Suspicions of Insurance Fraud and Pump & Dump
Returning to the United States, Pearlman formed Airship Enterprises Ltd, which leased a blimp to Jordache before actually owning one. He used the funds from Jordache to construct a blimp, which promptly crashed. The two parties sued each other, and seven years later Pearlman was awarded $2.5 million in damages. On the advice of a friend, Pearlman started a new company, Airship International, taking it public to raise the $3 million he needed to purchase a blimp, claiming (falsely) that he had a partnership with Wüllenkemper. He leased the blimp to McDonald's, for advertising.
He then relocated Airship International to Orlando in July 1991, where he signed MetLife and Sea World as clients for his blimps. Airship International suffered when one of its clients left, and three of the aircraft crashed. The company's stock, which had once been pumped up to $6 a share, dropped to a price of 3 cents a share and the company was shut down:
After he took his air charter company, Airship International, public in 1985, Pearlman became personally and professionally close to Jerome Rosen, a partner at small-cap trading outfit Norbay Securities. Based in Bayside, Queens, and frequently in trouble with regulators, Norbay actively traded Airship stock. This sent Airship's stock price consistently higher, enabling Pearlman to sell hundreds of thousands of shares and warrants at ever-higher prices. However, Airship was reporting little revenue, cash flow or net income. In return for keeping his penny stock liquid, Pearlman allegedly paid Rosen handsome commissions, according to a mutual friend, that reached into 'the tens of thousands of dollars' per trade. —Roddy Boyd, New York PostRead more about this topic: Lou Pearlman
Famous quotes containing the words suspicions, insurance, fraud, pump and/or dump:
“When we cannot stand certain people, we try to have suspicions about them.”
—Friedrich Nietzsche (1844–1900)
“Women hock their jewels and their husbands’ insurance policies to acquire an unaccustomed shade in hair or crêpe de chine. Why then is it that when anyone commits anything novel in the arts he should be always greeted by this same peevish howl of pain and surprise? One is led to suspect that the interest people show in these much talked of commodities, painting, music, and writing, cannot be very deep or very genuine when they so wince under an unexpected impact.”
—John Dos Passos (1896–1970)
“There exists in a great part of the Northern people a gloomy diffidence in the moral character of the government. On the broaching of this question, as general expression of despondency, of disbelief that any good will accrue from a remonstrance on an act of fraud and robbery, appeared in those men to whom we naturally turn for aid and counsel. Will the American government steal? Will it lie? Will it kill?—We ask triumphantly.”
—Ralph Waldo Emerson (1803–1882)
“The daughters of delight now pump iron.”
—Mason Cooley (b. 1927)
“I want to celebrate these elms which have been spared by the plague, these survivors of a once flourishing tribe commemorated by all the Elm Streets in America. But to celebrate them is to be silent about the people who sit and sleep underneath them, the homeless poor who are hauled away by the city like trash, except it has no place to dump them. To speak of one thing is to suppress another.”
—Lisel Mueller (b. 1924)