This is my response to The Motley’s Fool post “Remember Our Friend Jeff “Wakabayashi Fund” Stone?”. I thought it’s important I get my word out on this blog.
To: Matthew Goldstein
Kevin Krolick: by Reuters
For quite some time, I have been reticent to respond to your story and negative aspersions regarding myself and my wife pertaining to the “Web Sky” civil settlement. Yet now, no longer… I feel there is a significant injustice being done to myself and family if I don’t provide a retort due to your reckless and pathetically fact deficient indiscernible babble.
For starters, the only person I granted an interview with pertaining to this matter was yourself (Goldstein) which entailed a phone interview. Thereafter, you sent one of your colleagues (Krolick) to my office without first obtaining an appointment – completely unannounced; a “sneaky” attribute which I am certain shared within your type of industry… deficient in decorum.
It is disturbing and dishonest that both yourself-Goldstein as well as your colleague, Krolick assured me that the interview and “story-line” was not going to be subjective and I would be quoted verbatim in order to provide the “other side of the story” – our story which would have yielded an objective outcome; this did not occur. In short, and for lack of better words, your distortion, your mendacity has caused us harm.
The entire article is fraught with inconsistencies- one paragraph after another. My better judgment told me I should have recorded the interview whereby, I could have had more control over your “spew”. Accordingly, to list the following inconsistencies and fabrications:
- “One-time operator of a now- defunct New York investment firm called Crescent Fund- Response: The entity never evolved into a “defunct status” and never has been-the assets were acquired by another entity we control.
- 2. “Former Greenwich, CT. residents owe U.S. regulators nearly a half-million dollars in fines and restitution for their part in a five year-old penny stock manipulation scheme”. Response: we are not former residents of Greenwich, CT., we are still residents. Our primary residence remains Greenwich, CT. Further: we do not “owe $500,000” in restitution and fines in a five year penny stock manipulation scheme. We disgorged and conveyed profits in stock over to the SEC that had an equivalent value of the assessment. The various stock positions depreciated over time and at the point the SEC got around to liquidating. The contract activity between our firm and the client project involving this SEC civil case transpired for 6 months-not five years.
- Referring to your comment referencing-my retort: “They’ll have to beat it out of me and that I have no intention of ever paying the U.S. regulators who secured a civil judgment against Stone and his wife in Jan. 2009, referring to them with an expletive involving “mothers…”
Response: That is not what I said-you contorted my words – I said they would have to pull it from my clutched fist with respect to paying any “additional money” and I did not refer to “them” as “mothers…”, I referred to them as “nefarious cock suckers”.
- Your inference that I make “no apologies for raking in more than $ 1 million from the sale of shares of Websky, a tiny San Francisco broadband company. Further, referencing that regulators call the Stone’s scheme classic “pump and dump” charging that they artificially drove up the price of the stock by issuing spam emails to prospective investors and then unloaded millions of shares”.
Response: Your “sleuthing” has provided you with fragmented data. And again, you choose to “deep-throat” everything you hear or read or rather, what the SEC purports. More specifically, we purchased this stock in a 504 offering and transferred our funds; thereby, taking a risk by doing so. If we choose to take profits in a stock that has appreciated in value which this position did by up to 800-1000%, it is our business! It is our prerogative and “market-acceptable right” – we bought this stock and paid for it as well as rendered legitimate services. Furthermore, you infer that we sold the stock to unsuspecting “windows and orphans”- this is pure babble. We do not deal with retail investors-individual investors. We sold our position to Qualified Purchasers-sophisticated institutional investors that had done their research prior to purchasing and had due diligence contact with management of WebSky.
In the interest of fairness though, we were retained to help provide consulting services for fund raising and market sponsorship which we did but only to institutional investors. We do not communicate our flow to the retail public as you constantly infer. We direct our communication largely to the institutional “buy-side” industry. So, the classic phrase of “pump and dump” used by the SEC and scholastically deficient is a misnomer. I assume you could apply the same context to an investor or Investment Banking firm that bought Facebook at $17 and sold at $38; (or purchase at $17 with a run to $38 and revert back to $17 level) simultaneously, providing Investment Banking consulting advice-could also be construed as “pump and dump”… this is an exhausted, nebulous and accusatory indicting phrase which should be removed from regulatory arsenal.
- Another prevarication on your part- You indicated my wife sat for 2 hrs. of questioning in an SEC deposition while having to take care of an infant less than a year old.
Response: In fact, it lasted for approximately 8-9 hrs. Get your facts straight or rather, ask the attorney for the SEC to stop garbling the truth – as this is where you most likely received this info. Better yet, refer to the court reporter in order to provide you an accurate accounting of the time spent – the tape will provide an accurate occurrence of time. Additionally, my wife goes by Diller-Stone not Dillerstone.
- Another inaccuracy- “The Stone’s operated Crescent out of a so-called virtual office on Wall Street paying about $ 100 a month to a company that answered phone calls and collected mail for them.
Response: “ We have rented the space for 12 years” and the Executive service structure we utilize in the building has been able to modify our growth and contraction during this time frame. Additionally, your cost metric is off exponentially.
Either you are too indolent with respect to doing your homework or you are just another reckless journalist with a dark soul intent to gurgitate a story regardless of the impact it has on people. If you continue this practice, you should either be removed as an employee of your firm or alternatively, endure a swift combat boot right up your ass by the next guy you try to tear apart. If it were not illegal, I would oblige you.
- 7. You also reference that there was a “ruling” in the WebSky case and that U.S. District Judge Harold Baer said he was “wary” about some of my wife’s representations”.
Response: I do not understand why you are not aware that this case was a settled civil case and did not go to court whereby, there was an agreement to settle with neither “admit or deny”? Meaning, there was no comment from the Judge-either in our favor or the SEC. It was an agreement involving two parties – only signatures not commentary nor courtroom discussion.
Lastly, to avoid any further confusion, I founded the firm- act as an Advisor and along with other partners in the firm provide directive. Further, my regulatory history is a personal matter-meaning, it is my business. However, if people want to inquire and engage in the media sensasionalism, it is there prerogative and is “public record”. We have a real franchise, mechanism to help these small, obscure, illiquid micro-cap companies move from point A-B- execute their business plan properly and within industry standards. If an entity chooses not to do business with me due to my purported “regulatory inconsistencies”, then that too, is their prerogative and I wholeheartedly understand. Either way, I do not need a job. On the other hand, it is unfortunate that there remains a significant base of folks that choose to “deep-throat” everything they read or hear that the regulatory bodies espouse and make public-media-yourself included. It is scholastically deficient and the mere fact that the SEC (in many instances, not all) has such a history of turning something which started out nice to ugly should be pondered more closely and a stop imposed.
To bring this dark and ugly matter to an end – at least for me, I feel incumbent to expound on my initial regulatory infraction that resulted in an SEC charge-it is a matter of public record. Everyone knows it is out there. This matter has resulted in the SEC referring to me as a “recidivist” – an unfortunate tag that I endure. It is what it is but, in order to illuminate the terrain and provide maximum clarity on the event, I will give you the other side of the story and in the process, could careless who may or may not believe what I profess…
16 years ago, 1997, I was involved with a business colleague which ran a small Investment Banking boutique separate from my firm. Both of our firms raised capital and brought companies public. To make a long story short, this gentlemen I refer to became a target for prosecution for securities violations sanctioned by the SEC. Upon a forensic accounting into the dealings and transactions of his firm, I was contacted by Federal authorities and questioned regarding my relationship and transactions with his firm. Within minutes, I was asked to be a government witness against this man… I refused. He and his family had grown to be close friends. I was not about to “rat”, or “inform” (regardless of vernacular) on a friend. It is not something I would do to anyone-friend or foe as I do not possess that type of internal make up.
What ensued thereafter, is “par” for the course when dealing with dishonest cretins within the government… there were 2 agents that enunciated clearly that I was not a “target” but that they needed my help and if I did not assist them in order to “nab their man”, they would orchestrate “collateral damage” and cause me grief. In the end, I would not relent and they fulfilled their threat, thereby, charging me for “commingling” funds and labeling it as wire fraud by taking a loan from my friend which made an investment into my brokerage operation. More specifically, to expound further, during this time, I formally raised capital and was in the process of building out my operation from a 20 man brokerage -100 man operation. This colleague I mention above executed a subscription agreement and became an equity partner. What the government failed to mention in their public postings is that I paid back every penny of investor money based on performance. Succintly, I have never taken a dime from anyone nor would I.
My explanation nor side of the story matters not at this point… I continue almost daily dealing with the stigma and ugliness of it all – no one forgets and I am not complaining – I am fairly a clinical guy. It is what it is…
The moral however is:
If you find yourself in the “cross-hairs” of the Govt., know this – cooperate at any cost because it matters not who you are nor how much money you have or who you know, you cannot prevail against a “stacked-deck”. These guys “control all of the marbles” and have the wherewithal to contort and twist an outcome.
This is my side of the story.
The International Monetary Fund warned Tuesday that the U.S. recovery is still on shaky footing, and political action must be taken to keep economic growth stable.
"The U.S. recovery remains tepid and subject to elevated downside risks, in light of financial strains in the euro area and uncertainty over domestic fiscal plans," the report by the IMF says. "Against this background, policies need to decisively tackle medium-term challenges while using the available room to support the recovery."
Instead of a bank foreclosing on another homeowner, the Florida homeowners foreclosed on a bank and had sheriff’s deputies foreclose on the North Carolina based bank, Bank of America.
It started five months ago when Bank of America filed foreclosure papers on the home of a couple, who didn’t owe a dime on their home. The couple actually paid cash for the house.
The case went to court and the homeowners were able to prove they didn’t owe Bank of America anything on the house. In fact, it was proven that the couple never even had a mortgage bill to pay.
A Collier County Judge agreed and after the hearing, Bank of America was ordered, by the court to pay the legal fees of the homeowners’, Maurenn Nyergers and her husband. The Judge said the bank wrongfully tried to foreclose on the Nyergers’ house.
After an excess of 5 months of the judge’s ruling, the bank still hadn’t paid the legal fees, and the homeowner’s attorney did exactly what the bank tried to do to the homeowners. He, rightfully, seized the bank’s assets.
“They’ve ignored our calls, ignored our letters, legally this is the next step to get my clients compensated, ” said attorney Todd Allen.
Sheriff’s deputies, movers, and the Nyergers’ attorney went to the bank and foreclosed on it. The attorney gave instructions to to remove desks, computers, copiers, filing cabinets and any cash in the teller’s drawers.
After about AN HOUR of being locked out of the bank, the bank manager handed the attorney a check for the legal fees.
“As a foreclosure defense attorney this is sweet justice” says Allen.
Allen says this is something that he sees often in court, banks making errors because they didn’t investigate the foreclosure and it becomes a lengthy and expensive battle for the homeowner