Tuesday, September 2, 2014

Fertittas Walk Away From Xyience & Xenergy With Big Red Buyout

By: Rich Bergeron

Inside sources at Xyience, Incorporated broke the news to me last week that the company would soon be sold off to Big Red, based in Austin, Texas. Employees will apparently not be receiving severance packages, and early indications are that the beverage company buying out the brand will not seek to enter into the supplement business. This means only the Xenergy line of energy drinks will remain under the Xyience label. I held off on publishing the news immediately due to a promise of more intelligence if I let it go a few days. Then, the Las Vegas Review Journal forced my hand today with THIS REPORT.

The sudden washing of their hands of the former supplement giant known for sponsoring Chuck Liddell in happier days is par for the Fertitta course. It comes as no surprise that Lorenzo and Frank would bail on the company in this fashion. It certainly is ironic, though. It was actually disgraced Xyience Founder Russell Pike who originally came up with the idea to hype up the Xenergy line in the hopes of selling it to a major bottling outfit. Pike wanted Pepsi or Coke to come in with a multi-million dollar offer to take over Xenergy and transform it into a wholly unique company. The Fertittas obviously fell short of that lofty goal (maybe it had something to do with something Dana White once said), possibly banking on their Galveston, Texas roots and other family connections in Texas to ink the new deal that allows them to walk away from this boondoggle.

Other whispers from the final days of the Fertitta-run Xyience indicate that marketing studies showed Xenergy is being sold to more mainstream non-UFC-fans than ever. This reality also means the end of UFC sponsorship deals with Xyience and Xenergy.

One thing the company managed to do well over the last few years is in the realm of building distribution agreements for their sugar-free energy drink. Since the heady "Monica" days at Xyience, Xenergy's always been easier for the company to market than the supplement lines. Insiders who are aware of the Fertitta walkout point to profitability, or lack thereof, as an issue for the whole conglomerate. Lorenzo Fertitta in particular, one of the principles at Fertitta Enterprises (which holds the official, albeit obscured, ownership position over Xyience), is reportedly growing tired of losing $5 million a year.

This is the end of another monumental scam for the Fertittas, who just barely escaped serious liability in a lawsuit brought against them by the U.S. Trustee in bankruptcy court. The scheme that drove Xyience just far enough into the ground for the billionaire casino barons to take the whole thing over is now officially in the rear view mirror of their Rolls Royce. The roadmap's been painfully obvious to people like me from the very beginning, but somehow the local boys made good managed to avoid culpability and accountability for the mess they ultimately left behind by their selfish actions throughout the whole process. Let's not forget the hundreds of innocent shareholders who saw their investments turn to dust thanks to the way the Fertittas swept in and turned the whole operation into another sad example of vulture capitalism.

Though I took some small consolation from Fertitta Attorney Greg Garman telling a judge at my final hearing that my reporting has caused his clients multiple headaches with the gaming authorities in Nevada, it is even more comforting to know the Fertittas never could get Xyience buzzing again under their leadership. Maybe they will finally come to realize they would have been better off doing everything above board. I know, fat chance on the "Come to Jesus" moment ever happening for these scum-of-the-Earth con artists.

The bottom line is there won't be any former Xyience investors waiting for the final closing of this deal to cash in on what they put their life savings behind so many years ago. The Fertittas will be another couple of fat cats getting fatter when they deposit the final checks that bail them out from this disaster they constructed and created out of sheer, callous greed. Perhaps it will all go to pay for another yacht, another private jet, or another summer getaway they can jet off to when everyday life gets too real. Whatever the final sale price is, it is a crying shame that none of it will go to the honest folks who actually put the brand on the map with their hard-earned money from decades of the kind of hard work the Fertittas themselves will never be able to relate to. Whoever said liars and cheaters never win probably never met Lorenzo and Frank Fertitta III.

We'll have more details as they come to light on this blockbuster transaction.  

Saturday, June 28, 2014

Convenient Accident or Cold-Blooded Murder?

"You wanna pull off a brilliant murder, you gotta act like it's an accident. If you do it right, you ain't even gotta be there when it goes down." Jamie Foxx as Dean Jones in Horrible Bosses (2011)

EDITOR'S NOTE: It may be helpful for readers to review a few of our prior reports herehere, and here in order to better understand the history leading up to the events described in this article. 

By: Rich Bergeron

      More than 20 years ago, on the afternoon of November 4th, 1993, Carl Wesley Thomas died after his 1992 Suburban crashed on a gravel-lined stretch of Plush road in Frenchglen, Oregon. According to the official police report (for the full document click on these links to pages 1, 2, and 3), the investigation of the scene indicated the vehicle swerved to the left first, with the two left-side tires leaving the road briefly. 

     Upon swerving back onto the road, Thomas apparently paid dearly for not wearing his seat belt. He was ejected from the vehicle as it rolled over, crushing him underneath it. The report goes on to state that the vehicle rolled again and wound up in a ditch at the side of the road. Thomas was discovered face-down on the road, some 36 feet from where the Suburban ultimately came to rest. 

     The Harney County Sherriff's Office dispatched Officer F.H. Hickey, Jr. to the scene. His report of the accident explained, "The victim received multiple fractures of the right leg, a flailed chest, and head injuries and was pronounced dead at the scene at 6:15 PM." 

     Whatever Hickey observed that did not end up in the report may forever remain a mystery, because the officer died of a heart attack in 1995. 

      The Sheriff at the time was Dave Glerup, who still holds the position today. I spoke to Glerup last October, just a few weeks shy of the 20th anniversary of the fateful crash. He explained that the scene of the rollover was a rural, remote road which experienced "lots of accidents of this type." He added that the conditions were "kind of treacherous," especially for anyone who was driving while intoxicated. 

     Officer Hickey's report also indicated that a half-ounce of cocaine was found on Thomas along with an empty baggie and a short straw, discovered in his pocket only after the body went to a local funeral home. The records Sheriff Glerup sent me included a Blood Alcohol Report on Thomas from the State Medical Examiner, which came back negative for alcohol. To the sheriff's knowledge, there was never any testing done to determine whether Thomas had any other drugs in his system at the time of the crash.  

    Despite inferences of foul play suggested to him over the years, Sheriff Glerup remains convinced that the cause of death should be classified as accidental. "It's hard to believe this could be anything but an accident," he explained. "I can't picture a homicide where the vehicle actually rolls over him like that." 

   Throughout the decades since the incident, rampant speculation still points to the case as a possible homicide. Adding to the suspicious circumstances involved in the crash is the fact that, just prior to his death, Thomas agreed to provide testimony at a very important meeting with Missouri Gaming officials regarding their inquiry into whether or not they should grant a gaming license to Station Casinos. Just before his death Thomas also reportedly met with Station Casinos officials to discuss his summons to Missouri, and that meeting most likely included Frank Fertitta, Jr. offering counsel to his longtime friend and associate. The crash happened on his trip back to Oregon from the Vegas sitdown, and it guaranteed Thomas would never testify in Missouri. The Fertittas were able to get their Station Casinos license after all with the dead man telling no tales. 

     There was only one condition put on the final approval: Frank Junior could not be part of the Missouri operations of the company. Frank's eldest son Frank Fertitta III, AKA "Frankie Three Sticks," ended up having to hold the reins there in Missouri until the state implicated the company in multiple scandalous incidents detailed further here. Missouri revoked their license and forced Station Casinos to sell their Missouri properties and go back to Vegas where Frank III also eventually had to take over due to his father's questionable past.  

    It's a long story, but it's safe to say Station Casinos would benefit tremendously from the death of Carl Thomas. Though that doesn't make it a sure thing that the crash was somehow orchestrated or caused by an unknown suspect connected to the Fertittas, the family collected a unique type of figurative "insurance" after the "accident."  

     To put things in perspective, Thomas earned a permanent ban from all Nevada casinos in 1990 after being implicated in the massive skimming operation popularized in the 1995 movie Casino, starring Robert DeNiro and Joe Pesci. Frank Junior himself was on the fringe of that scandal, and the prevailing Las Vegas legend has Frank taking over Thomas' co-ownership of what later became the first Station Casino property for a lump sum of one single dollar. The forfeiture of his ownership interest reportedly came just before Thomas went to prison for what was supposed to be a 15-year stretch. Thomas served only two of those years according to a report of his death published in the Orlando Sentinel, thanks only to his willingness to cooperate with authorities.

     Frank Junior had connections to multiple casinos in Las Vegas during the heydey of Mafia skimming there. Between his departure from Texas in 1960 and his purchase of "The Casino" with Carl Thomas in 1976, Fertitta went from bellboy to dealer to pit boss to Baccarat manager to general manager at properties including: The Stardust, The Tropicana, The Sahara, Circus Circus, and ultimately The Fremont. "The Casino" later became "The Bingo Palace" which would morph further into Palace Station in 1983, launching what would become a vast "locals casino" empire rivaled only by the Boyd Corporation founded by Sam Boyd. To this day, Station Casinos and Boyd compete as the leaders of this market catering to local Las Vegas residents and casino workers.  

     The jury is still out on how Frank Junior avoided prosecution in the skimming investigations, especially since FBI wiretaps caught him on tape talking about "excess cash" and other veiled references to the skimming repeatedly. A security agent named Harry McBride, who worked under Thomas at the time, also told authorities that there was a "Frank" involved in perpetrating the skimming operation at the Fremont Hotel and Casino. McBride also cooperated with investigators who ultimately turned Thomas as well. McBride testified in a U.S. District Court Case against five members of the skimming ring in 1985. 

      There are no official records I know of regarding any testimony or cooperation on the case offered by Fertitta himself, but I did find one court document in which a name of a witness was redacted, and the person described sounded like Fertitta. My personal theory is that Frank was a secret witness in exchange for immunity from prosecution. Rather than testify in open court, he could have provided background information that helped further the investigation. After all, that might explain why David Helfrey, the chief prosecutor in the 1985 trial cited above, later went to work for Station Casinos in Missouri. If Frank Junior being a snitch sounds too far fetched, consider the fact that Frank "Lefty" Rosenthal (played by Robert DeNiro in Casino) died before the fact that he was a government informant leaked out. 

      Another possibility is that Carl Thomas himself could have requested Fertitta be left alone in exchange for his cooperation. Thomas switched sides during the same 1985 trial in which McBride testified. He obviously had some very incriminating and useful evidence for federal prosecutors about all the players, but he certainly could have left Fertitta out of any information he volunteered. The only other alternative explanation for Fertitta avoiding jail time is that he was an extremely lucky man. 

     For more on the investigations into Mob-influenced Vegas skimming at the time, check out this Dennis Griffin blog, which is the first of three chapters on the whole operation. Like most organized crime schemes, the whole enterprise turned out to be very sophisticated. The movie based on the true events is a bit loose with the facts, and it's really only half the story. 

    Harry McBride would later resurface during a 4-year probe of Frank Junior by the Nevada State Gaming Control Board in the lat 80s. If McBride agreed to testify before the Control Board, it could prove that Fertitta lied about his role in the Argent skimming operation when he applied for his gaming license. Thanks in part to McBride's outright animosity toward a commission member, the vast political connections cultivated by Frank Junior, and also possibly the lack of any criminal penalty for not taking the stand, McBride declined to cooperate with the board. He reportedly also did not think any good would come of him testifying. 

     The final decision on the matter came down to a 2-1 vote to take no action against Frank Junior. Just a few years later, in 1993 (the same year Carl Thomas died), Frank Junior passed the empire to his sons Frank III and Lorenzo. Despite Frank Junior giving up official control of Station Casinos, he spent a great deal of time at the very same property he named "The Casino" when he bought it with Carl Thomas in 1976. Though he was no longer officially in charge, workers at Palace Station would often run into Frank Junior making his rounds or eating lunch there right up until his tragic death on the operating table during a heart procedure in late August of 2009.

      Carl Thomas died a tragic, yet convenient death for a Las Vegas family that later saw their power and influence grow exponentially. Even a pre-planned bankruptcy of the whole Station Casinos chain didn't stop the Fertittas from reigning supreme in the locals market and taking a once little known fight league from barbaric side-show to mainstream attraction. Through it all, Lorenzo and Frank III heeded the example of their dearly departed father. Like Frank Junior--who was a prolific political donor in his day--they always grease the wheels whenever and wherever possible. Both Democrats and Republicans benefit from that family tradition, and if paying off the politicos isn't enough to keep their corrupt actions from being shut down, they also continue to keep up their father's habit of buying a ton of advertising in the local papers to keep mainstream reporters from writing too much about their worst transgressions.       

     Beyond Las Vegas, the Fertittas also have contracts with various Indian-run casinos to manage casino complexes across the country. The Fertittas also do consulting work for casinos and stand at the forefront of the online gaming movement. This quiet expansion is nothing new, which is likely why the Harney County Sheriff's Office received requests for the records of the Carl Thomas crash from the Missouri Gaming Commission and the Indiana State Police Gaming Enforcement Section in 1994. Oddly enough, Nevada gaming officials have never requested accident report copies according to Sheriff Glerup.  

    My own investigation of the records leaves more questions than answers. The first question, and perhaps the most important one is: what caused Thomas to swerve when the crash initiated? Even the most comprehensive forensic examination with all the technology we have even today might run into a dead end trying to answer that one. The fact that the crash happened on a gravel road might mean that any tracks of another vehicle that was possibly involved might not be detected by investigators. Another unanswered question is why was there no testing for drugs when Thomas had cocaine in his pocket at the time of his death? Also, how often are passengers ejected from a vehicle that then rolls over them? Though Sheriff Glerup concludes the ejection and rollover makes it most likely the cause of death was accidental, I really don't understand that reasoning. 

     If the straw and the cocaine were both in his pocket at the time of the crash, it seems obvious to me that Thomas wasn't doing the cocaine at the moment of the initial swerve. So, that can't be the cause. If there was any amount of cocaine in his system, it also seems highly unlikely he fell asleep at the wheel. The only valid explanation in my humble opinion is that he was trying not to hit an animal crossing the road (accident), or another person and/or vehicle was responsible (murder or vehicular manslaughter). Since the area was so remote, there would be no witnesses, and law enforcement would take considerable time to arrive on the scene. 

     Rather than pin this down as an accident, I consider this a cold case that should be classified as unsolved with the official cause of death deemed undetermined. Unfortunately for all who wish to know the full truth, this is one case that will never be re-opened. There's absolutely no possible way of finding out exactly what happened, which makes Jamie Foxx's line at the top of this story so relevant to the situation. If it was murder, it was executed flawlessly. If it was actually an accident, there's still not enough evidence to conclude what really caused the rollover. It's a perfect storm of suspicious, but easily explained away facts that could support either side of the debate. Regardless of how he died, though, without Carl Thomas helping Frank Junior get his start, the Fertitta empire might not exist today. In the same breath, it must be said the death of Thomas also helped guarantee the continuation of that empire that might have been stopped in its tracks if Thomas told the truth in front of those Missouri gaming officials. 

      Those who dismiss the conspiracy theories would point to Thomas not implicating Fertitta when it counted back in 1985. Why would he bother to throw Frank Junior under the bus in front of a gaming commission that didn't have the power to throw him in jail for a long time if he didn't cooperate? Doubters would also point out that Fertitta wouldn't have a formal meeting with Thomas if he knew he was going to have him killed on the trip home. The very fact that at least two gaming authorities wanted to see the crash report proves that even the slightest possible inference of a criminal deed sheds a bad light on any gaming license candidate. Why would Frank Junior risk the suspicion that would surely fall on him? I can only surmise that if it was murder, Frank Junior might not be the one who ordered it. If he was running the Fremont skim for the Kansas City mob as the evidence shows, he could have also expanded to Missouri to appease the next generation of the same Kansas City outfit after the original skim bosses went down. 

      A murder for hire operation of this scope and magnitude, leaving no trace of evidence of a homicide, seems more like the work of a trained and experienced killer used to working in the shadows of the underworld. The hit could have been ordered by someone else deep within the organization who stood to benefit from Station Casinos getting a Missouri license, if indeed it was a sophisticated hit. Then again, who had more to gain than Frank and his family? Therefore, you can't forget the words of another "Lefty" from another movie based on a true story. I'm talking about Al Pacino's character in Donnie Brasco. "When they send for you," Lefty said, "You go in alive, you come out dead, and it's your best friend that does it."

     Regardless of the true circumstances surrounding the Carl Thomas crash, it is a mystery that will follow the Fertitta family for eternity. The ghost of Carl Thomas will haunt the family legacy as long as the facts as we know them are passed down from one generation to the next. The cloud of suspicion will never go away even if speculation of any current mob connections to the Fertittas is unfounded. The fact is, the physical Mafia ties may be long gone, but the organized crime mentality still exists thanks to what Frank Junior passed down to his sons. Everything they do may technically be "legal," but there's a good chunk of activity that could be labeled very close to crossing the line into criminal behavior. Even if you can't call it criminal, you can certainly call it corrupt and underhanded. Go back through their history, and you will find one deftly avoided major scandal after another. From Argent to USA Capital to the orchestrated Station Casinos and Xyience bankruptcies to the dirty dealings of Zuffa over the years, it's all a matter of complicating and obfuscating things just enough to avoid serious lawsuits and/or criminal prosecution. It may not be the textbook definition of "crime," but it's definitely organized. 

Monday, October 7, 2013

Smoking Gun Evidence that Bergeron Case Was Unfounded in Law or Fact

The above email chain dates back to the beginning of the $25 million Xyience lawsuit filed against me in Las Vegas District Court back in 2007 by Attorney Jamie Cogburn. These exchanges came from an email recently sent to me by the brother of Xyience Founder Russell Pike, who is currently incarcerated due to a conviction for tax evasion. I will be publishing a large cache of other insider emails in the near future.

At the time these emails originated, Pike was working feverishly to get more investors to come in to keep Xyience viable. My reports were making those efforts nearly impossible. The lawsuit described investors willing to enter into financing with Xyience, but only if my articles were removed from the Internet. As soon as the case resulted in a preliminary injunction against me, Russell Pike sent a representative out to deliver copies of the injunction order to local investors. This rep wrote the following statement in an affidavit I filed in my counterclaim:

The Fertittas always denied through their attorneys that they had anything to do with the suit against me, but it's obvious from this testimony that they forced Xyience's hand. Dana White didn't end up investing anything, but before Fertitta Enterprises went through with their loan package they did get White's approval.

This email chain will be the main exhibit in a new case against Attorney Cogburn in Nevada. There will be much more to come on this front in the days and weeks ahead. Stay Tuned. 

Saturday, October 5, 2013

Xyience Dismisses Claims Against Rich Bergeron; Accepts Summary Judgment on Counterclaim


By: Rich Bergeron

It's been a long time, but even a six-year legal battle did not deter me from continuing to report the truth about the history and current operations of Xyience. Today I can look back knowing I finally managed to get the claims against me completely dismissed. Four different judges oversaw the case over those six years, and multiple law firms and attorneys for the opposition.
The above order also allows for a summary judgment request on my counterclaim against Xyience to go unopposed, so it marks the first major judgment on my behalf in any legal action I've ever been involved in. It's all the more impressive since the opposing lawyer admitted the now-dissolved $25 million case against me had no merits.  
Though this order officially releases me from any liability and confirms my efforts to expose the truth, it does not end the litigation entirely. I still have an extensive sanctions motion in play with multiple affidavits supporting that motion. My own affidavit and evidence files explain the whole situation, but after a September 19th, 2013 hearing I can honestly say I don't think that presiding Judge Lloyd King bothered to read any of that content. 
Judge King certainly did not even consider the fact that the judge prior to him (Judge Mike Nakagawa) allowed me to amend the motion for the record. Judge Nakagawa would not allow me to amend a motion which had already been decided, which was the contention of the Fertitta lawyers going into this hearing.
The hearing resulted in an indefensible decision I will appeal to the 9th Circuit. That hastily-made ruling proved Judge King is biased against me to the point of believing everything the opposing lawyers contend, even if it happens to be a lie. Judge King actually made the effort to locate and read out loud an order on the motion before him, and that moment will be a major basis for my appeal. If it was a "senior moment" for the aging federal judge, his capacity to continue in such an important judicial role should be seriously questioned at this stage of his career. 
Now, I'm no law school graduate, but the last time I checked a summary judgment denial is not in the same legal ballpark as a complete claim dismissal. How could any acting federal judge get as far as Judge King has without knowing the difference between those two distinctions? 
Judge King read the decision on a 2008 summary judgment request in my case like it was a smoking gun for the Fertitta lawyers during the September 19th hearing. The motion he referred to is actually the most viewed document I currently have on Docstoc.com and can be accessed HERE. The Fertitta lawyers also tried to represent at the September 19th hearing that the same motion was dismissed on the merits, but the actual dismissal order concludes the dismissal is mandated by technicality, because I did not properly serve the motion on all creditors involved in the bankruptcy. I would have had to file my own bankruptcy petition in order to pay the postage alone on such notifications. I don't have the kind of budget most lawyers and law firms typically bring to the legal process. Everything I do is fueled by extremely minimal financial resources. 
So, Judge King read this order denying summary judgment on my sanctions claims. He read it right out loud in court for the record right after trying to explain that it meant the whole issue had already been litigated and dealt with. Why even have a hearing in the first place if his conclusions were true? If he reviewed the record and came to the decision that the Fertitta lawyers were correct in their false representation of the record, there would not even be any basis for holding the hearing where he made this huge mistake. I immediately corrected him at the hearing, but that only made things worse for me. He continued to betray an overwhelming bias against me along with a willingness to praise and commend the opposing lawyers. He even rejected a legally feasible and logically sound request for a default judgment against all parties who did not answer the claims and did not have any representation at the hearing. 
I gave Judge King multiple chances to hold a more comprehensive hearing when I could physically attend, asking for the hearing on September 19th to be considered a scheduling conference. Instead, he allowed the telephonic appearance to be my final say in the matter, and I had a great deal of issues with the court hanging up on me and not being able to hear me clearly. Judge King couldn't even be bothered to come up with any official legal background for his denial of my claims. He left that up to the main opposing attorney and his law firm. 
Gordon Silver is a high-class Las Vegas law firm, and the main guy they put on this case is a managing partner named Greg Garman. This shark is a well-trained and experienced lawyer with a very esteemed position at his firm and in the legal community. So, how could he really confuse the record himself to the point that he put such incredible misrepresentations in print and then repeated them in open court after I corrected him in my reply brief? The most logical answer is that he was never confused at all and just purposely painted the record in a false light to make his case look like it could be easily dispatched on a technicality instead of actually being examined on the merits. Lawyers seem to love winning legal battles on technicalities. It saves them the trouble of actually defending against or pressing claims based on actual facts and evidence. 
This time, the basis for giving Garman the win on a technicality was completely fabricated. His argument that a technicality existed at all made Judge King look like a fish out of water when he tried to take the bait. 
Once again, the September 19th hearing proved to me that justice is an evil bitch. The judicial system in this country is hopelessly bogged down by patronage, abuse, waste, and incompetence. People like me were not intended to be able to even make it this far into the legal process. I jumped through every hoop my opposition put in front of me, and by some miracle I remain standing more than six years into this extensive litigation that went from an obscure district court claim to a major bankruptcy adversary proceeding. I simply could not make it to this point if I did not have the truth on my side. 
Over time I learned to realize that pointing out serious flaws in the opposition's arguments and legal citations did not mean those points would even register with a judge who came into the process as a biased party. I came to appreciate how twisted the system is when it comes to pro-se (self-represented) parties. I knew at some point only an appeal examined by competent and unbiased federal judges would set the record straight. At this point, Mr. Garman hasn't even filed any order to appeal, but I'm eagerly awaiting the moment when I can actually see what the court's official decision will use for a basis in law. 
Perhaps the most interesting aspect of the hearing came in the response to my opening comments (which went largely unheard due to a bad connection). Mr. Garman began his statement by confessing that the Fertitta brothers are already suffering due to my work. He did not get into specifics, but he claimed I was responsible for their recent issues with the Nevada Gaming Control Board. If their trouble with the gaming authorities is my doing, I wonder what else about the Fertittas gaming officials might need to know. I haven't even really investigated Station Casinos as much as I have researched the Fertitta involvement in Xyience.  
Garman's remarks proved to me what I've always known in the back of my mind: courts are far too slow at delivering justice. Real justice comes from the court of public opinion. Exposure of inherent evil is often fatal to its ability to fester and grow out of control. Station Casinos has a history of leaving victims behind as the Fertitta brothers continue to hoard their billions in personal assets. As a gaming licensee in Nevada, these casino barons ought to have a much cleaner background than they currently do. The fact that the Fertittas brought Ultimate Poker into legal status as the first official online poker outfit in the state of Nevada is disturbing when you look at what Fertitta Enterprises is really capable of when it comes to fraud. Their connections to the illegal Full Tilt Poker operation through their ownership of Strikeforce is also egregious considering they should have known the illegal status of online poker when they made decisions to retain their sponsorship agreement with the company when it came under Zuffa control. Even worse, US prosecutors labeled Full Tilt Poker a Ponzi Scheme since the outfit's owners were allegedly pocketing player funds
The Station Casinos expansion as a management firm into California casinos governed by Native American tribes is even more troubling under the circumstances. Their indirect financial connections to California senators are telling. Senate Majority Leader Harry Reid also has a son named Key Reid who is on the board of directors for the Fertitta-run Meadows Bank
It makes sense that even a federal judge would be afraid to rule against people with this kind of power and access. They are virtually untouchable. Still, Judge King also refused to sanction me despite saying in open court that he actually felt I was the one who deserved sanctions. So, basically he admits he is not willing to even rule in favor of what he feels is actually justified. 
The appeal process should be intriguing, but I also plan to report Judge King to the state bar for displaying a complete lack of ability to do even minimal research into the claims he decided so hastily. The most important development at this stage is regarding my long break from working on this site. The litigation process leading up to my departure from Las Vegas was draining and stressful, and I needed a break from all of it. The hearing designation and dismissal of all claims against me opened new doors and brought me back to the heart of the story and the need to expose the real truth here. 
With no legal obstacles, I can now pursue a non-fiction book project on the case. I can also begin to plan out a documentary. At the rate I'm going, such projects will have a better potential to benefit burned Xyience shareholders than any legal action I could possibly undertake. I am also compiling an extensive report to deliver to Nevada, California, and Native American gaming authorities, which could do more to bring the Fertittas to justice than any judge in any court in this land. Someone must show these ruthless robber barons that there is a price to pay for screwing over innocent people and destroying their investments needlessly and thoughtlessly. 
Although I should be disappointed upon losing the decision on the most important motion in my case thus far, I am actually thrilled. My passion for this story is renewed. My prospects for a successful appeal are promising. Judge King's bias was more pronounced than ever at this latest hearing. Over the next few weeks I will be working to revamp this site to include all the relevant information and documentation detailing the irresponsible and corrupt history behind the Fertitta family facade. Stay Tuned for more frequent updates in the days and weeks to come.
All stories on this site are now free to read with no subscription fee required. I will be spending some time updating broken links on the site in the next few days. This is mostly due to an unfortunate issue with the loss of all customer files hosted on fileden.com. We had a ton of material hosted there that now needs to be relocated to another public server. Some of these files are now hosted HERE. We will make a formal announcement when all bugs are fixed. 

Saturday, February 16, 2013

The Choice of a NOS Generation

By: Rich Bergeron

It's only fitting that Xyience's star is falling and the brand is collapsing into debt just as Coca Cola's NOS brand of energy drinks cements a spot as the top sponsor of The Ultimate Fighter. TUF is the show that put Xyience on the map in the first place, so it's a strange coincidence.

News is trickling in lately surrounding the stable of fighters Xyience once sponsored, and it sounds like Xyience and Xenergy are at DEFCON X. Virtually all of the current UFC fighters on "Team Xyience" were cut from their sponsorship deals in recent days and weeks, and inside sources say the company owes at least 1.5 million dollars to Cott, the beverage giant responsible for creating and canning Xenergy. Without a bailout from the same Fertitta Family that owns the majority of the UFC, the company could be headed for a second bankruptcy or a fire sale. Fertitta Enterprises still owns and operates the brand, but a recent ultimatum from Frank Fertitta III and Lorenzo Fertitta forced the brand to make attempts to stand on its own without further financing from the billionaire brothers.

Inside sources also report that the Fertittas and UFC President and Part-Owner Dana White recently tried to convince Coca Cola's NOS brand to replace Xenergy as an official UFC sponsor. Right now NOS does not appear in any other octagon outside of the one on the TUF series. It's a relationship that the company fostered more with the Fox network than with the UFC itself. Yet, Dana is always drinking from his can of NOS whenever the show's camera crew catches him with one in hand. That's pretty interesting considering in past years fighters were sometimes caught "drinking" from closed Xyience cans. Dana's can is always open, much like his mouth.

What makes the NOS connection even more interesting is the fact that only a little less than six years ago, Dana White was telling NBC Sports that the UFC didn't need Coke's sponsorship:

“I’m cool with Mickey’s and Toyo Tires, man, believe me, you’ll never hear me bitch. The way that we’ve run this business and the way we have come up, think about it… we didn’t have any mainstream press, we didn’t have any mainstream sponsors, and look at how huge we are. I don’t ******* need Coke to keep doing what we’re doing, man. Believe me, the big time sponsors if they come on, of course that’d be fantastic. I don’t need ‘em. 18-to-34 year old males, they’re here hanging out with me. If Coke wants them, Coke needs to come to us.”

Suddenly it seems that White's words have come back to haunt the UFC, and apparently Coke still holds a grudge and won't bite on the league's multi-million dollar price tag to move their branding beyond the reality show. They don't need actual UFC fighters to flaunt their brand, either. The same tired commercial featuring a flashy, overconfident MMA fighter getting dropped with one punch is the new standard for NOS when it comes to marketing to the TUF fan base. And you can tell the winner of the fight in the commercial is really drinking from the can in the TV spot. He chugs it so fast, much of it ends up dripping down his face. Another jab at the UFC, although it seems unintentional, is the fact that the whole made-for-TV fight happens inside a ring, not a cage.

The Fertitta-run Xyience is in crisis mode these days, recently laying off multiple sales personnel and leaving the rest of the staff in fear of an imminent implosion. The company the Fertittas surreptitiously acquired by stealing it out from under hundreds of earnest investors is now a money pit. The Fertittas don't seem to want to spend the capital to keep the operation going despite getting a hold of the company for a song. It's the ultimate payback for all those shareholders who didn't get a dime out of the deal when the Fertittas purposely bankrupted the company and then retained ownership through a scandalous scheme involving former Cott executives pretending to enter into a serious purchase agreement only to later default on that deal.

For a little while the Fertittas made all the right moves to make the brand appear stable and ready to X-pand. Sponsorship deals with top-notch fighters like Jon Jones and Anthony Pettis appeared to be signs of the brand's resurgence as a key UFC sponsor. None of the fighters pictured above represent the brand any longer according to inside sources at the floundering supplement company. For Matt Serra, this marks the second time he's getting screwed for associating with Xyience. His prize for winning The Ultimate Fighter ended up getting wiped out by the company's bankruptcy, and he was the only fighter from that Xyience stable to come back to the brand before Chuck Liddell came out of Xyience retirement in recent months. Since Liddell's sponsorship agreement came with a pre-paid setup, he is among the last of the Mohicans still repping the brand. That's also fitting seeing as his initial Xyience sponsorship was one of the most lucrative deals in the history of the sport at the time of his first signing with the company.

The operation of Xyience once the Fertittas had control of it certainly betrays their attitude toward the fighters they employ in the UFC. It shows these silver-spoon billionaires just don't give a damn about the people who line their pockets. These recent developments illustrate an underlying selfishness on the part of the UFC's royal family that pervades everything they do. Xyience only mattered to them when it was a way to get a HUGE LOAN or a way to pay the UFC with the same money they used to get the chief lien position over the company just before they rigged the bankruptcy process to work in their favor.

At the moment my own legal battle with Xyience and the Fertittas is in limbo. I've been waiting for the right moment to ask for a final hearing on my remaining claim asking for millions of dollars in sanctions against the Fertittas and their associates who made the whole fraudulent bankruptcy possible by silencing my reporting. Should Xyience and Xenergy fold due to the Fertittas failing to put their own money up to bail their UFC sponsor out, it will be the perfect cap stone for the case I've built brick by brick and year by year to prove that Frank and Lorenzo Fertitta only wanted Xyience to be a going concern if it operated as a personal piggy bank. Without any way to siphon money off the brand or use the brand to make the UFC look better than it actually is, the Fertittas just don't need it. Sadly, this has been the trend as long as Xyience has been in business. It's been passed from one abusive management and ownership crew to the next. Everyone seems to find a way to smack it around and treat it like another red headed stepchild with no real identity or meaningful purpose for living and thriving.

What seems to get lost in translation to most of the fans who stumble onto this story is that there are real victims behind this ongoing scandal. As the saga continues to unfold the people who suffered most are only reminded of the savings they invested into the fledgling Xyience. They saw all their hard-earned dollars put into the company get wiped out by a couple of scumbag brothers who have way too much money to begin with. Some of the children of these victims had to forego college. For many, their retirement plans were catastrophically altered. The money some of them spent their entire lives putting away for a rainy day is just gone, flushed down the drain by the careless and ruthless actions of a couple of casino barons who had all their wealth passed down to them from Daddy Dearest. They will never know what it is to truly earn a paycheck, but those they victimized over the years to keep themselves healthy and wealthy will always know what it's like to lose everything and have to start over.  

Let it be known that the Fertittas just don't care about real people with real struggles. They don't have any genuine concern for their own fighters, and they don't get bent out of shape in ruining families just to make themselves a little richer. Making things right for every individual they burned in the Xyience bankruptcy would be a drop in the bucket for these two billionaires with their ever-growing business empires, but they choose to ignore the suffering and act like it never happened.

While I never rooted for Xyience to fail in the past, it seems to be sweet justice to see it failing now. I seriously doubt my fledgling BOYCOTT XYIENCE campaign made a dent, but I'm at least proud that I never really gave up the struggle to educate the public about who the Fertittas really are and where their motivations really lie. I will never forget the people who really put Xyience in position to be successful in the first place, and I will cherish the day I am allowed to put Frank and Lorenzo on the witness stand to answer some real hard hitting questions about the damage they've done and the lives they've destroyed in the name of pure greed.

In all honesty, I hope Xyience doesn't fail just yet. I hope that the Fertittas actually sink a few more million into trying to make it work. I hope they invest just enough so they wind up losing as much as the people they've screwed over the years have lost for believing the brand would be taken care of by the UFC owners. Now that would be real justice. Here's to hoping Karma catches up to these corrupt and spineless scamsters, so even if the burned Xyience shareholders don't get any financial relief they can at least get a little revenge...served with a cold can of Xenergy.   

Wednesday, June 13, 2012


Thursday, May 17, 2012

X Marks the Sport: Xyience Scam Shows Dark Side of MMA's Most Powerful Promotion

"Where ignorance is bliss, 'tis folly to be wise." Thomas Gray, Ode on a Distant Prospect of Eton College, 1742

From the oldest dimestore novels to the most current TV cop dramas, a classic element of detective stories is the old familiar line about the perpetrator always coming back to the scene of the crime.

As Xyience Inc. limped through a controversial bankruptcy process over the past few years, the Xyience and Xenergy branding was relegated to UFC fighters wielding cans of the energy drink and the Xyience.com and other Xyience and Xenergy logos appearing only on the outer ring of the mat or on the ring bumpers.

Saturday, May 5, 2012, marked a milestone for Xyience: a triumphant return to their old domain. Once again, the brand picked up where it left off, marking the center of the mat space for UFC on Fox 3 with the "Xenergy" (pronounced Zen-ergy) name, focusing on the company's sugar-free energy drink.

Ironically, this is the same strategy employed by Xyience Founder Russell Pike. Now facing July sentencing for being found guilty of tax evasion, Pike's been someone the current company wants to distance the brand from. Yet it was Pike who first decided to take the Xyience bar code off the mat and replace it with a Xenergy can.

Back then Pike's goal was to drum up interest in a potential buyout of the drink label while the rest of the company would continue under the Xyience name.

Though the Fertittas seem to paint Pike as the prototypical fall guy, they went to great lengths to lock the founder and his friends and family out of controlling the operation so they could bankrupt it after promising shareholders that their involvement and intervention would save the company from such a fate.  

On Oct. 2, 2007, Xyience Co-CEOs Adam Frank and Kirk Sanford informed Russell Pike, William Pike and Michael Clark (shareholders who represented 25 percent of the shares outstanding) that if they did not sign the funding consent form for the Fertitta funding and give up their voting rights, Frank and Sanford would put the company into bankruptcy.

On Oct. 3, under duress, the Pikes, Clark and other major shareholders signed the consent forms. Only 11 shareholders, who represent over 50 percent of the shares outstanding, ever saw the funding agreement before it became official.

An email sent by Fertitta Enterprises GM Bill Bullard to Lorenzo Fertitta on Oct. 4, 2007 discussed a $150 million offer from Cott Beverages to buy Xyience. This email was only found due to an intense discovery process initiated by the trustee's counsel, Jon Backman. The full text of that message is below:

By January 2008, the Fertittas perfected their scheme by foreclosing on their loan and speeding the company ship toward the iceberg of bankruptcy.

Instead of letting Cott buy the company at full price, two former Cott executives wound up agreeing to purchase the brand out of bankruptcy for $15 million through a front company called Manchester Consolidated.

Coincidentally, that purchase price was exactly 10 percent of the $150 million mentioned above. Manchester would later default on their payment plan, ceding control back to Fertitta Enterprises.

All the golden parachutes were reserved for company insiders who were in on the scheme, and over the past four years and counting the result of losing their Xyience investments tore apart innocent families, caused individuals who lost everything significant pain and aggravation, and forced a ton of folks to start over on building their once-substantial nest eggs.

The Fertittas rode into the sunset with their own supplement company that is now making record profits.
Few Mixed Martial Arts fans know the true extent of what went on behind the scenes at Xyience leading up to and throughout the ongoing bankruptcy. Wednesday, in a Las Vegas courtroom in front of a substitute judge from Hawaii, Attorney Jon Backman, the bankruptcy trustee's counsel for Xyience, settled some contentious issues with Fertitta Enterprises

The re-organized Xyience (Zyen, LLC) staff celebrated the announcement of the settlement recently with a huge catered dinner at Red Rock Casino, the most modern and luxurious casino the Fertittas own in Vegas. They're calling the next phase of the business "Xyience, Round 2."

Meanwhile, 385 original Xyience shareholders will be left with absolutely nothing once the final check is signed distributing the final dollar left in the trust.

Over 65 million shares issued in the company during their early days of rubbing elbows with the UFC will now be worth less than the paper they're printed on. Family trusts, retirement accounts and college funds were wiped out by the Fertitta takeover.  

Some say life imitates art, while others argue it's the other way around. I stumbled upon the Xyience debacle for the first time as an independent investigative reporter covering the sport of MMA in 2006. The resulting project and related litigation eventually became a significant part of my everyday life.

This site will someday make a phenomenal book and/or documentary effort. The experience proves beyond any reasonable doubt that fact is truly stranger than fiction. 

Those MMA fans who might wonder why they should care about scandals like Xyience need to look at the bigger picture. The Fertittas knew they could get away with this from the very beginning when they first pulled the trigger on this scheme. Consider this snippet from a Las Vegas Business Press article printed a month into the bankruptcy:

Attorneys for three unsecured creditors claimed that the deals were part of a "lend to own" strategy pursued by the Fertittas.

The Chicago law firm of Bell, Boyd & Lloyd filed papers alleging that Xyience's "bankruptcy case appears to being run for the sole benefit of Zyen -- the debtor's insider secured creditors."

It added: "Zyen is given a giant axe to hold over the debtor's head, while the debtor's credits are left with no opportunity to defend themselves against improper chopping."

Zyen, a Fertitta company, would have the right to make a bid for the company, the Chicago attorneys contended.

Chicago attorney Jim Morgan told the judge: "There is going to be possibly a forced sale with absolutely nothing left in the estate for unsecured creditors."

Greg Garman, attorney for the Fertitta's Zyen, rejected criticism from shareholders and unsecured creditors, even though his clients' crooked behavior was one of the main reasons why these parties were concerned in the first place. It is unlikely that Xyience shareholders will recover anything from the bankruptcy due to the large amount of debt, Garman said.

The bigger picture reveals that Xyience's bankruptcy basically served as a practice run for the much larger and more profitable Station Casinos bankruptcy. Both companies sit comfortably on the other side of bankruptcy as reorganized entities at the moment. Station Casinos just announced a $6.8 million profit for the first quarter of 2012.

The Fertittas are still rich and getting richer, but at what cost? The little people paid for it all, from the private jets to the tailored suits to the luxurious mansions.

Pension funds and savings accounts across the nation affecting countless average Americans in multiple locales were impacted negatively by the unethical and irresponsible behavior of the Fertittas and their minions. 

Too many MMA fans and even more MMA media professionals stick their heads in the sand and pretend that the UFC's primary owners are great guys, model citizens, and all-around heroes. If you look into their past, you will see that Xyience is just the tip of the iceberg.

Since their transgressions have gone unchecked for so long, these powerful Las Vegas brothers keep generating bigger and bolder schemes, enlisting high-powered local lawyers to deal with the fallout. They grease the palms of enough national political forces to insulate themselves from any federal probe, too. 

This penchant for pulling off fraud and stepping on the toes of little people most certainly carries over into their operation of the UFC at many levels. Silence is golden for the the Fertittas when it comes to the UFC, and there's millions of reasons for them to keep most of their financials private. 

This is why no fighter is making a million dollars per bout in the UFC while there are a number of boxers who can command that amount and more.

Interestingly enough, Russell Pike reportedly gave Chuck Liddell a million-dollar contract to pimp Xyience back in the early days of the company. Pike's regime also signed multiple high-caliber fighters to the brand across the MMA landscape and not just in UFC circles.

Despite his criminal tendencies, the company founder made bold moves and laid the foundation for the UFC's current symbiotic relationship with Xyience.

The Fertittas have much more cash at their disposal now as owners of Xyience, but they don't have nearly the same number of talented fighters in the sponsorship stable these days. The Fertitta-owned Xyience also now only sponsors the UFC and their own fighters instead of branching out to other MMA leagues and sports as Xyience did in past years.

The little people in the UFC to the Fertittas are the fighters, even though many of the men and women fighting for the top dog in MMA become fiercely loyal to the Zuffa, LLC organization. Few fans and media professionals realize that this is a conditioned response.

The Fertittas and Dana White fostered a leadership environment leading to a whole new class of obedient fighters who rarely rock the boat or call out their bosses for any reason at all.

Over the next ten years as MMA athletes who fought the bulk of their careers for the UFC are retiring, we may begin to see the real toll a UFC career can have on a fighter's health. By then it will be too late for the fighters suffering from the worst symptoms to negotiate for a higher per-fight pay or a piece of the royalties the UFC makes off their past fights and likeness rights

It's time for the truth to trump the lies. It's time for people to realize the Fertittas built their success off the backs of better men and women than themselves. These silver-spoon-fed brothers are much worse than whoever is responsible for JP Morgan Chase's $2 billion miscalculation the FBI jumped all over recently.

Why aren't any federal authorities taking a harder look at the tactics these billionaires are using to continuously get away with ruining the lives of average Americans who get duped into backing these economic hitmen

In reality, Bernie Madoff and Wall Street's worst scam artists are not nearly as bad as the combined negative force of the army of financial wizards in this country like the Fertittas who get away with fraud considered to be legal (or only borderline criminal) and only subject to civil penalties. And those civil penalties only apply if those damaged by the fraud can afford the world's most fantastic lawyers.

Paying law firms to cover up their worst behavior becomes cheaper for businesses and billionaires than it would cost to do business the right way: with respect and responsibility.

The roadmap to riches for the Fertittas ripped apart the lives of regular folks from all walks of life, from firefighters and teachers bilked out of retirement funds, to Xyience investors who had their shares wiped out due to Fertitta greed, to all the fighters the UFC chewed up and spit out for not fighting up to the big dog of MMA's standards.

Don't believe the hype and never forget the people who bought out and rebuilt this league will take care of themselves first and screw the little guy any chance they get if it can make them an extra buck by doing so.

The Fertitta family's Galveston gangster ancestors would be so proud to see what kind of corporate crooks these grown brothers have become.