Whenever it seems the fun must come to an end, DeRoos cooks up yet another zany scheme.

CDFT in a nutshell

And there are plenty of nuts to go around. DeRoos’s adventures in our capital markets began in 2010, when he decided to take the credit card transaction company he’d run for years public. The attorney he chose to prepare his initial S-1 registration statement was the notorious Diane Dalmy. who by that time had already been relegated to OTCMarkets’ Prohibited Attorneys list. We reported on a promotion run by the company—one paid for by an illegal issuance of S-8 stock—as early as 19 September 2012. That S-8 issuance was promptly cancelled when we exposed this embarrassing mistake.

Shortly thereafter, DeRoos somehow hooked up with Canadian Javan King and his Syndicate Trust, and a few months later described the wonders of this new relationship in an interview with Nanocap Magazine. (Nanocap was then owned by King; it has since been sold to Olie, Inc .— OLIE —the same OLIE that was suspended by the SEC in January.)

King’s plan for CDFT. and for all the companies he advises, was that they should uplist to an exchange. To accomplish that feat, rare for OTC issuers, they would need to do several important things: acquire assets sufficient to meet the listing requirements by paying for them with anti-dilutive convertible preferred stock; pay common shareholders a dividend in a different series of convertible preferred; do a gigantic reverse split to reduce the float to almost nothing; have those shareholders reconvert their new preferred to restricted common stock; and—finally—file an S-1 offering with the SEC to register the restricted common shares and reconstitute the float. It would, however, be reconstituted at a much higher level: DeRoos intended to price the offering at $2.50.

King’s program for CDFT was well documented in an article written for Promotion Stock Secrets. For the purposes of this present piece, suffice it to say that the program did not work out as intended. The S-1, promised for 31 July at the latest, never appeared, so shareholders were stuck with their restricted stock.

The Riad bond scam

Since the first few asset purchases, once appraised, turned out to be worth less than anticipated, a new one, much more valuable, was needed. Sometime in June or July, it seems, DeRoos met Joseph E. Riad, a strange character who claims to own more than 700 U.S. Treasury bonds with a face value of $1 billion each. Riad had no trouble working his wizardry on the hapless DeRoos.

Joseph E. Riad

Riad was introduced as a new member of Citadel’s board on 15 August, 2013. While the relative press release made no mention of the his fabulous bond trove, CDFT investors learned of it when they researched Riad, and naturally the sheep were thrilled by the revelation. Ten days later, a second over-the-top announcement appeared, proclaiming that a valuation of a portion of [Riad’s] personal assets had shown him to be worth a cool $43.8 billion, making him the third-richest man in the United States. Obviously the bonds were not included in that valuation.

Here’s a photo of one of Riad’s bonds, which are actually described both as bonds and gold certificates, in reality two entirely different animals. The color is explained by the use of a yellow filter by the photographer: