Penny Stock Company sues author Randall Lane on alleged Lenny Dykstra stock pump report

July 1st, 2010
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Contributed by: Teri Buhl
Former Mets star Lenny Dykstra and a small Southern California publicly traded company have been wrung through the media gambit this week when former Trader Monthly E.I.C. Randall Lane broke news alleging they were involved in a pay for play for stock promotion. Or at least that’s what you might think if you read Lane’s explosive excerpt from his book The Zeros at The Daily Beast on Monday. A story that Shannon Illingworth, CEO of AVT, the accused penny stock company that Lane tries to oust in his book, told HedgeTracker he thinks is littered with falsity and negligent attention to the facts. So much so that his company has just filed a $100 million lawsuit in Orange County Superior Court against Randall Lane and his book publisher Penguin. Talk about knocking a punch back.

Lane (and the team who published his book) are now faced with civil charges for: libel, false light, negligence because his tantalizing reporting, according to Illingworth, has led to the SEC calling his transfer agent to investigate if anyone from Team Dykstra received stock in the company and why. Additionally AVT is now fielding a slew of serious phone calls from its investors concerned if they are tied into a company that could be in trouble with the SEC (source)

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The most troubling news for all parties is Lane’s book alleges that AVT issued 250,000 shares to Lenny Dykstra, via his brother-in-law Keith Peel, in exchange for access to CNBC’s Jim Cramer and stock promotion in Dykstra’s newsletter that had a publishing deal with Thestreet.com. Peel worked for Dykstra in an assistant role. Lane in fact, says he saw stock certificates issued to Peel, which his single source Richard O’Connor, who worked as a consult for AVT, says he got from a staffer of the publicly traded company. What Lane left out of his report is that O’Connor has a major ax to grind against Illingworth and AVT. He was fired by AVT for not delivering on his fund raising and marketing commitments and then was sued by the company for libel and false claims in Orange County Superior Court. AVT won a judgment against O’Connor for $37,569.82 , which according to Illingworth, O’Connor has yet to pay. O’Connor could not be reached for comment at press time.

Lane told the New York Post when they reported AVT issued a cease and desist order against Lane, that he stands by the book "in its entirety’ (source). We’re sure he does, except let’s not forget the hard-on Lane has for Dkystra who pulled a million dollar financial newsletter business from his company, Doubledown Media, in early 2008.

While Illingworth admits the stock was issued as a private placement with restricted shares on March 25th, he says Team Dykstra never took possession of the stock - you have to physical hold the stock certificates to cancel it. The plan was to pay Lenny and his brother to help them get AVT’s vending machine product in front of the Major League Baseball teams. On April 9th when Illingworth reviewed the deal O’Connor had set up and decided Dykstra and his brother didn’t have the influence to get his product in front of people who would buy it - he canceled the stock issuance. It wasn’t till June that Dykstra then published a short story on why AVT was a favored stock pick to his 100 plus paid subscribers – a story that never made it to TheStreet.com but was noticed and reprinted at an options trading blog. In his newsletter he writes:

The company's shares are under a buck and give investors a lot of potential upside. In the interest of full disclosure, I am long in shares of AVT and am now a consultant to the company's CEO Shannon Illingworth. I like this company so much that I have some skin in the game. You can't ask for much more of an endorsement than that.

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