And here's our long awaited answer regarding the validity of this company (WEBS)
WebSecure Investigation
Unearths Fictitious Software
By JON G. AUERBACH
Staff Reporter of THE WALL STREET JOURNAL
An internal investigation at WebSecure Inc. has
found that the company last year transferred more
than 40% of its shares to a foreign company for
nonexistent software, and then received sublicensing
fees on the fictitious product.
An investigator for WebSecure and the company's
former chief executive both say they believe the
transactions were arranged by Emanuel Pinez, the
indicted former chairman of Centennial
Technologies Inc.
WebSecure, an Internet services provider based in
Saugus, Mass., said in February that it was
investigating possible links between Mr. Pinez, who
was fired by Centennial, and "certain software
licenses." Mr. Pinez, who is in jail on charges of
securities fraud related to Centennial, denies having
anything to do with the WebSecure transactions.
Centennial was a founding investor in WebSecure
and once held a 40% stake in the company.
Centennial sold $1 million of its WebSecure
holdings in the December 1996 initial public offering,
and now owns a 6% stake. WebSecure stock, which
was issued at $8 a share, rocketed to $20 in early
January and closed Tuesday at $3.375, unchanged,
on the Nasdaq Stock Market.
Shell Company
People familiar with the WebSecure investigation,
conducted by the Boston law firm Hill & Barlow, say
it found that WebSecure gave away a 43% equity
stake to an Irish-registered shell company to license
software that doesn't exist. WebSecure then
received about $800,000 in sublicensing fees, some
from a close friend of Mr. Pinez, for the nonexistent
software. The fees represented about 90% of the
revenue reported by WebSecure in its fiscal first
quarter ended Nov. 30, 1996.
Hill & Barlow's report to WebSecure finds links
between Mr. Pinez or Centennial and many of the 12
individuals and companies registered as
shareholders of the Irish company, Manadarin
Trading Co., according to people familiar with the
probe. These people say registered shareholders of
Manadarin include the wife of a Centennial sales
executive, as well as several foreign companies with
ties to Mr. Pinez or Centennial.
Tibor Vais, who served as WebSecure's chief
executive and president from January until earlier
this month, says his own inquiries determined that
WebSecure received the $800,000 in fees from
Presage Corp., a closely held Massachusetts
company run by Robert E. Lockwood, and from
another company that is registered in the offshore
tax haven of Jersey. Mr. Vais says Mr. Lockwood
arrived unexpectedly at WebSecure with a check for
about $250,000 and a contract to sublicense the
software. The remainder of the money was wired to
WebSecure from the Jersey company. Mr. Vais says
he determined that Manadarin had no other
operations.
Close Friends
The federal indictment of Mr. Pinez says Centennial
booked $2.1 million in sales of a fictitious
computer-memory product to another company run
by Mr. Lockwood as part of an alleged scheme to
manipulate Centennial's stock. Mr. Pinez says he
and Mr. Lockwood are close friends. Mr. Lockwood
was indicted last month by a state grand jury in
Massachusetts on 13 counts of tax evasion
unrelated to Centennial.
Also indicted on tax evasion was Carroll M.
Lowenstein, WebSecure's chairman, who replaced
Mr. Vais as president earlier this month. Neither Mr.
Lockwood nor Mr. Lowenstein returned phone calls.
Mr. Vais, who joined WebSecure after the
transactions took place, says he believes Mr. Pinez
created Manadarin as a way to get WebSecure
shares out of the country. Mr. Vais says that as far as
he knows, none of the shares have been sold. Mr.
Vais says Robert Kuzara, who preceded him as
chief executive, told him that Mr. Pinez had arranged
the transaction. Mr. Kuzara, also a former Centennial
director, didn't return phone calls.
WebSecure dismissed Mr. Vais earlier this month,
saying it required "leadership by an individual with a
different skill set." The company didn't return
numerous calls. Last week, WebSecure asked the
Securities and Exchange Commission for a five-day
extension to file its financial statements for its
second quarter ended Feb. 28, pending receipt of
the Hill & Barlow report. |
