Wall Street

By H. Bernstein - editor, StockPatrol

Online Stock Market Trading Panamed Corp(Otcbb: PANA) and Quintek Technologies Corp (Otcbb: QTEC) were caught off guard by the SEC for swindling investors in a penny stock promotion.Visit our AXcess News Forum and add your comments on this story. Try your hand at writing, the best story will be published on our news network. Take our micro cap stock poll too!

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Stock Market Game In June 2002, StockPatrol.com reported on PanaMed Corporation (OTCBB: PANA), an obscure company that claimed it was planning to test an HIV/AIDS "therapeutic" in Africa. See PanaMed Corporation - African Adventures; and PanaMed Corporation, Part II - Penny Kings From Heaven. At the time we noted that promoters had been touting the Company's purported product without providing essential details. In particular they had failed to say how the Company would fund its operations, or whether the "therapeutic" product had been tested, and by whom.

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Stock Investing Game Our articles pointed out that PanaMed's co-founder, President, Treasurer and Chairman, Thomas Sims, also was CEO and President of Quintek Technologies, Inc. (OTCBB: QTEK), a California-based company that marketed a technology for recording and storing digital images on an aperture card. In November 2001, Quintek exchanged 2 million shares of its common stock for 2 million shares of PanaMed.

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Journal Prime Rate Street Wall As we discovered, Quintek already was under SEC scrutiny. The Commission had initiated an informal inquiry to determine whether sales of securities by Quintek - or PanaMed - had violated the federal securities laws.

In many cases, business insiders will hire promoters to get individual investors involved. There are a chain of press releases and fake research reports that entice investors into purchasing these stocks. This system is most common in the world of penny stocks. To prevent the bulk of these scams, stop investing in penny stocks. The hype associated with pump and dump scams is similar between scams. The false press releases and research reports always peddle the given business as being on the threshold of a world changing technology, treatment for a disease or fantastic new invention. The focus is forever on the glorious future of the business, but very little information is given about the company's present status.

Stock Market News The SEC's inquiry related to a series of press releases issued by the two companies. Those apparently included January and March 2002 press releases issued by Quintek trumpeting its relationship with a company called Penny King Holdings Corporation. On January 8, 2002, Quintek announced that Penny King had signed an exclusive agreement to distribute Quintek's aperture cards in certain Eastern European countries. That press release also revealed that Penny King had obtained 2.3 million shares of Quintek in a "private transaction," with an unidentified seller.

Stock Investing Basics The press release did not say how Penny King - a self-described private "Investment Holding Company" - would distribute the products. But it did offer a description of Penny King that might have left investors a tad skeptical. Quintek claimed that Penny King had "exclusive Western Hemisphere distribution rights to a whole new series of technologies under agreements with The Free and Clear Foundations of America, Inc. a Washington DC-based non-profit organization."Our research raised serious questions about the value, and viability, of those Free and Clear Foundations. As it turned out, the Free and Clear Foundations were the brainchild of a Hungarian-born individual named Gabor Sandor Acs, who claimed that he had been "managing the vision of a free and clear planet through the aspices (sic) of The Free and Clear Foundations of Earth, International," which owned 50% of Penny King. According to a website maintained by Penny King, the "Foundations buys pennies from homeless people for a nickel each."Needless to say, we were skeptical about Penny King's value as a business partner - for Quintek or anyone else. Nevertheless, on March 20, 2002, Quintek issued a press release announcing that Penny King had assigned its distribution rights to EuroTrend Informatics Ltd. (ETL), a private Hungarian information technology and software company. The press release claimed that ETL was about to place orders for $10 million in Quintek products, as "the first phase of a $250 million two year project being developed by The Free and Clear Foundations relating to the deployment of automated voting systems in Hungary, Central and Eastern Europe." It also claimed that Penny King was planning to provide a $15 million revolving credit line to ETL so that it could purchase the Quintek products. Quintek projected that the ETL sales would result in net pre-tax revenues of "around 18 cents per share."

Stock Investing Software Then, on April 12, 2002, Quintek announced that Penny King had not completed any financing arrangements, and that ETL had not yet placed any firm purchase order. At the same time, however, Quintek conceded that it had given Penny King $5,000 and approximately 129,000 shares of common stock in exchange for "promoting Quintek's name in the financial community, providing company information to investors and financial institutions, and seeking contracts or purchase orders for Quintek's products."

Stock Market Trading That's where things stood when we published our report in June 2002.

Stock Investing For Dummy Now, it's clear that our concerns were justified.Enter the SEC

Stock Market Crash On August 1, 2003, the SEC filed a complaint in U.S. District Court for the Central District of California against Quintek, Sims, and PanaMed. The complaint alleges that the two companies had issued false and misleading press releases, each of which had been written or reviewed by Sims. These included the March 20, 2002 press release that claimed a $10 million order had been placed for the Quintek product by a Hungarian company and that Penny King was providing Quintek with a $15 million line of credit.

Stock Investing Tip The SEC also has charged that PanaMed made false and misleading statements in offering materials and press releases about the status of testing for its HIV/AIDS therapeutic product, and anticipated revenues for the PanaMed product.

Stock Market Chart Finally, the SEC says that both Quintek and PanaMed failed to file public reports on a timely basis.Quintek and Sims have settled the charges, without admitting or denying the allegations. Both have consented to orders permanently enjoining them against future violations of the federal securities laws. Sims has also consented to an order barring him as a director or officer of a public company for five years, barring him from involvement with penny stock offerings, and imposing a $25,000 penalty.

Online Stock Investing The claims against PanaMed are still pending.

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