Sunday, June 28, 2009

A Seattle Reporter's Scoop on IPOs

The Seattle Times had a terrific report yesterday from its deputy business editor, Rami Grunbaum, on how a Seattle lawyer has been serving as a conduit for IPOs from a string of OTC stock offerings for little Russian and Ukrainian companies.

It's the kind of thing that we don't see often enough in business journalism, which too often is obsessed with "CEO porn" and puff pieces.

The deals are almost laughable. Green Bikes Rental Corp. of Ternopil, Ukraine, raised $50,830 in its initial stock offering, only to abandon its business plan months later because "our marketing research showed that in [Kiev, Ukraine's capital,] roads are not designed to have bicycle traffic."

But the implausible IPOs from Dean, whose Dean Law Corp. has offices in Seattle and Vancouver, B.C., serve the purpose of an Eastern European assembly line producing shell companies ready-made for penny-stock promoters. Local bank accounts and a Seattle CPA also form part of the network.

These are tiny deals, raising as little as $50,000, but are often exploited by stock promoters into scams of far greater magnitude. Hopefully Grunbaum will keep his eye on these schemes.

© 2009 Gary Weiss. All rights reserved.

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