet to produce any of either. 

"IOC's momentum is major, and it will surprise to the upside," LaBeouf said in a text message to the GQ article's author, Adam Sachs, using the trader lingo he apparently picked up while prepping for the film.

The 23-year-old star of the "Transformers" franchise was referring to InterOil, a Canadian firm with the New York Stock Exchange ticker symbol IOC that says it's searching for natural gas and oil in Papua New Guinea. 

However, after seven years of exploration and drilling, InterOil has yet to produce any proven commercial oil or gas reserves. 

Nevertheless, InterOil's stock is up an astounding 385 percent since the start of 2009 -- a feat critics attribute to InterOil's flurry of uplifting press releases about its drilling and exploration plans. [Emphasis added.]

On April 21, 2010, Independent Film Corporation (IFC) posted a videotape on Youtube showing John Thomas Financial CEO Thomas Belesis shouting to his brokers, "InterOil is at $67, hopefully going to $85!"



Thomas Belesis sounds like he's running what's known as a boiler room operation. He did not want anyone to see that video of him pumping InterOil and filed a lawsuit seeking to take down that video against Independent Film Corporation and Honest Engine Inc.

On September 7, 2011, the Financial Industry Regulatory Authority (FINRA) fined John Thomas Financial $275,000 for overcharging its customers.

With InterOil closing at $45.82 per share today, actor Shia Labeouf and John Thomas Financial CEO Thomas Belesis have egg on their faces.

Recommended reading

White Collar Fraud - Can Shia LaBeouf Help Shed Light on a Stock Market Manipulation Scheme Involving InterOil and John Thomas Financial? by Sam E. Antar

Financial Investigator - AMBER Ready: The Moonlighting Cop, The Wanna Be Mogul and The Killer App That Wasn’t by Roddy Boyd

Written by,

Sam E. Antar

Disclosure

I am a convicted felon and a former CPA. As the criminal CFO of Crazy Eddie, I helped my cousin Eddie Antar and other members of his family mastermind one of the largest securities frauds uncovered during the 1980's. I committed my crimes in cold-blood for fun and profit, and simply because I could.

If it weren't for the heroic efforts of the FBI, SEC, Postal Inspector's Office, US Attorney's Office, and class action plaintiff's lawyers who investigated, prosecuted, and sued me, I would still be the criminal CFO of Crazy Eddie today.

There is a saying, "It takes one to know one." Today, I work very closely with the FBI, IRS, SEC, Justice Department, and other federal and state law enforcement agencies in training them to identify and catch white-collar criminals. Often, I refer cases to them as an independent whistleblower. In addition, I teach about white-collar crime for government entities, professional organizations, businesses, and colleges and universities.

I do not seek or want forgiveness for my vicious crimes from my victims. I plan on frying in hell with other white-collar criminals for a very long time. My past sins are unforgivable.

I do not have any position in InterOil securities.

New Movie: Shia Labeouf Helps Thomas Belesis from John Thomas Financial Pump InterOil

IFC Media Project put out a movie clip about actor Shia Labeouf's role in helping John Thomas Financial CEO Thomas Belesis pump InterOil (NYSE: IOC) stock. This blog and others are featured in the video. Link to video here or view video below:




According to IFC Media Project:

How not to get played when playing the market -- the Shia LaBeouf Story!

When Oliver Stone went looking for a new co-star for his sequel to Wall Street, he found fresh-faced Transformers' star Shia LaBeouf. Shia trained for his role by shadowing Wall Street power brokers at John Thomas Financial.

But now, Shia's gone nutty for the stock market game and some critics -- with their own agendas -- have alleged that John Thomas may be using Shia to meet their own ends...

The following are links to all websites shown in this clip -- please read and digest this information with a critical eye:

Business Insider: Shia LeBeouf's Stock Picks: Buy IOC, Oil And Apple, And Short Gold

Dealbreaker: Shia LaBeouf Turned $20,000 Into $489,000 In Mere Months

New York Post: Shia's 'Slick' Tip

Business Insider: What's the Story of  Shia Labeouf Pumping InterOil?

Going Concern: Let's Take a Closer Look at This Shia Labeouf and InterOil Situation

Dealbreaker: Shia LaBeouf Pawn In John Thomas Financial’s Attempt To Pump InterOil Stock?

Business Insider: InterOil's Own Geologists Say It Is Lying To Wall Street, Says Skeptic

White Collar Fraud: Is InterOil Built on a Foundation of Fraud?

Anatomy of a Stock Market Manipulation Scheme

In my blog post entitled, "InterOil, John Thomas Financial, and Clarion Finanz: Anatomy of a Stock Market Manipulation Scheme," I provided detailed evidence of a stock market manipulation scheme involving InterOil, John Thomas Financial, Clarion Finanz AG, and banned stock promoter Carl Caserta. I believe that they conspired to raise the stock price of InterOil's shares to force the conversion of certain outstanding debentures to common stock.

White Collar Fraud blog featured in IFC Media Project movie

InterOil filed a false report with the Securities and Exchange Commission claiming that the company paid no fees for a private placement $95 million convertible debt offering. However, documents submitted in another court case reveal that Clarion Finanz (a major shareholder of InterOil) had in fact received $5.7 million in fees.

Those same court documents show how InterOil used Clarion as a buffer to conceal John Thomas Financial's and banned stock promoter Carl Caserta's role in the debt offering. About a year earlier, InterOil told the New York Times that it was not doing business with Caserta.

That deception enabled John Thomas Financial analyst Wayne Kaufman to appear on CNBC and recommend InterOil's stock without accurately disclosing his company's conflict of interest from his company's prior investment banking relationship with InterOil. Afterwards, John Thomas Financial heavily promoted Wayne Kaufman's CNBC appearance to pump InterOil stock to its customers without disclosing its prior investment banking relationship with InterOil. Over the next couple of weeks, InterOil shares rose dramatically and the company was able to force the conversion of its debt to equity.

Written by:

Sam E. Antar

Read some of my other blog posts on InterOil here:

04/08/10: Open Letter to Morgan Stanley "Research" Analyst Evan Calio: About Your Seriously Flawed Report on InterOil

03/31/10: Did InterOil Commit Securities Fraud? 

03/29/10: The InterOil Saga: Convicted Felons Battle Current Breed of Stock Market Miscreants

03/26/10: Is InterOil Based on a Foundation of Fraud?

03/25/10:  Can Shia LaBeouf Help Shed Light on a Stock Market Manipulation Scheme Involving InterOil and John Thomas Financial?

07/13/09:  InterOil, John Thomas Financial, and Clarion Finanz: Anatomy of a Stock Market Manipulation Scheme

07/01/09: Banned Stock Promoter Carl Caserta Still Working for InterOil and Promoting Its Stock Despite Previous Denials

06/18/09: InterOil Files False Disclosures With SEC (Redacted Version)

Disclosure:

I am a convicted felon and a former CPA. As the criminal CFO of Crazy Eddie, I helped Eddie Antar and other members of his family mastermind one of the largest securities frauds uncovered during the 1980's. I committed my crimes, simply because I could.

If it weren't for the efforts of the FBI, SEC, Postal Inspector's Office, US Attorney's Office, and class action plaintiff's lawyers who investigated, prosecuted, and sued me, I would still be the criminal CFO of Crazy Eddie today.

I do not own any InterOil securities, long or short. However, I assisted Fraud Discovery Institute in researching InterOil. Fraud Discovery co-founder Barry Minkow has publicly that he has held short positions in InterOil securities.

Did InterOil Commit Securities Fraud?

In the latest salvo of its battle to expose fraud, deceit, and misconduct by InterOil (NYSE: IOC) and its CEO Phil Mulacek, Fraud Discovery Institute sent former LA Times investigative reporter, now an iBusiness Reporting blogger, William Lobdell to a Texas courthouse to pour "thousands of pages of legal documents" and discovered even more damaging information of an ongoing pattern of deceit involving the company and Mulacek. William Lobdell's detailed blog report can be read here.

iBusiness Reporting is a division of Fraud Discovery Institute (co-founded by convicted felon, now fraud fighter Barry Minkow). Both Lobdell and Minkow publicly acknowledge holding short positions in InterOil securities.

Possible Securities Fraud

Separate and apart from new information discovered by Minkow and Lobdell, this blog has uncovered troubling false and misleading disclosures by InterOil in filings with the Canadian Securities Commissions and the Securities and Exchange Commission that violate securities laws in both countries. Certain disclosures by InterOil in financial reports conflict with disclosures uncovered in two separate court cases, as detailed below.

Zeigler Litigation

For example, in June 2009, this blog exposed how InterOil filed a false SEC form Regulation D claiming it paid no fees for a $95 million private placement of convertible debt in 2008.

In a July 2009 blog post entitled, "InterOil, John Thomas Financial, and Clarion Finanz: Anatomy of a Stock Market Manipulation Scheme," I provided detailed evidence of a stock market manipulation scheme involving InterOil, John Thomas Financial, Clarion Finanz AG, and banned stock promoter Carl Caserta. I believe that they conspired to raise the stock price of InterOil's shares to force the conversion of certain outstanding convertible debt to common stock.

InterOil's material omission of fees in its SEC form Regulation D filing later enabled it to conceal in other filings John Thomas Financial's role in helping the company raise money from investors.

That deception enabled John Thomas Financial analyst Wayne Kaufman to appear on CNBC and recommend InterOil's stock without accurately disclosing his company's conflict of interest from his company's prior investment banking relationship with InterOil. Afterwards, John Thomas Financial heavily promoted Wayne Kaufman's CNBC appearance to pump InterOil stock to its customers without disclosing its prior investment banking relationship with InterOil. Over the next couple of weeks, InterOil shares rose dramatically and the company was able to force the conversion of its debt to equity.

A joint investigation with Fraud Discovery Institute, securities litigator Howard Sirota, and this blog found Court documents in the Zeigler litigation that revealed the payment of undisclosed fees by InterOil to Clarion Finanz AG, headed by Carlo Civelli who controls a major stake in InterOil. Originally InterOil was dealing directly with John Thomas Financial in helping it raise funds for its $95 million private placement of convertible debt securities.

However, that relationship was papered over to instead make it look like John Thomas Financial was working for Clarion. In other words, InterOil deliberately set up Clarion to act as a buffer between the company and John Thomas Financial. In any case, InterOil disclosed no fees paid to Clarion or indirectly paid to John Thomas Financial in its SEC form Regulation D filing and later filings. Therefore, both Clarion's and John Thomas Financial's role in helping InterOil obtain financing was concealed.

In addition, those Court documents revealed that InterOil was still doing business with banned stock promoter Carl Caserta, after the company lied to the New York Times by telling them that it stopped doing business with Caserta.

In other words, InterOil told one story to investors (no fees paid to raise $95 million of convertible debt in SEC form Regulation D) and while its internal company documents told a conflicting story to the Court (investment banking fees paid). (Full details here.)

Nikiski Partners Litigation

Likewise, former LA Times investigative journalist now working for Fraud Discovery's iBusiness Reporting blog uncovered a similar scheme by CEO Phil Mulacek in an ongoing Court battle between him and InterOil's original seed money investors. Those investors are alleging that Mulacek and various entities under his control defrauded them.

Originally, the investors sued InterOil, Mulacek, and Nikiski Partners, which is controlled by Mulacek (Todd Peters, et. al. v. Phil Mulacek et. al.). Mulacek attempted to throw Nikiski into bankruptcy (in re Nikiski Partners, Ltd.) to derail the investor's lawsuit. In that case, Mulacek's and his attorneys made claims to the Court that conflict with InterOil's disclosures to investors, as I will detail below.

Last week, Fraud Discovery went public with its investigation and issued a press release and Lobdell published a blog report detailing their findings. Below is an excerpt from Fraud Discovery's press release summarizing Lobdell's report:

...William Lobdell details stunning allegations made by about 20 original investors in what is now InterOil. Among the claims: InterOil CEO Phil Mulacek forged documents, secretly created a shadowy Bahamian company, and ignored "crippling conflicts of interest" in order to enrich family, friends and himself.

So desperate was Mulacek to evade the consequences of his actions relating to a case going to trial this May that he filed bankruptcy for a company he controls in what seems an attempt to derail the lawsuit, which is asking up to $1.3 billion in derivative or stockholder claims.

In one candid admission, Mulacek and his attorneys testified that even a $50 million judgment for the plaintiffs would be "devastating" to InterOil. The bankruptcy testimony also showed the precarious financial condition of InterOil, with $60 million in cash and massive amounts of money needed to drill wells ($1 billion), construction of a pipeline ($900 million) and the building and construction of a liquefied natural gas (LNG) plant ($5-7 billion).

To date, InterOil hasn't found any commercial oil or gas.

Federal Judge Marvin Isgur ruled that Mulacek had filed the bankruptcy in "bad faith" and the executive's credibility was "diminished" by building a key argument for bankruptcy upon a lie. [Emphasis added.]

If even a $50 million judgment would be "devastating" to InterOil and a favorable verdict by the Plaintiff's against Mulacek would threaten InterOil's licenses for drilling on Papua New Guinea land as claimed by Mulacek's attorneys, you would never know it from the company's filings with the Canadian Securities Commissions and the Securities and Exchange Commission.

Let's review InterOil's financial reporting disclosures.

InterOil Disclosures

While the Todd Peters litigation had been going on, InterOil did not even disclose it in its 2005 and 2006 Annual Information forms. In 2007, InterOil finally disclosed the litigation but said that "management does not believe the litigation will have a material adverse effect on the Company or its subsidiaries." (See InterOil 2007 Annual Information page 50.)

In its 2008 Annual Information form, InterOil provided more details of the actual allegations in the Todd Peters litigation:

Plaintiffs contend that the defendants, including the Company, breached their fiduciary duties to the plaintiffs as part of these transactions and also assert claims for knowing participation in a breach of a fiduciary duty, common law fraud, fraudulent inducement, statutory fraud, securities fraud, breach of contract, investor oppression and conspiracy. Plaintiffs are seeking actual damages of up to $118,068,759.00 and unspecified punitive damages, attorneys’ fees, expenses and court costs, an accounting and access to books and records. The Company and other defendants are vigorously contesting the matter. Management does not believe the litigation will have a material adverse effect on the Company or its subsidiaries. (See InterOil 2008 Annual Information page 43.)  [Emphasis added.]

Finally, in its 2009 Annual Information form, InterOil disclosed that:

If, however, plaintiffs are successful in obtaining a favorable verdict, actual  damages could exceed $125,000,000.  Plaintiffs also seek unspecified punitive damages, attorneys' fees, expenses and court costs.  The case is set for trial beginning in October 2010. The Company and other defendants are vigorously contesting the matter. If however, plaintiffs succeed in obtaining a judgment in the amount they seek, it could have a material adverse effect on the Company or its subsidiaries. (See InterOil 2009 Annual Information page 43.)  [Emphasis added.]

For fiscal year 2007, InterOil reported a net loss of $28,912,908 and shareholder's equity of $96,098,569 and claimed that "management does not believe the litigation will have a material adverse effect on the Company or its subsidiaries."

For fiscal year 2008, InterOil reported a net loss of $11,797,077 and shareholder's equity of $227,133,927 and acknowledged that "Plaintiffs are seeking actual damages of up to $118,068,759.00 and unspecified punitive damages, attorneys’ fees, expenses and court costs." However, InterOil still claimed that "management does not believe the litigation will have a material adverse effect on the Company or its subsidiaries."

For fiscal year 2009, InterOil reported a net profit of $6,082,627 and shareholder's equity of $441,976,093. InterOil bragged, "The 2009 year is the first recording an annual net profit." This time InterOil disclosed that "actual  damages could exceed $125,000,000.... If however, plaintiffs succeed in obtaining a judgment in the amount they seek, it could have a material adverse effect on the Company or its subsidiaries." (Source: See InterOil News Release dated March 1, 2010.)

That same year, InterOil made the Guinness Book of World Records for its claimed “world-record” gas flow from a certain natural gas well owned by the company.

InterOil CEO Phil Mulacek under fire

Mulacek's Financial Disclosures in Court Transcripts

According to the December 30, 2009 Bankruptcy Court transcript Attorney Thomas M. Kirkendall said:

InterOil, as Mr. Mulacek testified that InterOil wouldn't even be able to pay a $50 million judgment, much less a 100 million or several hundred millions or a billion-dollar judgment, as the Peters group is seeking, without substantial third party financing.

Compare InterOil's Financial Disclosures with CEO Phil Mulacek's Court Disclosures

As of December 31, 2009 InterOil's shareholder equity was reported at $441,976,093 compared to $227,133,927 at the end of 2008. InterOil reported a 2009 net profit of $6,082,627 compared to a 2008 net loss of $11,797,077. As I detailed above, that same year InterOil made the Guinness Book of World Records for its claimed “world-record” gas flow from a certain natural gas well owned by the company and the company reported its first annual operating profit.

In its 2009 Annual Information, InterOil claimed that a judgment exceeding $125,000,000 and not less than $125,000,000 "could have a material adverse effect on the Company." However, Mulacek told the Bankruptcy Court that InterOil couldn't even pay a $50 million judgment without substantial third party financing.

The fact that InterOil cannot even satisfy a $50 million judgment "without substantial third party financing" is a "material adverse event" and that threshold should have been clearly disclosed by the company in its 2009 Annual Information. Instead, InterOil's 2009 financial disclosures mislead investors into believing that a possible judgment exceeding $125,000,000 "could have a material adverse effect on the Company or its subsidiaries."

In 2008, when InterOil was in a far worse financial condition than in 2009, the company reported a 2008 net loss of $11,797,077 compared to a 2009 net profit of $6,082,627. The company's 2008 shareholder's equity was $227,133,927 compared to $441,976,093 in 2009 or about 50% less equity. InterOil claimed that the "Plaintiffs are seeking actual damages of up to $118,068,759.00 and unspecified punitive damages, attorneys’ fees, expenses and court costs." In fact, InterOil had not yet made it into the Guinness Book of World Records.

Yet, with its far worse financial condition reported in 2008 compared to 2009, InterOil claimed that "management does not believe the litigation will have a material adverse effect on the Company or its subsidiaries." InterOil gave no indication that a even a $50 million possible judgment could have a "material adverse effect" on the company.

Conclusion

The main issue is that InterOil financial disclosures conflict with and are inconsistent with disclosures in either internal company documents or representations by its CEO Phil Mulacek found in two separate Court cases. That is out and out fraud!

Whether or not InterOil eventually settles the Thomas Peters litigation, the company and Phil Mulacek have to answer for false, misleading, and conflicting disclosures to investors. Securities regulators have been notified.

Written by:

Sam E. Antar

Disclosure:

I am a convicted felon and a former CPA. As the criminal CFO of Crazy Eddie, I helped Eddie Antar and other members of his family mastermind one of the largest securities frauds uncovered during the 1980's. I committed my crimes, simply because I could.

If it weren't for the efforts of the FBI, SEC, Postal Inspector's Office, US Attorney's Office, and class action plaintiff's lawyers who investigated, prosecuted, and sued me, I would still be the criminal CFO of Crazy Eddie today.

I do not own any InterOil securities, long or short. However, I assisted Fraud Discovery Institute (co-founded by convicted felon, turned fraud fighter Barry Minkow) in researching InterOil. Barry Minkow and William Lobdell (iBusiness Reporting) have publicly stated that they have held short positions in InterOil securities.

The InterOil Saga: Convicted Felons Battle Current Breed of Stock Market Miscreants

Updated:

Oliver Stone should take note. We may have the makings of "Wall Street 3." I am just kidding about the movie idea, but very serious about InterOil's and John Thomas Financial's misconduct uncovered so far.

Here we have InterOil (NYSSE: IOC), what I believe is a sleazy company run by dishonest CEO Phil Mulacek, aided by a stock pumping promoter John Thomas Financial CEO Thomas Belesis who apparently pretends like he wants to clean up Wall Street's image, and  mixed-up naive young actor Shia LaBeouf apparently fantasizing as if he is living out in real life a role he is playing in the upcoming movie, "Wall Street: Money Never Sleeps."

Fraud Discovery Institute (co-founded by convicted felon, turned fraud buster and short seller) Barry Minkow, iBusiness Reporting blog (a division of Fraud Discovery written by former LA Times investigative journalist, turned blogger and short seller William Lobdell), and this blog plan to continue our respective investigations and document misconduct at InterOil and John Thomas Financial.

There is a saying, "It takes one to know one." Plenty of what is going on with InterOil and John Thomas Financial reminds Minkow and me of our own felonious pasts as we continue to uncover patterns of inadequate, inconsistent, misleading, false, and contradictory disclosures by InterOil and John Thomas Financial.

Below is a summary of last week's unfolding events as quoted from various sources, media, and blogs. My additional commentary follows.

March 25, 2010: New York Post - Shia's 'slick' tip: Actor LaBeouf continues broker role off camera by Kaja Whitehouse

Actor Shia LaBeouf appears to be taking his role as Gordon Gekko's protégé in the upcoming "Wall Street" movie a little too seriously.

After preparing for his turn as a hedge-fund trader by visiting trading floors of small brokerage houses, LaBeouf in the April issue of GQ talked up the stock of an oil and natural gas exploration company that has yet to produce any of either.

"IOC's momentum is major, and it will surprise to the upside," LaBeouf said in a text message to the GQ article's author, Adam Sachs, using the trader lingo he apparently picked up while prepping for the film.

The 23-year-old star of the "Transformers" franchise was referring to InterOil, a Canadian firm with the New York Stock Exchange ticker symbol IOC that says it's searching for natural gas and oil in Papua New Guinea.

However, after seven years of exploration and drilling, InterOil has yet to produce any proven commercial oil or gas reserves.

Nevertheless, InterOil's stock is up an astounding 385 percent since the start of 2009 -- a feat critics attribute to InterOil's flurry of uplifting press releases about its drilling and exploration plans.

[Snip]

LaBeouf in the GQ article boasted that his apparent training at trading stocks helped him parlay $20,000 into $450,000

Read more here.

March 25, 2010: White Collar Fraud -  Can Shia LaBeouf Help Shed Light on a Stock Market Manipulation Scheme Involving InterOil and John Thomas Financial? by Sam E. Antar

Apparently, Shia LeBeouf learned about InterOil from John Thomas Financial. It would be interesting to find out what he knew, when he knew it, and if he traded any InterOil shares. Maybe he can provide details on how John Thomas Financial  pushed InterOil  shares on it's customers? Afterall, LeBeouf learned about how the underbelly of Wall Street operates from John Thomas Financial and other firms to prepare for his leading role in the movie.

For more details, please read my full blog post entitled, "InterOil, John Thomas Financial, and Clarion Finanz: Anatomy of a Stock Market Manipulation Scheme." In that blog post, I documented how InterOil filed a false report with the Securities and Exchange Commission claiming that the company paid no fees for a $95 million convertible debt offering. However, documents submitted in a court case show that Clarion Finanz (a major shareholder of InterOil) had in fact received $5.7 million in fees.

Those same court documents show that InterOil concealed John Thomas Financial's and banned stock promoter Carl Caserta's role in the debt offering. About a year earlier, InterOil told the New York Times that it was not doing business with Caserta.

That deception enabled John Thomas Financial analyst Wayne Kaufman to appear on CNBC and recommend InterOil's stock without accurately disclosing his company's conflict of interest from their prior investment banking relationship with InterOil. John Thomas Financial heavily promoted Wayne Kaufman's CNBC appearance to pump InterOil stock to its customers without disclosing its prior investment banking relationship with InterOil.

Over the next couple of weeks, InterOil shares rose dramatically and the company was able to force the conversion of its debt to equity.

Read more here.

March 25, 2010: Benzinga - Shia LaPump by Joshua Brown

This Shia LaBeouf kid is apparently trying his best to make sure that any enthusiasm for the Wall Street sequel is completely drained by the time it hits theaters.

With every puff piece on how he's shown himself a 2000% return in his personal stock trading account, more eyes roll and more sighs of disappointment can be heard amongst the film's would-be core audience - Wall Street itself.

The latest ridiculousness involves Shia's pumping of an experimental oil stock that has no earnings from oil exploration or production of any kind as yet...

[Snip]

Kid, can you just talk about your movie and stop digging your credibility hole any deeper?  You seem like a nice guy and no one is rooting against you.  When you read this stuff you're saying five years from now, you're going to cringe in embarrassment like the rest of us are doing as we speak.

Try to be a little more Sheen-like circa 1987...in other words, just be cool.

Read more here.

March 25, 2010 - Economic Policy Journal - Shia LaBeouf Caught Up In Rumors He Is Touting a Possibly Edgy Stock by Robert Wenzel

Shia LaBeouf trained at John Thomas Financial to study for his role in the upcoming Oliver Stone/Michael Douglas motion picture "Wall Street 2: Money Never Sleeps," according to Sam Antar, former Crazy Eddie fraudster, turned fraud buster.

Antar claims that a stock market manipulation scheme took place awhile back involving InterOil (NYSE: IOC), John Thomas Financial, Clarion Finanz AG, and banned stock promoter Carl Caserta.

[Snip]

This the SEC may look into. A naive actor is red meat for the SEC, whether as witness or participant, unlike other potential cases.

Read more here.

March 26, 2010: iBiz Reporting - Company controlled by InterOil CEO files 'bad faith' bankruptcy; Mulacek dumps nearly $1.5 million in stock 2 days before filing for federal protection; tries to derail civil fraud case that seeks up to $1.3 billion in damages and could be 'devastating' to InterOil by William Lobdell

A company controlled by Phil Mulacek, chief executive officer of InterOil Corp. (NYSE: IOC), filed a "bad-faith" federal bankruptcy in December in an attempt to derail a potentially massive civil judgment in a fraud case against him and companies he controls, according to court documents filed in Houston.

Less than a month after the filing, federal Judge Marvin Isgur in Houston ruled that Nikiski Partners—a corporation whose $2 million investment in a used oil refinery gave birth to InterOil, one of Wall St.’s high-flying stocks in 2009—had filed the bankruptcy in “bad faith.” (Read transcript here.)

Two days before filing for bankruptcy, Mulacek, through his holdings in Nikiski Partners, dumped nearly $1.5 million worth of InterOil stock, according to the Canadian Securities Commissions.

Read more here.

March 26, 2010: Fraud Discovery Institute - Is InterOil (NYSE: IOC) Built on a foundation of fraud? by Barry Minkow

A potentially massive lawsuit by many of InterOil Corporation's (NYSE: IOC) original investors, who are seeking up to $1.3 billion in damages, worried company CEO Phil E. Mulacek so much that a certain company he controls filed a bad-faith bankruptcy in an apparent attempt to derail litigation set for trial this May. In fact, federal Judge Marvin Isgur said that Mulacek's credibility "diminished" by building a key argument in bankruptcy papers upon a lie.

In a special report released today by iBusiness Reporting ('http://www.ibizreporting.com') - a division of the Fraud Discovery Institute Inc., former Los Angeles Times journalist William Lobdell details stunning allegations made by about 20 original investors in what is now InterOil. Among the claims: InterOil CEO Phil Mulacek forged documents, secretly created a shadowy Bahamian company, and ignored "crippling conflicts of interest" in order to enrich family, friends and himself.

So desperate was Mulacek to evade the consequences of his actions relating to a case going to trial this May, that he filed bankruptcy for a company he controls in what seems an attempt to derail the lawsuit, which is asking up to $1.3 billion in derivative or stockholder claims.

In one candid admission, Mulacek and his attorneys testified that even a $50 million judgment for the plaintiffs would be "devastating" to InterOil.

Read more here.

March 26, 2010: White Collar Fraud - Is InterOil Built on a Foundation of Fraud? by Sam E. Antar

When a company like InterOil starts on a corrupt foundation, everything that follows continues to be corrupt. In many ways, Phil Mulacek's transgressions against investors remind me of me, back in my criminal days at Crazy Eddie. We both exploited the hopes of our investors with "spin and lies." During its entire existence, InterOil has issued an endless string of press releases hyping its future prospects and selling hope to gullible investors. Yet, after almost a decade, InterOil has no proven commercially exploitable reserves to show for it.

[Snip]

If Phil Mulacek can screw his original seed investors and his company has shown its capability to file false and misleading reports with the SEC, he is clearly capable of screwing anyone else as he and his cronies continue to sell hope to gullible investors.

Read more here.


March 26, 2010: Blogging Stock - Interoil's Strange Comments on Stock Price by Zac Bissonnette

Hedge fund manager Whitney Tilson is short the company and in a recent email newsletter noted that Interoil could be could be "one of the largest stock promotions ever, going on right under [the SEC's] nose..."

What's especially interesting about this latest Interoil news mention is this line from a New York Post piece: "InterOil spokesman Wayne Andrews said that although the company isn't currently making money on its oil and gas exploration, and that a plant may take to 2015 to build, the stock is not overvalued."

It is extremely unusual for a corporate spokesman of a public company to argue to the media outright that the company's stock is not undervalued. Ken Lay and Jeff Skilling used to do that in the days of Enron but, in the post-Sarbanes Oxley world, it never happens.

Read more here.

March 26, 2010: Before It's News - Shia LaBeouf (Wall St. 2) Caught Up In Rumors He Is Touting a Possibly Edgy Stock by "Lois Lane"

Shia LaBeouf trained at John Thomas Financial to study for his role in the upcoming Oliver Stone/Michael Douglas motion picture "Wall Street 2: Money Never Sleeps,"  according to Sam Antar, former Crazy Eddie fraudster, turned fraud buster.

Antar claims that a stock market manipulation scheme took place awhile back involving InterOil (NYSE: IOC), John Thomas Financial, Clarion Finanz AG, and banned stock promoter Carl Caserta.

Read more here.

March 26, 2010: Deal Breaker -  Shia LaBeouf Pawn In John Thomas Financial’s Attempt To Pump InterOil Stock? by Bess Levin

Yesterday we mentioned that thespian, Level III CFA candidate and noted stock picker Shia LaBeouf had been talking up InterOil, an oil and natural gas exploration company. “IOC’s momentum is major, and it will surprise to the upside,” LaBeouf said in a text message to the GQ article’s author, Adam Sachs, who wrote about ShiLa’s new hobby (making it rain all from the comfort of his boxers) for the magazine’s April issue. But where did the master trader get the idea? Sure he meets with Goldman Sachs execs on the reg and is thisclose to becoming a CFA but is he really that good? I’d like to give him the benefit of the doubt (he’s going to be running one of the most powerful hedge funds in the world one day so trying to stay on his good side and all that) but others are thinking the budding BSD had some help from his friends at John Thomas Financial (the people who brought you the pride rally and breasts as napkins).

Read more here.

March 26, 2010: Business Insider - What's The Story Of Shia LaBeouf Pumping InterOil? by Lawrence Delevinge

LaBeouf and InterOil?

Earlier this week, we noted the actor's investing tips from a GQ profile, including energy company InterOil:
"Look at IOC. IOC's momentum is major and it will surprise to the upside."

Hey, plenty of people are betting on oil, so why not?

But there's a back-story to the very specific pick. As felon-turned-financial blogger Sam Antar and others have implied, the apparent reason for choosing IOC at virtual random is Shia's relationship with brokerage John Thomas Financial.

As part of his Wall Street preparation, LaBeouf spent time at John Thomas in New York to understand high finance. So good was the training, LaBeouf says, he turned a $20,000 investment into $489,000 with the help of advisers at John Thomas and others.

It's not clear if any of that investment was in IOC, which is still up nearly 150% over the past 12 months despite slipping recently. But at least knowledge and interest in the company appears to come from LaBeouf's mentors at the upstart Wall Street brokerage.

John Thomas' Wayne Kaufman has called IOC their "favorite energy stock," and the financial brokerage has a prior investment banking relationship with InterOil, via Clarion Finanz, according to Antar. (Antar has accused InterOil, John Thomas, and Clarion of a stock market manipulation scheme; in response, Thomas Belesis, CEO of John Thomas, calls Antar a liar and an "idiot.")

Read more here.

March 26, 2010: William K. Wolfrum Chronicles by William K. Wolfrum

So who do you get your stock tips from, these days? How about 23-year-old actor Shia Labeouf? Yes, in studying for his role in the upcoming film “Wall Street 2,” Labeouf spent time at John Thomas Financial. At John Thomas, InterOil (IOC) is their “favorite energy stock.”

So guess which stock LaBeouf is praising?

“IOC’s momentum is major, and it will surprise to the upside,” texted LeBeouf to a GQ writer.
That InterOil is beset with controversy, lawsuits, and a distinct inability to find proven reserves of oil or natural gas doesn’t seem to dissuade the young actor.

Of course, maybe he could have researched a little better. From Sam Antar’s White Collar Fraud:

When a company like InterOil starts on a corrupt foundation, everything that follows continues to be corrupt. In many ways, Phil Mulacek’s transgressions against investors remind me of me, back in my criminal days at Crazy Eddie. We both exploited the hopes of our investors with “spin and lies.” During its entire existence, InterOil has issued an endless string of press releases hyping its future prospects and selling hope to gullible investors. Yet, after almost a decade, InterOil has no proven commercially exploitable reserves to show for it.

Read Antar’s lengthy look at InterOil here for more, and see for yourself if John Thomas has found a willing patsy to pump InterOil stock.

Read more here.

March 26, 2010: Going Concern - Quote of the Day: Sam Antar Is Ready to Rumble by Caleb Newquist

I challenge John Thomas Financial CEO Thomas Belesis to a match on the Jerry Springer show. To even the odds, he can bring Overstock.com CEO Patrick Byrne. Two crooks versus a convicted felon born in Brooklyn. They can bring actor turned stock pumper Shia LaBeouf for added muscle, too.

~ Sam Antar, reacting to Thomas Belesis calling him an idiot after Antar suggested that Shia might be able to shed some light on the goings-on at John Thomas Financial involving InterOil. And if you forgot, Sam and Patrick have a bit of a history.

Read more here.

March 28, 2010: Jr Deputy Accountant - What I'm Beating TLP With This Week by Adrienne Gonzalez

Is InterOil Built on a Foundation of Fraud? InterOil better look out, you don't want Sam Antar on your ass (I'm not scared, he's afraid of me and I'm training him for his next bout).

Read more here.

Stay tuned

This blog will continue to expose corporate misconduct in real time, just like my successful battle against Overstock.com CEO Patrick Byrne, another masquarading stock market reformer, who is now under investigation by the Securities and Exchange Commission, as a result of reporting in this blog. Recently, Overstock.com (NASDAQ: OSTK) was forced to restate its financial reports for the third time in three years, after this blog exposed GAAP and SEC disclosure violations by the company.

Phil Mulacek and Thomas Belesis need to get ready for a very long forensic accounting colonoscopy, like Overstock.com and Patrick Byrne. Pricewaterhouse Coopers (PwC) was Overstock.com's former auditors and every single financial reported audited by them turned out to be wrong because of GAAP and SEC disclosure violations. Apparently, PwC ignored management integrity issues at Overstock.com. It turns out that PwC is InterOil's auditors, too.

Shia LaBeouf

Shia LaBeouf should not let fame get to his head, unless he wants to infamously end up like Barry Minkow and me, back in the day. LaBeouf is probably a good young man and is surely a great actor with a promising career. He should stick to his acting talent instead of trying to internalize his roles in real life. Wall Street is a dirty filthly cesspool that is polluted by the likes of John Thomas Financial CEO Thomas Belesis, who uses his current claimed efforts to improve Wall Street’s image as a "wall of false integrity."

To be continued.....

Written by:

Sam E. Antar

Disclosure:

I am a convicted felon and a former CPA. As the criminal CFO of Crazy Eddie, I helped Eddie Antar and other members of his family mastermind one of the largest securities frauds uncovered during the 1980's. I committed my crimes, simply because I could.

If it weren't for the efforts of the FBI, SEC, Postal Inspector's Office, US Attorney's Office, and class action plaintiff's lawyers who investigated, prosecuted, and sued me, I would still be the criminal CFO of Crazy Eddie today.

I do not own any InterOil securities, long or short. However, I assisted Fraud Discovery Institute (co-founded by convicted felon, turned fraud fighter Barry Minkow) in researching InterOil. Barry Minkow and William Lobdell (iBusiness Reporting) have publicly stated that they have held short positions in InterOil securities.

I do not own any Overstock.com securities short or long. My research on Overstock.com and in particular its lying CEO Patrick Byrne is a freebie for securities regulators and the public in order to help me get into heaven, though I doubt that I will ever get there anyway. I will probably end up joining corporate miscreants such as Patrick Byrne in hell.

In any case, exposing corporate crooks is a lot of fun for a forcibly "retired" crook like me. Analyzing Overstock.com's financial reporting is a forensic accountant's wet dream and Patrick Byrne is about to become the SEC's new orgasm.

Is InterOil Built on a Foundation of Fraud?

A report by former LA Times reporter William Lobdell in iBusiness Reporting and an accompanying press release by Fraud Discovery Institute provide disturbing details of  fraud allegations made in an ongoing court case by the original investors in InterOil (NYSE: IOC) against company CEO Phil Mulacek. The court documents obtained by Lobdell provide an inside look into Mulecek's desperate court room antics to avoid responsibility for his actions which were later scolded by the Judge in the case. In addition, filings with the Canadian Securities Commissions show that InterOil insiders dumped about $10 million of stock in recent weeks.

iBusiness Reporting is a division of Fraud Discovery Institute (co-founded by convicted felon, now fraud fighter Barry Minkow). Both Lobdell and Minkow publicly acknowledge holding short positions in InterOil securities. Read Lobdell's entire report here.

Fraud Discovery's self explanatory press release is re-printed below. Additional information and my commentary follow it:

Is InterOil Corporation Built On A Foundation Of Fraud, Asks FDI's Barry MinkowLawsuit, set for trial in May, alleges InterOil (NYSE:IOC) CEO Phil Mulacek used a variety of illegal schemes to enrich himself and defraud original investors.

For Immediate Release

SAN DIEGO/EWORLDWIRE/March 26, 2010 --- A potentially massive lawsuit by many of InterOil Corporation's (NYSE: IOC) original investors, who are seeking up to $1.3 billion in damages, worried company CEO Phil E. Mulacek so much that a certain company he controls filed a bad-faith bankruptcy in an apparent attempt to derail litigation set for trial this May. In fact, federal Judge Marvin Isgur said that Mulacek's credibility "diminished" by building a key argument in bankruptcy papers upon a lie.

In a special report released today by iBusiness Reporting ('http://www.ibizreporting.com') - a division of the Fraud Discovery Institute Inc., former Los Angeles Times journalist William Lobdell details stunning allegations made by about 20 original investors in what is now InterOil. Among the claims: InterOil CEO Phil Mulacek forged documents, secretly created a shadowy Bahamian company, and ignored "crippling conflicts of interest" in order to enrich family, friends and himself.

So desperate was Mulacek to evade the consequences of his actions relating to a case going to trial this May, that he filed bankruptcy for a company he controls in what seems an attempt to derail the lawsuit, which is asking up to $1.3 billion in derivative or stockholder claims.

In one candid admission, Mulacek and his attorneys testified that even a $50 million judgment for the plaintiffs would be "devastating" to InterOil. The bankruptcy testimony also showed the precarious financial condition of InterOil, with $60 million in cash and massive amounts of money needed to drill wells ($1 billion), construction of a pipeline ($900 million) and the building and construction of a liquefied natural gas (LNG) plant ($5-7 billion).

To date, InterOil hasn't found any commercial oil or gas.

Federal Judge Marvin Isgur ruled that Mulacek had filed the bankruptcy in bad faith, and the executive's credibility was "diminished" by building a key argument for bankruptcy upon a lie.

"It's hard to know where to start - there's so much in this special report," said Barry Minkow, cofounder of the Fraud Discovery Institute (FDI). "The most serious of these claims is the most obvious - the very foundation on which InterOil was built is a fraud based on the intentional inflation of an asset costing $250,000 which allowed InterOil to refine unleaded gasoline. It was reported to investors by Mulacek to have cost $15 million.

"It is the very artificial inflation of assets that is at the core of the InterOil scheme. Mulacek simply added zeroes in the current scheme - instead of a refinery component not being worth $15 million, he now touts oil and natural gas exploration sites in PNG as being the largest find in the world, yet to date, not one drop of commercially viable reserves has been sold by the company."

The lawsuit also alleges the deception started with one of the company's first assets and that scheme gave an offshore company secretly controlled by Mulacek 5.1 million shares of InterOil - 25 percent of the company's stock at the time - in exchange for nothing.

"This would be nearly unbelievable if this was any company other than InterOil," Minkow said. "All you get is hype-feeding-hope, and criminals know people live on hope and exploit that hope with spin and lies. The company lied about fees paid to Clarion and John Thomas. The company hyped with an endless string of press releases, and yet there are still no commercial reserves and no partner."

Because this information can be found in court documents in the public record and available on IBizReporting.com at 'http://www.ibizreporting.com', it cannot be refuted "no matter how many diversion names supporters call me or other detractors," added Minkow.

For more information, call the Fraud Discovery Institute at 1-888-300-8307, e-mail info@frauddiscovery.net, or visit FraudDiscovery.net at 'http://www.frauddiscovery.net', or IBizReporting.com at 'http://www.ibizreporting.com'.

According to Lobdell's report, a couple of days before filing the filing of the "bad-faith bankruptcy" which the Judge later tossed out, Mulacek "dumped nearly $1.5 million worth of InterOil stock...."

Interoil's lack of full and transparent disclosure

Lobdell goes on to document how InterOil has not yet to come clean with investors about the full potential financial impact of the litigation on the company by lowballing its estimate of potential damages:

InterOil’s 2009 annual report released earlier this month reported that a favorable judgment from the plaintiffs in the Peters case could result in damages exceeding $125 million. The report doesn’t mention the $275 million to $1.3 billion range that the plaintiffs of the Peters case are seeking in damages--figures Mulacek's attorneys used in the bankruptcy proceedings.

Insiders dump shares

While keeping shareholders in the dark, InterOil insiders are dumping huge amounts of stock. According to Lobdell:

Five directors or officers have dumped nearly $10 million worth of stock, according to documents filed with the Canadian Securities Commissions.

On March 5, Director Edward Nicholas Speal sold 30,000 shares at 63.8593 for $1,915,779.
On March 10, Director Gaylen J. Byker sold 30,000 shares at $69.25 for $2,077,500.
On March 16, President and COO William Jasper sold 30,000 shares at $67.47 for $2,024,100.
On March 17, Director Roger Grundy sold 25,000 shares at $66.39 for $1,659,750.
On March 18, Director Christian Vinson sold 30,000 shares at $68.50 for $2,055,000.

When a company like InterOil starts on a corrupt foundation, everything that follows continues to be corrupt. In many ways, Phil Mulacek's transgressions against investors remind me of me, back in my criminal days at Crazy Eddie. We both exploited the hopes of our investors with "spin and lies." During its entire existence, InterOil has issued an endless string of press releases hyping its future prospects and selling hope to gullible investors. Yet, after almost a decade, InterOil has no proven commercially exploitable reserves to show for it.

Other schemes

In my blog post entitled, "InterOil, John Thomas Financial, and Clarion Finanz: Anatomy of a Stock Market Manipulation Scheme," I provided detailed evidence of a stock market manipulation scheme involving InterOil, John Thomas Financial, Clarion Finanz AG, and banned stock promoter Carl Caserta. I believe that they conspired to raise the stock price of InterOil's shares to force the conversion of certain outstanding debentures to common stock.

InterOil filed a false report with the Securities and Exchange Commission claiming that the company paid no fees for a private placement $95 million convertible debt offering. However, documents submitted in another court case reveal that Clarion Finanz (a major shareholder of InterOil) had in fact received $5.7 million in fees.

Those same court documents show how InterOil used Clarion as a buffer to conceal John Thomas Financial's and banned stock promoter Carl Caserta's role in the debt offering. About a year earlier, InterOil told the New York Times that it was not doing business with Caserta.

That deception enabled John Thomas Financial analyst Wayne Kaufman to appear on CNBC and recommend InterOil's stock without accurately disclosing his company's conflict of interest from his company's prior investment banking relationship with InterOil. Afterwards, John Thomas Financial heavily promoted Wayne Kaufman's CNBC appearance to pump InterOil stock to its customers without disclosing its prior investment banking relationship with InterOil. Over the next couple of weeks, InterOil shares rose dramatically and the company was able to force the conversion of its debt to equity.

Actor Shia Labeouf uses his celebrity status to pump InterOil

In a bizaare twist, actor Shia LaBeouf has joined the InterOil stock pumping bandwagon. Labeouf trained at John Thomas Financial to study for his role in the upcoming motion picture "Wall Street 2: Money Never Sleeps." According to a recent New York Post article:

After preparing for his turn as a hedge-fund trader by visiting trading floors of small brokerage houses, LaBeouf in the April issue of GQ talked up the stock of an oil and natural gas exploration company that has yet to produce any of either.

"IOC's momentum is major, and it will surprise to the upside," LaBeouf said in a text message to the GQ article's author, Adam Sachs, using the trader lingo he apparently picked up while prepping for the film.

The 23-year-old star of the "Transformers" franchise was referring to InterOil, a Canadian firm with the New York Stock Exchange ticker symbol IOC that says it's searching for natural gas and oil in Papua New Guinea.

However, after seven years of exploration and drilling, InterOil has yet to produce any proven commercial oil or gas reserves.

Nevertheless, InterOil's stock is up an astounding 385 percent since the start of 2009 -- a feat critics attribute to InterOil's flurry.

Shia LaBeouf learned about InterOil from John Thomas Financial and is using his celebrity status to pump InterOil stock. In my last blog post, I suggested that:

It would be interesting to find out what he knew, when he knew it, and if he traded any InterOil shares. Maybe he can provide details on how John Thomas Financial pushed InterOil shares on it's customers?

Shia La Pump blogger Joshua Brown was roundly criticized Shia Labeouf's antics:

This Shia LaBeouf kid is apparently trying his best to make sure that any enthusiasm for the Wall Street sequel is completely drained by the time it hits theaters.

With every puff piece on how he's shown himself a 2000% return in his personal stock trading account, more eyes roll and more sighs of disappointment can be heard amongst the film's would-be core audience - Wall Street itself.

The latest ridiculousness involves Shia's pumping of an experimental oil stock that has no earnings from oil exploration or production of any kind as yet...

[Snip]

Kid, can you just talk about your movie and stop digging your credibility hole any deeper?  You seem like a nice guy and no one is rooting against you.  When you read this stuff you're saying five years from now, you're going to cringe in embarrassment like the rest of us are doing as we speak.

Try to be a little more Sheen-like circa 1987...in other words, just be cool.

Economic Policy Journal blogger Robert Wenzel suggested:

This the SEC may look into. A naive actor is red meat for the SEC, whether as witness or participant, unlike other potential cases.

Conclusion

If Phil Mulacek can screw his original seed investors and his company has shown its capability to file false and misleading reports with the SEC, he is clearly capable of screwing anyone else as he and his cronies continue to sell hope to gullible investors.

Written by:

Sam E. Antar

Disclosure:

I am a convicted felon and a former CPA. As the criminal CFO of Crazy Eddie, I helped Eddie Antar and other members of his family mastermind one of the largest securities frauds uncovered during the 1980's. I committed my crimes, simply because I could.

If it weren't for the efforts of the FBI, SEC, Postal Inspector's Office, US Attorney's Office, and class action plaintiff's lawyers who investigated, prosecuted, and sued me, I would still be the criminal CFO of Crazy Eddie today.

I do not own any InterOil securities, long or short. However, I assisted Fraud Discovery Institute (co-founded by convicted felon, turned fraud fighter Barry Minkow) in researching InterOil.

Can Shia LaBeouf Help Shed Light on a Stock Market Manipulation Scheme Involving InterOil and John Thomas Financial?

Oliver Stone film starring Michael Douglas and Shia Labeouf

Updated:

In July 2009, this blog provided detailed evidence of a stock market manipulation scheme involving InterOil (NYSE: IOC), John Thomas Financial, Clarion Finanz AG, and banned stock promoter Carl Caserta. I believe that they conspired to raise the stock price of InterOil's shares to force the conversion of certain outstanding debentures to common stock.

Now it turns out that actor Shia LaBeouf trained at John Thomas Financial to study for his role in the upcoming motion picture "Wall Street 2: Money Never Sleeps." LaBeouf claims that he turned an initial investment of $20,000 into $489,000 while training for his role in the movie. According to an article in today's New York Post by Kaja Whitehouse, LaBeouf is pumping InterOil shares, too:

After preparing for his turn as a hedge-fund trader by visiting trading floors of small brokerage houses, LaBeouf in the April issue of GQ talked up the stock of an oil and natural gas exploration company that has yet to produce any of either.

"IOC's momentum is major, and it will surprise to the upside," LaBeouf said in a text message to the GQ article's author, Adam Sachs, using the trader lingo he apparently picked up while prepping for the film.

The 23-year-old star of the "Transformers" franchise was referring to InterOil, a Canadian firm with the New York Stock Exchange ticker symbol IOC that says it's searching for natural gas and oil in Papua New Guinea.

However, after seven years of exploration and drilling, InterOil has yet to produce any proven commercial oil or gas reserves.

Nevertheless, InterOil's stock is up an astounding 385 percent since the start of 2009 -- a feat critics attribute to InterOil's flurry of uplifting press releases about its drilling and exploration plans.

According to the New York Post:

CAA, LaBeouf's talent agency, didn't return a request for the actor to comment."

Apparently, Shia LeBeouf learned about InterOil from John Thomas Financial. It would be interesting to find out what he knew, when he knew it, and if he traded any InterOil shares. Maybe he can provide details on how John Thomas Financial  pushed InterOil  shares on it's customers? Afterall, LeBeouf learned about how the underbelly of Wall Street operates from John Thomas Financial and other firms to prepare for his leading role in the movie.

For more details, please read my full blog post entitled, "InterOil, John Thomas Financial, and Clarion Finanz: Anatomy of a Stock Market Manipulation Scheme." In that blog post, I documented how InterOil filed a false report with the Securities and Exchange Commission claiming that the company paid no fees for a $95 million convertible debt offering. However, documents submitted in a court case show that Clarion Finanz (a major shareholder of InterOil) had in fact received $5.7 million in fees.

Those same court documents show that InterOil concealed John Thomas Financial's and banned stock promoter Carl Caserta's role in the debt offering. About a year earlier, InterOil told the New York Times that it was not doing business with Caserta.

That deception enabled John Thomas Financial analyst Wayne Kaufman to appear on CNBC and recommend InterOil's stock without accurately disclosing his company's conflict of interest from their prior investment banking relationship with InterOil. John Thomas Financial heavily promoted Wayne Kaufman's CNBC appearance to pump InterOil stock to its customers without disclosing its prior investment banking relationship with InterOil.

Over the next couple of weeks, InterOil shares rose dramatically and the company was able to force the conversion of its debt to equity.

My personal friend convicted felon, turned fraud fighter, Barry Minkow (see disclosure below) is a critic of InterOil's financial disclosures. Additional information on Interoil can be found in Fraud Discovery Institute's InterNoOil website and iBusiness Reporting blog.

Written by:

Sam E. Antar

Disclosure:

I am a convicted felon and a former CPA. As the criminal CFO of Crazy Eddie, I helped Eddie Antar and other members of his family mastermind one of the largest securities frauds uncovered during the 1980's. I committed my crimes, simply because I could.

If it weren't for the efforts of the FBI, SEC, Postal Inspector's Office, US Attorney's Office, and class action plaintiff's lawyers who investigated, prosecuted, and sued me, I would still be the criminal CFO of Crazy Eddie today.

I do not own any InterOil share long or short. However, I assisted Fraud Discovery Institute (co-founded by convicted felon turned, fraud fighter, Barry Minkow) in researching InterOil. In the past, Minkow publicly disclosed being short on InterOil securities.

InterOil, John Thomas Financial, and Clarion Finanz: Anatomy of a Stock Market Manipulation Scheme

In this blog post, I will provide evidence of what I believe is a stock market manipulation scheme involving InterOil (NYSE: IOC), John Thomas Financial, and Clarion Finanz AG. I believe that InterOil with the assistance of Clarion Finanz concealed John Thomas Financial’s involvement in helping it raise $95 million through a private placement of convertible debt securities.

Clarion Finanz acted as a buffer between InterOil and John Thomas Financial to help InterOil hide John Thomas Financial's role in raising funds. Afterwards, InterOil filed false and misleading reports with the Securities and Exchange Commission in an effort to conceal John Thomas Financial’s role in helping the company raise $95 million in convertible debt.

Carl Caserta, who in 1991 was barred by the Securities and Exchange Commission from “association with any broker, dealer, or investment advisor” played a role in helping InterOil use John Thomas Financial to obtain funds from investors. InterOil, John Thomas Financial, and Clarion Finanz concealed Caserta's role in helping the company raise $95 million in convertible debt.

About a year later, John Thomas Financial helped InterOil improperly inflate the price of its common shares above $32.50 per share to force the conversion of debt to equity. Wayne Kaufman from John Thomas Financial appeared on CNBC and called InterOil "Our favorite stock" and falsely disclosed that his company and InterOil had no prior business relationship.

A couple of days later, John Thomas Financial issued a press release hyping Kaufman's CNBC appearance and his recommendation of InterOil and that press release also failed to disclose any prior relationship between the companies. Brokers from John Thomas Financial cold-called customers to get them to buy InterOil common shares and pump up the price of InterOil common shares.

Right after John Thomas Financial started pumping InterOil shares to investors, without making conflict of interest disclosures, InterOil common shares traded over $32.50 per share for fifteen consecutive days, enabling the company to force the conversion of all convertible debt to equity. Clarion Finanz is a major shareholder of InterOil and the value of its stock holdings rose as a result of the illegal scheme.

Investigation by Fraud Discovery Institute with Research Help from Me Documents the Scheme

My conclusions are based on a two month investigation by convicted felon turned fraud fighter and short seller Barry Minkow (co-founder of the Fraud Discovery Institute) with additional research assistance from me.

Evidence of the stock market manipulation scheme was pieced together from InterOil filings with the Securities and Exchange Commission. I compared InterOil financial disclosures with Court filings and affidavits involving a lawsuit brought by William Ziegler against John Dolan and two of his entities (Carey International Ltd and John Thomas Structured Finance - unrelated to John Thomas Financial above).

Dolan had assisted InterOil in raising funds for the $95 million convertible debenture private placement and raised $20 million from Ziegler. However, Ziegler's lawsuit claims that he is owed certain fees from Dolan and his companies.

Note: Download lawsuit here, download exhibits here, download John Dolan affidavit here, download Thomas Belesis (John Thomas Financial) affidavit here, and download Neil Dolinsky (InterOil Affidavit) here.

In addition, I obtained certain documentation from reliable sources that confirms my belief of a stock market manipulation scheme between InterOil, Clarion Finanz, and John Thomas Financial. That documentation was delivered by me to securities regulators.

Details of the scheme are below.

Private Placement of $95 million in Convertible Debt

On May 3, 2006, InterOil entered into a two year $130 million loan agreement with Merrill Lynch Capital Corporation and Clarion Finanz. Merrill Lynch provided InterOil with $70 million and Clarion Finanz provided the company with $60 million under the said loan.

By March 31, 2008, InterOil had drawn down all of the funds under the loan agreement and lacked enough funds to pay back the $130 million loan. On May 1, 2008, InterOil extended the loan maturity date to May 12. (See Page 10, Note 3). On May 6, 2008, Clarion Finanz converted its $60 million share of the $130 million loan to 2,649,007 shares of common stock, including 79,470 shares issued as a fee, based on a price of $22.65 per share (See Annual Information Form Page 45 and 46).

InterOil required a $95 million cash infusion to pay back $70 million of debt still due to Merrill Lynch by May 12. In addition, the company needed to raise an additional $25 million of working capital to fund its operations. As of March 31, 2009, InterOil reported working capital of only $61.2 million and paying back such debt would have wiped out its working capital (See Consolidated Balance Sheet).

The company prepared to raise that $95 million through a private placement of convertible debt securities. Reliable information received by me and passed on to securities regulators, shows that InterOil initially sought the help of John Thomas Financial, who in turn brought in Carey International to assist the company in raising funds. According to court documents filed in the Ziegler lawsuit, John Thomas Financial received a "royalty fee" or finder's fee from Carey International.

Other documentation shows that InterOil CEO Phil Mulacek's brother Pierre Mulacek, President of Arkanova (OTC BB: AKVA.OB) had a previous investment banking relationship in March 2008 with John Thomas Financial when Arkanova paid a finder's $40,000 fee to John Thomas Financial. Pierre Mulacek is a founding shareholder of InterOil.

InterOil used Clarion Finanz as a Buffer to Hide the Role of John Thomas Financial

InterOil chose to hide the role of Carey International and John Thomas Financial in helping the company raise $95 million for its private placement convertible debt offering. Initially InterOil was dealing directly with Carey International and John Thomas Financial. Later, InterOil used Clarion Finanz, headed by Carlo Civelli, as a buffer between InterOil on one side and Carey International and John Thomas Financial on the other side of the transaction.

According to the New York Times, "InterOil has obtained millions of dollars in loans from Clarion Finanz AG, the investment firm of Carlo Civelli, a Swiss businessman who has worked with Mr. Mulacek since 1996 as an investor or adviser." Carey International and its principal John Dolan did not know that they were being used as buffer as part of a stock market manipulation scheme.

Other information obtained by me and passed on to securities regulators show that Carl Caserta played a role in helping the InterOil with the assistance of John Thomas Financial raise $95 million in convertible debt. In 1991, Caserta was barred by the Securities and Exchange Commission from “association with any broker, dealer, or investment advisor."

In a previous blog post, I detailed how in New York Times in 2007 reported that, Caserta "stopped working for InterOil" in 2005. According to the article, InterOil claimed that it "was not aware of Mr. Caserta's history when he was retained." However, an investigation by Fraud Discovery Institute co-founder Barry Minkow revealed that Caserta retained an active email address at InterOil up to the day of my blog post.

InterOil decided to directly pay Clarion Finanz $5.7 million in convertible debentures for its role in helping the company raise $95 in its private placement of convertible debentures and have Clarion Finanz enter into a separate agreement with Carey International and John Thomas Financial:

IOC issued to Clarion 228,000 restricted shares of its common stock as a finders fee, valued at $25 per share, equating to a total value of $5.7 million. (Source: InterOil Special Projects Manager Neil Dolinsky affidavit from Zeigler v Dolan et al).

On April 24, 2008, Clarion Finanz entered into a separate Investment Banking Consulting Agreement with Carey International for its role in helping Clarion Finanz raise funds for InterOil. The agreement called for Carey International to "receive compensation in the amount equal to five and one half percent (5 1/2%) of gross proceeds...." of funds it helped Clarion Finanz raise on behalf of InterOil. In addition, the agreement stated that "Carey International Ltd and/or assigns will pay a royalty fee of approximately 20% to John Thomas Financial and/or assigns."

By May 12, 2008, John Dolan and his company Carey International raised $20 million in funds from William Ziegler for the $95 million private placement of convertible debentures. (Note: As described above, in September 2008, Ziegler sued Dolan and his companies claiming that he was owed part of their fees.)

Court documents show that Carey International received 44,000 of the 228,000 restricted common shares due to Clarion Finanz from InterOil. Those shares were issued directly from InterOil to Carey International and John Thomas Financial instead of being paid to them directly by Clarion Finanz. Carey International’s convertible debt shares were valued at $25 per share (total value of $1.1 million or 5.5% of the $20 million raised by Carey). From those 44,000 restricted common shares due Carey International, John Thomas Financial received 20% of such shares as a "royalty fee" or 8,800 restricted common shares valued at $25 per share or $220,000.

InterOil $95 Million Private Placement and False Disclosures

On May 12, 2008, InterOil announced a private placement of $95 million in convertible debt securities to institutional investors and issued the following press release:

INTEROIL ANNOUNCES $95 MILLION PRIVATE PLACEMENT
May 12, 2008 — InterOil Corporation (IOL:TSX)(IOC:AMEX) (IOC:POMSoX), a Canadian company with operations in Papua New Guinea, announced that it has closed on gross proceeds of US$95 million from the sale to institutional investors of 8% Subordinated Convertible Debentures due 2013. InterOil used the proceeds today to fully repay all outstanding indebtedness (US$70 million) under its credit facility with Merrill Lynch Capital Corporation. InterOil will use any remaining proceeds to drill and develop oil and gas wells on the Elk/Antelope structures in Papua New Guinea and for general corporate purposes.

The Convertible Subordinated Debentures carry an 8% coupon rate with a conversion price of US$25.00 per share. In some cases, interest payments may be made in common shares. If the daily volume-weighted average price of the Company’s common shares equals or exceeds US$32.50 for at least 15 consecutive trading days, InterOil may require the investors to convert the debentures into common shares. InterOil may also be required to repurchase the debentures for cash, at 101% of the face value plus accrued and unpaid interest, upon the occurrence of certain change of control events.

The $5.7 million finder’s fee payable to Clarion Finanz was not disclosed in Interoil’s press release detailed above.

On May 28, 2008, InterOil filed Form D with the Securities and Exchange Commission which required the company to disclose sales commissions and finder's fees paid in connection with the $95 million convertible debt offering (See Section C, Item 4 on page 5 of 10). InterOil estimated that no sales commissions or finder's fees would be paid in connection with the offering.

However, Court documents show that InterOil had prior knowledge that such commissions or finder's fees were paid despite the company's failure to disclose them in its May 12 press release and May 28 Form D filing with the SEC. According to an affidavit filed by Neil Dolinsky (InterOil Special Projects Manager) in connection with Ziegler's lawsuit against Dolan and his companies, InterOil agreed to pay Clarion $5.7 million in convertible securities for its role in helping the company raise $95 million in its private placement of convertible securities and that “IOC issued to Clarion 228,000 restricted shares of its common stock as a finders fee, valued at $25 per share, equating to a total value of $5.7 million."

In addition, InterOil knew of the separate agreement entered into between Clarion Finanz and Carey International before its press release and SEC Form D filing. According to that agreement, Carey International was required to pay a "royalty fee" or finder's fee to John Thomas Financial.

In InterOil's 2008 annual report, the company finally disclosed that it paid $5.7 million pursuant to the $95 million convertible debenture offering without mentioning Clarion and cleverly tried to hide such fees as payments to investors (See footnote 23):

The placement fee of $5,700,000 paid to the investors in common shares of the Company was treated to be in the nature of a debt discount and was offset against the liability component. The transaction costs relating to the issue amounting to $219,966 has been split based on the percentages allocated to the liability and equity components; the costs relating to the liability component of $189,711 has been offset against the liability component, and costs relating to the equity component of $30,255 have been allocated against the equity component recognized. [Emphasis added.]

However, $1.1 million of such fees were not paid to "investors" as claimed by InterOil and was instead paid directly to Carey International and John Thomas Financial. Neither John Dolan nor Carey International invested any money in InterOil and therefore, such fees cannot possibly be a part of the $5,700,000 paid to “investors.” Yet, that is exactly where Mr. Dolan’s 44,000 shares, valued at $1.1 million, came from. Ultimately, Carey's shares were divided up into 35,200 shares made payable to Cary International (John Dolan’s group) and 8,800 shares John Thomas Financial (as a royalty fee).

In addition, InterOil provided no disclosure of Clarion’s role in the transaction, unlike other material disclosures relating to Clarion such as on:

Page 37 “Midstream Liquefaction Operating Review” Page 47 “Financing Activities” Page 90 Footnote 19 “Secured loan”

Interoil’s “Annual Report Form” lists various disclosures under the caption, “Material Contracts.” However, InterOil omitted any disclosure relating to Clarion's roles in the $95 million private placement while disclosing Clarion's role in other transactions.

John Thomas Financial’s Orchestrated Campaign to Hype InterOil Common shares Without Disclosing Its Role in the $95 Million Convertible Debt Private Placement

Apparently, there was a very good reason to hide any direct role by John Thomas Financial in raising $95 million of convertible debt. As I will detail below, John Thomas Financial orchestrated a public campaign to hype InterOil stock, without disclosing to investors its conflict of interest from helping InterOil raise convertible debt.

On April 28, 2009, Wayne Kaufman appeared on CNBC and said (see video link):

Our favorite stock is something called InterOil which I recommended on the air before.
Note: Above quote appears 3 minutes and 55 seconds into video clip.

Worst yet, 4 minutes and 6 seconds into the video clip, CNBC shows a screen called "Analyst Disclosure" that checks off the following items as "no."

Stock Ownership: No
Analyst: No
Analyst's Family: No
Analysts's Firm > 1%: No
Investment Banking Client: No
Other Conflicts: No
[Emphasis added.]

See the image below:

Contrary to the disclosure above on CNBC that John Thomas Financial had no investment banking relationship with InterOil, such relationship was cleverly hidden by InterOil using Clarion Finanz AZ as a buffer to raise $95 million for its private placement and have Clarion deal with John Thomas Finance through Carey International.

After Wayne Kaufman’s appearance on CNBC, InterOil common stock closed at $30.39 per share, up $1.14 from the previous day. On April 30, 2009, InterOil common stock closed at $32.29 per share, up $1.90 from the previous day. Brokers from John Thomas Financial were cold calling investors to buy InterOil stock and price of InterOil shares continued to rise.

On May 1, 2009, John Thomas Financial issued a press release touting Wayne Kaufman’s CNBC appearance and featuring his InterOil recommendation without disclosing their broker/dealer relationship with InterOil that was cleverly disguised by false SEC filings as detailed above.

May 01, 2009 14:57 ETSell in May?

CNBC Once Again Features Wayne Kaufman, CMT at John Thomas Financial, Inc. NEW YORK, NY--(Marketwire - May 1, 2009) - John Thomas Financial, Inc., a licensed, full service broker dealer offering client-centric retail brokerage and investment banking services, today announced that Wayne S. Kaufman, CMT and Chief Market Analyst at John Thomas Financial was a featured analyst on CNBC from the floor of the New York Stock Exchange debating whether the "sell in May" indicator will hold true this year, with Jeffrey Hirsch, Wayne Kaufman and CNBC's Rebecca Jarvis.

When asked if this market will keep going, Kaufman remarked that he sees "Nothing that says we can't keep going up. Sellers don't seem to be around and Governments around the world are pumping money into the market. I am looking for a continuation of stocks that have been strong in the tech and energy areas such as Interoil Corp, Symbol IOC on the NYSE."

Thomas Belesis, Founder and CEO of John Thomas Financial, commented, "When the public needs great information they call on the years of experience, technical and analytical skills of Mr. Kaufman."

Kaufman authors the popular daily market letter, "The Kaufman Report," which includes technical and fundamental analysis of the U.S. equities markets, general investment philosophies and reviews of prevailing political, economic and business trends that are impacting the financial markets.

With over 10 years experience as a technical and fundamental market analyst with several Wall Street firms, Kaufman has been widely quoted in the financial media, including CNBC, Bloomberg Radio, Barron's and the Wall Street Journal. Holding the designation of Chartered Market Technician (CMT) and a licensed Research Analyst, Kaufman has served as an online instructor teaching CMT candidates "Level 3" coursework for the Market Technicians Associations (MTA), the leading national organization of technical analysts in the United States. The MTA's CMT program is considered the industry's gold standard in technical analysis. Kaufman graduated from the University of Michigan where he earned a Bachelors degree in Liberal Arts.

To see Wayne's full comments from the show click on the following link:
http://www.cnbc.com/id/15840232?video=1105892699

About John Thomas Financial, Inc.

John Thomas Financial, member of the FINRA and SIPC, is an independent broker dealer and investment banking firm headquartered in New York City's Wall Street district, with a growing network of branch offices throughout the country. Emphasizing a client-centric approach to managing all aspects of its business, the firm offers a full complement of retail brokerage and corporate advisory services tailored to the unique needs of its clients. For more information on the firm, please visit http://www.johnthomasbd.com/ or contact our strategic business development center below. [Emphasis added.].

Information obtained by me and turned over to securities regulators clearly shows that John Thomas Financial's compliance personnel knew from April 2008 about the prior business relationship with InterOil, but they apparently did nothing to disclose the conflict of interest with CNBC or in the above press release. As described above, John Thomas Financial's relationship with InterOil was subsequently papered over to use Clarion Finanz as a buffer between InterOil and John Thomas Financial.

On May 1, 2009, InterOil common stock closed at $35.22, up $2.93 from the previous day. Starting on May 1, 2009 and for 14 consecutive trading days thereafter, InterOil common shares closed above $32.50 per share. InterOil common stock continued to close at above $32.50 per share to May 21, 2009 (Source: NASDAQ).

The $95 million convertible debt private placement had called for a forced conversion of the debt to equity by InterOil under certain circumstances. According to InterOil’s May 12, 2008 press release about the convertible debt:

The Convertible Subordinated Debentures carry an 8% coupon rate with a conversion price of US$25.00 per share. In some cases, interest payments may be made in common shares. If the daily volume-weighted average price of the Company’s common shares equals or exceeds US$32.50 for at least 15 consecutive trading days, InterOil may require the investors to convert the debentures into common shares.

On May 22, 2009, InterOil announced the forced conversion of the its convertible debentures to equity, exactly 15 trading days after John Thomas Financial issued a press release touting Wayne Kaufman’s appearance on CNBC where he called InterOil, “Our favorite stock” without disclosing any prior relationships between the companies.

Meanwhile, Clarion Finanz received about 2.6 million shares on May 6, 2008 from converting its $60 million loan to common stock valued at $22.65 per share. In addition, Clarion received a net amount of 184,000 restricted common shares valued at $25 per share for its role in helping InterOil raise $95 million in convertible debt on May 12, 2008. By May 21, 2009, Clarion Finanz's common shares were valued at $36.23 per share.

For other details of Fraud Discovery Institute's investigation of InterOil, please visit InterNoOil.com.
To be continued....

Written by,

Sam E. Antar

Disclosure:

I am a convicted felon and a former CPA. As the criminal CFO of Crazy Eddie, I helped Eddie Antar and other family members mastermind one of the largest securities frauds uncovered during the 1980s. I pleaded guilty to three felonies.

I am assisting Barry Minkow and Fraud Discovery Institute in researching InterOil and Minkow has a short position in InterOil. I have no position in InterOil securities, long or short.