AMC Retail Project Popcorn Scam:
Retail owns AMC and their ownership was stolen from them by heist. AMC Retail Shareholders seek the recovery of the company they legally and ethically purchased.
Retail investors began acquiring AMC shares in 2020, taking on a percentage of the company's ownership in the form of AMC Class A common stock. They observed that short sellers, as well as debt holders, were breaching their fiduciary duties to AMC by devaluing its shares and overall market value. Instead of divesting their holdings, retail investors purchased an even larger share of AMC's common stock.
However, AMC's management seemed to collaborate with parties that had an interest in weakening the stock's value. Consequently, the Board of Directors released all of the company's reserved common stock into the market and diluted shareholders by 390% within 6 months. Retail investors responded positively and bought all the newly-released shares. Meanwhile, debt holders and short sellers began to flood the market with an excessive amount of shares, without first borrowing or purchasing a single available share for shorting. This led to a significant increase in the daily 'failed-to-deliver' shares. Despite these challenges, retail investors continued to accumulate more common shares that were sold to them.
On multiple occasions, AMC’s CEO stated that retail investors owned 80-95% of the company. However, many retail investors believe they own far more than that percentage, as they have been legally and in good faith purchasing and continuing to purchase shares. Suspicion arose when the board sold off the company's entire reserve of shares, along with their personal shares, at high prices capitalizing on retail investors' enthusiasm to buy at any cost.
Due to these actions, retail investors started demanding an accurate share count to properly determine the company's ownership structure. They wanted to curtail the activities of predatory short sellers and debt holders who might be selling additional unauthorized shares. Despite these concerns, the board declined to comply, choosing instead to engage in what is known as “Project Popcorn”.
“Project Popcorn” was nefarious scheme that violates multiple ethical and legal standards. The Board did not only severely breach their fiduciary duties to shareholders but also created actions where the results of the project favors parties with economic antagonism, facilitates insider trading, and defrauded nearly 3.8 million individual investors out of their savings, which, for many, constitute a significant portion of their financial reserves.
The essence of 'Project Popcorn' allowed participating entities in selling an unlimited number of company shares over the next two years with impunity. They planned to convert 50 million preferred shares into 5 billion shares, effectively diluting the total number of legally issued common shares by a factor of 10. Various illicit methods were used to secure a majority vote on the conversion, thereby wresting control of the company from retail investors and draining their financial resources. The excess shares sold by debt holders would subsequently be concealed. Evidence for this scheme purportedly exists in internal emails between the board and Citigroup, which holds the majority of AMC's debt.
Moreover, despite retail investors' efforts to promote and purchase the company's products, as well as propose alternative methods for capital raising, the board is accused of undermining the company's financial strength. They are alleged to have taken on additional debt primarily arranged by Citigroup. Citigroup, meanwhile, is alleged to have been short-selling the company's shares and signaling a low target share price of $1.5, even as AMC shares had reached highs of $72.
Imagine a company that owns a high-rise apartment complex with 500 million apartments. Ownership of the complex is determined by dividing these apartments into shares, each with a registered deed. In this scenario, there are over 3.8 million retail investors who, according to a 2021 survey involving a sample size of 71 million votes, collectively own 72 million shares an average of about 1,014 shares per retail investor. Simple arithmetic suggests that these retail investors could, on average, hold over 4 billion shares in a company that is legally supposed to have only 519 million shares.
In essence, the board and their lenders appear to have sold more shares than the company actually has, essentially selling the same 'apartment' multiple times. Retail investors bought these shares in good faith, but it is alleged that the board colluded with bad actors to implement a scheme called 'Project Popcorn' to essentially rob retail investors of their ownership. Despite having bought shares at all price points offered, retail investors now find themselves in a precarious situation.
Allegedly, the board and other involved parties used financial maneuvers like reverse splits and conversions to obscure the over-issuance of shares. The goal appears to be to reclaim control of the company and leave retail investors holding worthless shares, while those who orchestrated this alleged scheme continue to hold both the debt and the valuable shares. Retail investors, therefore, are left fighting to recover ownership of a company they believe they already own.