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The Mitzvah Factory

Imagine you and your younger brother are poor Jewish kids in mid-1950s Hungary. Unlike so many, you managed to avoid the Holocaust only to be swept up in a bitter revolt against the cruel Soviet occupation government.

A Reckoning for the Hedge Fund King of Akron, Ohio

Anthony Davian, a once-prolific presence on social media who held himself out as a iconoclastic hedge fund manager prior to his August 2013 indictment on a series of fraud charges, was sentenced several hours ago in a Cleveland courtroom to four years and nine months in federal prison. Federal Judge Patricia Gaughan of Ohio's Northern District court also ordered Davian to make restitution of approximately $1.8 million to his defrauded investors and serve three years of probation after his release. Should Davian waive his right to appeal, he is slated to report to prison in late December or early January, pending his recovery from a recent foot surgery. According to a pre-sentencing guideline federal prosecutors filed on November 18th, they sought a 60 month sentence (and full restitution) for Davian based on an investigation they claimed showed Davian had never sought to manage money, but only to raise investor capital to fund personal and business expenses, including paying off an office lease and attorney fees. A once forceful presence on what is now known broadly as "Finance Twitter," Davian's signature remark was "Ching!" Continue Reading →

The Invention of Professor Dr. Anthony Nobles

Reader, let’s not mince any words about Dr. Anthony Nobles, a 50-year old inventor, teacher, community leader, entrepreneur and soon-to-be space tourist: his life is vastly better than yours. Hailing from Michigan, Nobles didn’t start with much but using his pair of Biomedical Engineering doctorates he developed a patented heart suture technology that he claims has saved thousands of lives; it certainly saved his bank account, because he has been able to buy residences in Steamboat Springs and a seaside boro of Orange County's Huntington Beach. How many Biomedical Engineering doctorates do you have, reader? None? SIRF thought so. Continue Reading →

The Life Fantastic: Michael Saylor’s All Expense Paid World

You may not remember where you were on March 20, 2000, but it’s a very safe bet that a man named Michael Saylor does. More than 14 years later, and it’s likely still fresh in his mind because it’s not every day that one incurs what is the greatest single-day hit to personal wealth in capital market history. That day, as the CEO and majority shareholder of software company MicroStrategy Inc., whose clients now include Facebook and Starbucks, Saylor lost $6.1 billion of his reported $15 billion fortune. Saylor’s historic loss was a result of MicroStrategy’s price per share freefalling $140 in a single day after the price fell to $86.75 from the previous day’s close of $226.75. The stock price's sharp decline was the result of a major restatement of MicroStrategy’s earnings. Continue Reading →

What’s in a Name: The Ongoing Saga of Medbox

It is the third week of April of 2011 and Rishi Patel is on a mission: He is taking a hard look at business opportunities in the wake of Arizona’s decision to permit the sale of medical marijuana in dispensaries across the state. To Patel’s thinking, selling medical marijuana is going to be a fantastic opportunity to earn money while offering a scientifically valid therapeutic service to people wrestling with disease. Patel had come across an ad from Prescription Vending Machines, a company helping folks like him get into the medical marijuana business, and in short order he was in a running dialogue with the company’s founder, an agreeable and talkative fellow named Vincent Mehdizadeh. From there, it wasn’t long before Patel and a pair of friends had struck a plan to help Prescription Vending Machines land a dispensary permit in Arizona. Just before he wrote a very large check—his father was staking him the capital—Patel did a background search on Mehdizadeh. Continue Reading →

The Copper Archipelago: Truth, Lies and InterCloud Systems

InterCloud Systems, a company familiar to Southern Investigative Reporting Foundation readers, put out a press release last week sharply disagreeing with the claim that they had hired a controversial public relations firm to promote its shares. While affirming a commitment to grow its businesses, InterCloud’s statement said that it had retained an unnamed former Securities and Exchange Commission attorney who had not found any evidence that the company used the Dream Team Group, a public relations outfit whose practice includes paying authors to post favorable, company-vetted articles about its clients on popular stock market websites. The unambiguous stance worked and reversed a week of constant decline in InterCloud’s share price when a series of plaintiff law firms announced their investigations regarding InterCloud’s undisclosed promotional activities. A public relations firm that hires authors to write flattering articles about a clients prospects without disclosing they are being compensated to do so isn’t just gaming public opinion, but is running the risk of violating the Rule 17(b) of the Securities Act of 1933, which mandates disclosure of an economic interest in the promotion or sale of securities. One company that had their public relations firm commission articles, Galena Pharmaceuticals, is already in the SEC’s crosshairs, having received a demand for documents related to this issue. Continue Reading →

Kindred Healthcare Chairman Snares Loaded Retirement Sendoff

Editors Note: This is a cross-posting of an article released today from the Kentucky Center for Investigative Reporting that we felt would be of interest for our readers. By: James McNair7 hours ago

At Kindred Healthcare Inc., retirement gifts have gone way beyond the farewell cake, the cheap wristwatch and the sendoff reception at the local sports bar. Last December the Louisville-based hospital and nursing home chain announced that its chairman, Edward Kuntz, would be quitting the board of directors after its annual shareholders meeting in May. Kuntz is 68 and has been chairman since 1999. Until 2004, he was also the publicly traded company’s chief executive. Continue Reading →

The Copper Archipelago: InterCloud

Editors note: In addition to several minor copy edits to correct spelling and grammar usage, the article was amended to include a comment from John Mylant denying that he is part of an organized stock promotion effort. A disputed December 2011 transaction between Orlando Birbragher and the stock promoter Richard Barsom was mischaracterized and was changed to reflect the claims in a lawsuit. It’s fair to say that a recent New York Observer article ably framed what every investor needs to know about a curious enterprise named InterCloud Systems: its prospects are marginal and the management doubly so. Experience, however, often shows that companies surfacing from the bronze deep of small-capitalization stock finance have rich backstories. With that in mind, the Southern Investigative Reporting Foundation dove in, tracing the backgrounds of its executives, advisors and following the money trails between the two. Continue Reading →

How To Effortlessly Earn A Riskless 90% On Your Bitcoins Through The Magic of Binary Options Trading, Or, The Nigerian Email Con Comes To Wall Street

Let’s discuss an ambitious African immigrant named Obawtaye Folayan who appears to have a very big American dream but an unfortunate approach to getting there. Starting in the mid-90s Folayan started laying down some real markers on the road to success, picking up a finance degree from Delaware State University and later, a masters degree in education administration from New Jersey’s Rider University in 2002. Two years later he would become principal of a school in Bridgeton, New Jersey. But Folayan was a restless sort and moved on from the principal’s office to start a host of businesses, from landscaping to a for-profit education initiative. Like many a fellow before him, Folayan heard the siren song of Wall Street, and in 2012, he set up Folayan Financial Holdings, a Delaware-chartered company with some tall designs on the world of consumer financial services. Continue Reading →

Meet Benjamin Wey, Media Mogul

Sometime on Sept. 3, Maureen Gearty, 56, of New York City started receiving emails and calls from old friends and colleagues asking about the details of her torrid affair with a man named Ronen Zakai, a former colleague at two since-shuttered small-cap boiler rooms.

Gearty told anyone who would listen she had never had any romantic involvement whatsoever with Zakai and that she was pretty certain she wouldn’t be hearing from him either since he was in a world of legal trouble for an alleged fraud involving some serious misuse of clients’ funds. In January, less than 15 miles away from Gearty’s home in the borough of Queens, Dune Lawrence, 38, a highly decorated Bloomberg News reporter, went online one morning to find her picture splashed across a Web site with the headline “Is Dune Lawrence Racist?”

The two women are very different: Gearty is a 30-year veteran office manager of Wall Street’s rough-and-tumble boiler rooms, and Lawrence is an award-winning investigative reporter. Both became quite upset. Gearty was paralyzed by anger and disgust, she said, at the lies that seemed to metastasize from story to story, while Lawrence was taken aback by the bitter personal attacks, even if she understood the articles would not be seen as serious professional criticism of her journalism, she told her friends. Continue Reading →

Bryan Caisse Comes Home

Bryan Caisse, the former submarine weapons officer turned hedge fund manager, was arrested Saturday in Bogota, Colombia, by officers from the Department of State’s Diplomatic Security Service. His name should ring a bell for Southern Investigative Reporting Foundation readers: Caisse was the subject of a December report detailing how the once well-regarded mortgage-bond fund manager disappeared from New York in the autumn, leaving a daughter and numerous investors from his fund behind and in the dark. In October, a prosecutor with the New York County district attorney’s major economic cimes bureau impaneled a grand jury to investigate a host of allegations surrounding Caisse’s nonpayment of a series of so-called working capital loans to his hedge fund, Huxley Capital Management. Specifically, the prosecutor was interested in unpaid loans from Caisse’s friends and family, many of whom had lent him money on the assurance that there was virtually no risk involved and that it would be repaid with interest in under a year. The Southern Investigative Reporting Foundation obtained documents showing Caisse avoided repaying several of these investors by creating email accounts for a pair of fictitious personal assistants that repeatedly assured the investors a wire transfer was forthcoming or an overnight mail delivery of a check was en route. Continue Reading →