Ron, Thanks for the info on the article site. Unfortunately, it looks like the investors are going to pay the price of the past sins of the company, and the arrogance of the SEC. The article is listed below: Darrell
BY ROGER J. MEZGER AND GLENN GAMBOA
Beacon Journal business writers
January 25, 1997
The Securities and Exchange Commission is investigating the operations and publicly
traded stock of Interactive MultiMedia Publishers Inc., an Akron-based developer
of touch-screen computer kiosks that present information and advertising.
The federal regulatory agency has subpoenaed thousands of pages of documents in
the company's possession and has ordered P. Joseph Vertucci, IMP president and
chairman, to testify before agency attorneys in Washington, D.C.
SEC officials would neither confirm nor deny the nonpublic investigation.
However, Vertucci confirmed in an interview this week that he must provide the
documents to investigators by Monday.
The investigation represents another serious regulatory step by the SEC, which
halted trading of IMP's stock for 10 days last month, an action agency officials say
is reserved for cases where they have "serious concerns" about information the
company provides investors.
Such close SEC scrutiny worries shareholders. And many, including at least one of
Vertucci's former employees, are upset that their IMP portfolios, once valued at
thousands of dollars, are now essentially worthless.
Last February, IMP briefly stepped into the national spotlight when its stock price
soared from 56 cents a share to $6.38, an increase of more than 1,000 percent in a
matter of weeks. After that run-up, a broker predicted that IMP would be a future
"Microsoft of multimedia."
The company was touted on the Internet and in more conventional national
publications as a possible winner in a technology-loving stock market, which enticed
many people, including some in Northeast Ohio, to invest.
However, IMP's high-flying days were short-lived.
Two months after the stock hit $6 in March, it lost two-thirds of its value.
And now, IMP stock trades at one-tenth of a cent, driven down by months of
financial uncertainty and the SEC's unusual action in December of ordering a 10-day
halt in trading of the stock.
The SEC said it took that action because of questions about the accuracy of the
information that IMP officials have given about the company's finances and its stock.
Colleen Mahoney, deputy director of the SEC's enforcement division, said in
December that the halt was unusual, one of only 10 ordered in 1996. She declined
to comment on IMP specifically, but said that the halts are issued in general when
the agency has "serious concerns" about a company.
Deal put on hold
The SEC investigation comes at a particularly inopportune time for the financially
strapped company. When the stock-trading moratorium was announced, IMP was
in the final phases of negotiating a contract with the United States Golf Association
to start installing its interactive kiosks in the pro shops of nearly 9,000 USGA
member golf courses nationwide.
That deal is now on hold, Vertucci said, while USGA lawyers assess the impact of
the investigation on the company.
IMP has similar kiosks in several other locations, including Gund Arena in
Cleveland.
Vertucci blames the company's problems on opportunistic "market makers,"
securities dealers who buy and sell large quantities of a company's stock, and on
some former business associates whom he describes as corrupt.
"The SEC talks about wanting to maintain the integrity of the market," Vertucci said.
"They can't do that at the expense of the companies. Their perception is that every
company out there is into beating the investor. ...
"It's just not a fair playing field. And my concern is, what's a company like us to do?
We're just kind of victims of these market makers."
Some of the company's investors are unhappy, too, about being held in financial
limbo -- like Ron Forgus of Port St. Lucie, Fla.
Forgus, formerly of Ravenna, said he purchased thousands of shares at $3 each last
year and picked up some more when the stock dropped to 75 cents. Now, that
investment is worth less than a nickel.
"We feel like we've been handcuffed," said Forgus, who worked with Vertucci
years ago and still believes in the company. "I just don't think it's fair."
The SEC subpoena for IMP records is believed to cover all documents concerning
the value of copyrights held by Vertucci that became part of IMP when the
company was created in April 1995.
In SEC filings at the time, IMP said those copyrights were worth $37 million. But
several months later Vertucci was quoted as saying the copyrights had been
reappraised at $82 million, and an investment newsletter repeated that figure last
summer.
When the company quoted the newsletter's report on its Internet Web site, the SEC
objected. Under pressure from the SEC, the company issued a news release in
August assigning the copyrights a value of $7 million.
Former employees say they became aware in September that an SEC inquiry was
under way.
The SEC also may be looking for IMP's annual financial report for fiscal 1996,
which ended March 31, and its quarterly financial reports for the first two quarters
of fiscal 1997. IMP has filed none of those reports, which are required of public
companies. Vertucci's Monday deadline to provide documents to the SEC may be
delayed, however. Vertucci said the deadline already has been moved back twice
and may be again, because he recently had to find a new lawyer.
But the SEC deadline isn't the only one Vertucci faces Monday. He must also prove
to a Summit County common pleas judge that he has found an attorney to defend
him against a lawsuit filed 15 months ago by former employee Richard L. Herbruck.
The suit charges Vertucci with securities and corporate fraud and breach of
contract.
Vertucci's previous lawyer, Thomas C. Furth, withdrew from the Herbruck case in
December, citing, among other things, Vertucci's failure to pay legal fees. Before
that, the Cleveland law firm Kaufman & Cumberland withdrew as Vertucci's
counsel, also citing Vertucci's failure to pay up.
Vertucci said this week that he owes Kaufman and Cumberland about $40,000. He
said he doesn't know how much he might owe Furth because, he claims, Furth did
not provide adequate billing information.
Furth said he has a signed contract with Vertucci that outlines how much money he
is owed.
"Joe stopped paying me in October, right after he retained me," Furth said this
week. "He's always been behind in his payments, but I let it slide. Now, I just want
my legal fees and my out-of-pocket expenses repaid." |
