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The Deal: Microcap Stocks Get Undeserved Promotions

Goff is also one of several penny stock companies and stock-promotion newsletters that were named as defendants in a lawsuit filed in May, alleging violations of California's law against spam e-mail.

Hotstocked.com, which tracks paid stock promotions, has reported that at least a dozen e-mail campaigns had been undertaken by promoters in May, who were paid $67,500 by an entity called Winning Media and other parties to recommend Goff shares. The information is based on the legal disclaimers on the promotional e-mails. At least one of the promotions stated that Goff stock was poised to "bounce 50-100% from current levels."

The promotion of Goff had been under way since March, according to PromoBuyer, another site that tracks promotions. It posted a screenshot of a mailer sent by stock promotion newsletter Penny Stock Pillager. Its publisher, Capital Financial Media, had received and managed a production budget of $2.2 million for its promotion of Goff, according to the legal disclaimer in the mailer.

Aside from the efforts of stock promoters, Goff appeared to be trying to raise its own profile. It put out at least 26 different press releases from March 15 to May 6, announcing new developments in its claimed gold mining project in Colombia.

At the same time, Goff has disclosed little about its mining projects in its filings with the Securities and Exchange Commission. As of the end of 2012, Goff was a development-stage company whose only asset was $5,653 in cash, according to its most recent quarterly filing with the SEC.

Efforts to reach Goff management for comment failed. The phone number listed on Goff's SEC filings no longer works and an e-mail sent to the company from its website bounced back as undeliverable.

Seeking Alpha said in its article acknowledging the paid-for articles that it wasn't aware of them until The Motley Fool market commentary website published a story about the Goff promotion on May 15.

Stock promotion is not illegal, in and of itself. Investor relations specialists often promote their clients' stocks to investors and the media. Promotion is said by many small-cap market observers to be a necessary task for microcap companies, as even those with legitimate business prospects often have trouble attracting attention from investors.

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