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Strategies & Market Trends : Mr. Pink's Picks: selected event-driven value investments -- Ignore unavailable to you. Want to Upgrade?

To: benchpress550 who wrote (16978)	8/29/2002 10:06:35 AM
From: Mr. Pink	Read Replies (4) \| Respond to of 18998

Actrade article nypost.com INFAMOUS AMOS By ERIC MOSKOWITZ August 29, 2002 -- Amos Aharoni is on the lam again. Until last week, he was chairman of Actrade Financial Technologies Ltd., a public company headquartered near Penn Station. Now the SEC is looking at what's left of his company, after he abruptly quit on Aug. 21 and fled back to his native Israel. For the second time in 17 years, the Israeli has left behind angry investors - except this time the group includes such big-name firms as Vanguard Group, Barclays Bank and Bridgeway Capital Management. A number of class-action lawsuits also are pending against Aharoni's financial-services company. Calls to the company weren't returned, and all mention of Aharoni, 57, has been removed from the company's Web site. Aharoni's home phone number is out of service. The story of Infamous Amos begins in the mid-1980s, when he started multiple businesses in Israel under the moniker Mentor Communications and Production Corp. In late 1985, he told creditors he was leaving the country to get their money - and never came back. Aharoni became a fugitive, leaving debts of millions of dollars to banks and private individuals, according to Ha'aretz, an Israeli newspaper. Escaping to New York, Aharoni founded another company - later renamed Actrade - in 1987 and, using what sources say is his "extraordinary charm and outsized ego," built the company into a publicly traded firm worth $130 million in 1997. His personal holdings were worth $85 million at the company's peak, but his 22 percent stake in the company is now worth around $6 million, according to proxy filings. As the company's growth continued, Aharoni reportedly paid off his Israeli creditors and was allowed to return to the country. Even after the stock market shake-out, Forbes magazine selected Actrade in October 2001 as the fifth-best small company in America. But now U.S. officials, including the Securities and Exchange Commission's enforcement division, might want to have a word with Aharoni. Actrade's stock has slid from over $30 to just over $2 this year as questions about the company's business practices have multiplied. The Nasdaq stopped trading on Actrade's stock last week, and the company said its annual report for the fiscal year ending June 30 won't be filed on time. "Actrade's business model never made any economic sense," said Dan Loeb, a portfolio manager at Third Point Management who until recently had a large short position in the stock. "Add that to the colorful backgrounds of management, and we felt that this stock was a good candidate to see its trading halted one day. And that day is now here." SEC officials in June asked the company for records involving its Actrade Resources business, a foreign unit that was recently shut down by the firm. That sent the stock from $24 to $13 - and sent institutional shareholders scurrying for the door. "We sold out in June and July, and we're glad we did, because the bottom line right now reads like a soap opera," said John Montgomery, portfolio manager of the mutual fund firm Bridgeway Capital Management. Actrade also stated last week that Aharoni had declined to cooperate with Actrade's audit committee. Aharoni has not yet been accused of any criminal wrongdoing, but "Israeli nationality is not grounds for denying extradition from Israel to the U.S.," said Michael P. Scharf, a professor of international law at Case Western Reserve University. For extradition proceedings to begin, Aharoni would need to have at least a criminal felony charge against him, noted Scharf. Aharoni's bizarre business history has some parallels with that of Crazy Eddie. Owners of the now-defunct consumer electronics chain, Eddie and Mitchell Antar, fled to Israel and were later convicted on fraud and racketeering charges in the late 1980s. Mr. P$nk