If you find yourself in a similar situation contact your lawyer. You, as a stockholder, can sue. The courts are the best place to adjudicate this. Conditional upon advice from the law firm contact the SEC, the state financial regulators, e.g. DFS in New York, and the state DOJs. This is not to elicit enforcement action, simply to put a time-stamp on the complaint.
>The con artist would then “help” the company execute a Reverse Merger...[then dumped his] stock prematurely or used insider information to sell off. This ultimately caused the stock to crash and the public market to be stuck with the loss. Meanwhile you, the unknowing founder, probably end up in jail.
This is not evidence of pump and dump. There was a dump which may have violated lock-up terms, fair disclosure, or insider trading rules. But I don't see a pump, just a reverse merger and liquidation by an investor. The classic pump and dump involves acquiring a position in an illiquid stock, spreading false information to get investors to bid up its price, selling out of the position at a profit, and leaving the market to figure out it overvalued the stock.
Also, you will not go to jail. You can be incredibly stupid, down to hiring a chimpanzee chairman who moonlights as a special advisor to the board to take your company public via a reverse merger (he read about it on StockTwits) who liquidates his investment on the day the lock-up ends, thereby hosing every other stockholder, and still be well within the law, which punishes fraud, not naïveté.
>Here were a few reasons why it didn't get covered: ...b) Too difficult to prove
The threshold for the Wall Street Journal, Bloomberg, et al to report purported fraud isn't astronomical. They can claim first amendment protection and like to break this kind of information for short sellers.
>The international holding company was actually an organized crime group, with offices in Barbados and the Cayman islands committing fraud in the US.
This line set off alarms because I've experienced, first hand, how difficult it is to get information about a Cayman holding company or trust in person, let alone remotely, let alone before 2008.
>In order to silence the class action lawsuit from Texas, the fraud portfolio company ultimately filed for bankruptcy and settled with the investors.
If this is true, the class action settlement is illegal - you are not allowed to take payouts from a fraudulent scheme. Further, it is unlikely that the victims of a fraud would settle via a class action lawsuit (versus privately and bilaterally), let alone settle at all. The former deputy director of the CIA could probably manage a phone call to a DOJ.