Short VUZI. Fraud.
March 16, 2018
- This report is the opinion of the author. The author is short VUZI.
- Vuzix recently used an undisclosed stock promotion involving dozens of mainstream media outlets to artificially inflate the share price and volume, and then raise $30 million
- Photos of leaked documents from IRTH Communications show IRTH bragging to potential clients that it was responsible for more than 30 articles from mainstream media outlets which all simultaneously erupted in connection with Margolis’ “Alexa ruse”. These specific IRTH sponsored articles were conspicuous in that they offered effusive praise for Vuzix but appeared as standard news on dozens of mainstream sites
- The information contained in the articles and product reviews was flat out wrong, but was then repeatedly re-broadcast by Vuzix (esp. Margolis) in order to inflate the stock. Margolis made heavy use of social media, adding the $VUZI ticker next to the sponsored articles
- Vuzix’s “Blade” is little more than a low tech mock-up which serves as a prop for journalists to conduct sham reviews. When these journalists “reviewed” the product at CES, neither the Alexa feature nor the browser were functioning – not for any of the journalists. Yet these same journalists then widely touted the device in their mainstream bylines, overwhelmingly on the basis of the Alexa features that actually don’t exist !
- Matt Margolis conceals his past employment by multiple fraudsters who had also been behind undisclosed promotions on Vuzix for years. Margolis’ former employer Mark Gomes was shut down under SEC fraud proceedings in September just after running his latest promotion on Vuzix
- With a separate promoter, Margolis was actively promoting Cemtrex and other IRTH clients without disclosing that he was being paid via IRTH Communications. Cemtrex subsequently collapsed.
- Vuzix’s recent “Alexa ruse” was actually a recycled ploy that Margolis had used on Vuzix in 2016,while he was still employed by outside promoters. Just like with the “GoPro ruse” in 2016, adding Alexa functionality costs nothing and can be done in just one hour by downloading a simple developer kit. Margolis then uses this non-event as a pretense to run a stock promotion
- Over the past 11 months, we have seen a very visible acceleration in SEC enforcement against this exact type of fraud. The recent undisclosed IRTH promotions were now too blatant and were then used for an immediate $30 million capital raise at $9.95. Investors in that offering ended up seeing nearly immediate losses after the pump campaign stopped.
