CSHD – Textbook Pump and Dump

Conversion Solutions Holding Group is a classic penny stock pump-and-dump that went from 10 cents to four dollars to an SEC lawsuit. Not to put to fine a point on it, but stock message boards are the breeding grounds that allow scams like this to grow and thrive. CSHD CEO Paul Rufus Harris himself had an account on HotStockMarket.com and regularly posted to the CSHD forum, instructing users to “buy the s— out of CSHD.”

Note: HotStockMarket has since deleted this link, and deleted all links to ValueWiki from their site.

The Saga of CSHD

What follows is a timeline from when the pump began (in August), to the fever pitch (the $4 spike in October) to the SEC trading halt (that gap in November) to its current pre-litigation collapse on the grey market.

From its August inception, CEO Paul Rufus Harris, now under SEC litigation, claimed that CSHD had received major financing from several major institutions. These growing claims culminated on Monday, October 16, when CSHD issued this 10-K claiming an asset portfolio worth $7.2 Billion.

CSHD’s 10-K claimed to own Lehman Brothers Holdings PLC Bonds worth $564,092,494.32, Republic of Finland Sovereign Bonds worth $939,000,348.90, and Caracas Group Bonds worth $5,000,000,000. In the 10-K, CSHD boldly states “the corporation currently has an asset portfolio of $7,292,601,135.22” and claimed a current book value of $70/share.

By October, the CSHD Message Board on HotStockMarket.com was exploding with hundreds of messages per hour. A massive cheerleading section emerged among message board regulars, some of whom may have made 4,000% on the rise from 10 cents to 4 dollars. As is standard policy, any desenters to appear on the message board were quickly reported to HotStockMarket.com’s moderators and banned for being “bashers.”

Meanwhile, there was ample and growing room for skepticism. On September 28, CSHD skipped a much anticipated interview on Market News First. According to Market News, CSHD’s CEO didn’t show up to the interview and no one in CSHD’s office answered phones all day. Watchdog websites StockLemon.com and Stockwatch.com issued frantic warnings to investors about CSHD’s shady operations. TDAmeritrade blocked investors from buying the company, causing Paul Rufus Harris to level accusations that TDAmeritrade was carrying a huge short position on CSHD.

October 24, the SEC steps in

By October 24th, the SEC decided enough was enough. The SEC filed this restraining order against CSHD and Paul Rufus Harris and halted trading under rule 15c2-11. Neither CSHD nor Paul Rufus Harris filed replies to the SEC lawsuit. This has allowed the SEC to file entries of default judgement.

In a remarkable display of investor psychology, CSHD continues to enjoy a massive fanbase on HotStockMarket.com. The CSHD forum continues to be HSM’s most highly-posted forum. Investors have bonded together to create the Conversion Solutions Shareholder Committee to help in the restructuring and resurrection of what is essentially a corporate shell that defrauded investors of millions of dollars.

In November, Paul Rufus Harris was fired, re-hired, and fired again by the CSHD board of directors. The CSHD board has shuffled through various replacements, currently settling on Vancouver trader John Arlitt as CEO. Stockwatch.com has provided enormous and devastating coverage of John Arlitt, painting a picture of a former penny stock broker who is shady and underqualified at best.

The moral of the story

We are a long way from the days when the pinksheet stocks were actually listed on pink sheets of paper. And one would imagine that with the information-sharing power of the internet, scams like CSHD would no longer be possible. But unfortunately it is the information-sharing power of the internet that allows these cons to spread farther and wider than ever before. More uninformed investors were pulled into CSHD than could ever have been possible in the days of the pink sheets.

The saga of CSHD is exactly why Zach and I are starting ValueWiki. By keeping ValueWiki articles neutral and referenced, we are working to build a reliable forum for pooling investment information. By setting a Wikipedia-level of objectivity, we can counteract Message Board hype. Any investor who read the research and coverage on our CSHD page would have no excuse for losing money in that scheme.

In the end, what did Paul Rufus Harris stand to gain? Whatever his share-dilution was between August and October, was it really worth the jail time he will face? Did he really expect to keep his winnings, after publicly touting a $7 Billion asset value for his ten cent company? Yet people are drawn into these schemes every time.

My advice to CSHD bag-holders…learn better due diligence and start using ValueWiki!

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30 Responses to CSHD – Textbook Pump and Dump

  1. Florian says:

    Hi,
    I found your blog via google by accident and have to admit that youve a really interesting blog 🙂
    Just saved your feed in my reader, have a nice day 🙂

  2. Jon says:

    Thanks Florian!

  3. Valis says:

    ‘By keeping ValueWiki articles neutral and referenced”

    laughable

  4. Jon says:

    Valis,

    I know you from the HotStockMarket message boards. You lost a lot of money in CSHD. Is there anything in the CSHD article you feel is not neutral or referenced?

    Jon

  5. g8nOld says:

    All of the article is biased.
    In fact, you might be a CSHD short.
    Rufus is back and he might actually
    get things done. If he does, it will be egg in
    your face.
    Now let me answer your next question. I did not loose nay money yet as I have not sold any. Even if I do not make any money – it oes not matter. I bought CSHD to support NSS elimination.
    Revisit CSHD DD and you might get a different view.

  6. Jon says:

    g8nOld,

    All of my due diligence comes from http://www.valuewiki.com/w/CSHD

    If there is anything you feel is not factual, feel free to edit the page yourself. It is like Wikipedia, where anyone can add information. Cheers,

    Jon

  7. sygy1 says:

    what a joke,,,unbiased,,lololololol,,

  8. J2 says:

    I hope the SEC goes after the owners of hotstockmarket.com if they took money from stock promoters and aided and abetted this fraud by banning users and deleting messages that went against the pump.

    As for you bagholders, I don’t have much sympathy for you. You were blinded by greed and whipped into a mob mentality, vindicative and vicious against anyone who tried to warn you.

    “I bought CSHD to support NSS elimination.” Yeah, right, how convenient. You bought CSHD because you were guaranteed it was going to the moon. Nobody attempts to reform the stock market by buying some obscure penny stock shell company with a dubious history. If any market reform is needed, it is closing the OTC markets to unqualified individual investors to protect fools like you from these dens of thieves.

    But that’s not party of the mythology! Anyone who says anything negative must be a basher and an evil short! Yeah, right. The only ones who were likely short this POS were the insider pumpers who could see the top and probably doubled their ill-gotten gains on the way down.

    “I did not loose nay money yet as I have not sold any.” That is such a sad cry of denial. I hope you didn’t “loose” your house.

  9. privateaye007 says:

    If anyone is interrested I can take you back to when the whole debacle was called Fronthaul or, in the beginning, Loadsource…. How many of you know the original concept of the Company…

    I fell-off a log and investesd in Fronthaul way back before the effort had taken shape, worked inside the start-up (not as a principal) bailed because of ethical concerns (my ethics not in question). Looked-up one day the stock was trading at $2.50 and all of my remaining shares were restricted! YIKES!

    Needless to say I scrambled over the next few days and was successful in getting the shares cleared through the transfer agency. Unfortunately the price was declining, but… I managed to sell all but a few thousand shares on a Friday. (Thanks Steve!) There is a lot more to the story and I love to tell it to anyone who will listen!

    Best regards….

  10. Jon says:

    Privateaye007 – I’m interested!

  11. Gutzy1 says:

    Zach, you may think you know the real story but you’ve barely scratched the surface. All is not as it seem with CSHD. The naked eye sees P&D,,but after months of viewing original documents, court testimony and the SEC’s inability to even prove a dump by the Harris family I feel you need to do the due dilligence. The bonds are real and in Mr. Harris’s (CSHD) possession. The amount of work this man has put into this company and it’s “sting operation” is unfathomable to you. No P&D has ever prolonged like this one and for Paul Rufus Harris to be walkly freely right now should say something in and of itself. Why would the “ring leader” as you may think of him, still be around filing doc’s, answering questions of shareholders, and remain stedfast in his story with utmost sincerity and confidence in his plan. When successful, the market will be free of Naked Short Selling and many corrupt scammers/manipulators of the stockmarket. Many Americans have lost faith in the marketplace and stopped investing due to the blatant shorting and devaluation of countless companies, not limited to otc stocks. When this happens, I expect an apology blog in place of this one. 2008 will be great for CSHD shareholders.

  12. I know people who have lost a home and barely can eat due to investing in this stock. They need to make sure this never happens again and the stock market is a complete fraud where liars and thieves run rampant.

  13. MHD says:

    Paul Harris has been pulling this same scheme since at least 2001. He ripped off several investors in Newnan, GA under the corporate name GHW. Then he tried to do the same thing in Haines City. FL with Grenelefe Golf Resort. Hopefully the SEC will bust this crook and put him in federal prison where he belongs, for a long, long time.

  14. Peter says:

    Listen people. With any stock you buy into, you incur risk. I lost with CSHD, but I only lost what I could afford to lose. If you threw thousands at CSHD, you should have been willing to lose thousands. IMHO, taking a flier on CSHD was not worth that much risk. But believe me, I was also drinking the kool-aid and hoped that Rufus would be the genius everyone promised him to be.

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  16. bohaya says:

    bohaya
    cshd rock

    enter cshdtrust.com

    bohayyaaaaaaaaaaa!!!!!!!!

  17. Fred says:

    Stocklemon.com is owned by a convicted felon and stock manipulator, guilty of stock fraud himself. Your article was fine, but if you are promoting stocklemon I have to assume that you are one of Tim Miles many aliases.

    PEOPLE..do not trust stocklemon…he is a fraud and trying to mainpulate the penny stock market.

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  19. Joye Lattig says:

    I enjoyed studying, brought me back to beginnings with my first online ventures, it is important to comply with game plan,without it it is laborious to make a pennies!—————————————————————————————————————————-http://privatetip.com

  20. Susan G says:

    I have been to your posts before. The more I learn, the more I keep coming back! 😉

  21. I’ve been wanting through the web for my analysis on this topic, thanks so much…

  22. Joseph Sly says:

    Do not trust this Web Site. It is just another alias for convicted felon and stock manipulator, Timothy Miles (Google his name). He wants to earn your trust by speaking about a known frauf and then perpetrating his own fraud on you. Stay clear of this blog. Tim Miles is a crook.

  23. I like your blog, very informative.

  24. Nothing worst than a pump and dump scam and the scum bags behind it, all they do is give penny stocks a bad name and rip honest investors off. We have done a write up on our blog for 10 good tips to save your money your welcome to add this to your blog.
    Regards
    Mike @ Penny picks

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    [url=http://awesomemovies.org/adventure/sinbad-legend-of-the-seven-seas-2003/]Sinbad: Legend of the Seven Seas (2003)[/url]: [url=http://awesomemovies.org/wp-content/uploads/2011/02/cover_big-272.jpg][img]http://awesomemovies.org/wp-content/uploads/2011/02/cover_big-272.jpg[/img][/url] Sinbad (voiced by Brad Pitt) is a sailor who intends to steal for the legendary Book of Peace, a mysterious artifact that protects the land from chaos in Syracuse. He runs into his old friend Prince Proteus (voiced by Joseph Fiennes) who is guarding it, despite this he still plans to steal the book, until Cetus attacks the ship. Sinbad kills the monster, but is dragged under water by one of its tentacles. He is saved by Eris (voiced by Michelle Pfeiffer), the Greek goddess of chaos. 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Proteus realizes that Sinbad and Marina have fallen in love and allows Marina to go with Sinbad. This story takes the name Sinbad, the presence of a Roc, and the incident wherein Sinbad and his crew encounter an island that turns out to be the back of a gigantic sea-beast from the One Thousand and One Nights; however, much of the setting is derived from Greek mythology, including the presence of monsters that also appear as constellations, a trip to Tartarus (to recover the Book), and an encounter with the Sirens. The plot scenario [url=http://awesomemovies.org/drama/confessions-of-a-dangerous-mind-2002/]Confessions of a Dangerous Mind (2002)[/url]: [url=http://awesomemovies.org/wp-content/uploads/2011/02/cover_big-282.jpg][img]http://awesomemovies.org/wp-content/uploads/2011/02/cover_big-282.jpg[/img][/url] Chuck Barris’ whole purpose through his teenage years in Philadelphia concerns promiscuity, but he is unsuccessful. 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