Warning #2:
The following does not represent my personal opinion, and was simply copied from an earlier post on SI. I have no personal knowledge of these events, and cannot confirm or deny the truth of the information contained herein......please do your own DD and make your own decisions.
"
To: +Shih Jen Liao (228 )
From: +Mike Morton
Saturday, Jun 22 1996 12:26AM EST
Reply # of 923
Shih,
Here is that post to the "misc.invest.stocks" newsgroup by
"The Detective". Read it and weap. Can anyone verify or
refute any of this information? I imagine it is pretty
scary especially if you are heavily invested long on WARPF.
Mike
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Subject: Possible stock manipulation !!Avoid WARP10 stock!!!
Date: Fri, 21 Jun 1996 21:52:51 -0400
From: The Detective <detect@rcmp.stk.com>
Organization: iSTAR Internet Inc.
Newsgroups: misc.invest.stocks
Jack Banks Jack Banks controls three public companies that have very similar histories:
Gaming Lottery (NASDAQ GLCCF), Instant Publisher (NASDAQ TIPIF) and Warp
10 Technologies (NASDAQ WARPF).
These companies purport to be in the printing industry, they were all formed by an
amalgamation of a private company and a public shell company, they were all
heavily promoted by Richard Geist's newsletter and the Investor Relations
Group, and they all had very ambitious plans based on so called high-tech
proprietary technologies. But Warp 10, unlike Gaming Lottery and the
Instant Publisher is still trading at a substantial market capitalization of
$330 million.
Gaming Lottery, formerly Laser Friendly, had very ambitious plans when Jack
Banks founded it. The 1995 annual report boasted that "the explosive growth
of the gaming industry has created a wealth of new opportunities. With two
major strategic acquisitions behind it and a continuing commitment to an
aggressive acquisition program, Laser Friendly is in the right place at the
right time." Boasts like that helped the stock climb to $12.35 July 1995.
Unfortunately, the acquisitions referred to had to be unwound. The
Washington State Gaming Commission refused to grant licenses when Laser
Friendly would not reveal the names behind the Swiss banks who invested in
the $26 million private placement used to finance the transactions. In
their reasons for denial the commission stated that "there is the
possibility that these individuals have criminal backgrounds that the
investment funds were generated from criminal sources or that other factors
exist which would disqualify them from holding a gambling license."
As it turns out, the company itself may be subject to criminal charges. It
seems that Gaming Lottery continued to do business in the state without a
license, and the state is considering pressing felony charges. The
investors who provided the funding for the acquisitions were not happy when
they learned that the "completed" transactions were not actually completed.
They are suing Jack Banks and Gaming Lottery for fraudulently
misappropriating their funds" and "knowingly and recklessly misstating
material facts". They are asking for $39,000,000 US., more than amount of
cash currently on Gaming Lottery's balance sheet.
Gaming Lottery's troubles do not end there. A Swiss bank is suing the
company to release 2.5 million shares of Gaming Lottery so the bank can
cover a margin loan that it made. Gaming Lottery has taken the position
that the shares were never issued. Meanwhile the stock has fallen to $4.20
from its high of $12.35. The company has announced that is will divest of
all its printing assets and move to Bermuda with $50 million in cash.
The same investors who are suing Gaming Lottery are suing Instant Publisher,
another Jack Banks company. The investors claim that the defendants,
Instant Publisher, Jack Banks and others made "misrepresentations and
materially incomplete statements" and that these were made in "reckless and
negligent" manner while they were trying to sell 850,000 shares of Instant
Publisher to the investors. Like Gaming Lottery, TIPI was formed by merging
a shell company with Instant Publisher and was heavily touted by Richard
Geist's newsletters and the Investor Relations Group. Geist claimed that
the company's "proprietary hardware/software unit, the IPS950" would propel
earnings to $0.50 or $0.60 per share in 1996. He was quoted in Fortune
magazine as predicting sales of $50 million for 1996. Shortly thereafter
the stock ran up to $11 1/8 only to collapse back to $2.
And now there is Warp 10. It too was formed through an amalgamation of a
Jack Banks company and a public shell, and is heavily touted by Richard
Geist. Warp's president Marvin Igelman is a lawyer. Marvin's brother
Alex, also a lawyer, is Warp's secretary, and the Executive Vice-President,
David Wraxell was formerly a prepress system salesman. The auditors, Lipton
Wiseman, are also the auditors for Gaming Lottery and Instant Publisher.
Larry Weltman, President of Gaming Lottery, Executive Vice-President of
Instant Publisher, and Director of Warp 10, was formerly a chartered
accountant with Lipton Wiseman.
Warp came into existence in August 15, 1995 as a result of an amalgamation
of "Grand Empire Resources" and "Warp 10 Private". Grand Empire had assets
of $119,391 which combined with Warp 10 private assets produced $517,758 of
total assets upon the amalgamation. After a private placement some days
later on August 22, 1995 Warp 10 Technologies had total assets of $7.5
million, mostly cash.
Warp shares began trading on the Canadian Over the Counter network 2 days
later on August 24, 1995 at $10 per share. This share price implied a
market capitalization of over $200,000,000, quite high for company with $7.5
in assets and a R&D budget of $330,000 over the last 12 months. Apparently
Jack Banks thought so too. He filed an insider purchase of 1 million shares
of Warp at $0.25 per share on January 12, 1996 from an undisclosed seller on
a private trade. The shares were trading for 10 3/8 at the time. Two
months later Warp became listed on NASDAQ and Richard Geist was quoted in
business week as saying that the shares could double within one year. Geist
would continue to tout Warp 10 over the next few months along with the
controversial stock Solvex. Solvex is subject to an FBI probe into the
involvement of two notorious stock swindlers who may have been manipulating
its share price.
Warp also announced major alliances with Rogers Network Services and
Newbridge Networks. The Financial Post wrote a one page article, largely
quoting Richard Geist and Larry Weltman, President of the Print Three chain
of printer shops. Larry Weltman stated he loved Warp's technology and
wanted to use it for his stores. Print Three is also controlled by Jack
Banks and is Warp's largest shareholder. These events, combined with an
announcement of a successful first installation of Warp's system at a
reputable Toronto graphics shop propelled the shares to a high of $21.75 on
May 27, 1996, representing a market capitalization of almost $400,000,000.
Unfortunately, the controversy that follows Jack Banks and Richard Geist
seems to be affecting Warp 10. Command Post and Transfer Corp., the client
who allegedly purchased the first "successful installation" of "Warp 10's
Technology" has publicly reputed Warp 10's claims. Contrary to the press
releases by Warp 10, Command Post is not "running the company's support and
administrative systems" using Warp 10 Technology, nor did Command Post buy
any Warp 10 products. Instead, Command Post bought some Newbridge Network
hardware to connect to their existing network and Warp helped to install it.
So what is Warp 10's Technology? Prior to going public in August of 1995
Warp 10 has spent $330,000 over 12 months developing four "ATM networking
solutions". Not bad since other networking companies such as Newbridge have
annual R&D budgets in the tens of millions.
Since then, most of their energy seems to have been spent reselling
Newbridge hardware and Rogers Network cable. The major alliances with
Newbridge and Rogers have proven to be distribution agreements allowing Warp
to buy network products developed by these companies and resell them to
Warp's customers. Warp has yet to sell anything they have developed to
anyone, despite press releases to the contrary. Warp's best skill, like its
sister companies, seems to be self promotion.
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