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Citron Exposes Medbox CEO Sales, Irregularities with Form 144 Filings

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Citron Research published an article on Monday morning warning investors about Medbox, a popular OTC marijuana stock. The report analyzes the insider sales of Bruce Bedrick, CEO of Medbox. The note is titled “Medbox - We Have Seen the Pump, Now Here Comes the Dump.”

Earlier in February, Dr. Bedrick filed two Form 144 documents, one showing he sold 30,000 shares in 2013, and another showing 33,000 more shares were sold on January 7th, 2014. Form 144 is a notice of “proposed” sales of securities. In the second form, Bedrick leaves the “date of notice” line incomplete.

“Both of the forms list the source of the stock as a ‘gift' of 500,000 shares from Vince Mehdizadeh on 10/8/2102,” according to Citron. The research firm noticed a similar transaction in Longtop Financial, a Chinese company that managed to lie about $332 million in cash it claimed on its balance sheet.

Additionally, both of the Form 144 documents were submitted in paper form instead of electronic filings. Citron goes on to say“casual investors would not see them...until its too late” due to paper submissions not hitting the Pink Sheet stock website. Only after two weeks did the filings even appear on Bloomberg, Citron said.

While both filings were received the same day (February 12th), Citron noted Bedrick “lists two completely different amounts of outstanding shares for Medbox, varying by 100%.”

Shares of Medbox are down nearly 3 percent amid the negative Citron piece. The stock last traded at $27.20.

Posted-In: News Short Sellers

 

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