Re: 9/3/00 - [TVCP] The Dark Side: Internet stock manipulation (third in a series of articles by Les French)
LesLFrench
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Posts: 131
From:Portland, Oregon USA
Registered: Mar 2000
posted 09-03-2000 17:07
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The Dark Side: Internet stock manipulation
(The following is the third in a series of articles by Les French relating to MAXX International and other companies related to Michael Solomon and Jeremy Schuster.)
One wonders how seasoned Entertainment businessmen like Michael Jay Solomon, or the aggressive young lawyer Jeremy Schuster, choose their business associates. Perhaps, when it comes to developing investment markets for corporate shells, they look for aggressive promoters who have a quality for building recognition in the market place, and driving the price of the stock to profitable margins for large insider shareholders...
In the case of Sector Communications, Mohamed Hadid, who is listed as the chairman, and who also receives the greatest amount of compensation from Sector in the form of Sector stock, recently appointed Michael Zwebner to his board, of which Schuster was already a member. A glance at Sector's SEC filings just going back the past five years reveals an entrepreneurial adventure that never got off the ground. Sector, which wanted to enter the telecommunications business in Bulgaria, formerly had its telecommunications license revoked, for no apparent good reason, by the Bulgarian authorities several years ago. Now Sector is back in business in Bulgaria again, but according to SEC filings only has five commercial customers, all resort hotels, connected to its telephone network, with a grand total of nine employees.
Sector '"Communications has a history of legal problems which makes the company "not too attractive" for investors. It's SEC statement reveals, for example, a $40,000 cash judgment, among other judgments, which was later negotiated down to $15,000 cash, which the company admits it will pay only as soon as "it is able". And to make matters worse, its chairman, Mohamed Hadid, whose background is in five-star hotel properties, recently filed for personal bankruptcy, according to the SEC filing.
Hadid isn't the only director at Sector on the public company's board with a bankruptcy history. According to court documents, Michael J. Zwebner, who is chairman of TVCP, was an undischarged bankrupt as recently as January 1997. These kinds of legal disclosures would prevent a company such as Sector from becoming eligible for membership on Nasdaq or other public stock market, which should bring concern to financial enterprisers such as Solomon or Schuster. Further, Zwebner has not disclosed on any SEC filing the facts of his bankruptcy history. Still, Solomon may have good reason for wanting to keep Zwebner around.
Zwebner was formerly the CEO of a private enterprise which, through reverse merger, acquired what was essentially a defunct shell company, Legacy Software, now known as Talk Visual Corporation (TVCP). During the past year since the merger, Chairman Michael Zwebner has shown a remarkable ability to develop and promote the market for TVCP's stock, which about a year ago traded at about seven cents last year, and peaked as high as $4.00 late last February. The stock of TVCP is now trading at around fifty cents. TVCP's SEC filings demonstrate that it has little revenue from its operations, has few assets outside of real estate holdings and investments, and suffered net losses in excess of $5 million in the past fiscal year. So why is this stock so popular?
Zwebner seems to have spent a great deal of effort promoting TVCP's securities on the internet, particularly on anonymous message boards. In my last article, I described an "inner circle" of individuals, known as "Zwebner's List", who Zwebner regularly emailed with information relating to TVCP. Some of the persons on the List were bulletin board "regulars" who frequently touted the stock of TVCP. The tactic of Zwebner and these posters is worth examining at close range.
One of the "anonymous" posters, who remained in close contact with Zwebner for at least the past three years, was a TVCP investor using the aliases "ClearThinker", "John_Quinlan", "PointInCase", and various other aliases, at least eight in all, who would frequently appear on Raging Bull's popular message board and post information which purportedly had just been indicated by Chairman Zwebner in a phone conversation. Numerous times, during the period that TVCP made its meteoric climb from seven cents to four dollars, this individual held "conversations" with his "other aliases" online, in order to give the impression to viewers that numerous persons were endorsing and buying the stock of TVCP, and to lend credibility to the poster.
Not only did "John_Quinlan" manufacture conversations on the Raging Bull message board, he also redistributed information to his own e-mail list of about 500 recipients, also using the "John_Quinlan" alias, in an effort to further promote and tout the stock. On February 25th, only 11 days after TVCP sued "the_worm06" for defamation, the person using the alias "the_worm06" politely pointed out that at least four aliases were one and the same person. Quinlan and the other aliases immediately and mystically "disappeared" from any further appearances on the board.
John_Quinlan would also "leak" out previously unreleased information from the Chairman, in an effort to cause viewers to run out and purchase the stock prior to TVCP's formal announcements. Further, many casual viewers would be "duped" into joining in and participating in these manufactured conversations. On one occasion, the John_Quinlan "character" actually discussed having to go to the hospital to tend after his sick grandson. Viewers responded to the hoax with generous accolades of sympathy. Zwebner never once denied the authenticity of the posts, or the fact of his relationship with the poster.
If the John_Quinlan character knew and conversed with Zwebner only as a matter of casual coincidence, yet another online touter on Zwebner's List was and is actually employed by TVCP and Zwebner. This individual, employed in one of TVCP's local offices, regularly posts, masquerading as a casual investor, purportedly with no paid relationship to the company. Not only is this person a paid agent of the company, but is also privy to confidential information from Zwebner, and frequently participates in the discrediting of any critics, known as "bashers" by the touters, who dare to speak ill of either Zwebner or TVCP.
And then there is the strange case of another touter on Zwebner's List, a southern California psychiatrist who posts aggressively on the internet, often threatening Zwebner's critics with "death threats", and vulgar comments threatening vulgar "anal" punishment and other intimidating threats. On at least one occaision this touter falsely accused Zwebner's critic, "the_worm06", of being a convicted child molestor. One would not normally expect to find a licensed practitioner of mental health sciences in the business of threatening, harassing, and otherwise verbally and socially abusing his victims. This particular touter also claimed to have made significant business introductions for Zwebner.
The list of touters goes on, however a pattern becomes evident. The Chairman, either by telephone, or through the "inner circle" e-mail list, would share "confidential" information which would soon be reported by the touters. This information, regardless of its significance, would soon find its way leaked out on the message boards by some of the same individuals. The price would immediately spike, even prior to the formal announcement by the company. This pattern continued for weeks until TVCP finally hit $4.00.
Zwebner denies that anyone was on the list other than "directors of companies" that he wanted to keep apprised of news releases while they were out of the country. Zwebner otherwise denies that the list exists altogether. But a close examination reveals that many touters are on the list, besides those mentioned above. In addition to directors and touters, the list also contains a large category of attorneys.
Besides the touters, Zwebner would occasionally appear on the boards himself, interacting with the posters. On one occasion, he actually confirmed a fictitious "appearance" by one of the touters at a investment gathering in which Zwebner made a public appearance. The appearance was fictitious because the individual was actually employed by Zwebner himself, and was not an unrelated investor who was casually attending the meeting.
There is a dark side to Zwebner: not all online appearances by Zwebner are for self-promotional purposes. Zwebner, who frequently tangles with his critics, utilizing the public message boards as a sort of lock-stock to brutalize his enemies. As mentioned above, Talk Visual Corporation filed a lawsuit against the_worm06, an online critic, and obtained discovery identifying the individual's true name, address, and phone number. "the_worm06" was never served with the lawsuit, however Zwebner published the_worm06's identity and business background online. "the_worm06" soon found himself subject to malicious, threatening phone calls, unwanted visitors at his door, and numerous "hate" messages threatening death or personal injury.
The investor market of Sector Communications, like Entertainment Internet, Inc., and MAXX International, all companies directed by Jeremy Schuster and/or Michael Jay Solomon, continue to flounder. With Michael Zwebner's proven history in promoting TVCP's stock to levels in which Zwebner and other insiders were able to earn millions of dollars while dumping millions of shares into the market, Zwebner could prove to be just the burst of energy needed to keep Solomon's and Schuster's investments alive.
(To be continued... Next time, "Bear Mating Season, Baer Bribes, Behr Disclosures, and other Bare Facts from the Dark Side")
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