How Patrick Byrne Levered a SPAC to Create Cryptocurrency Kingdom

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(Republished with permission from Prospectus LLC) -Patrick Byrne has often been dismissed by contemporaries for being brash, confrontational and someone who just likes to create chaos. Courtesy of a $1million stake in Kennedy Cabot Acquisition Holdings, a Special Purpose Acquisition Company aka SPAC, Byrne is further along on a journey to secure the title of being the cheapest online discount broker and also, the crown to the cryptocurrency kingdom .

Overstock.com, the on-line retailer led by multi-industry disruptor Patrick Byrne has seen its share price surge nearly 100% in the past four weeks, and not because of online shopping spikes during this holiday season. And not because it was the first retailer to accept bitcoins back in the day when no other retailer even understood the concept of distributed ledger and blockchain, the elements that power bitcoin, the ubiquitous cryptocurrency whose price has gone from $500 to over $20,000 in less time than it takes most companies to float an initial public offering.

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Patrick Byrne

Along the way, we can guess that the former online discount retailer of stuff has watched his net worth increase by at least several hundred million dollars, as the shares of all of his various holdings have increased multi-fold. Its because Patrick Byrne has been hard at work during the past number of months executing a stealth strategy by leveraging his purchase of a SPAC (special purpose acquisition company) that has made Overstock a virtual holding company whose portfolio of companies now includes (i) Medicia Ventures, a cross between a PE and VC platform that is focused on cryptocurrency enterprises (ii) an on-line brokerage that was formerly a woman-owned broker-dealer known as Muriel Siebert & Co and renamed “tZero” that will enable day traders to make $2.99 stock trades and pay in cryptocurrency, (ii) a stake in Delaware Board of Trade, an electronic exchange run by the former head honcho at the Philadelphia Stock Exchange former vice-Chairman of NASDAQ OMX and positioned as the first and only blockchain based Alternative Trading System fully licensed by the SEC, which will float Initial Coin Offerings (ICOs)  and enable investors to buy and sell bitcoin based bond funds that are packaged in similar fashion to exchange-traded funds aka ETFs.

Having a successful ICO is usually easier and costs less than an IPO, the penalties for fraud remain the same. Make sure you document everything and have an experienced partner in your corner to ensure you are meeting obligations to both investors and, eventually, regulators.

But every road has its bumps. A planned initial coin offering (ICO) for Overstock blockchain subsidiary tZERO, scheduled to go live at midnight Monday, has yet to launch as originally anticipated. While little is known about the now nearly day-long delay, a countdown clock on SAFTLaunch.com, the issuance portal for tZERO’s token, has expired without any update to the company’s website or social media accounts. Indeed, CoinDesk’s calls to key Overstock executives, including CEO Patrick Byrne, went unreturned or unanswered today.

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SEC Cyber Unit Brings First ICO Fraud Charge

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ICO Fraud Charge is the First, Certainly Not Last as Initial Coin Offerings No Longer Under Regulators’ Radar

(Courtesy of RTTNews) – The Securities and Exchange Commission said Monday that its new cyber unit has obtained an emergency asset freeze to halt an Initial Coin Offering or ICO fraud.

The SEC noted that the ICO fraud, advanced by “PlexCorps” owned by a mysterious shell company known as DL Innov Inc., which is operated by Canadian resident Dominic Lacroix and Sabrinia Paradis-Royer raised up to $15 million from thousands of investors since August by falsely promising a 13-fold profit in less than a month.

These charges are the first to be filed by SEC’s cyber unit, which was created in September 2017.

The SEC’s complaint was filed in federal court in Brooklyn, New York. The complaint alleges that Lacroix and PlexCorps marketed and sold securities called PlexCoin on the Internet to investors in the U.S. and elsewhere by claiming that investments in PlexCoin would yield a 1,354 percent profit in less than 29 days.

Based on its filing, the SEC obtained an emergency court order to freeze the assets of PlexCorps, Lacroix, and Paradis-Royer. These charges are the first to be filed by SEC’s cyber unit.

The complaint seeks permanent injunctions, disgorgement plus interest and penalties. In addition, the SEC is seeking an officer-and-director bar for Lacroix, and a bar from offering digital securities against Lacroix as well as Paradis-Royer.

Issuers of Initial Coin Offerings: Don’t Get Caught Short By Failing to Follow the Spirit of Securities Regulations. Industry experts at Prospectus.com can provide sage guidance for staying inside the regulatory goal posts and prepare investor offering documents that conform with the spirit of the regulatory regimes governing ICO initiatives.

The SEC’s cyber unit was created in September to focus on misconduct involving distributed ledger technology and initial coin offerings, the spread of false information through electronic and social media, and hacking as well as threats to trading platforms.

“This first Cyber Unit case hits all of the characteristics of a full-fledged cyber scam and is exactly the kind of misconduct the unit will be pursuing. We acted quickly to protect retail investors from this initial coin offering’s false promises,” said Robert Cohen, Chief of the Cyber Unit.

In August, the SEC’s Office of Investor Education and Advocacy issued an Investor Alert warning investors about scams of companies claiming to be engaging in initial coin offerings.

BrokerDealer.com expresses thanks to RTT News for the coverage content. For the full article from RTTNews.com, please click here

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Mischler Financial Group Announces 2017 Annual Veterans Day Pledge

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Newport Beach, CA & Stamford, CT –November 1, 2017 —Each year, Mischler Financial Group, Inc., the securities industry’s oldest minority broker-dealer owned and operated by service-disabled veterans pledges a percentage of the firm’s profits to veteran and service-disabled veteran philanthropies as part of its annual Veterans Day charitable initiative. This year, Mischler is proud to announce that Children of Fallen Patriots (CFPF) will be the recipient of the proceeds. Established in 2002, CFPF supports Gold Star families with college scholarships and educational counseling to military children who have lost a parent in the line of duty. Since its inception, CFPF has provided the runway to educational success for young men and women throughout the United States.

Dean Chamberlain, Chief Executive Officer of Mischler Financial Group stated, “Since we opened our doors nearly 25 years ago, our mission has been binary. Our business ethos is to not only serve the marketplace needs of Issuers, state and local governments and institutional investment managers with the highest degree of market proficiency and integrity, but to also share the rewards of our efforts by supporting men and women injured while defending our freedoms and the families of those who made the ultimate sacrifice.” Added Chamberlain, “Thanks to the opportunities presented by our clients, we take great pride in paying forward by supporting carefully selected philanthropies throughout the year. When paying tribute to Veterans Day in particular, we believe CFPF exemplifies Gold Star recognition.”

 

mischler-cfpf-veterans-dayAbout Children of Fallen Patriots

Nearly 20,000 dependents have been left behind by troops killed in the line of duty over the last 35 years. Many surviving families struggle to make ends meet with 63% of surviving spouses making less than $50,000 per year. CFPF scholarships and financial assistance, funded by loyal donors and corporate sponsors, have assisted nearly 1000 bright and motivated students throughout their undergraduate studies. The vision of CFPF is to ensure that every child of a fallen patriot receives all necessary college funding. The organization’s website is www.fallenpatriots.org

 

 

mischler-veterans-day-pledge-brokerdealerAbout Mischler Financial Group

Mischler Financial Group, Inc. is a federally-certified Service-Disabled Veterans Business Enterprise (SDVOSB). We provide capital markets services across primary debt and equity markets, secondary market agency-only execution within the global equities and fixed income markets, and asset management for liquid and alternative investment strategies. Clients of the firm include leading institutional investment managers, Fortune corporate treasurers and municipal officials, public plan sponsors, endowments, and foundations. The firm’s website is located at http://www.mischlerfinancial.com.

 

Weinstein Saga Update: Co Pres David Glasser Financial Schemes Come Back to Haunt

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While news media has been busy focusing on the travails of Harvey Weinstein–and glamorizing the newly-appointed (or interim) corporate chiefs, for some reason, investigative journalism is losing cache…But, lo and behold, one Hollywood news journalist has peeled back the onion to discover what could be an episode from “Arrested Development” starring Weinstein & Co. President & COO David C. Glasser, who was elevated to share the CEO suite with Bob Weinstein as the Hollywood mogul sex scandal unfolded last week. As reported by Variety’s Gene Maddaus, Glasser, who started his Hollywood career as a child actor, has been a “person of interest” in more than a few financial fraud investigations extending back two decades. According to Maddaus’ reporting, “Glasser has long been dogged by legal issues that date back more than two decades. In the most serious case, Glasser’s former film finance company was used by the now defunct penny stock broker-dealer Hanover Sterling Securities to launder the proceeds of a massive stock manipulation scheme which, according to federal prosecutors, was connected to the Genovese crime family.” While Glasser managed to dodge the bullets of federal prosecutors in that incident, in an exclusive reveal, Glasser’s inglorious film finance history includes a long trail of yet-to-be paid civil court judgements in various jurisdictions for defrauding investors in an assortment of “pre-production finance deals.”

david-glasser-weinstein-company-fraudTo be fair and balanced, Hollywood is as notorious for its deal makers advancing “the Art of Steal” as it is for casting couch hi-jinks for which Harvey Weinstein has been “reputation-ally cremated.” Just as Harvey is no lone wolf for gaslighting aspiring (and well-established) actresses and coercing them to observe (or enable) his sexual deviant behavior, Weinstein’s Glasser is not the only film finance aficionado who has played the deviant game of “hide the banana from investors.” The industry-common scheme is taking investors’ money, then later informing them the projects they backed either ‘died on the vine’ or courtesy of using two sets of accounting books, produced meager returns. One classic case study is the Academy Award winning film and box office blockbuster “Crash”, coincidentally produced by David Glasser and industry titan Bob Yari.  This was a small budget project investors backed but “somehow” didn’t produce any profits for distribution to those investors. For the record, the film Crash, written and directed by Paul Haggis, was produced on a budget of $7.5mil and brought in $250mil in ticket sales. According to Glasser’s partner Yari, the film was not profitable. According to a civil court finding, it was, and the producers were ordered to disgorge millions.

The connection between Glasser in that case, seems more than ‘tangential’, a phrase Glasser has invoked multiple times to investigators when being named a ‘person of interest’ in film funding schemes that have gone sideways under his watch. Glasser was also a target in a convoluted criminal investigation into the 2001 financing behind a remake of “Devil and Daniel Webster,”  the first and last directorial debut for Hollywood bad boy Alec “Bloviator” Baldwin, who also starred in the film with among others, Sir Anthony Hopkins and Jennifer Hewitt.  As reported at the time, before the film could be completed, Baldwin went over the limit on expenses, including renting a government venue for shooting certain scenes. When confronted with the bill, he claimed (to the FBI) that Glasser committed fraud. The reels were ultimately seized during post production editing by a bankruptcy court. In partnership with Bob Yari, Glasser then quietly acquired the rights from the bankruptcy court for pennies, the “new producers” then changed the title and sold the property to Starz. The story behind Glasser’s role in the financial shenanigans is the topic of a novel making its second way around book publishing circuits, but upon closer look, that case is part of a longer trail in which Glasser has found to have defrauded investors.

Entrepreneurs seeking to raise capital for an innovate product or industry disruptive business model need to follow two first steps: assembling a compelling business plan that is complemented by investor offering documents that comply with securities laws and regulatory guidelines relating to private placements to accredited investors. A leading firm that specializes in the full spectrum of capital formation documents and collateral is Prospectus.com

As evidenced by interrogating pacer.gov–Glasser is better cast as a serial financial fraudster who has racked up multiple civil court judgements in various jurisdictions, -each of which determined Glasser had perpetrated fraud relating to ‘pre-production film financing’ schemes in which investors lost all and restitution awards were mandated by the various courts. As best as can be determined, those restitution awards, totaling several millions of dollars, remain unsatisfied. In 2004, in the midst of various litigations, Glasser transferred ownership of his $2.8mil home in Hollywood’s Calabasas community to a ‘trust’ held by him and his wife.  Why the complicated 3 Card Monty game to shield title to that asset? One could conclude (as many have already) the ‘former child actor’ is a notorious bad actor, as evidenced by the cases below.​

Here’s 1 example http://caselaw.findlaw.com/tn-supreme-court/1651031.html.
A quick trip to court record database www.pacer.gov provides more insight to cases back in ’05 ’06 and ’14 3 other cases prior to ’05 are not available in the pacer.gov dbase, but through a stealth investigations, those records are being held pending what could prove to be a blockbusting class action law suit against Glasser.

1 Glasser, David C. (dft) flsdce 0:2005-cv-61655 140 10/14/2005 08/18/2006

2 Glasser, David C. (dft) txwdce 6:2006-cv-00178 370 06/26/2006 04/20/2007

3 Glasser, David C. (dft) cacdce 2:2014-cv-01947 890 03/14/2014 05/07/2014

4 Glasser, David C. (dft) cacdce 2:2014-mc-00058 890 01/31/2014

As Fortune CEOs Take Unequivocable Stand -This BD Bids On

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August 15 2017-A Special Editorial from BrokerDealer.com: Most Fortune CEOs, as well as leaders of Investment Banks and Broker-Dealers (aka BD) are typically loathe to take a political stand. For the former, making pronouncements that will raise the ire of the current president are likely to be met by “injury by twitter,” or worse still, federal agency scrutiny of the company, which could prove devastating for public company shareholders. For the universe of corporate leaders with a conscience and also recognized thought-leaders, only a few have yet to prove unequivocal when reacting to the equivocal comment made by President Trump when framing his first view of what US Attorney General Sessions labeled as a”domestic terror event.” We’re referring to the white supremacist rally that led to 3 deaths and multiple injuries in Charlottesville, VA this past weekend.

For investment banks and broker-dealers, let’s face it-politics and business mix best with each other when done over cocktails or discrete ‘off-site’ meetings to discuss new capital market initiatives, deal issuance and/or asset management mandates. After all, most traditional broker-dealers eschew taking a political stand that opposes the federal government administration, simply out of fear that the long lips of the current WH CEO will whisper to administration-appointed SEC bureaucrats with a message akin to ‘the right industry regulator might want to make this [firm] go away..” Most, but not all is the catchphrase that compels a re-distribution of a capital markets desk commentary that focuses on fixed income markets and along with a smidgen of geopolitical observations and delivered to a captive group of leading Fortune 500 corporate treasurers, as well as a select group of sell-side syndicate desk ‘book-runners’.  Here’s the extract of the day’s piece, titled Risk On, Risk Off, US-NOKO Tensions Subside; Ugly Heads of Racism Take Top Headline

Investment Grade Corporate Debt New Issue Re-Cap – A View About Charlottesville and the Aftermath

Risk was clearly back on in the financial markets today, as U.S./NOKO tensions fell to the wayside.  Unfortunately prejudice and racism reared their ugly heads in the Charlottesville, Virginia riot over the weekend.  On Monday, Fortune 500 thought leaders Ken Frazier, CEO of Merck & C0., Brian Krzanich, CEO of Intel, and Kevin Plank, CEO of Under Armour each took a stand by protesting the ‘equivocal’ comments made by President Trump in his first response to the domestic terrorism acts in Charlottesvile, which were advanced by self-proclaimed alt-right and white supremacist neo-Nazis.  Our firm  stands with every corporate executive who stays true to their own right-minded beliefs and their company’s dedication to doing right and doing good, many of whom also maintain proactive Diversity & Inclusion initiatives. For those corporate executives who spent all of their undergrad time in finance and accounting classes, and perhaps not as familiar with the history of the United States as they could be, racism and bigotry are diseases, and cancers that every generation of this country has been working to eradicate.

To the above point, one only need to re-read the Constitution and the Bill of Rights to appreciate that D&I is actually part of our country’s DNA. It is also part of the cultural foundation of many Fortune 500 corporations, including Intel, including Merck, including Under Armour and including many others! D&I means respect for and appreciation of differences in ethnicity, gender, age, national origin, disability, sexual orientation, education, and religion. But it’s more than this. We all bring with us diverse perspectives, work experiences, life styles and cultures and we presumably all share a disdain for anyone and any group that attempts to dismantle, disrupt and or destroy. Kudos to Mssrs. Frazier, Krzanich and Plank for putting themselves in harm’s way and risk of “injury by Twitter” for being true leaders and staying true to their convictions and their constituents. Kudos also to the many Fortune executives who have raised their own voices and to those who, like Jamie Dimon, have opted to protest by remaining that much more proactive in the WH-appointed roles in which they serve as volunteers.

Today’s VIX closed 3 bps tighter versus Friday’s close. Also a reminder that tomorrow is August 15th – “mid-August” – that’s when North Korea’s illustrious “bad boy” proclaimed that he’d have his master plan ready to bomb Guam developed by.  One week from today on Monday, August 21st begin joint U.S-South Korean military exercises referred to as Ulchi-Freedom Guardian. The exercise began in our Bicentennial year of 1976. North Korea has annually perceived the joint exercise as “preparation for war.” It is the world’s largest computerized command control implementation. Up to 80,000 American and South Korean troops have participated in this exercise in the recent past.  The game will go on for two weeks before concluding on Thursday August 31st.  Enjoy the show Mr. Jong-Un. You’ll have front row seats though I recommend binoculars. Here’s lookin’ at you kid!

If you ask me this is the perfect time for corporations to issue bonds. Not a bad thing will really happen, risk is back on and summer vacations are quickly approaching. My prediction – expect Amazon to the hit the tapes first thing tomorrow morning.  Free market enterprise at work. Ya gotta love it!

Today’s IG Corporate dollar DCM finished with 5 issuers that priced 7 tranches between them totaling $4.10b

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