Re: More info on the "checkered" past of Dr. Fred Cruz
Dr. Fred Cruz is listed as Chairman and CEO of the Countryland Internet Network Trust, involved in "Mining, Wellness Hotels and Casinos." Prior names include "Continental Wellness Casinos Trust", "Continental Wellness Casinos, Inc., and "Grand American International Corp."
Kerry talked about Countryland Internet Network Trust here:
Message 11618219
And Tonto talked also talked about them here:
Message 11618308
One of Kerry's links, bankruptcydata.com, shows:
Continental Wellness Casinos, Inc. Files Plan (July 2, 1997) A creditor in the Stratosphere Corp. Chapter 11 Case, Continental Wellness Casinos, Inc., filed a Plan of Reorganization in the U.S. Bankruptcy Court.
In that Plan (not available on the web), Continental Wellness Casinos (CWC) provided audited financials. Here is the "Profit and Lost Statement" (sic).
CONTINENTAL WELLNESS CASINOS, INC.
PRO-FORMA
PROFIT AND LOST STATEMENT
PROFIT AND LOST STATEMENT
AS OF OCTOBER 31, 1996
(Dollars in Thousands)
EARNINGS:
Life Extension Membership Club $100,000
Maxim Hotel and Casinos Las Vegas, Nevada 75,000
Gold and Silver Mines Properties 150,000
Total Earnings 350,000
EXPENSES
Life Extension Membership Club $61,704
Maxim Hotel and Casinos Las Vegas, Nevada 41,200
Gold and Silver Mines Properties 41,200
Total Expenses 154,858
PROFIT OR LOSS 192,142
Despite the above numbers, CWC filed no tax return because they had "no earnings to report." Despite having no earnings to report, they somehow claimed they were in the process of taking over the Maxim casino, just like they claimed they tried to take over Stratosphere, and just like they recently claimed they were taking over Jackpot. In fact, it was pointed out in the court documents that even eight months after filing this they could produce no evidence that they had ever even made an offer to Maxim, although in the first filing they were "just completing the acquisition" of Maxim.
Note also that the above numbers were labeled "as of 1996", in other words as real dollars, but they were actually pro forma-- what they hoped to do in some future year. And, in their filings, they indicated that they operated 39 mines, even though there were no revenues and no expenses from mining operations (or any other operations). There is no evidence that they have ever had a Life Extension Membership purchased from anyone.
Note that they also describe gross revenues as earnings. And what are the chances that Maxim and the Gold and Silver Mines Double Plural Properties would have exactly the same expenses? Even worse, every math operation is wrong!
Yes, I said these numbers were audited! Actually, they were prepared by a Luis R. Hidalgo, then at 2056 Stevely Avenue in Long Beach, CA 90815. He says, in part, that his responsibilities include "evaluating the overall financial statement presentation", and that "In my opinion, the balance sheets referred to above present fairly, in all material respects, the financial position of Continental Wellness Casinos, Inc. as of October 31, 1996 and October 31, 1995 in conformity with generally accepted accounting principles."
Seems he missed a few things.
There was one other page, the Balance Sheet, plus "notes to Financial Statements" (see below). Only eight numbers per year, for two years. Entire assets were Gold in Storage ($27M, exactly the same for both years in spite of the change in gold price) and Deferred Mining/Promotion/Operating expenses (of about $3.25M-- how is a deferred expense an asset?).
The gold is in 6 55 gallon drums in a warehouse in Southern California:
On October 9, 1990, the Company deposited at xxxxxxxxxxxxxxxxxxxxxxxxxx, six (6) 55 gallon-drum containers of gold dust (powder form) 999.5 pure weighing 76,112 troy ounces with a value of $27,316,600 based on the gold floor price of $358.90 per troy ounce. The market values of gold per troy ounce as of October 31, 1996 and October 31, 1995 are $378.00 and $384.30 respectively. At these prices, the gold in storage would carry fair market values of $28,770,336 in 1996 and $29,249,841 in 1995.
Amazingly, they were able to predict the future in their audited financials to have the gold in storage worth, in both years, exactly what the price was going to be when they submitted the bid to Stratosphere.
Total liabilities were... 0. The only thing balancing these assets (they had just figured out the mining rights trick -- it's discussed -- but they hadn't yet applied it) is stockholder's equity.
Here's the explanation of how deferred mining costs is an asset on the books (almost their only asset!):
3. DEFERRED MINING EXPLORATION COSTS
Deferred mining exploration costs were incurred in prior years with the amounts being estimated based on the prevailing costs of mining exploration at that time due to the absence of supporting documentation. In On April
13, 1996, the Company issued shares of stocks valued at $3,252,669 to pay for its obligation arising thereto.
"In On" and "shares of stocks" are sic.
Other amusing parts include:
7. CONTINGENCIES
The Company is not involved in any legal proceeding which is considered to be ordinary routine litigation incident to its business.
Nope, I'll bet that every case they are involved in is extraordinary.
8. TAXES
The Company has not filed a federal income tax return because there are no earnings to report.
There are actually three companies we are dealing with. This one is the Colorado corporation, but there is one in each of California and Nevada as well.
10. ACQUISITION OF THE MAXIM HOTEL AND CASINO LAS VEGAS, NEVADA
The Company is in the process of concluding the purchase of the Maxim Hotel and Casino Las Vegas, Nevada, an 800 rooms hotel and casino.
They issued the 47M shares to Grand American Bank Trust to pay for the mining exploration that they did not do. They got a legal opinion that this was OK.
Recall that there are no liabilities on the balance sheet. Nevertheless, we have:
12. LOANS PAYABLE -- This represents the amount owing to Delores M. Kelly, Successor Trustee of the Kelly Family Exemption, UDT dated January 19, 1984, due January 1, 1997, and personally guaranteed by Fred Cruz, President of Continental Wellness Casinos (formerly Grand American International Corporation).
Do they owe the Trustee, or the Exemption? Wonder if either one got paid.
Lastly, we have the "plan" CWC was going to undertake to be able to purchase the Stratosphere Hotel and Casino. This was by itself in double spaced courier, with a slightly horizontally stretched effect that looks like 8 pitch.
CONTINENTAL WELLNESS CASINOS, INC. will obtain a $75,000,000 Take Out Committment for the purpose of completing the Phase II of the construction of 1,000 rooms at the Stretophere Hotel and Casino Las Vegas, Nevada. Said Take Out Committment will be from a large institution that has shown desire to undertake this financing and the Take Out Committment will be issued fifteen (15) days after the Plan of Reorganization submitted by Continental Wellness Casinos, Inc. has been approved and confirmed by the United States Bankruptcy Court District of Nevada
CONTINENTAL WELLNESS CASINOS, INC. is selling $8,000,000 Class "A" common shares price at $5.00 per share and 8,000,000 warrants to purchase Class "A" common shares price at $5.00 per warrant which will bring to the company a total of $80,000,000 and this funds could be used also for the completion of Phase II for the construction of 1,000 additional rooms at the Stratophere Hotel and Casino Las Vegas, Nevada. The above IPO is offered under Securities and Exchange Commission Regulation "S".
I have carefully preserved the typos in the original, can you find them? (g) Here's what I found:
1. "Committment"
2. Misspelling (twice) of Stratosphere (the company they were trying to purchase!)
3. "shown desire"
4. first paragraph ends without a period
5. "common shares price at"
6. "this funds"
7. "Phase II for the construction"
8. "IPO"(!)
I can just imagine how this played out in court. ;^)
- Jeff |
