A conservative pundit who regularly appeared on outlets like Fox News, Fox Business, and CNBC used his cable news appearances to defraud investors, according to a government investigation.
The News Journal reported that the Securities and Exchange Commission (SEC) sanctioned Todd Schoenberger after he admitted defrauding four investors of "a total of $130,000 after he told them he would invest it in a hedge fund that had $65 million under management." In reality, "the SEC said, his purported Onshore Fund was a limited partnership that never had any assets to its name. Schoenberger, it said, spent some of the funds investors gave him on a new house and living expenses."
The SEC stated in an order that "Schoenberger has been a frequent investment and stock market guest commentator on national cable television business news programs. He also served as an occasional business news columnist for a national newspaper and national news website. In soliciting investors, Schoenberger touted his appearances on cable news programs to bolster his credibility with investors, create around himself an aura of success, and entice investments in his scheme" (emphasis added).
Indeed, Schoenberger has made countless appearances on various cable news networks as a financial analyst:
Media outlets like CNBC, The Wall Street Journal, Fox Business, and Bloomberg Television have been giving a platform to a disgraced financial firm that was fined $1.5 million by the Securities and Exchange Commission for engaging in "deliberate fraud" and profiting from "false statements."
The firm, Stansberry Research, heavily markets itself in conservative media by catering to right-wing audiences' fears of President Obama and big government. It predicts doomsday "End of America" financial scenarios that involve waves of violence, "martial law," and the destruction of the American economy. Last year, for instance, Stansberry claimed on its EndofAmerica.com website that on "July 1st, 2014," "'H.R. 2847' goes into effect. It will usher in the true collapse of the U.S. dollar, and will make millions of Americans poorer, overnight." (America and the dollar did not end.)
Numerous observers have criticized Stansberry's marketing practices as "misleading," "dubious," "questionable," and "an example of the worst excesses of financial marketing."
The firm also paid a $55,000 civil monetary penalty to the Social Security Administration in 2011, while not admitting wrongdoing, to settle an allegation it broke federal law.
Continuing a "troubling" pattern, The Washington Post is allowing opinion writer Ed Rogers to defend Wall Street from attacks without disclosing his firm "offers services" to Wall Street interests. The Post also doesn't disclose that Rogers' firm "provides investment banking services" for American and foreign clients.
Rogers is a "Republican mega-lobbyist" who is the chairman and co-founder of the BGR Group with former Gov. Haley Barbour (R-MS) in 1991. The Post noted the firm is one of the top Washington D.C. lobbying firms, having banked more than $15 million in 2014.
Media Matters previously documented that Rogers' firm received more than $1.6 million in 2014 lobbying fees from energy and transportation clients that benefit from positions he repeatedly espoused in his Post writing. The Post and Rogers never disclosed his firm's clients.
The Post has defended the practice, telling Media Matters via email, "His full-time lobbying job is in his bio on every single piece he writes." But such a standard requires readers to actively search federal lobbying records to ascertain if Rogers has clients that might benefit from his writing. Media ethicists have slammed the Post for this "troubling" and "dishonest" standard.
Rogers' undisclosed and conflict-laden commentary extends into other areas beyond the environment, including financial regulations.
Mike Huckabee, who is parting ways with Fox News, has profited from renting his Fox-promoted MikeHuckabee.com email list to a wide range of shady characters, including a medical quack claiming Alzheimer's disease cures; a for-sale stock pundit that was fired from Fox; a financial firm that was fined by the government for engaging in "deliberate fraud"; and a survival food company that profits off of readers' fears of being "herded into FEMA camps."
Huckabee has previously denied responsibility for his shady sponsored emails, telling Media Matters: "You are supposed to read the disclosure and the disclaimer that is a part of the messages. You know, we are simply the conduit to send messages, these are sponsored and I can't always vouch for the veracity."
Fox News helped grow Huckabee's email list, as Fox and the former Republican governor regularly promoted MikeHuckabee.com on his weekly program Huckabee. When visitors reach Huckabee's website, they're asked to sign-up for his email list.
Numerous conservative media outlets are scamming their followers with paid promotions for dubious marijuana stocks. In one instance, a promoted stock had its trading temporarily halted and was part of an FBI-investigated pump-and-dump scheme. In another, fine print acknowledged the promoters had "a direct conflict of interest" that would "negatively" affect "your shares."
Erick Erickson's RedState, Dick Morris, Newsmax, Townhall, and Human Events have all recently pushed the shady investments.
Readers who took the financial advice would have made a bad call as the stocks have plummeted. For example, conservatives sent sponsored emails recommending a company called MediJane at an entry point of $0.85. The stock's closing price on December 2 was $0.03. Dick Morris sent a sponsored email promoting Cannabis-Rx, Inc. on April 14, when it was trading at around $1. The stock's closing price on December 2 was $0.17.
Politico recently reported that pot companies "are a new vehicle for stock scammers promising big returns," prompting federal and state agencies to investigate stock manipulations. Scrutiny is focusing "on pump-and-dump schemes, which involve attempts to inflate a company's share price and then sell, or dump, the stock before unsuspecting investors get wise to the scheme." The schemes are more likely to target "penny stocks," which the Securities and Exchange Commission (SEC) defines as "a very small company that trades at less than $5 per share." Penny stocks are traded over-the-counter instead of on formal exchanges such as the New York Stock Exchange.
The SEC issued an investor alert in May warning that "fraudsters" are using penny pot stocks "to lure investors with the promise of high returns." It cautioned that red flags include "E-mail and fax spam recommending a stock" and "SEC trading suspensions" -- both characteristics of the conservative-promoted stocks.
These shady stock promotions are part of a larger trend of conservatives scamming their followers for profit. Fox Business host Charles Payne was paid to promote now virtually worthless penny stocks. Tobin Smith sent paid promotions for stocks that ended up tanking; he was eventually fired from his position at Fox News for the practice. And Fox News host Mike Huckabee sent sponsored emails touting Smith's recommendation of Gray Fox Petroleum (GFOX); GFOX's price has since tanked and is now trading at a near 52-week low.
Below is a look at two recent marijuana stocks that conservative media promoted to followers.
Conservative pundit Dick Morris, who wrote 2005's Condi vs. Hillary: The Next Great Presidential Race and predicted Mitt Romney would win the 2012 election in a "landslide," now wants you to trust him with your retirement savings.
According to a July 30 press release, Morris is working with Retirement Media Inc. "to educate seasoned investors on how to protect their savings with safe alternatives outside of the stock market." Morris is headlining several events in the next few months where attendees will "hear market predictions from him." The event's website includes a video featuring "A Special Message from Dick Morris" in which Morris warns of people preying on "suckers."
Why anyone would voluntarily listen to "predictions" from Morris is unclear. Morris has a history of comically wrong political forecasting, incorrectly gave credence to warnings of a 2013 stock market crash, and has sent numerous pitches through his email newsletter promoting penny stocks which subsequently tanked and are now virtually worthless.
The former Fox News pundit -- whose tenure was marked by a pattern of ethical misdeeds -- became a national laughingstock after the 2012 election for his enthusiastic prediction that Mitt Romney would win in a "landslide." Other failed Morris predictions included his statements that "it's very possible" Obama would drop out of the race, that Donald Trump was "going to run" for president and "he could beat Obama," that Herman Cain would "overcome" sexual misconduct allegations, and Republicans would "win 10 seats in the Senate" in 2012.
Fox News finally let Morris go in February 2013. He was eventually hired by Philadelphia radio station WPHT for an afternoon program despite having "no ties to Philadelphia save for a few long-ago political consultancy gigs." Morris still makes regular appearances on Fox News -- he has appeared on Hannity eight times this year, according to a Nexis search.
Morris' previous warning of a stock market crash proved wildly wrong. On August 7, 2013, he posted a piece headlined, "Prediction Of A Crash In Next Two Weeks." Morris wrote that Jim Fitzgibbon "predicts a massive drop in the stock market and the economy this month that will continue, with brief spurts upward, until the end of the year and beyond. His track record in predictions is extraordinary." Morris concluded: "This is not a paid ad. It is my heartfelt wish that you hear what he has to say and take it seriously." The stock market did not crash -- in 2013, the Dow Jones and S&P 500 posted their biggest percentage gains since 1995 and 1997, respectively.
An easy way to lose money is to listen to stock advice sent through Morris' email list. Morris has regularly sent sponsored emails for penny stocks -- risky micro-cap stocks that often lack transparency and a long track record -- from dubious compensated stock pitchers who promise to "potentially double or triple your money" and turn "$2,000" into "$132,000." Many of the stocks promoted through DickMorris.com have become virtually worthless. Here are just five examples since 2013 (current stock prices as of posting):
Financial analyst and Fox Business contributor Charles Payne, who has been fined by the Securities and Exchange Commission (SEC), been paid to promote now virtually worthless penny stocks, and smeared the poor as "indebted servants" to the government who are too "comfortable" living in poverty, is being rewarded with his own show, the network announced today.
Fox Business said the show, Making Money with Charles Payne, will debut on June 2 in the evening. FBN executive vice president Kevin Magee praised Payne as having "an incredible talent for identifying growth sectors in the markets and we're excited to launch a new show dedicated to helping viewers spot these emerging investment prospects."
That Payne has a talent for identifying growth may be a surprise to someone who followed some of Payne's previous stock advice. After joining Fox in 2007, Payne was compensated to push the prospects of three stocks, as Media Matters documented in July 2013. Payne used his Fox credentials in promotional materials to assure skeptical investors that his advice was trustworthy. The stock of those companies are now virtually worthless:
The practice of compensated stock endorsements is currently prohibited by Fox rules, and resulted in the contract termination of contributor Tobin Smith. Payne responded to inquiries from Media Matters by ducking questions and scrubbing his corporate website of information.
Payne and his company, Wall Street Strategies, have a problematic history related to the proper disclosure of stock recommendations. In 1999, the SEC announced that while not "admitting or denying" wrongdoings, Payne "agreed to pay a civil penalty of $25,000." The SEC alleged of Payne:
Fox News host Mike Huckabee denied responsibility for shady email pitches sent to subscribers to his email list, telling Media Matters that he is "simply a conduit to send messages" and "can't always vouch for the veracity" of the promoted products.
Huckabee is part of the conservative movement's attempts to cash in on their followers by renting out their email lists to suspect sources. Fox News contributor Scott Brown was recently forced to disown a quack doctor after he sent a sponsored email touting the doctor's dubious Alzheimer's disease cures. Huckabee also sent emails promoting the doctor.
During a press conference held at the annual Conservative Political Action Conference (CPAC) outside Washington, Media Matters asked Huckabee about shady sponsored emails he's sent with his name on it, such as the Alzheimer's disease emails.
Huckabee shrugged off responsibility for the emails, saying "You are supposed to read the disclosure and the disclaimer that is a part of the messages. You know, we are simply the conduit to send messages, these are sponsored and I can't always vouch for the veracity."
Huckabee's sketchy sponsored emails extend beyond questionable medical cures. He recently sent a sponsored email touting the stock recommendation of a financial analyst who was fired from Fox News for ethical violations.
Stansberry & Associates, an investment research firm catering to right-wing audiences' fears of President Barack Obama, has been fined $1.5 million for engaging in "deliberate fraud" and profiting from "false statements." Despite its shoddy history, numerous conservative outlets and personalities including Newt Gingrich, Fox Business, Glenn Beck, Mike Huckabee, Alex Jones, WND, and The Washington Times, have helped legitimize the firm and its wild investment schemes. The firm has also enlisted the help of former Fox News contributor Dick Morris, who has frequently promoted the firm in sponsored video pitches.
Stansberry & Associates was founded in 1999 by Porter Stansberry and claims to have "been predicting the most promising emerging trends and the most influential economic forces affecting the market - with uncanny accuracy - for the past 13 years." Stansberry advertises its services to right-wing audiences with attacks on President Obama and warnings about a forthcoming apocalyptic type collapse of the American government and financial system. Stansberry emails carry subject lines like, "A Survival Secret That Could Save Your Life."
In 2007, Stansberry and his firm -- then called Pirate Investor LLC -- were ordered by a district court to pay $1.5 million in restitution and civil penalties as a result of a Securities and Exchange Commission complaint. As reported by the Baltimore Sun, Stansberry was accused of "disseminating false stock information and defrauding public investors through a financial newsletter ... They claimed investors could double their money if they paid $1,000 for a stock tip involving Bethesda energy company USEC Inc. In total, 1,217 people purchased the report, although 215 of them got their money back after complaining."
A judge in 2007 ruled that Stansberry's activity "undoubtedly involved deliberate fraud" and "making statements that he knew to be false." An appeals court later found that "it would take an act of willful blindness to ignore the fact that Appellants profited from the false statements." Stansberry's defense of his actions can be found here, and a group of publishers, including The New York Times ("The Right to Be Wrong"), defended Stansberry's case on First Amendment grounds.
The Social Security Administration's Office of the Inspector General announced on September 12, 2011, that Stansberry & Associates "agreed to pay a $55,000 civil monetary penalty to the Social Security Administration" to settle an allegation it violated the Social Security Act. The firm settled the case by paying the fine while not admitting a violation. SSA's complaint alleged that Stansberry advertised it services by claiming to have information from "insiders" on how to increase your Social Security check, and "the SSA OIG believed that the characterization of Stansberry's SSA contacts as 'insiders' falsely implied that the information was not available to the public. The claimed 'insider' information was, in fact, available to anyone upon request."
UPDATE: Erickson responded to Media Matters' post by tweeting: "Sorry Media Matters, but I happy [sic] to support a good friend. Didn't earn a penny." Erickson did not address why much of his endorsement of his "good" friend's get-rich-quick plan was lifted from old Ann Coulter emails.
If you're relying on financial advice from Fox News contributor Erick Erickson to become a millionaire overnight, you might want to hold off on buying that boat.
Erickson emailed subscribers to his RedState.com email list this week claiming he's found the "best investment advice I know of, bar none," in the financial newsletter of analyst Mark Skousen. Yet 12 paragraphs of Erickson's signed endorsement are virtually identical to language used by Ann Coulter in emails nearly four years ago.
Erickson's email -- titled, "How to Retire in Comfort Even If You DON'T Work in Government" -- attacks public-sector workers for purportedly living in luxury with President Barack Obama in office. He then endorsed Skousen's newsletter, which purports to reveal a "secret" system to becoming "instant millionaires." Erickson claimed that Skousen "knows how to make you money," and the "best investment advice I know of, bar none, can be found in Mark Skousen's Forecasts & Strategies -- and I urge you to give it a try."
While Erickson's and Coulter's emails contain different openings -- Erickson mocks public sector employees, Coulter criticizes liberals -- the two converge when it comes to pitching Skousen's financial newsletter.
The following is a side-by-side comparison of the Skousen discussion in Erickson's email this week and Coulter's 2009 email. The language highlighted in red is identical, except for several small revisions (go here for a larger image):
A Wall Street CEO charged with defrauding investors and physically threatening associates was a regular and favorite anti-regulation guest for Fox and the network's senior vice president, Neil Cavuto.
Fox News and Fox Business hosted John Thomas Financial founder and CEO Thomas Belesis 24 times in 2012 and January 2013. Fox ironically turned to Belesis to combat negative perceptions about Wall Street and push claims that government regulation is hurting businesses. Cavuto held up Belesis as an example of someone who defies the stereotype of "greedy, selfish pigs" on Wall Street, and called him a "friend," someone with "a good track record," and even encouraged him to run for office ("I'd vote for you").
Watch a video compilation of Cavuto's praise for Belesis:
Fox Business has aired analysis from questionable voices in the past. Fox last month fired analyst Tobin Smith for receiving compensation to promote the stock of Petrosonic Energy, a violation of network policy. Fox Business contributor Charles Payne, who is still employed by Fox, was also paid to promote now worthless stocks, and previously "agreed to pay a civil penalty of $25,000" in 1999 to settle a Securities and Exchange Commission complaint.
Fox's Charles Payne responded to a Media Matters inquiry about his recent paid promotions for company stocks by declining comment on all but one question. Payne, or his firm, also appears to have scrubbed a webpage on his company's website connecting him to one of the company stocks in question.
Media Matters reported earlier today that Payne, a contributor and frequent guest host for Fox News and Fox Business, was compensated to promote the now worthless stocks of three companies (Brainy Brands, NXT Nutritionals, and Generex) since joining Fox. The practice of compensated stock endorsements is currently prohibited by Fox rules, and resulted in the recent contract termination of contributor Tobin Smith.
Payne responded to a Media Matters inquiry by declining to comment except for one question. Media Matters had asked Payne:
1) How many times has Payne, or his firm, received compensation to promote the stock of a company since October 2007?
2) How much did Payne, or his firm, receive to promote Brainy Brands Company, NXT, and Generex?
3) All three companies' stock prices appear to be virtually worthless now. Do you have any comment on how these stocks have fared given Payne's forecast?
4) Can you confirm that Payne was involved in setting up the websites Afterthecrashwinners.com, Investafterthecrash.com, and Postcrashgains.com?
5) MarketWatch reported that Fox rules state "no Contributor to FBN, nor his/her firm, and/or family members are allowed to accept financial consideration of any kind whatsoever to issue research, advertisements, or to otherwise promote individual stocks or securities." Did Payne's compensation to promote the stocks of Brainy Brands, NXT, and Generex violate this policy?
6) In 1999, Payne reached a settlement with the SEC to settle a claim without confirming or denying wrongdoings. Is Fox aware of the SEC settlement?
Payne responded this afternoon: "Never heard of any of the websites your [sic] mentioned and only affiliated with www.wstreet.com. There are no other comments to you or your organization."
A webpage on Payne's Wall Street Strategies site -- housed at www.wstreet.com/brainybrands/default.asp -- previously advertised an offer for "Charles Payne's FREE 10-day Bonus Report--Spotlight on a Winner: How Brainy Brands Is Poised to Take Over the Multibillion-Dollar Early Education Industry (a $19 value)." Media Matters linked to the webpage in its original report, and the URL was functioning prior to posting. Now, however, the URL redirects to www.wstreet.com/signup/newsletter.asp, which doesn't contain any mention of Brainy Brands. The original page is still accessible via Google Cache and is screenshotted here (see a Google search for the site here). The page carried a 2011 copyright date.
Charles Payne, a contributor and frequent guest host for Fox News and Fox Business, was compensated to promote the stocks of at least three companies since joining Fox. The practice of compensated stock endorsements is currently prohibited by Fox rules, and resulted in the recent contract termination of contributor Tobin Smith.
According to a Media Matters review, Payne was paid $40,000 to promote The Brainy Brands Company, "$25,000 by a third party" to promote NXT Nutritionals Holdings, and an undisclosed amount for a "consulting arrangement" to promote Generex Biotechnology Corporate.
The share prices of the companies Payne was paid to tout are now essentially worthless.
Payne forecasted lofty gains for investors who bought those stocks. He projected in 2011 that Brainy Brands could hit $4.50 a share in three years. At the time of the pitch, Brainy Brands was trading at around $1.35 -- it's now below 1 cent. Payne claimed in 2009 that NXT could "turn $10,000 into $25,000." At the time, NXT was trading for $2.00 -- it's now below 1/10th of a cent. And Payne claimed in November 2007 that Generex, then at $1.58, was a long term "screaming buy" which could hit $7.00. It's now trading at roughly 4 cents.
Aside from rosy projections, Payne's sponsored stock pitches shared a common theme: using his cable news and Fox credentials to assure skeptical investors that his advice was trustworthy. A direct marketing company which worked with Payne stated it brandished Payne's Fox News connections "to build credibility" with his potential customers. The stock pitches were also used as a vehicle to entice readers to join Payne's subscription newsletter.
Fox policy prohibits contributors from receiving compensation to promote a stock. MarketWatch -- which, like Fox, is owned by News Corp. -- reported on June 18 that a spokesman said "no Contributor to FBN, nor his/her firm, and/or family members are allowed to accept financial consideration of any kind whatsoever to issue research, advertisements, or to otherwise promote individual stocks or securities." As a result of the rule, Fox News fired contributor Tobin Smith, who regularly releases sponsored research reports (Smith claimed his contract "did NOT include any exclusion from me or my company sponsored research").
While Fox currently prohibits financial arrangements like Payne's, it's not clear whether his actions specifically violated Fox rules. MarketWatch quoted Smith claiming that the rule was instituted in "late" 2012, or after the three Payne stock promotions studied in this report first occurred. It's also not clear if Payne has been compensated for stock promotions after 2011. Regardless, even if Payne's actions occurred before an official Fox policy, he still used Fox's brand to engage in practices that the network now thinks is problematic enough to prohibit and fire an employee.
Fox and Payne did not respond to requests for comment.
Payne and his company, Wall Street Strategies, have a problematic history related to the disclosure of paid stock endorsements. In 1999, the Securities and Exchange Commission (SEC) announced that while not "admitting or denying" wrongdoings, Payne "agreed to pay a civil penalty of $25,000." The SEC alleged of Payne:
The Complaint alleges that on at least eight occasions, Wall Street Strategies recommended that its clients purchase Members stock through recorded messages on its telephonic stock recommendation service. The Complaint also alleges that Payne failed to disclose that he received payments from Members to promote Members stock.
More about Payne's alleged actions are contained in this May 1997 SEC release.
In this report:
Fox News has fired paid contributor and market analyst Tobin Smith for receiving compensation to promote the stock of Petrosonic Energy, a violation of network policy. According to a Media Matters review, Smith's company, NBT Equities Research, also received compensation for promoting numerous other companies through his website and conservative newsletters, and used his Fox News credentials to hawk volatile stocks to conservatives.
MarketWatch's Chuck Jaffe reported that Smith issued "sponsored investment research" to tout Petrosonic's stock in a 20-page mailer, for which NBT received $50,000. The paid endorsement is against Fox's policy that "no contributor to FBN [Fox Business Network], nor his/her firm, and/or family members are allowed to accept financial consideration of any kind whatsoever to issue research, advertisements, or to otherwise promote individual stocks or securities." In a post today on his website, Smith acknowledged that he is "no longer a Fox contributor" but defended his "business of sponsored research for uncovered emerging growth companies." He also wrote: "For the record, my last contributor agreement with Fox News did NOT include any exclusion from me or my company sponsored research. But that is water under the bridge."
MarketWatch -- which, like Fox News, is owned by News Corp. -- noted that companies hire people like Smith for sponsored research "to help small stocks find a market using fluff-and-shine hyperbolic chatter" at novice investors.
Smith's company produces voluminous quantities of sponsored content. In June alone, NBT's website has featured posts by Smith with compensation disclaimers for GlyEco ("200,000 options of GlyEco"), Petrosonic ("$50,000"), Brazil Minerals ($40,000), Barfresh Food Group ("$35,000 and 75,000 restricted shares"), and Pulse Beverage ("$50,000").
Smith also regularly pitches paid stock promotions to conservatives through right-wing email newsletters. Media Matters identified at least six recent instances in which Smith's NBT Group was compensated to promote a company's stock via Townhall.com newsletters. The companies include Medient Studios in 2013 ("225,000 shares"); BOLDFACE Group in 2013 ($50,000); IceWeb in 2012 ($50,000 via a third-party firm); Plandai Biotechnology in 2012 ("$30,000 monthly and 1.4 million shares for a one year"); Replicel Life Sciences in 2012 ("a fee of over $1000.00 in cash"); and Petrosonic in 2012 and 2013 ($50,000).
Since mid-December 2012, Smith has sent compensated Petrosonic advertisements to subscribers of email lists for Townhall.com, National Review, Dick Morris Reports, and CainTV, which is run by Fox News contributor Herman Cain.
MarketWatch wrote that Smith's Petrosonic advertising pitches ignored several problems with the company's finances, including its lack of revenues, "Petrosonic's rising losses, negative cash-flow and the 'going-concern letter' from auditors who think there is 'substantial doubt' in Petrosonic's ability to survive."
Other stocks that Smith promoted to conservative newsletter subscribers paint a similarly rosy picture of volatile companies with low share prices. At least two stocks are now virtually worthless: BOLDFACE Group closed yesterday at $.06 and IceWeb closed at $.02. Two other companies, Plandai Biotechnology and Replicel, are both trading at between approximately $.50 and $.65. And Medient Studios is trading at near $1 a share.