InvestSource latest SEC penny stock fraud case in on-going hunt for fraudulent stock promoters

July 18, 2010 - (Tip Report) Los Angeles - The Securities and Exchange Commission has levied [civil] penny stock fraud charges against InvestSourceinc.com and site operator, Songkram Roy Sahachaisere, 40, of Huntington Beach, Calif. in the Fed's on-going investigation into online penny stock fraud.

The SEC complaint, filed July 9, 2010 United States District Court for the Central District of California in Los Angeles alleges Sahachaisere heavily touted penny stock company stocks between January 2008 to March 2009, sending over 450 email messages over the time in question in its daily email newsletter, called the "Daily Digest," and by posting company profiles on its website.

The SEC claims "ROY" Sahachaisere generated over $276,000 in profit, which seems like small potatoes compared to others who were charged earlier this year. Still, "the dollar amount has nothing to do with it," says one Florida investigator. "Mr. Sahachaisere was touting stocks illegally."

Tipreport.com noted that InvestSourceinc.com is offline and that Mr. Sahachaisere has not been charged criminally in the state of California, which is odd considering the State Attorney General is quick to prosecute where the press is showing interest in a topic.

A search for investsourceinc.com revealed that the website is no longer online, though a cache search will reveal some of Sahachaisere's site content.

The focus of the SEC civil complaint was on the defendants' lack of disclosure, noting that while investsourceinc.com did say that it 'may' own stock in companies it promotes from time-to-time, the SEC charged that Sahachaisere owned stock regularly and typically sold those shares through its email newsletter campaign to unsuspecting investors. So heavily did Sahachaisere tout penny stocks that, according to the SEC complaint, over 24 million investors received his email over the period in question outlined in court documents.

The SEC's complaint charges InvestSource and Sahachaisere with violating the antifraud provisions of the federal securities laws, Section 17(a) of the Securities Act of 1933 (Securities Act), Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. It also charges them with violating the antitouting provisions contained in Section 17(b) of the Securities Act. The SEC's complaint seeks permanent injunctions, disgorgement with prejudgment interest, and civil monetary penalties against both defendants. In addition, the SEC seeks penny stock and officer and director bars against defendant Sahachaisere.

The complaint focuses on seven specific penny stocks that defendants touted in which, the SEC alleges, defendants made misleading statements regarding the nature of their compensation on InvestSource's website and in the promotional emails. The defendants also failed to disclose that they were selling the very securities they were recommending investors buy. According to the complaint, between April 2008 and March 2009, defendants sold over 5 million shares of these seven clients through one or more of their approximately 36 brokerage accounts, illegally reaping profits of at least $276,000.

The companies named in the complaint were China Forestry (OTCBB: CHFY), whose shares closed up more-than 60% Friday; FIMA, Inc. (OTC: FIMA), of which Sahachaisere is the CEO (The Company's press releases list him by his middle name, "Roy"); Heart Health (no listing could be found) Praebius Communications (OTC: PRCM); Obee's Franchise Systems (OTC: OBEE); Purespectrum, Inc. (OTCBB: PSRU) and New World Gold (OTC: NWGC), formerly New Asia Gold, the latter of which alarmed PIPE financiers considering the Company had raised $2 million through a PIPE offering in 2001, though the Statue of Limitations of any criminal wrongdoing relating to that financing have expired (lucky break). PIPE deals through unregulated hedge funds are on the Fed's radar screen for criminal investigations. TipReport recently covered NIR Group, where a principal of the fund was recently arrested - further charges against NIR Group's principal may show up shortly if the canary caged by the Fed's sings.

TipReport would like to give kudos to patrickpretty.com, a blogger that rants on stock touts, for highlighting one of the companies mentioned in the SEC complaint - Praebius Communications. In his July 16 post, PP wrote: The timing of the alleged touting scheme, according to records, coincided with dates in October 2008 in which AdSurfDaily, Inc. (ASD), an autosurf company, was announcing a purportedly lucrative joint venture with Praebius.

The blogger noted that ASD was under investigation at the time for operating fraudulently. ASD owner, Andy Bowdoin, was not named in the July 14, 2010 SEC complaint against InvestSourceinc.com and "Roy" Sahachaisere. As to why "Pretty Pat" would peel the scab off of Bowdoin's wounds may make one wonder, but his point was well taken in providing an example of just how [allegedly outlandish] Sahachaisere could be - its a wonder he wasn't charged sooner!