GET OUR LATEST REPORTS DELIVERED TO YOUR INBOX
As some of you might know we have been keeping a close eye on GRN Holdings Corp. (Pink: GRNF) (formerly Discovery Gold Corp. DCGD) over the last couple of months and in the process have written three short posts which shed some light on this very dubious stock. Despite the information we have unearthed (which in our opinion offers plenty of reasons to not purchase this stock) GRNF/DCGD continues to be hugely overvalued, trading at around $0.90. We have thus compiled the information from our previous reports/posts and some new findings into one article in an attempt to make investors and traders aware of the many red flags this ticker raises.
GRN Holdings Corp. is the dictionary definition of a shell. At the present time it has no assets and no revenue, and this has been the case during most of the years it has existed under different names. It first became publicly traded in 2010 under the name of Norman Cay Development, Inc., at the time it was in the business of wireless phone and service plan resale (a curious name when one considers Norman Cay is a Caribbean island that acted as drug trafficking hub for Pablo Escobar’s Medellin Cartel). In 2012, it changed its name to Discovery Gold Corp., and became a mining company with prospective operations in Ghana. Between 2012 and 2018 no revenue was generated and the number of outstanding shares increased from less than 50 million to over 240 million.
On June 25th 2019, Justin Costello acquired a 55% stake in GRNF/DCGD when he purchased 139 million shares of common stock for the sum of $300,000 ($0.0021 per share) and was appointed as new CEO. Since then GRNF/DCGD has gone from being a sub penny stock to surpassing the $2.00 mark on September 11th. The reason touted for this is that Mr. Costello is supposedly a successful businessman and multi-millionaire who intends to transfer assets of his businesses into DCGD, something that is yet to happen as demonstrated by GRNF/DCGD’s latest 10Q which clearly states that assets and revenue remain at zero (1).
This is all perplexing to say the least. Why would a stock experience such a drastic price increase despite there being no concrete evidence of a supposed merger months after the Mr. Costello’s acquisition? And why would a successful businessman be willing to merge his multimillion-dollar businesses into a heavily diluted shell of which he only has 55% ownership?
GRN Empire?… Really?
For the sake of argument let’s assume the supposed merger will be taking place. If this is the case then Mr. Costello’s other businesses must be inspected more closely in order to determine whether they are valuable enough to warrant the drastic price increase GRNF/DCGD has experienced over the last few months. However, a quick look at the GRN Funds (2) and the GRN Holdings (3) websites will reveal little to no information. This has not always been the case. On August 8th we published the second part of our report on DCGD and we took several screenshots of GRN Funds’ website because at the time it contained information about Mr. Costello’s other supposed business ventures. GRN’s website stated that they are “proud to manage an overperforming portfolio of brands” but they only 5 were listed on their website; One Source CBD, Pacific Media Group, Pacific Merchant processing, Seed Science CBD and Soulshine Full Spectrum CBD.
One Source CBD’s website seems to no longer exist as the domain name is currently up for sale (4). Seed Science’s main website page clearly states that their products have not been evaluated by the FDA (5).
We have been unable to find Pacific Media Group’s website. Soulshine’s wide spectrum CBD’s website (like Seed Science CBD’s) states that the statements on the website have not been evaluated by the FDA in a disclaimer at the bottom of their website’s main page (6).
Pacific Merchant Processing’s Instagram page is currently inaccessible (7). Their Facebook currently has 57 likes and 59 followers despite being up since 2017 and it only used to have 4 likes and 5 followers three months ago (8).
One would think that if GRN Fund’s investments are “overperforming” they would present themselves competently or at least have a better online presence. And it would appear that GRNF/DCGD now agrees with us as their main websites have been under maintenance for the last month or so meaning that the above “businesses” are no longer featured on it. It is almost as if they were trying to cover their tracks. This theory becomes more plausible when one realises that GRN Funds is not even registered as an investment adviser with the SEC as revealed in a Seekingalpha article by White Diamond Research (9). Hardly what one would expect to find when having a look at the investments of a fund that claims to manage over $1 billion and have $600 under deposit (this information has also disappeared from GRNF’s websites, luckily, we got hold of a screenshot).
This is undoubtedly suspicious and raises many questions about the legitimacy of GRN’s portfolio and business as a whole.
Now we move on to the CEO, Justin Costello. He is a self-proclaimed multimillionaire/billionaire and supposedly the man to take GRNF/DCGD from the pink sheets all the way to the New York Stock Exchange… or at least this is what some accounts/profiles on twitter and other social media sites would make you believe (10) (11).
However, there are a few reasons to be sceptical about Mr. Costello. Firstly, it would appear that he has links to twitter promoters, a quick look at GRN Holding Corporation’s twitter account (@IncGrn) will confirm this account mainly follows penny stock/pumping accounts as opposed to cannabis industry accounts. The main one being @LlcBillionaire who has been incessantly promoting DCGD for a few months now and even met Mr. Costello in New York City recently (11). It could be argued that it was simply a CEO meeting a shareholder, but it does seem very curious that it happens to be a shareholder who spends most of his time promoting/pumping OTC stocks. Furthermore, Mr Costello spends a lot of time engaging with potential GRNF shareholders on Facebook and Ihub. How does the CEO of “billion-dollar” fund have enough time at his disposal to spend the bulk of it on social media? In our opinion a CEO of a pink sheet company/shell exhibiting this kind of behaviour is a massive red flag and strong indicator of potential illegal activity.
And there is more. Mr. Costello has also been caught lying. A look at GRNF/DCGD 8K filing from June 25th 2019 will reveal that Mr. Costello is Harvard Business School Graduate (12). This claim was proven as false by White Diamond research, who contacted Harvard Business School only to find out that Mr. Costello had never attended this institution (9). This put Mr. Costello in a very compromising position and he reacted by posting a long letter on the grnholding.com in which he states that he never attended HBS and claiming that he attended Harvard University instead.
Mr. Costello didn’t react well to being exposed as a liar as he went on to issue cease and desist letters to SeekingAlpha, Eli Hoffman (the owner of SeekingAlpha) and White Diamond Research claiming that the article which exposed him was “false” and defamatory (13) (14) (15). Which is ridiculous when one considers that Mr. Costello conceded that he had lied on the 8K filing as he acknowledged that he never attended HBS. This shows that he is willing to be dishonest about his credentials on an SEC filing, is willing to cover up his false statements and is also willing to threaten legal action however baseless and contradictory it may be.
Furthermore, on September 15th 2019, Mr. Costello threatened to “send his people” after three separate employees of Salish lodge & spa. As a result of this incident, he was arrested by local authorities after which he proceeded to threaten and harass the officers in charge of his arrest (16). Although the case has already been closed, this type of behaviour should hardly be expected from a person at the helm of a multimillion-dollar business, particularly when it is clear this was not an isolated incident as Mr. Costello is named as a defendant in four other Washington courts cases over the last 5 years (17).
It should also be noted that in 2017 Mr. Costello was trying to sell a group of twelve cannabis businesses for the sum of $60-$70 million (18), and it seems that there were no takers as no news have been ever published about the sale. This makes one wonder how much has changed over the couple of years and whether Mr. Costello is still trying to make money by selling his “businesses”.
Yet another concerning finding about Mr. Costello are the views he has previously expressed about penny stock reverse mergers. On an article published on November 2017 Mr. Costello stated “a lot of people are trying to do these reverse mergers and penny stock deals. That’s a big red flag. All they’re trying to do is make a play and make money on your business” (19). This statement is particularly worrying when one bears in mind that the number of unrestricted GRNF/DCGD shares has increased from 36.5 million to 47.4 million between August and November this year (20). It would thus appear that Mr. Costello himself is well aware that what he is doing is very suspect.
One more reason to be worried and sceptical about GRNF is Mr. Costello’s alleged links to Canal Capital Corp. (COWPP) which were referenced in pump tweets by the account @computerbux (another infamous twitter pumper who has been pumping GRNF/DCGD for months). These tweets have now been deleted but once again we have a screenshot as evidence.
COWPP shares were suspended by the Securities Exchange Commission (SEC)on November 1st 2019 due to “concerns about the adequacy of information in the marketplace about the company’s operations and operating status, if any, and due to recent potentially manipulative trading activity” (21).
Mr.Costello’s dirty business partner
And last but not least we have what is arguably GRNF’s dirtiest secret. It has to do with Robert Leslie Hymers III, he is Mr. Costello’s managing partner at Microcap Advisors. Hymers is a CPA and a scammer/fraudster with a proven track record. His first legal ordeal involved Mets former centre fielder Lenny Dykstra, who after retirement experienced unlikely success by picking stocks. Hymers was his accountant. Dykstra ended up being accused of bankruptcy fraud, obstruction of justice, filing false financial statements and grand theft auto. Hymers was involved with it all and ended up being indicted with Deputy District Attorney Alex Karkanen stating: “He scammed everybody he knows. They faked pay stubs. They faked income information for the company. They made it all up on a laser printer at home”. Maria Ramirez, head deputy district attorney in charge of the auto fraud unit, said Dykstra’s company, Home Free Systems, “doesn’t even exist.… He’s hardly a financial guru.” (22). According to Reuters, Dykstra was sentenced to three years in prison and Hymers copped to a no-contest plea count of identity theft as part of plea bargain (23). This raises some serious questions about whether Microcap Advisors exists or is simply a fake business put in place in order to make GRN Funds supposed reverse merger into GRNF appear to have some substance.
This is not Hymers’ first problems with the law. It turns out he was also complicit in Erick Hansen’s BlueStar Digital Technologies fraud case which was subject to an FBI raid in 2014 (22). Hymers was BlueStar Digital Technologies’ associate producer and production accountant which meant he was sentenced to probation despite denying he was complicit in BlueStars’ illegal activities (24).
In our honest opinion GRNF/DCGD is a pump and dump scam as it ticks all the boxes. Majority stake in shell purchased for less than a cent a share by dubious unregistered hedge fund that has hidden all information on its websites (i.e. covering tracks), check. Massive social media promotion and drastic increases in share price and volume on the basis of a supposed reverse merger, check. CEO of hedge fund that lies about education, spends a large fraction of his time engaging with shareholders, gets in trouble with the law regularly, has dealings with people who have previously been involved with fraud, sends baseless cease and desist letters and has links to prominent twitter pumpers and to shares that have been suspended by the SEC, check.
We thus advise investors to stay away from GRNF/DCGD and believe significant profits can be made on the short side provided the SEC gets its act together and looks into this very dubious matter.
If you found this short report useful please consider signing up for our premium service. You will receive our short reports directly to your email before they are published on our website and will also gain access to a due diligence, research and trading chatroom.