Part 3.
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FAR EAST VENTURES, INC., PART III – CONSULTANTS TO SPARE
May 30, 2000
It pays to be a consultant. Actually, it seems to pay particularly well for consultants to Far East Ventures, Inc.
As we saw in our last article on the Company, Black and White and A Lot of Gray, Far East Ventures has retained four different consultants since January of this year. The last two to come on board were an individual named Alan Berkun (sometimes spelled Burkun by Far East) and a company called J.B. Marc. & Associates, Inc. Joseph Blumenthal is identified as the President of J.B. Marc & Associates.
Far East Ventures has not provided investors with a great deal of information about these two new consultants, but a review of their consulting agreements indicates they have much in common. In fact, it shows that, on the surface at least, there is little distinction between the two consultants. Indeed, the two consulting agreements are virtually identical in every respect – right down to the services to be provided and the compensation to be paid.
The Berkun Agreement
On February 1st the Company retained Alan Berkun as a consultant "to identify acquisition targets" and "in structuring mergers or other acquisitions." As a fee, Far East issued Berkun 900,000 shares of the Company’s common stock and agreed to register those shares, on a Form S-8 with the SEC "immediately."
A Form S-8 registration statement differs from most other registration statements filed with the SEC because it is not reviewed by SEC examiners before it becomes effective. Instead, it becomes effective upon filing, which means the shares registered on the S-8 can be sold at once.
Far East complied with its obligation to Berkun and filed an S-8 Registration Statement for the Berkun shares on March 2nd.
So, in just one month, Berkun received full compensation under the agreement and was free to sell his 900,000 shares. But what of the services Berkun is to provide? Has this consultant identified targets or structured acquisitions? The Company has issued no information in that regard. Is he likely to do so in the future? Maybe. But there is one potential hitch that may concern investors - the agreement between Far East Ventures and Berkun can be terminated, by either party, on fifteen days notice.
That means Berkun is free to cancel the agreement at any time (if he hasn’t already done so). What happens to the 900,000 shares if Berkun then? The payment is non-refundable - meaning Berkun owns 900,000 registered shares free and clear even if he terminates the relationship and never performs.
The J.B. Marc & Associates Agreement
Although Far East Ventures had zero operations and zero revenues before the year 2000, on March 21st it entered into yet another consulting agreement. J.B. Marc, like Berkun, agreed to "identify acquisition targets " and "in structuring mergers or other acquisitions." It also undertook to "advise management [of Far East] in reference to executive compensation." Like Berkun, J.B. Marc received a fee consisting of 900,000 shares of Far East Ventures common stock. As with Berkun, the Company agreed to "immediately" register those shares with the SEC on a Form S-8.
Again, the Company complied with that obligation – acting even more quickly in this instance by filing the Form S-8 on March 22nd, just one day after signing the consulting agreement.
As with Berkun, the agreement can be cancelled by either party on fifteen days notice. What happens to the stock if the contract is terminated? No surprise there – the payment of shares is non-refundable so J.B. Marc & Associates (like Berkun) gets to keep the shares even if it performed no services.
Investors may wonder why the Company issued 1.8 million shares of stock (later valued by the Company at $4.2 million) to two different consultants, within little more than one month, to perform virtually identical services. They may also ask why the Company would issue those shares, register the stock and agree to permit the consultants to cancel the agreements almost instantly, without having performed, and still retain full payment.
As for the similarities, they apparently do not end with the identity of terms in the two agreements. Alan Berkun’s office address is listed as 17 State Street, New York, N.Y., 5th Floor. J.B. Marc & Associates’ address? 17 State Street, New York, N.Y. 5th Floor. As it turns out, Alan Berkun and Joseph Blumenthal appear to share an office at that address under the name Turus Trading Corporation. A receptionist at that office described Turus as "a funding company."
Talk about your coincidences.
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