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The case involving the fraud perpetrated by Russ Wasendorf, Sr. continues to get worse as more information comes out.

The Iowa department of revenue announced that Russ Wasendorf, Sr. also duped them, out of approximately $14 Million in unpaid taxes:

Russ Wasendorf Sr. duped customers, regulators and his colleagues as he pulled off a 20-year, $100 million fraud at his Iowa-based brokerage. The state's tax collectors say he and his ex-wife also duped them, and that the former couple owes Iowa more than $14.1 million in unpaid taxes, interest and penalties.

The Iowa Department of Revenue filed an assessment in November against Russ and Connie Wasendorf, alleging they underreported their taxable income between 2001 and 2009 by about $75 million and dodged $6.6 million in taxes as a result, according to court records released this week.

This announcement comes at a bad time for the case, now seeing more bills associated with it adding up. PricewaterhouseCoopers, one of the world's largest accounting firms, submitted a bill for $1.6 million for about 4,239 hours of work between July 22 and October 31, according to a filing in Peregrine's bankruptcy case on Monday. On Friday, Shaw Fishman Glantz & Towbin, the law firm representing Trustee Ira Bodenstein, submitted a bill for $671,417 for 1,508 hours of work between July 10 and October 31, according to court documents.

The case now has a number of the total fraud, according to documents recently released. $215 Million.

"Defendant claims the loss is less than $200 million," Acting Iowa U.S. Attorney Sean Berry said in a sentencing memorandum filed yesterday in federal court in Cedar Rapids. "The actual loss in this case can be determined with remarkable precision."

The National Futures Association, an industry self- regulator, announced the same day as the suicide attempt that about $200 million in customer funds the firm reported was on deposit at its bank were unaccounted for.

According to his plea agreement, Wasendorf started stealing from Peregrine in the early 1990s, covering his theft by altering statements from the company's bank and passing them to his chief financial officer and accountants.

Institutional Decay

If we are suspicious of our own institutions then who can we really trust? Our global financial system is comprised of a network of insittutions who custody our assets; it isn't possible for individuals to custody their own assets. If a trusted NFA Member who sat on the board of the NFA was capable of stealing $215 Million from clients over a period of many years without getting caught, what other monsters lurk in places we haven't yet looked?

In our article Modern Insitutional Decay we had outlined some facts that seem to point to a trend; the institutions that built the modern world are dead or dying.

The insituttions that watch the institutions, such as the ratings agencies, and the regulators, have also in some cases found guilty of conflicts of interest.

Traders need to rely on their own analysis, and try to obtain as much objective information as possible.

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The risk of loss in trading foreign exchange markets (FOREX), also known as cash foreign currencies, or the FOREX markets, can be substantial.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

We've been monitoring the situation with Marijuana legalization since a series of announcements by states such as Colorado legalizing Marijuana for medical and eventually recreational use. Our first article posed that Marijuana may be the next big growth sector. Then we researched the individual issues to try to narrow down the best from an overall portfolio of pot stocks. We've narrowed it down to Medical Marijuana (MJNA) and here's why:

1. Medical

The focus of this company is on the medical side, not recreational or a component industry like distribution. In states such as Colorado, medical Marijuana is legalized first. In addition to medical Marijuana, the company is developing non smoking technologies such as gums and other products that include THC. For people who truly want the THC for its medical benefits, this is a more clinical approach (vs. buying a bag of weed from a dispensary).

2. Patents

The company has an extensive patent portfolio that can be licensed to other companies producing similar products.

The company has patents in over 100 countries for its biotechnology medical delivery devices.

As we've seen with other industries, patents and licensing alone can be a great source of revenue.

3. Only company with revenue

Medical Marijuana (MJNA) unlike many of its competitors, actually has revenue.

Medical Marijuana, Inc. (MJNA), a leading cannabis and hemp industry innovator, recently announced its third quarter earnings. The company earned net income of approximately $1.19 million on gross revenues of $3.00 million for the quarter ended Sept 30, 2012. This represents a gross revenue increase of 1500 plus percent quarter-over-quarter when compared to revenue of $198,813 for the quarter ended Sept 30, 2011.

4. Not overvalued

Although the reason for the low stock price is the large amount of float, the price itself is low per share. It's accessible to more investors and has more room to grow. It's not overvalued, although as we've stated in previous articles, proper valuations of startups in new industries can be misleading.

5. Industry gaining support

In Pennsylvania, a state senator has proposed a Marijuana legalization bill.

State Sen. Daylin Leach, a Democrat representing Montgomery and Delaware counties, announced plans Tuesday to introduce legislation that would legalize marijuana in Pennsylvania.

He has two co-sponsors on the bill -- Democrats from Philadelphia and Pittsburgh -- and plans to introduce the bill within the next week for the 2013-14 legislative session.

Leach during the Legislature's 2011-12 session introduced Senate Bill 1089 to create a medical marijuana program, but the measure did not make it out of committee.

60 Minutes did a segment on the industry, showing to average TV viewers some of the professional business aspects of the industry. Shows like this are starting to spread knowledge of the trend to the mainstream. While the movement to legalize has a cult following, it still is not part of the mainstream culture.

The risks

MJNA is still a micro-cap, we are afraid to use the word penny stock. Investing in any company so early can be very risky. But the other advantage, it's possible to make a micro investment. Priced at .11 buying 1000 shares will cost only $110 - at most brokers the small commission would be 10% of the investment! So while the risks of investing in such small issues are fairly high, it is also possible to risk a very small amount of money. For retail investors who want to get a piece of the pot pie, or for fund managers that want exposure to this growth market, this makes MJNA attractive.

Comparison

We have looked at other pot companies such as Cannabis Science (CBIS) and others, with the purposes of picking one or two 'best' ones, which Medical Marijuana (MJNA) was the choice. However, in such a new industry there can be many factors that could cause this pick to be a poor choice. In other words there's a higher amount of chance in analysis of a new industry with potential legal and regulatory hurdles. So if it isn't necessary to pick one in particular, it would be wise to create a portfolio of pot stocks. Since we've been covering this industry we've seen many opinions and have been asked many times which one rises to the top. After reviewing company information and available information about the legalization situation, the best seems to be Medical Marijuana (MJNA).

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Americans have never had to mourn such a loss of young lives as they have in the tragic, recent school shooting.

Gun makers were initially down on the news, as stricter gun laws would mean less potential customers.

But this last weekend, sales of Assault weapons exploded at Gun shows, according to Reuters.

Prices for assault weapons have surged since the Connecticut shooting. At the Kansas City show, Jerome Ratliff bought an AR-15 on Saturday for target practice, paying $925. The same model would have cost only about $400 a year ago, he said. Most models were selling for $1,500 or more.

The NRA is also a powerful force campaigning for the 2nd amendment, with over 4 Million members. They recently made a call for armed officers to be placed in schools, at an estimated cost of $80,000 per officer per school.

Wayne LaPierre, executive vice president of the National Rifle Association, said that "the monsters and the predators of the world" have exploited the fact that most schools are gun-free zones. Other important institutions-such as banks, courts and power plants-are protected with armed security, he said.

The National Rifle Association, the nation's largest gun-rights lobby called for armed police officers to be posted in every American school to stop the next killer "waiting in the wings."

"The only thing that stops a bad guy with a gun is a good guy with a gun," Mr. LaPierre said in a statement to reporters Friday.

The NRA proposal has been backed by some School Chiefs, such as in Georgia.

Considering the NRA proposal which would result in a large purchase of weapons and ammo, and the surge in gun purchases by gun supporters, is this news really a bad thing for gun manufacturers? Or was the sell off a knee-jerk reaction, to be followed by a big recovery? Let's take a look at the companies, the current gun market, and the practicality of outlawing guns in the United States.

Company snapshots

Strum, Ruger & Company (RGR) is already off it's all time highs near 60. It's nearing a support line, but technical analysis isn't important in this case.

Sturm, Ruger & Company, Inc. is engaged in the design, manufacture, and sale of firearms to domestic customers. The Company operates in two segments: firearms and investment castings. The firearms segment manufactures and sells rifles, pistols, revolvers, and shotguns principally to a select number of licensed independent wholesale distributors primarily located in the United States. The investment castings segment manufactures and sells steel investment castings. The Company offers products in four industry product categories, which include rifles, shotguns, pistols, and revolvers. The Company's firearms are sold through independent wholesale distributors, principally to the commercial sporting market. The Company's customers include Jerry's/Ellett Brothers, Davidson's, Sports South and Lipsey's. Approximately 99% of the Company's total sales, during the year ended December 31, 2011, were from the firearms segment.

Smith & Wesson (SWHC) is also off it's highs of 11.25 to roughly 8.12.

Smith & Wesson Holding Corporation (Smith & Wesson) is a manufacturer of firearms. The Company manufactures a range of handguns, modern sporting rifles, hunting rifles, black powder firearms, handcuffs, and firearm-related products and accessories for sale to a range of customers, including gun enthusiasts, collectors, hunters, sportsmen, competitive shooters, individuals desiring home and personal protection, law enforcement and security agencies and officers, and military agencies in the United States and globally. It sell its products under the Smith & Wesson brand, the M&P brand, the Thompson/Center brand, and the Walther brand. The Company manufactures its firearm products at its facilities in Springfield, Massachusetts and Houlton, Maine. On July 26, 2012, it sold all of the assets of Smith & Wesson Security Solutions, Inc.

Both companies pose the same opportunity, although their products vary slightly.

Current Gun Market

US Firearms manufacturers will export $4.4 Billion worth of guns and ammo to other countries this year. The total market is about $11 Billion and employs more than 35,000 people. Customers also include governments, the military, private companies, and foreign buyers. Since 9/11, and the economic crisis, sales have been booming. Even agencies such as the Social Security Administration have been big buyers. Ammunition a big part of revenues:

Here's how one gun lobbyist put it: "You make a product for $300, and somebody could buy this revolver and, by the time they are 80, they'll have fired $10,000 worth of ammunition through it."

Making guns illegal

Gun control realists, many of whom live in the South or in rural areas, grin when gun control and gun bans are proposed. They imagine the reality of enforcing something like this; it's simply impossible, especially in rural areas. Places like cities, where you have certain access points such as bridges or tunnels, could enforce restrictions at checkpoints at these entry points. But how would you enforce something like this in rural areas? Could they make it illegal to own guns, of course. Prohibition outlawed the use of alcohol, and look how that ended. Not only was it finally overturned, it gave rise to what we colloquially refer to as the Mob, which always existed but didn't have such power and influence until prohibition.

Another point, while the sentiment of gun bans is strong, especially after a shooting, the sentiment to allow guns is almost always stronger. Recently thousands of gun lovers have signed a petition to deport British citizen Piers Morgan for the mere mention of gun control. Also there has been little realistic proposals to control or ban guns, as pointed out by the NRA and the recent legislation.

The issue of gun ownership is one held passionately by owners. Trying to take away their guns, may not prove to be a good idea.

Conclusion

Both these companies are manufacturers of products that will be needed regardless of the economic situation. But if things deteriorate, they will become even more valuable and in demand. Even hedge funds and other buyers are snapping up these stocks. Considering both are off their peaks, this looks like a good opportunity to buy and hold.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.