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.

Although the two women have little in common, both had somehow managed to seriously anger the man who (very quietly) has backed a new Web site The Blot: Benjamin Wey a 42-year-old promoter of Chinese stocks. And so both women found themselves the subject of a series of relentlessly personal articles on The Blot, whose motto is “Never Be Boring.”

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Figuring out Wey’s connection to The Blot took the Southern Investigative Reporting Foundation about 20 minutes.

Here’s how we did it:

Plugging the term “The Blot” into a search engine turned up a citation on CrunchBase, describing the publication’s office as being located on the 20th floor of 222 Broadway in New York City and listing Neil St. Clair as its founding publisher and editor. Confirming St. Clair’s role with The Blot was not hard; the New York Business Journal had profiled the new venture last July and even noted that the Web site had “a silent backer.”

Online searches for background on Neil St. Clair turned up his prior roles as an on-air reporter on New York City and Syracuse newscasts and that he is indeed operating a business from the 20th floor of 222 Broadway but not necessarily The Blot.

Additional Web searches surfaced St. Clair’s copyright claim for FNL Media, which is doing business as “theblot.com” and listing a work address at 40 Wall Street on the 38th floor. The New York Secretary of State’s business directory did not list much further information, but The Blot’s LinkedIn profile also included the 40 Wall Street address.

Plugging “40 Wall Street, 38th floor” into a search engine indicates another business associated with that address, Benjamin Wey’s financial advisory outfit, the New York Global Group.

One of The Blot’s few advertisers is FIKA, an upscale coffee and chocolate emporium which counts Ben Wey as one of its investors. The same lawyer, Neal N. Beaton, of Holland & Knight LLP, serves as the registered agent for both FNL Media and Wey’s coffee investments. (A man pictured with Wey on the Swedish news Web site, Nordstejrnan, is John Bostany, a lawyer whose 40 Wall Street offices are located several floors below Wey and whose firm is suing Maureen Gearty.)

In January when the Southern Investigative Reporting Foundation called the New York Global Group’s number and asked to speak to a staffer at The Blot, the person answering the phone said she couldn’t transfer the call but would—after being requested to do so—pass a message to the editor, Alicia Lu. (Lu, however, did not return a call to the Southern Investigative Reporting Foundation. Nor did she phone back after a message was left using The Blot’s primary number. Nor did Lu reply to an email sent her.)

The Southern Investigative Reporting Foundation also called the two editors, Neil St. Clair and Alex Geana, who had been profiled in the New York Business Journal in mid-July around the time The Blot launched.

Reached on his cellphone, St. Clair was uncomfortable about discussing his role at The Blot, claiming that he was only a consultant who had helped launch the site. Pressed about the New York Business Journal’s description of him as “editor-in-chief” and “publisher,” St. Clair said he would not confirm or deny whether Wey had a role with the publication. Instead he noted that he was subject to a nondisclosure agreement.

Alex Geana was more forthcoming. He told the Southern Investigative Reporting Foundation that Wey fired him on Jan. 2 after he refused to publish the first piece about Dune Lawrence.

“I was sick and tired of these libelous hit pieces,” said Geana. “The [Gearty stuff] was bad enough but when we are calling a reporter a ‘racist’ and we have no evidence to support that charge; that is immoral.”

The fight that eventually cost Geana his job had been in the making for a while, according to Geana: The tension started simmering when Wey grew angry at Geana for requesting proof of the allegations being made about Gearty and Lawrence in articles sent to The Blot by four columnists and reporters—whom Geana had never met or spoken with and whom Wey refused to put him in contact with.

After Wey repeatedly refused to provide him “notes” that Wey claimed the Blot’s authors had obtained during their “research process,” Geana told Wey that he refused to publish the articles, Geana recalled.

Wey fired him shortly afterward, Geana said. The pieces appeared anyway. See a statement from Geana regarding his termination from The Blot.

Wey could not be reached for comment about Geana’s allegations.

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Why Wey would create an organ like The Blot is a puzzling matter.

To arrive at a reason, it helps to understand that Maureen Gearty and Dune Lawrence, despite their differences, are very dangerous people to Ben Wey.

Wey is a stock promoter, a term of art on Wall Street as much as it is an actual job description.

Seen his way, Wey helps growing Chinese companies seeking access to the liquid U.S. capital markets find appropriate legal, accounting and financial advisers; the desired end result being a listing on an American stock exchange. Additionally, once a stock exchange listing is set up, he connects money managers to his client companies, with an eye toward helping the newly public companies navigate the challenging Wall Street investor-issuer relationships.

But Wey has not found it easy to accomplish all this.

The shares of Wey’s client companies have proved to be troubled investments in an asset class—Chinese reverse-merger stocks—that has suffered devastating price declines. New York Global Group’s clients have reliably separated investors and their capital, with one exception: Harbin Electric. (Wey took Harbin Electric private—at a sharp premium to its share price—in a management-led buyout.)

Earlier forays into stock sales, first as an Oklahoma based broker for Wilbanks Securities, and later as the owner (through his wife) of New York Global Securities, led to a series of regulatory headaches. (For his part, Wey is unrepentant for the controversies, telling the Financial Times in 2011 that with respect to the Oklahoma dispute—involving the sale of securities in a company in which he was an undisclosed adviser to—that he would do “the exact same thing.”)

In January 2012, the FBI raided Wey’s office and home. An FBI spokesman described the action as part of an “ongoing investigation.”

For Wey to be seen by potential Chinese clients as a credible promoter, he needs to not only get transactions done, but also to ensure stock is purchased by investors inclined to hold their positions and not panic at the first sign of bad news.

So when Gearty became a high-credibility witness last year for the Financial Industry Regulatory Authority, or FINRA, during its examination of First Merger Capital (a firm that Wey played a role in establishing and where two of his close allies had worked), she became a big threat to his interests.

Wey’s New York Global Group had an extremely tight relationship with the founders of First Merger Capital, brokers William Scholander and Talman Harris: Nearly 80 percent of First Merger Capital’s revenue came from trading the shares of just three clients of Wey: Deer Consumer Electronics, SmartHeat and CleanTech Innovations.

The First Merger Capital brokers were the subject of a lengthy FINRA inquiry last year examining a $350,000 payment from Wey client Deer Consumer Products, a maker of kitchen appliances. Gearty’s testimony, laid out in an unusually blunt 45-page FINRA examination document released in August, disclosed how the payment was, in effect, used to set up First Merger Capital, where Gearty worked with Zakai. (At the time of First Merger Capital’s organization in the fall of 2009, Zakai was serving a 30-day FINRA suspension for a violation at his previous employer.)

Wey’s company Deer Consumer Products provided funds for the purchase of the former Brentworth & Co. brokerage firm from another penny stock impresario and paid rent, bought furniture and computers—all to create a new brokerage that could reliably promote Wey’s companies’ shares.

Ultimately, what Gearty did is remove the lid on the workings of a mini penny-stock empire that, according to her testimony in the FINRA report, had worked quite well for Wey, Scholander and Harris (although markedly less so for their clients). She put Wey much closer to Wall Street’s dark underbelly than his relentless self-promotion would let on. According to her testimony, there was little difference between Wey’s New York Global Group and First Merger Capital: They shared the same office suite at 40 Wall Street as they had earlier at 14 Wall Street, where Scholander and Harris had owned a branch office of another deeply troubled penny stock trader, Seaboard Securities. The FINRA report noted that Wey, Scholander and Harris began their relationship in 2004 when they worked at Wey’s now shuttered New York Global Securities.

Moreover, although The Blot blasted Zakai as well as Gearty, the FINRA report indicates that Wey and Zakai had enjoyed a profitable working relationship before Zakai went to work at First Merger Capital.

When Zakai worked at collapsed boiler room between 2001 and 2006 Great Eastern Securities, he helped Wey market his first reverse merger deal in the United States, for Bodisen Biotech. (The role Wey played as an adviser to that Bodisen Biotech proved controversial enough that the company ended up firing him and the American Stock Exchange delisted the company in 2007.)

This past summer, FINRA decided to bar Wey’s allies Scholander and Harris from working as brokers in the securities industry based on, among other things, their failure to disclose the $350,000 payment they had received from Deer Consumer Products. In a withering assessment from FINRA’s examiners, their testimony was described in the report as “demonstrably false” and “a brazen attempt to falsify.”

Both brokers are appealing the FINRA decision, and until a final determination is released, they work at a firm they are co-owners of Cambridge Alliance Capital, a unit of Radnor Research and Trading. A receptionist at Cambridge Alliance told the Southern Investigative Reporting Foundation at the end of January that Scholander had not been seen in months and that he no longer worked there. When the receptionist was asked why he had left if he had told regulators he owned the firm, she hung up. Two calls to Radnor Research and Trading were not returned.

(In 2011, Scholander ran into trouble of an entirely different sort: According to the New York Post, he was arrested at a popular bar after he allegedly tried to take pictures of women as they used the toilet. He pleaded guilty to a criminal harassment charge and is being sued by a woman who said she caught him trying to photograph her.)

Both Harris and Scholander are also suing Gearty (as well as Zakai and his wife) for $10 million in damages, alleging, among other claims, that Gearty misappropriated their commission payments. Their suit was filed by John Bostany, a lawyer with personal connections to ex-First Merger Capital boiler-room stock sales veterans like Guy Durand (pictured in the middle of a Business Insider photo with Bostany at his right at a charity function) and who also sued a short seller on behalf of Wey client Deer Consumer Products. (The case was dismissed in November 2012 on First Amendment grounds.)

Harris and Scholander continue to profit from their relationship with Wey and were listed as shareholders of Nova Lifestyle, a furniture company accepted for listing on Nasdaq in January and whose stock price has been on something of a tear. The August 2011 Nova Lifestyle equity offering did not name Wey as a shareholder or adviser, but his sister Sarah Wei is listed as a seller of 690,000 shares through a portfolio managed by Witter Global Opportunities Ltd., a fund that also collaborates with Wey’s New York Global Group. (In addition, James Baxter, the president of Wey’s New York Global Group, sold 23,000 shares in the offering, through a holding company he and his two brothers own, Global Investment Alliance.)

Gearty, for her part, told the Southern Investigative Reporting Foundation last week that she is devastated to have been the subject of The Blot’s bombastic articles.

“I never slept with Zakai and no one [has] ever alleged it, ever. [Scholander, Harris and Wey] just want me to look bad for their fake lawsuit,” Gearty said. “I never took a penny of anyone’s money and no one who investigated these guys at FINRA or the Manhattan DA’s office ever said I did.”

“How could Zakai have given me gifts from client money when I never worked with him at his fund?” she said, responding to a claim in The Blot that she had siphoned off client monies from Zakai at an investment fund he had established after the collapse of First Merger Capital. “[The Blot] only said those things because I told [FINRA] the truth and they know I’m not rich and famous so I can’t hurt them back.”

Gearty said she did not benefit financially in an improper way when she worked at First Merger Capital and has not worked steadily since leaving the firm. She has been representing herself in a bid to fight off the Scholander and Harris lawsuit.

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Wey’s beef with Dune Lawrence follows a pattern that has emerged recently of companies using the Internet to strike back at investigative reporters whose reporting they deem offensive or threatening.

And harassing reporters offline, through means apart from the Internet, is hardly new. In 1998, Dan Borislow, the chief executive of highflying Telecom Tel-Save, had then TheStreet.com reporter Alex Berenson followed by private investigators after he wrote critically about his company. More recently, Hewlett Packard tried to obtain phone records of Wall Street Journal reporters and Allied Capital attempted to find the phone records of columnist Herb Greenberg and other company critics.

Like the suggestion that Gearty slept with an alleged thief, The Blot’s criticism of Dune Lawrence was obsessively personal: It alleged that she eats a problematic amount of Kentucky Fried Chicken meals to the detriment to her appearance, speaks Chinese poorly and takes bribes from short seller Jon Carnes.

The Blot did not, however, try to assert publicly online that Lawrence’s reporting has ever been wrong—nor have others, at least from what can be gleaned from an Internet search for lawsuits or substantive disagreements about her reporting.

To be certain, Lawrence’s work might win her few friends in China. With her colleague Michael Riley, Lawrence identified a lynchpin in a Chinese government-sanctioned computer-hacking unit. In December, Lawrence wrote about a long-running fraud at AgFeed Industries of China, a former client of Wey.

The Blot’s articles on Lawrence appear designed to create a lasting search engine optimization headache for her. For Lawrence’s Western readers, raised in a tradition of critical reporting and free speech, The Blot’s impact is likely to be muted; for her Chinese sources, who do not have this background, the charges may well resonate more.

When Lawrence wrote about short seller Jon Carnes in a 2013 story, it likely reinforced Wey’s oft-stated view that short sellers of Chinese companies use dishonest means to incite panic, usually through manipulating a crooked and lazy business press.

In turn, Carnes became the target of The Blot’s animus on Jan. 23 in a story that compared him to Jordan Belfort, the former chief executive of penny-stock brokerage Stratton Oakmont who served a jail sentence for defrauding his clients.

When Deer Consumer Products sued Carnes and his EOS Holdings fund in 2011, Wey and his colleagues likely had high hopes of a sharp reversal of fortune for Carnes, a man whose fund’s research had a role in helping expose fraud that resulted in the collapse and delisting of seven different Chinese issuers. Deer Consumer Products, however, lost its suit against Carnes, and Nasdaq delisted Deer Consumer Products in March 2012 for a host of fraud-related issues.

A disclosure is important here: The Southern Investigative Reporting Foundation has been a recipient of funds from Carnes through his charitable trust.

The war between short sellers and their critics took a sharply more serious turn when the British Columbia Securities Commission filed a claim in December that Carnes issued a misleading report on Silvercorp Metals, a company based in Vancouver with mines in China. In a statement posted on his Web site, Carnes said he is fighting the charges, which he characterized as “false and without merit.”

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Two phone calls and email messages (bearing a set of detailed questions) for Wey seeking comment were not returned. In recent weeks, as this article was being prepared, Wey began to use social media platforms to publicly link to articles from The Blot.

As he has done with other reporters whose work he does not like, Wey has extensively criticized the Southern Investigative Reporting Foundation and its board members on various online platforms in the past.

 

2 thoughts on “Meet Benjamin Wey, Media Mogul

  1. Someone please tell me how Ben Wey is not in jail? ATTENTION SEC and FBI, this man is a dangerous criminal who has robbed US investors of millions of dollars and poses as a legitimate citizen while practicing a business he has been banned from under the guise of his wife’s ownership. My 7 year old could build a case against this wife-beating, money-stealing, stock-promoting felon, please hurry before he ruins more lives.

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