FERTITTAS ROAD TO BUYING THEMSELVES OUT OF BANKRUPTCY PAVED WITH BAD INTENTIONS

By: Rich Bergeron

(at left, boys will be boys..Dana White stands in the middle of the two Fertitta Brothers in their younger days. The picture on the right is from a groundbreaking ceremony, and the labels printed on the photo should be reversed)


Las Vegas truly seems like the picture of luck and promise for visitors who flock to this mecca of over the top celebration hoping to hit it big or at least come home happy. As our nation is crippled piece by piece by massive fraud and failure of proper government oversight, a place like Vegas can easily get lost in the mix. It's not so appealing anymore now that most of us can see the whole "game" is rigged simply by observing our surroundings. It's all too easy to look around and get disgusted at the excess in a place like Vegas.

The housing crisis hit Vegas hard, especially when the economy soured and people stopped coming out there and taking such lavish vacations. Even the President of the United States, Barack Obama, was telling people at one point not to blow it all in Vegas.

The Fertitta family gambled hard and fast with Station Casinos on what is called "the locals market" and lost more than a bundle. Perhaps it is a bit of Karma for all the honest folks who lost their shirts in Fertitta casinos over the years. Possibly it could be chalked up to bad luck or a lack of foresight.

Or... maybe the more feasible and probable explanation is the Fertittas and their front men and lawyers did it all on purpose. They orchestrated a bankruptcy to purposely favor their position and buy the company back debt free and scare off other bidders by their sheer ability to make impossible deals possible.

It's not so far fetched, is it? Vegas is--after all--a city where the mayor is working to build a Mob museum out of an old courthouse. When a guy like Oscar Goodman, a former Mafia lawyer himself, is running "the show," it's hard to believe everything's not rigged toward the wiseguy blood in town. One of the questions that seems pointless to ask these days is, "Where's all the money really going?"

It's just becoming increasingly harder to track and regulate where and why money gets thrown around by these professional corporate crooks who have insulated themselves with vast resources and smart attorneys who know how to get around the bankruptcy courts and keep their bosses out of getting splashed with any real hot water.

Guys like William J. Bullard become untouchable after figuring out how to get through all the loopholes and sneak past regulators looking the other way. As long as the tax money and campaign contributions are flowing out, the investigators aren't looking into the Fertitta Enterprises affairs.

One of the most troubling aspects of my investigation into Fertitta Enterprises is how little there is regarding public information about what this company actually does to make all that wheel-greasing money. A look back into some INTERESTING CASE FILES of another bankruptcy process Fertitta Enterprises is involved in reveals that Fertitta Front Man William J. Bullard was implicated in some interesting claims in a massive bankruptcy of a group of companies under the USA Capital label. Bullard is connected at the hip to the Fertitta family, having common connections to Gordon Biersch, Fertitta Enterprises, Meadows Bank (Where he is ironically the "Whistleblower Contact"), and two older businesses listed on corporationwiki.com:

Inspectech Corporation of California

Tex-Wesley Clear Creek, L.L.C.

Crooks are by nature egotistical and arrogant people. The worst crooks can be the most likely to really add insult to injury with their crimes. They do this not only by way of the sheer magnitude of the crime itself, but also by the very methods and names they use to keep the whole matter secret. Consider the "USA" connection between two groups Fertitta Enterprises and Bill Bullard worked their financial fraud through over the years. Global Cash Access (GCA) Executives were heavily involved in the Xyience bankruptcy scandal. Fertitta Enterprises officials, under the guise of a subsidiary named Zyen, LLC, utilized Global Cash Access money and some of that scandal-ridden company's principal players to perpetrate the whole fraudulent Xyience bankruptcy process from top to bottom.

One of the earliest legal problems the co-founders of GCA faced were related to companies like USA Processing and EXCLUSIVE USA MARKETING CORPORATION.

GCA Founders Karim Maskatiya & Robert Cuccinotta, Former CEO Kirk Sanford, Executive Kathryn Lever, and Maskatiya's Nephew Omer Sattar are the known Global Cash Access plants put in place at Xyience to purposely bankrupt the company and funnel all the money to Fertitta connected companies like Zuffa, LLC and Zuffa Marketing. Kirk Sanford told me himself in a November, 2007 meeting in Times Square (see photo below) that Maskatiya had a considerable amount of money invested in the Fertitta lien position over Xyience.


The major connection Global Cash Access has with Fertitta Enterprises is by way of their contract to provide kiosk and transaction services to station Casinos. This is what likely put the Fertittas in touch with GCA's executives and officials in the first place.

Looking at the emerging pattern of fraud, analyzing the complicated nature of the involved transactions, and taking into account the overall landscape in Vegas that allowed this corruption to go on unchecked, it is easy to see why the Fertittas and their front men and women continue to escape culpability and accountability for orchestrating these massive fraudulent schemes. Nobody has the budget to face them in court and win, and not even the government's best investigative agencies seem willing to try to go the criminal route. The reason doesn't appear to be lack of cause as much as it seems to be about cold hard cash. The city of Las Vegas and the State of Nevada are getting their take six ways to Sunday, and so is the U.S. Government on casino, property, and income taxes paid out by the Fertitta family and their business interests.

But, the question must be asked: WHAT IS THE PRICE OF ALLOWING THIS FRAUD TO KEEP GROWING BIGGER? Do we have to let the Fertittas turn into the next Bernie Madoff before we throw the full weight of criminal charges at them? Their "bull"dog William J. Bullard should be using his financial talents to solve complicated financial crimes. Instead, he and the Fertittas have masterminded perpetrating them under the radar and behind the scenes without ever being called out by the major local press. They do direct business with the Vegas Media Magnate Greenspuns through Green Valley Ranch and Meadows Bank. They have literally covered every base but one.

A blogger with a clear conscience and a bit of talent in getting the facts out of a dedicated investigation came along and did what nobody else had the stones to accomplish and fight for.

I learned that justice is not simply a word or a concept. It is something you must believe in and strive for every day in a society that is trying to keep you from obtaining it if it means pissing off the haves in favor of the have nots. The who cares line gets tossed out there all the time like the first pitch at any big baseball game: ugly and off target.

Who cares? For one, you should if you are a true fan of mixed martial arts. Do you really want the kind of people who systematically take over and cripple companies after promising to invest in and take care of them to be ultimately in control of the best MMA league in existence? This UFC deal is "their thing" and they have some bondholders they have to pay back over the long run, but it's going to make them rich and the fighters poor after all is said and done. They put too many fighters out of business for too long when PRIDE collapsed, going down in history as just another Fertitta company destroyed with a principal purpose of picking up the best pieces and pissing away the rest.

Do you really want the kind of guys who would pay themselves with money pumped into Xyience to the tune of millions of dollars and neglect to square up with their own fighters under contract with the brand? The best warriors in the business should be making millions, and often they make pennies compared to the hours they have to put in to be in prime condition to fight. They rely on their best sponsorships at times.

The Fertittas had outstanding contract payments owed to UFC fighters sponsored by Xyience of less than a million dollars when they bankrupted the company as the chief lienholder. Why didn't they pay their own fighters who literally shed blood for the brand? All the Fertittas ever did for the brand before they destroyed it and took it over for themselves was front it with some ad space on the octagon, make their fighters accessible to sponsorships, and associate it with the rise of The Ultimate Fighter show on Spike TV. The fighters did the real work in promoting the brand. Yet only one old-regime Xyience fighter is back with the newly-branded Fertitta outfit. Matt Serra. Why? (Search this blog for Matt Serra)

The time has come for some light to be shed on this corruption and some action to be taken by the general public. If you agree with me and have your own examples of "usual suspect" fraud that's being overlooked, please Report Waste, Fraud, Abuse, or Misconduct Here.

The Fertittas are about the buy their own casinos out of bankruptcy on a budget of nearly a billion dollars built on what appears to be scheme after corrupt scheme and ruthless business practices that take advantage of the bankruptcy process and subject far too many innocent Americans and taxpayers to footing the ultimate trickle down bill. It starts with the huge investment banks. These institutions eventually pass the expenses on to the little people through overdraft and transaction fees to catch up on all the revenue they've lost hiding their transgressions and trying to avoid being prosecuted for financial crimes.

Why should we be surprised that the economic outlook is gloomy right now in America when we let financial fraudsters like this stay in control and out of jail for so long? As the Fertitta Family pumps hundreds of millions of dollars into getting a relatively debt free casino package out of a nearly 6 billion dollar and ballooning debt debacle with Station, another old associate is going down for 8-12 years in the penitentiary. Bill Bullard was a gung-ho pit boss type of mover and shaker for the company Joseph D. Milanowski drove into the ground. His scheme with one loan in the ongoing bankruptcy case of USA Capital prompted the lawyers explaining it to draw up a diagram:



So right now one lone wolf at the tip of this iceberg gets captured and caged for a while, but the rest of the wolves get to go right on running with the pack and wreaking havoc. Station Casinos is set for auction on this fast-money-first-Friday in August, and the Fertittas are poised to put in a bid as high as $772 million according to the Wall Street Journal.

Is it any coincidence that just as the Station Casinos auction closes leaving the Fertittas virtually free and clear of all the fraud that got them there, Joe Milanowski will be settling into his cell
after having a wall of bars closed on him?

August 6, 2010 could possibly be the day the Fertitta brothers make the deal of the century for themselves. This auction is paving the way for them to become even richer in the long run if they play their cards right and nobody outbids them. August 6th could potentially be the best day of the Frank Fertitta III and Lorenzo Fertitta's young business life, but it is sure to be the worst day of Milanowski's entire life, and he had to pay nearly $90 million in restitution to boot.

Instead of raising champagne glasses to toast yet another successful scheme when they steal their company back from the bottom of the cliff of debt they pushed it off, the Fertittas should be in their own bunk bed unit across from Milanowski. Bullard should be in the bunk above Milanowski. Maybe like Tyco's Dennis Kozlowski does now, they can do something constructive like teach their fellow inmates how to get their GEDs.

Here are some interesting links on Milanowski worth looking at and asking yourself why the Fertittas and William J. Bullard aren't implicated anywhere in this mess even though the civil charges implicate them as such a major player:

MILANOWSKI PLEADS GUILTY

U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 20536 / April 23, 2008

SECURITIES AND EXCHANGE COMMISSION VS. JOSEPH MILANOWSKI COMPLAINT


ACCUSATIONS OF FRAUD, SECURITIES VIOLATIONS: SEC sues ex-USA Capital President

AND WHO GOT RICH WITHOUT SHARING ANY ACCOUNTABILITY WHATSOEVER???

THAT'S RIGHT F#*KIN' LAWYERS!!!

"The longer this thing goes on (in bankruptcy court), the more the attorneys are going to get paid," Bullard said.

USA Capital investors fret over rising legal fees

THE REAL “DEAL” ON XYIENCE

By: Rich Bergeron

Recently A New York City Magazine that shall remain nameless published an article about the Xyience saga I’ve been reporting on since late 2006. The reporter interviewed me for over an hour as part of her research, but her editor cut out every single quote of mine she put into her story.

Whoever decided to make the cuts was also kind enough to leave a nasty quote in the story from one of the opposing attorneys in my case.

Of course I’m used to not being backed up by most media outlets on this huge scandal. Yet, I’m also confident that eventually the media will have no choice but to start following this case. I know that with the right effort and due diligence I’ll be able to carry my case forward to a shocking resolution. David will beat Goliath in this one, and the truth really will shine through.

Judge Mike Nakagawa held a show cause hearing in bankruptcy court on September 10th related to the recording of my May 14th hearings. He probably didn’t expect the whole thing to turn into an indictment of his own actions in the case, but that’s exactly what happened.

Judge Nakagawa continued the scheduling conference in my case on five different occasions prior to the show cause hearing, and he also promised to deliver decisions on at least three different dates without following through, and I decided enough was enough. Xyience is creeping closer and closer to ultimate approval of their reorganization plan. As it is that plan only benefits the players who orchestrated the fraudulent bankruptcy. I took control of the September 10th hearing to really send the message that I’m not playing games anymore. I wanted the judge to know that he was taking things much too lightly and not paying attention to the absolute need for a full and fair investigation of the whole process.

I asked the judge to recuse himself from the case in a prior motion, and he tried to pigeonhole the request into the category of a recusal based on a previous association.

“Have you ever met me, Mr. Bergeron,” he asked.

I told him no but explained that was not the reason I asked him to recuse himself. I laid into him at that moment, outlining all the various issues with his poor management of the entire case. I called him out for all his broken promises and his allegiance to the bankruptcy attorneys. It was the most amazing feeling of my life to be so captured by the emotion of it all and to be fighting for what I believed in with all my heart. Toward the end of the hearing, I could hear the judge’s voice quiver as if my assault on his character and integrity had really rattled him. He seemed pretty eager to get to the next case on the docket.

I have since requested that the case be transferred to U.S. District Court in Boston, Massachusetts. That will be the best venue for this type of case since there’s a First Amendment issue involved and since continuing the case in Nevada leaves my opponents with all the advantage. Bringing the matter to my home state allows me to at least appear in person, and the change in venue will also ensure that the Fertitta influence factor is eliminated. These billionaires have a lot of power in the Vegas area, and it’s just plain stupid to think they haven’t tried to manipulate the proceedings somehow.

The taxpayers of our great nation are going to have to foot the bill for about $700 billion of bad banking and mortgage and securities schemes in the coming months. Who knows if it’s the bottom of the barrel or if we might actually be in for more rocky roads ahead. The Xyience debacle should teach us that greedy billionaires can buy whatever they want, even judicial influence. This is a living example of how our nation is corrupted from within.

Sometimes the little things in life are the most telling. This may seem like a little, insignificant issue to many MMA fans, but you have to think of the ripple effects. How many people have suffered as a result of the 380 or so shareholders who lost a boatload of money on this bad deal? From another perspective, the Fertittas’ role in this fraud is even more disturbing. How many people do these guys do business deals with each year? How much money do these folks control through either their personal business decisions or choices they make on major boards they’re part of? If they’re committing fraud even at the lowest level and actually bankrupting a company to make a quick buck, there’s something fishy going on behind the scenes, and you don’t have to call Colombo to figure it out. This cancer will spread to their UFC operation in due time, and the league will choke on its own ego.

And another thing… where is the SEC on all this stuff? If they can’t wrap up a simple fraudulent caper like this—even when I gave them all the evidence as it was happening—how do we expect our federal government to really clean up the bigger and badder shit going down?

Markets don’t collapse because the big boys just stop pulling their weight all of a sudden. It’s because all the little screw ups combine to make one grand one. Every level of business can contribute to a crash, and no financial giant or mom and pop store is immune. Yet, there is something intrinsically wrong with the idea that billionaires like the Fertittas are pulling scams like the Xyience bankruptcy and getting off without so much as a slap on the wrist. Where is the accountability? Where are the watchdogs and advocates for a closer look at this thing? Where is the big investigation that should ensue? What is wrong with this picture?

The problem is, the fraud always starts small like the crazy dude in some major European bank who lost billions of the company’s money on bad futures trades. Nobody ever stepped in at the right time to stop him, and he never stepped in to stop himself. The Fertitta family financial boom started off with one casino. Now they own an empire of casinos, real estate, and other luxurious property. The old time roots of organized crime run deep in the family Fertitta, and when you have that much wealth, influence, and organizational power you can pretty much do what you want these days. The mantle of “clean money” fits the Fertittas well in the circles of public knowledge, but most people who follow the UFC aren’t actually up on the family’s brutal history. So you have to ask yourself: do Family ties ever become severed just because one or two of the family members starts making more money and gaining more territory? HELL NO! The fraud gets more sophisticated, and the operation moves underground and gets entrenched. Everything has to be more subtle. Instead of the physical removal of actual cash from the casino count room, now the “corrections” to the books are being done through computer programs and failsafe loopholes in the equipment that leave most people down on their luck at the end of the night.

The partnership between Global Cash Access officials and Fertitta Enterprises is very troubling. The individuals who left Global Cash Access to head up Xyience’s bankruptcy dive were all connected to an alleged failure to report and pay out commissions for the venues where their cash machines were installed. The machines allowed casino patrons to make paperless transactions for gaming cards and other casino offerings. Fertitta Enterprises operates multiple casinos in which Global Cash Access machinery is placed. Why would the Fertitta Brothers do business with a bunch of the very same fraudsters who just potentially screwed their company out of millions? Did Kirk Sanford take over as Xyience CEO to repay his debt to Fertitta Enterprises? Was he so good at his GCA bailout that the Fertittas knew he would be a natural at bankrupting Xyience?

I feel my case is on the verge of a major breakthrough, because the time has come. This kind of thing just can’t go unnoticed anymore if we are to survive as a healthy nation. This and every penny ante scam like it should be sniffed out and stopped before it ever gets this bad. And we can’t handcuff the press for trying to warn people about what dangers lie ahead and what’s really going on behind the scenes. We can’t keep fighting for freedom in foreign lands and ignoring the lack of it in some places here. If we keep acting like freedom is something that’s passed down from the richer to the poorer, we’ll never make real progress.

XYIENCE SALE APPROVED IN BANKRUPTCY COURT

LAS VEGAS REVIEW JOURNAL REPORTS ON $15 MILLION XYIENCE PURCHASE

Comments by: Rich Bergeron

Manchester Consolidated Corporation, an investment group consisting of just 4 employees, managed to gain approval to buy Xyience on April Fools Day, but the fat lady is not singing just yet. Emerging details regarding the principals, the sale negotiations, pertinent new and past litigation involving the players, and a host of other major issues will soon be revealed.

Many of the victims of this unfortunate situation might be shaking their heads and taking the woe is me approach to this sale, but it's important to remember that the sale of the company does not eliminate all culpability. Pandora's Box has been opened, and it's still producing incredible new information on a daily basis that may eventually lead to RICO Act proceedings against some of the pertinent players.

Over the next few days I will provide new updates. There is a tremendous amount of new facts emerging, and I've acquired multiple court documents I'll be posting here soon, too. Though Xyience and those who have maliciously bankrupted the company to enrich themselves may feel victorious now, they will be singing a different tune when all is said and done. Some of them may even be singing it behind bars.

XYIENCE CO-CEOS ADAM FRANK AND KIRK SANFORD RESIGN FROM BOARD OF DIRECTORS AS THE COMPANY PREPARES FOR A SALE

CEOS BAIL OUT WHILE CORNER OFFICE MANAGEMENT GETS TO COLLECT ON THEIR SIX-FIGURE SALARIES

By: Rich Bergeron



Even while the company is steamrolling through bankruptcy with the help of more capital infusions from Fertitta Enterprises to facilitate exploration of the company's sale, recent court filings from Xyience indicate that the latest casualties include Co-CEOs Adam Frank and Kirk Sanford. What's more intriguing is that the February 2nd filings claim that prior to Sanford and Frank resigning from the board of directors in late January they were not even paid employees.

Sanford (far right) and Frank (far left) have in recent months become the public faces of the Xyience/Zuffa scandal that is still unfolding in the press and inside multiple Las Vegas courtrooms. Both men came to Xyience under questionable circumstances with Frank having a serious breach of contract lawsuit hanging over his head and Sanford wrapped up in an internal investigation at Global Cash Access Holdings after he suddenly and suspiciously vacated his position there as President and CEO.

GCA is a financial services company that provides cash access products and services to the gaming industry. Sanford took the reins of GCA in February of 1999 and reportedly left just before November to "pursue other interests and spend time with his family."

Global Cash Access stocks then took a mid-November nosedive amid the internal investigation that followed Sanford's departure. Some of the company's financial reports were delayed as a result of the investigation. Despite the investigation not turning up any major fraud, the company's stock has yet to recover from the sharp losses it took last November. Trading just under $20 at its peak in April of 2006, the stock has been gradually depreciating ever since. Virtually flatlining around $16 between October of 2006 and July of 2007, the stock's market value tanked in November and dipped below $4. Since then the stock has been unable to reclaim even half of its pre-November value.

Not surprisingly, prior to Sanford's being brought on as CO-CEO of Xyience under Fertitta Enterprises' financing of the company, Station Casinos and GCA had a substantial business partnership.

Upon the company's successful acquisition of the Fertitta financing, Kirk and Sanford were also handsomely rewarded. The following snapshot is taken from the funding consent request sent out to shareholders in late September of 2007:

THE GOLDEN PARACHUTE

The funding consent request letter went out just one day after Xyience posted a preliminary injunction on the docket of their bogus defamation case against me. The proposal went out to try to gain the support of 70 percent of the shareholders, and both Frank and Sanford sent out an email on October 4, 2007 to announce the signing of the Fertitta deal despite claims now being lobbied by burned investors that the proper percentage of shareholders never agreed to the financing.

The February 2nd filing announcing the resignation of Sanford and Frank also ensures the company's employees making more than $100,000 are duly compensated. The document includes the following passage:

"On January 23, 2008, the Bankruptcy Court heard the Debtor’s Emergency Application for Authorization to Pay Salaries, Commissions, Employee Benefits, Accrued Vacation and Reimbursable Employee Expenses (“Payroll and Benefits Motion”). In conjunction with the Payroll and Benefits Motion, the Court required the Debtor to file a motion seeking the Bankruptcy Court’s approval of compensation paid to all employees who are presently paid an annual salary in excess of $100,000. This Salary Motion is filed for the purpose of seeking that approval."

Meanwhile, 12 other employees were laid off on January 25th, 2008 leaving Xyience with a bare bones staff of just 27 salaried employees. So who benefited with big paydays that forced 12 folks out of a job? The filing lists: Susan Curry, Vice President of Manufacturing; Vicki DiBernardo, Vice President of Human Resources and Administration; Michael Levy, Chief Financial Officer; Jeffrey Martin, Eastern Division Manager; Ruben Rios, Vice President of Sales; and Omer Sattar, Chief Operating Officer and President.

Two other unpaid board members, Lanis O’Steen and Jerry Kramer, also resigned at the same time as Frank and Sanford, though it is not clear how involved they were in the day to day operations of the company. Interestingly enough, the filing that revealed this information was almost put under seal. Instead, the court document was released in the spirit of full disclosure, which is a principle some Xyience officials, Fertitta Enterprises, and now-former Board Members Adam Frank and Kirk Sanford have all been accused of avoiding at all costs according to multiple initial Xyience shareholders.

This case continues to develop and raises more questions with each passing day. So far, only a select few independently driven fight news Web-sites have dared to delve into the really meaty details. The Las Vegas Review Journal has published only flat reports about the bankruptcy and what appear to be one-sided allegations of death threats claimed by the current Xyience brass.

The Review Journal's lack of any hard-hitting or critical coverage of the real heart of the story here may be related to the close ties between the Fertitta family and the Greenspun Corporation. The Greenspun-owned Las Vegas Sun is distributed in The Las Vegas Review Journal. 50/50 partners on the development of a 2005 hotel and casino community called Aliante Station, the Greenspun Corporation and Station Casinos go way back. It is also not the only project they've corroborated on.

"We have a great relationship with the Fertittas and Station Casinos as a result of the success of Green Valley Ranch Resort and we are confident that they will develop and operate a high-quality project for our residents and the surrounding North Las Vegas community," Brian Greenspun reportedly announced at the time of the Aliante Station project's unveiling.

Greenspun is the chairman of the corporation that controls more than just one Vegas newspaper. Greenspun Media Group's holdings include the Las Vegas Sun, Showbiz Weekly, Las Vegas Life, Las Vegas Weekly, VegasGolfer, The Ralston FLASH, In Business Las Vegas, VEGAS Magazine, Las Vegas Life Home & Design, and The NEWS. GMG also publishes a number of targeted and special interest products each year for businesses such as the Fashion Show Mall and the Wynn Hotel.

No wonder FNU's emails about this situation have not been returned by editors at the Las Vegas Sun.

The Greenspun Corporation also has other lucrative business connections with cable news outlets, local broadcast media, a film company, and transportation services. With that many smart investments, it's easy to see why they don't have any Xyience stock in their portfolio.

Beyond the lack of local scrutiny in the print media, Xyience is still holding its own despite the very public embarassment due to their voluntary bankruptcy. Ironically, even amidst all this internal turmoil, the almost completely financially tapped Xyience, Incorporated has yet to relinquish their lucrative marketing partnership with the Ultimate Fighting Championship. The court documents report, "Based upon the post-petition agreement entered into with Zuffa Marketing, LLC, Xyience retains its status as the Official Energy Drink of the UFC."

Xyience Temporarily Taps Out

XYIENCE FILES FOR BANKRUPTCY

By: Rich Bergeron


Over a month before it became official, Fight News Unlimited reported that bankruptcy was imminent for Xyience. Our article entitled THE ENRON OF MMA exposed some of the reasons why the company is in such dire straits, but the Las Vegas Review Journal dug a little deeper this week and examined the actual voluntary bankruptcy filing Xyience went forward with last Friday.

The official filing comes after an involuntary bankruptcy petition was filed on behalf of several investors tied into a lawsuit against the current Xyience regime. The petition, filed January 3rd, calls into question the Fertitta Enterprises loan and would essentially block any attempted foreclosure by the current controlling interests, and place all the assets under the court's discretion until the fight over the company is finally decided. Zyen, LLC, the company designed by Fertitta Enterprises to handle the $12,000,000 loan given to Xyience last year, filed a NOTICE OF STRICT FORECLOSURE late last year that allowed for only a 90 day window for investors to mount a fight for the company.

The LVRJ Xyience Bankruptcy article, now being circulated across the on-line MMA news landscape, dropped some major bombshells. Yet, there were some major inconsistencies that went to press in the piece, and the overall tone was extremely favorable to the current regime that is attempting to lock out hundreds of the company's initial investors.

One of the most outrageous misrepresentations of the facts reported include the following passage in the article:

"Sattar said the bankruptcy became necessary when the company was unable to raise $7.5 million more from shareholders."

This quote, coming from the lips of the company's newly-crowned president Omer Sattar, is a blatant misrepresentation of the actual situation that gave rise to the bankruptcy. Before Fertitta Enterprises provided loan capital to Xyience, a letter went out by email to a large group of shareholders telling them that if the deal was not ratified the company would go bankrupt. Once the deal was approved by less than half the shareholders, much of the Fertitta investment went right back into a hefty three-year sponsorship extension with the UFC and also helped to pay off past due sponsorship fees of approximately $6.5 million. According to the Las Vegas Review Journal the Fertittas put almost $18 million in total capital into Xyience, and a hefty chunk of that money came out of one pocket only to go right back into another, since the Fertittas are 90% owners of the UFC. Essentially, Xyience would have had double what they needed to stay in operation if they opted not to be a UFC sponsor this year to the tune of $15 million. Even with the extension in place the latest UFC sponsor (Harley Davidson) bumped Xyience from the center of the mat, and now it appears the company paid an absolutely ridiculous price to have their name on a couple cornerpads of the octagon.

The Las Vegas Review Journal is either guilty of extreme bias or sloppy reporting. Don't expect any follow up stories to question any move the Fertittas make. First of all, the Las Vegas Review Journal is partnered with The Las Vegas Sun, which is owned by the Greenspun Family. The Fertittas' Station Casinos partnered with the Greenspun Family on some notable casino developments. Aliante Station and Green Valley Ranch are both joint operations put together by these two major Vegas movers and shakers.

The Las Vegas Review Journal appears to be providing aid and comfort to their business partners in their latest struggle to save face on Xyience. The LVRJ even quoted Sattar's claims of death threats issued to Xyience officials without even contacting either of the men who reportedly made those threats in order to get a response. Ric Klingenberg was accused of making the threats along with his brother David Bergstrom. The dispute arose over a payment owed to Klingenberg's elderly mother, and both brothers were reportedly given the run around while trying to secure a check for $20,000. Reached by phone recently, Klingenberg categorically denied the description of the events Sattar presented in the voluntary bankruptcy filings.

"I went to that office, that part's true, but we didn't storm in there," said Klingenberg. "And we didn't threaten anybody's lives. We did go in and close the door, because, isn't that what you do when you have a meeting?" Klingenberg said Xyience CFO Michael Levy promised him his mother would get paid when the Fertitta Enterprises loan came through. He also said he left Levy a phone message telling him when he would be there to collect the check. Levy reportedly told Klingenberg his mother "was going to have a Merry Christmas" in late December.

"Voices were raised, and everyone was talking at once," said Klingenberg. "We were told to go find Adam Frank, because he was the only one who could authorize a check." He was later told he'd need to get an attorney in order to collect the funds.

Klingenberg also claims that Sattar lied as far as the bankruptcy. "They didn't file bankruptcy, we did," he said. Klingenberg's family trust is the main plaintiff in the investor suit under which the involuntary bankruptcy petition was filed. He explained that the company's hand was forced by their initial filing.

In the aftermath of the bankruptcy announcement, it now appears the bad press and the legal battles mounting have forced the company to now explore the possibility of selling the whole operation. A follow up article in the LVRJ reports that financing has been approved to help position the company for a sale even while the legal battles for control of Xyience rage on.

The Fertittas have not provided any published comment on their tactics regarding Xyience, leaving President Omer Sattar to provide the company's perspective to the public. Sattar is part of a group that came in to run Xyience from a company called Global Cash Access. Questions surrounding insider trading charges and a late filing of GCA's third-quarter report for 2007 followed the departure of the GCA contingent that is now operating Xyience. GCA's stock plummeted in November of 2007 and has yet to completely recover. Station Casinos was one of GCA's largest accounts, so it appears that the partnership between former GCA employees and Fertitta Enterprises stems from that initial connection.

Although the UFC continues to operate as the top dog in the Mixed Martial Arts industry, this latest debacle with Xyience and some other recent developments point to a rocky future for the pioneers of the sport. While other leagues are constantly looking for ways to co-promote major events, the UFC continues to refuse to even acknowledge that any other league competes with them. Their lawsuit against Randy Couture is also looming as a large distraction. On top of that, Tito Ortiz is planning to leave the organization after his next fight according to mmapayout.com. While Ortiz has never been one to hold his tongue about his frustrations with Dana White, he has also never been as popular as he is now with MMA fans. As the boyfriend of Pornstar Jenna Jameson and a contestant on the celebrity edition of the Apprentice, Ortiz is at the height of his fame right now. Wherever he goes from here, that league is sure to benefit from his star status while other UFC fighters will take note and might decide to follow his lead when their own contracts run out.

The UFC seems to be having enough growing pains without their principal owners getting heavily involved in a company with such a horrible reputation. Much of the mainstream MMA press reporting on this story of Xyience going bankrupt have just now started asking questions about what's really going on. The question on everyone's mind seems to be: "Why would the Fertittas want to buy into their own sponsor?" We're talking about a huge , profit-driven company here. Fertitta Enterprises is not the kind of outfit you'd expect to touch Xyience with a ten-foot pole. Yet, here they are up to their necks in debt and tied in to the point where they seem to be more willing to cut their losses than actually rebuild the brand. So, what's the motive. Well, you simply have to go back in time a bit to find the answer. We put together an in-depth report over a month ago that outlined how this day would come.

The truth is, the Fertittas never intended to restore the dignity of the company and save the day for the shareholders who built Xyience. If that was their plan, they'd be front and center in the press talking about it. Instead, they're hiding behind straws put in place to act as the fall guys. If they really wanted to clean the slate and keep the company in full operation, they would have tried to secure more financing a long time ago. They would have put the company first. Instead, they immediately signed a contract extension with the UFC as soon as they put their money in. The whole thing just stinks.

This whole bankruptcy fiasco has nothing to do with not having the money to prevent it. If they don't have it, they can certainly get it. The real reason they decided to file bankruptcy is so they can lock out an estimated 380 shareholders who built and sustained this brand even while fraud and corruption were tearing the company apart from within. Just when these folks were told their payday was on the horizon and there could be an IPO as early as this month, these investors are now forced to reclaim their interest in the company through litigation that could last years. Some of them have lost their life savings.

I have run into a lot of MMA fans who read my stories and other stories about Xyience's issues and ask, "Who cares?" They wonder why it's a story at all and who's the victim. The Enron, Tyco, and Worldcom scandals have tempered the American public to such an extent that we seem to expect this kind of back room underhandedness and duplicity. In one case I found a thread where one fan actually praised the Fertittas for the way they rigged their own loan by investing in Xyience.

Yet, there is so much about this story that people should care about. Let's just go back in time again to when Xyience was at the height of its popularity. All kinds of fighters were raking in big sponsorships. GNC agreed to take on a wide array of Xyience products. The Xyience commercials were a viral video hit because of the sexy models drinking Xenergy in them. Hundreds of investors had the feeling that they could depend on this thing becoming really big. Xyience was a big ticket sponsor at a time when fighters were getting paid chump change compared to boxers. Most fighters are still reliant on sponsors, and they will be until the sport gets sanctioned in more states and becomes more of a mainstream draw. In the wake of this huge scandal that now enters Chapter 11 (pun intended), it's clear there's no other sponsor that's going to equal what Xyience was doing in the beginning. Harley Davidson is not out sponsoring all kinds of fighters. You won't find the Lumber Liquidators logo on any fighter's shorts.

The bottom line is a lot of people got screwed so the Fertittas and Dana White could get themselves a fat dividend check. They laid waste to PRIDE first, and now they're focused on Xyience. Every step of the way they've lied to the public about what they were going to do. They said they were going to keep PRIDE going only to let it completely dissolve with no hope for ressurection. Investors in Xyience were told that the Fertitta deal was the only option and they had to do the deal or watch the company go bankrupt. They did the deal, and the company is still going bankrupt. The Xyience mouthpieces working on behalf of the Fertittas said they were going to reorganize Xyience and keep the brand going only to now come out and announce plans to sell it. It's sad that some people out there are willing to chalk all that up as good business sense.

In the end UFC fighters continue to get paid a fraction of what they should for the risks they take. Some great organizations rose and fell because of greed. Honest investors were shafted because the rich wanted to get richer. And we wonder why the economy is in shambles. Look around. People constantly get away with this kind of shady behavior simply because so many of us shrug our shoulders and say, "Who cares?"

As for who's the victim here, it's anybody and everybody who thinks there's nothing wrong with this picture. It's all the folks who choose to look the other way because great fights are still getting made. It's all the legions of brainwashed sheep who refuse to open their minds to the possibility that they're being lied to. It's all the screwed investors and all the fighters being used while their bosses are raking in all the big money. If this kind of behavior is allowed to go on unchecked, everyone loses.

THE SILENT MAJORITY STEERS XYIENCE TO FORECLOSURE & BANKRUPTCY

"The Silent Majority"

Zuffa, Xyience, and Fertitta Enterprises

By: Rich Bergeron

They live in the lap of luxury. There are yachts, homes worth tens of millions of dollars, and all the other perks of big business. The Fertitta family falls under the definition of the term "magnates" when it comes to the casino territory. Steeped in a rich history and estimated to be worth billions by some, what they control is an empire of free enterprise, with virtually all of it now under private labels. They are 90 percent owners of Zuffa, LLC, otherwise known as the parent company of the Ultimate Fighting Championships. Xyience has been their biggest ticket sponsor lately, and if Xyience fell there would be trouble. What these men now seem to be planning to do has the potential to produce voluminous amounts of federal and state litigation launched against them. Now in a position to bring Xyience to a screeching halt, a group of private funders with a heavy Fertitta Enterprises interest orchestrated a takeover that is coming to a crescendo now just a month before some investors were told the company would be going public.

Xyience is said to be fast approaching a foreclosure on the Xyience loan offered to the company by a "group of private investors" that included Fertitta Enterprises. Bill Bullard, the GM of Fertitta Enterprises, also subsequently became the Manager of Zyen, LLC, which he used as the on-paper entity that would take ownership of Xyience in the event of a foreclosure. Dana White and Adam Frank publicly stated the advantage of signing the extension in the hopes of growing both companies. In actuality, the writing on the wall points to Zuffa playing the name game to avoid being outed as the real name behind the company's new money. Zyen, a whole new company sounding just like Xyience without the last two letters, was put in place to follow the yellow brick road from there to complete insolvency and foreclosure. It was all designed to work best if Fertitta Enterprises was not directly connected to the investment/loan/capital infusion finalized between a "private investment group" and Xyience in early October.

The need for confidentiality is illustrated by the very argument Xyience filed to sue me for $25 million. They say right in that first filing that there were investors ready to put in $15 million, but only if my stories came off the net. This was a simple trade: money for an injunction. This is what the whole case against me was built for. They meant to impugn my character by claiming defamation, never thinking they would actually have to prove any defamation actually happened.

It has since become apparent that after just one missed interest payment from their capital contribution to Xyience, the Fertitta-driven investment group is planning to foreclose on that loan. Leading up to the holiday season there are details leaking out that mass layoffs are taking place.

While the push for foreclosure seems imminent, lawyers are mounting cases.

There are even some people banding together who would never normally even associate with each other. This is how bad the new raw deal is looking to the folks who put all their money on a hope and a dream that now appears as if it may never come true. Months ago, people were cursing me out in commentary I couldn't even print because of the graphic and threatening nature of the stuff. These same people responsible for trying to ruin my reputation by hurling insults at me are now knocking down my door looking for help. They want me to tell them the way out.

It was ironic enough sitting in pretty decent free seats at UFC 78 on Xyience's dime. Now, people are starting to see the light and the truth. It is all starting to make sense. All the dots are connecting. There are certain people involved who you may never read another thing about here, because to me they are past tense. They are now off the grid and in good hands as far as I can tell. Justice is working its magic.

For others, the war has just begun, and it is a pitched battle. Rumbling down the pipeline is another potential class action suit that may contain more shareholders in federal litigation.

The options all seem grim:

On one hand the company could "stay the course" and go to foreclosure, leaving Fertitta Enterprises free to reconstitute the brand however they would like to. That would leave the bulk of the 340 shareholders holding the big liability bag with no gifts in it, just in time for Christmas. It basically punishes the majority for the actions of a minority group of meddlers. This seems to be the point in the movies when the villain kills the hero's dog. All hell breaks loose after that. People get mad.

Another option is to foreclose, but get the Fertittas to let the investors buy back their old company in its svelte debt-free format. This option is slightly better than option A as far as potential for profitability, but as far as rebuilding partnerships, it sucks. All the vendors would get written off and new paths would have to be blazed. It's a heck of a rebuild to undertake. Plus, the current framework of stock holders could be wiped out. They would all have to essentially get the new funder's permission to take part in the new company. Their old stocks wouldn't mean a thing. This may be the most appealing option, but only if the asking price is right.

Finally, there is one more foreseeable option, though it may be the most impossible dream of all impossible dreams. There is the honest way out: fund the company and all its broken promises, too. Knock on doors, say you're sorry, keep the inroads you've made in place, or as many of them as you can still salvage. Pay the debts, settle the suits, make things right. It sucks to even imagine how much money that might take, but think of the damage done and the need for redemption here. This company needs to come out to the public and show it has taken bold new steps into a new and hopeful direction past all the difficulties it has been embroiled in. A statement needs to be made, and a responsible team of leaders needs to take charge while those being investigated need to step aside.

A term being passed around a lot lately is "full disclosure." It is an interesting term. It's business slang for "tell me everything you know." It has its roots in legal terminology, too. A lawyer has to present all his evidence to the other side in the spirit of full disclosure. Full disclosure implies there are no restrictions, that you may speak at will, and that you will tell the whole truth. Xyience has not been operating lately in the spirit of full disclosure. The new board of directors has shown no signs of having nothing to hide.

The Fertitta-driven powder keg is about to blow up here. I cannot enter this situation in any official capacity at this point. There is a $25 million bounty on my head in the Clark County courts. It was put on my head by Xyience. I cannot tolerate taking an inside position to guide Xyience in any way, and definitely not with a lawsuit over my head. Some people are suggesting I buy stock or advise the board, but I am a reporter. I am not a stock baron. I have a hard enough time trying to be my own lawyer. I do want to help Xyience, and what I can be is a conduit of information. There are many people contacting me from all angles of this situation and every direction. I am hearing directly from multiple fronts of the battle underway. Only Adam Frank and Kirk Sanford now seem to be in radio silence mode. I have also not heard from any representatives of Fertitta Enterprises. They have not made a peep publicly about any connection they may have to the Xyience deal. They are all being extra quiet lately as they roll to foreclosure, and the shareholders only have 20 days to block that foreclosure if that's what they choose to do. There is word that Adam Frank will soon be deposed next in a case regarding a land development for a Las Vegas "W Hotel," which is coincidentally the same hotel Kirk and Sanford used to house me when I came to New York City for UFC 78. The case documents filed against Frank are an excellent read.

I have been called everything from a homosexual to a conspiracy theorist. Some people think I wear a tinfoil hat and operate my shortwave radio in a cabin somewhere in the deep wilderness. The fact is, the folks behind the $25 million con-job of a case against me had a pretty crude smear campaign going to respond to the cold hard facts. They played dirty politics, used slimy legal tactics, and never provided one shred of real evidence that any of what I wrote was false. On the basis of the facts, they had no way to dispute any of it.

Now, there are people calling on me to salvage things. I'm just a writer. I tell it like it is and call 'em when I see 'em. I am not Superman. I cannot leap towers of legal bullshit in a single bound. I can't bend a crooked company back to straight. I'm not faster than a speeding conspiracy. I can print the facts as I find them, and that's all I can promise. As far as who CAN save the company. Look no further than the Fertitta family, because that's where the angry shareholders will ultimately look if foreclosure is followed through on in a manner that burns the bulk of the folks who helped put Xyience on the map. They will bring their pitchforks and torches, an army of salivating lawyers with dollar signs gleaming in their eyes, and a mountain of evidence of the fraud taking place. If the buck stops there, pull up a seat, because this one's about to get really interesting, and it could get ugly really quick. And not stage ugly. Not Jerry Springer ugly. We're talking suicide ugly, no retirement ugly, lost house and homeless family ugly. There were people depending on their contribution to pay off. There are still deep questions as to where it all went, but there is one extremely bright light pointing to where it's going.

Look no further than the trophy case at Fertitta Enterprises. To them it's not something to polish and point to every time there's company. Like PRIDE they'll probably take what they need from it and leave the scraps and bones by the side of the road. Either way, it doesn't appear those who bought in early will get any kind of a promising pay out in the end.

At the forefront of this whole raw deal are people who prefer to make voluminous millions in every deal they sign, regardless of how they have to make it. The principle of the most profit for the least cost does not coincide with the idea of providing the greatest good for the greatest number of parties who contributed. The same folks who feed and fuel their impossible wealth with these kind of deals always buy out their problems, pay off their competition, and obscure the facts to get whatever they want. They are ruthless, sharks in the water that smell blood, and a blight on mankind that reveals the true horrors of the excessive airs of some of the most capitalist-minded and money-driven people in America. It is disturbing, disgusting, sickening, and awful all at once to imagine the amount of people who will have to endure a miserable Christmas this year: unsure of their futures, regretful of their past, and having no fun with the present.

If miracles are indeed possible, and if the company stays intact in its current state, Xyience will have to depend on a big one.

IS XYIENCE'S TURKEY COOKED?

XYIENCE’S NEXT CHAPTER

By: Rich Bergeron

Never in my wildest dreams did I ever expect to get invited to a UFC event after beginning my series exposing the ongoing mess over at Xyience, Incorporated. If I doubted that possibility while I was working on the story, I had no good reason to change my outlook after being sued by Xyience for $25 million in the 8th District Court of Nevada in July of this year.

Yet, I just got back from New York City where I stayed in a room on the 30th floor of the posh W Hotel in Times Square in order to attend a UFC event on Xyience’s dime. Even while this lawsuit hangs over my head, I was there at the fights and invited by Xyience to take it all in. I clearly didn’t imagine actually sitting in the stands in Xyience’s seats and seeing UFC 78 live. That happened. It doesn’t make any sense, but it happened. I even had a witness who saw the fights with me and met some of the Xyience folks. I brought a friend in the Web-site business from Newark, New Jersey where the Prudential Center Arena that hosted the fight is located. He can vouch for me that I really was there.

What began as a minor inquiry into a questionable situation at a supplement company has now blown up into a full-scale monster of a financial mess. A new chapter is unfolding, one much more intriguing and powerful than anything I have produced thus far. The latest infusion of capital and the circumstances surrounding the delivery of this deal is coming to light and looking extremely damning for the players who made it happen. What appears to be happening now is a situation in which the new investors are trying to bankrupt the company and write off the rest of the people who put in money early and stuck with this company from day one. All of this is resulting in a level of infighting that has left both sides now seeking to enlist my help.

No, I’m not dreaming, I keep telling myself. This is really happening.

First of all, the players who invited me to the Big Apple are Xyience CO-CEOs Adam Frank and former Global Cash Access Holdings Director Kirk Sanford. Both have some skeletons in their closet as far as their past business dealings, and both men are also dealing with a significant backlash due to the stock options they set themselves up with and the 600,000 shares they each acquired when they came on board the Xyience train. These guys contacted me and made it appear as if they wanted to put everything behind them. They kept telling me the lawsuit would be over and they just wanted to meet with me and talk about the future of the company. They even talked about hiring me on as an advisor to the board of directors.

Naturally, I don’t necessarily think it’s cool to be walking around with a $25 million lawsuit hanging over my head. I figured I’d hear them out and see what they’d bring to the table to end it. These guys acted like they were intent on really helping the company get cleaned up. Yet, over time and interaction with Frank and Sanford, I realized that my trip to NYC would be better off as a recon mission. I took the opportunity of our first lunch meeting to invite a new friend to our table who works for a company in NY that provides capital in situations exactly like the one Xyience is facing right now. Frank and Sanford seemed a bit miffed, but they accepted our new guest and soon were talking to him about the future more so than me.

They even wanted to know how soon and how much money they could get out of this company if they needed it. My friend told them of one instance when his company provided over $1 million in a 24-hour period for a California power company.

The tone of the conversation had Frank and Sanford maintaining over and over again that the company needs to be bankrupted. They also repeatedly mentioned the 340 investors they would have to buy out or appease if they chose another route. That’s when my friend suggested the “knock on doors” approach. Basically, that procedure involves going directly to investors and buying them out one by one.

When asked if the plan was to ultimately go public, Sanford was especially irked by my line of questioning pointing to the Fertittas favoring private companies over public ones. He finally explained that they would do whatever they had to do to make sure the company is the most profitable it can be.

When we concluded lunch, Frank and Sanford each plopped a $100 bill down on the table for me so I could get a ride to Newark for the fights. I told them I spent just about all the travel expenses they sent me for the trip on my suit, which was true. I went the extra mile to look professional only to arrive to find Frank and Sanford dressed like they were ready to go on a camping trip.

My first impression led me to believe both men were trying to take over Xyience for themselves and reap all the benefits with a much smaller group of investors than they currently have to deal with. Coupled with the Fertitta Enterprises contribution, it looks like Frank and Sanford are in position to be part of the company’s new regime whenever the current mess is sorted out. Yet, all their talk of cleaning up the company didn’t match up with what they told us they wanted to do next.

My friend and I spoke at length after Frank and Sanford left the restaurant. This potential investor/financier I had just met was eager to provide capital and help this company out of the current mess. One of the shareholders in the other camp trying to oust Frank and Sanford complained to me recently to let me know that the new leaders of Xyience just can’t seem to find the capital they need to keep the company out of trouble. Yet, I found it easy to find someone with enough capital to help, and here I am just a blogger with virtually no business and financing experience.

It is my humble opinion that Frank and Sanford don’t want to find new capital. They instead appear more willing to bankrupt the company, reconstitute it, and rake in the profits without having to share revenue with a huge pool of folks that bought in early when the company was looking a heck of a lot more successful than it looks now.

What also baffled me is that my friend found me by looking at my blogs about Xyience. The Xyience lawsuit claims that my stories made it practically impossible to find investors to put money into this company. Yet, I only made one phone call and found someone willing to offer up his company’s extensive coffers to help.

Later on, I reconnected with Adam Frank at the venue. My fellow Web-site entrepreneur friend met me there late after a whole lot of hassle trying to network with him and figure out where he was. I went to find Adam Frank in the Xyience suite they had for the fight, but I ended up spending most of the night in my seats. Frank was scarce for most of the evening, and even before my friend arrived he didn’t seem very talkative. It appeared to me that these guys had no plan as to how to deal with me. I had documents and paperwork in hand that I almost passed off to them in hopes of getting a deal done, but something held me back. Something was not right.

After watching the great card, I wasn’t able to locate Frank at all. I called him and asked if there was anything going on afterward, giving him one last chance to meet and negotiate. He never called back.

Having had no chance to do any real business as far as planning for the future, the trip became more valuable to me as an informal deposition. I was able to measure the commitment of these two men, and I found it lacking. As far as making sure there is really an effort to clean things up, I think I came away with the impression that the Xyience situation is only getting worse. I was disappointed in Frank and Sanford’s approach to things, and I am glad I had a business and financial expert by my side to get everything out of them in discussion. Had I been there alone, I wouldn’t have thought of half the questions to ask about the business aspects of the situation.

I ventured home via Laguardia Airport and set the stage for how to proceed. Such a big charade is par for the course with Xyience, as that is how I was told they attracted much of their initial investors. They get them to come to the fights, see the Xyience name associated with the big UFC event, and wine and dine people into chipping in. I have to admit, I was spinning my wheels thinking of how I could chip in after all was said and done and I was in the air on the way back to Boston.

My latest motion set to be filed soon in my lawsuit asked for $1 million before the trip. I figured I’d start the negotiations there, and I did so through some detailed emails explaining how I thought I could help from the inside. I even offered to have the contract structured over 2 years.

Putting all that out there wasn’t enough, though. I knew there also had to be an alternative plan, which would be to keep the lawsuit going. To me, I felt a bit disrespected by the whole process, because Frank and Sanford assured me the case against me was going to be over soon, and I told them I wanted it over and done with by the time I got to NYC. They lied to me. Then they told me they were going to give me $5,000 for travel, and they only gave me $500. On top of those red flags there was the affidavit Frank signed that is the centerpiece of the case against me:

Give that a read, and then tell me if this conversation I recorded with Adam Frank and Kirk Sanford makes any sense to you:



Whatever the possibility of me coming on board at Xyience, which I knew was probably pretty far fetched anyway, I still had a $25 million case hanging over my head.

To me it felt like someone pointing a gun at me telling me they’re not going to hurt me, but they never stop aiming it at my head while I talk to them. The lawsuit itself was like someone punching me in the head and then turning around and suing me for hurting their hand. It was always Xyience defaming me through subversive blogs that spouted complete bullshit and didn’t even include one shred of proof. I only printed the truth.

So, I decided to play hardball when I came back from my trip. I increased the asking amount in my motion for Rule 11 sanctions to $5 million in damages and financial sanctions against the plaintiff. I feel like a message needs to be sent here. Corporations can’t be permitted to crush innocent people under their feet. If I stand in the way of Xyience making a bright future possible for themselves it is only because I exposed the truth about what they were doing wrong. If my stories were lies the suit would be applicable and needed, but they were not lies.

BERGERON'S RULE 11 MOTION AGAINST JAMIE COGBURN, RUSSELL PIKE, AND XYIENCE, INC.

Whatever happens from here, I am in a promising position. What began as a skeptical public saying I had some grudge against Xyience has now resulted in lots of people starting to come out of he woodwork realizing I am right. Some of the more mainstream MMA press backed my reporting up with recent stories that confirmed what I wrote months ago. The general public is even starting to sniff out the truth. Blog comments I’ve read about the subject have featured most people giving me props for sticking to my guns.

However, I know I still ought to and need to do the right thing here. I need to carry this through to the end and make something good happen here with Xyience if I can. People on all sides have told me how damaging my pieces were to the company, and I am honestly sorry about how that might have affected the innocent folks there just doing their jobs. Yet, the ultimate purpose was always to do a great deed and expose the shady behavior so it could be fixed. Now it appears that the involved parties have vastly different ideas about what it will take to truly fix this broken company. The infighting threatens to destroy Xyience from within, and I'd hate to see that happen. Although it makes it easier for those attacking me to believe I have it out for Xyience, I really don’t. I have always wanted to see this company cleaned up and put back in line to be a great contributor to the MMA scene again like it once started out to be.

Stay tuned for more.

THE ENRON OF MMA

**Editor's Note: This Article was written Wednesday, November 28, 2007**

THE ENRON OF MMA

By: Rich Bergeron

Because of an email that is now the subject of a $25 million lawsuit against me, and because I followed up on that email, I’m in a position now where I can put all of the intricate puzzle pieces together to prove the greatest fraud in fight industry history.

This story is too huge to keep to myself. It is dubbed the Enron of MMA for a reason, because it really is.

Right under the very noses of the fans who tuned in faithfully for every big show, right behind the backs of the fighters who put their safety on the line for the cash and the bragging rights of fighting in the "Octagon," and right past federal regulators behind the curve, the latest Xyience backers have been feeding a chain of lies to investors and the public, and for a long time they were able to fly under the radar and avoid detection.

All the while, the UFC has found a way of representing themselves as having this great, exclusive sponsor, but it’s not really all that great.

Some fans might have heard that the UFC (AKA Zuffa, LLC)
took out a $325 million loan not too long ago:

DETAILS OF ZUFFA LOAN.

In June 2007 Zuffa, LLC, the parent company of the UFC, borrowed $325 million through a Senior Secured Credit Facilities Term Loan
due 6/18/15. This debt instrument was placed with Oppenheimer Funds, Franklin Templeton Funds, Fidelity Funds and others.

Evidently the Fertittas spent most of the proceeds on the purchase of PRIDE and on a dividend for themselves and Dana White. The provisions of the loan are as follows: The loan is a pledge of the entire Zuffa assets and revenues, including the UFC, and a stated amount of revenue must come from sponsorships.

The new UFC Xyience contract, which newly-crowned co-CEOs Adam Frank and Kirk Sanford negotiated with John Mulkey, the CFO of Zuffa LLC, calls for $9 million the first year, $11 million the second year and $12.14 million the third year. And Xyience will reportedly not be in the center of the mat after March. In other words: The Fertitta funding and new UFC contract with Xyience appears to be a sham for the auditors of Zuffa and the UFC to cover-up the fact that a key covenant in their $325 million loan was in breach.

They were allowed to obtain this loan by representing the sponsors they have are all above board, successful companies. Once Zuffa had secured and collected on their own loan, Fertitta Enterprises and a few other outside investors gave Xyience financing in a deal that shareholders were told would directly benefit the company and provide operating funds for an expansion of the brand.

The alternative would be to bankrupt the company. The scare tactic
worked. The new investment group now plans to do what they said they
were trying to avoid all along, all in order to truly capitalize for themselves on their investment.

Instead of providing bridge financing for an IPO of Xyience stock (as some investors were told the Fertitta funding would facilitate) or funds to pay off a host of other vendor fees Xyience has accrued, the Fertitta loan barely made a dent in Xyience's extensive debt.

Fertitta Enterprises entered into financing Xyience and almost immediately decided to pay off the company's UFC debt. The Fertitta Enterprises money came in, and Xyience reportedly forked out more than half of it, over $6.5 million in past due sponsorship fees, that had been accrued by Xyience and were owed to the UFC.

The company also extended their UFC sponsorship contract right after the Fertitta Enterprises deal became official. The Fertittas and a few other investors basically funded a company on the verge of bankruptcy to provide capital for themselves.

So, the Fertittas and a few friends paid the debts owed to the UFC by Xyience while also propping Xyience up as a valid, viable company. Any way you slice it, it's a devious scam perpetrated by misdirection and manipulation.

Xyience has been insolvent for months now, yet the folks at Fertitta Enterprises used Xyience as a significant reference to get their hands on $325 million for Zuffa, LLC, and the entire business’ assets are riding as collateral on that loan. Zuffa took the money, made a heavy investment in PRIDE, took some dividends for the principal players, gave a significant bailout loan to Xyience through Fertitta Enterprises, and extended the Xyience endorsement contract for three years.

Sales under the new Xyience regime are suffering amid the clamoring MMA mainstream press eager to print explosive evidence, like the report that a supplement Sean Sherk was taking had tested positive for a banned substance. There were also reports of fighters getting stiffed on contract money, and months after I reported it on my site the
Liddell/Xyience issue was finally brought to light and confirmed.

Those who once saw me as a conspiracy theorist had to open their eyes, look twice, and say, “Jesus, the kid was right all along.”

At this point I know almost all there is to know about Xyience. So, let’s get to it:

Xyience's original product line and business concept were actually allegedly stolen from John Scott, the Current Owner of John Scott’s Nitro.

Xyience's history is a train wreck. The company brass perpetuated lies and hyperbole about Xyience's growth and placement in the marketplace for far too long. Xenergy is not the fastest growing and selling energy drink and likely never really was when those claims were being made in the earlier days.

Kirk Sanford and Adam Frank are leading the company into what they describe as a situation where they simply must bankrupt it once and for all. This revelation is coming just mere weeks after they purported to save it from that same exact scenario with the Fertitta deal.

The company has already had one round of layoffs and faces another one soon as the prospect of bankruptcy comes into focus.

For some reason it didn’t surprise me when I found out that Kirk Sanford’s old company Global Cash Acess Holdings had a very significant account with Station Casinos, the Fertitta Family's cash cow.

The Fertitta Brothers--through Fertitta Enterprises and their company plants--have been able to hijack Xyience without inspiring any sort of outrage from the MMA fans or the fighters who might have appreciated that $12 million investment being put back into the UFC and/or paid out to fighters with past-due sponsor payments from Xyience owed to them.

Lobbying against Fertitta Enterprises and Frank and Sanford are an estimated 340 Xyience investors. The offer tentatively on the table, according to inside reports, is to give the existing investors a 5 percent interest in the new company if they are willing to cooperate.

The company is fraught with liability and debt. Bankruptcy may be the only way out, but why do those 340 shareholders have to be left holding the bag if they don't pledge allegiance to the new regime? Why should the folks who put in early get screwed? Why should they be forced to support a group who only seems to be furthering and complicating the fraud at Xyience instead of alleviating it?

It's pretty clear something has to be done to permanently prove the company is in good hands and has begun moving in a better direction to regain loyal customers and cleanse the name of the institution. This company has been bought and sold over and over again, six ways to Sunday, and around the world in 80 days.

Once the Fertitta deal separated Xyience Founder Russell Pike and his close associates from voting rights, a new group of movers and shakers in the shady business world came in and began to pick the remaining post-Pike assets apart. They are taking everything of value and dismantling it all, pulling off a massive scam, all under the veil of an association with the Ultimate Fighting Championships, A.K.A. Zuffa. Layoffs at Xyience to move closer to bankruptcy will leave all those employees out of work for the holiday season, and many have already jumped the gun and put their resumes up on www.monster.com.

The resulting fallout unfolding here reminds me of the words of one of my early sources:

“Xyience isn’t a sponsor of the UFC, the UFC is a sponsor of Xyience.”

Nothing could be more true right now.

The UFC became its own sponsor when the Fertittas bought into Xyience. Their $325 million loan terms require them to have strong sponsor partnerships, so it was not merely a factor of being guilty by association. There was more to it than that. They had overextended themselves, they needed a loan, and they needed their main sponsors to stay strong and look the part. 

Not too long ago Dana White was screaming from the rooftops about how the UFC didn’t need a Coke or Pepsi level sponsor.

“I don’t fucking 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,” White proclaimed.
Turns out Coke didn't need White, either.

In the end he was stuck with the option of having nobody come knocking, and Xyience had to stay on point somehow. If the company went under, everything would go wrong for the UFC. It would be the second straight sponsor bailing out from on-the-mat advertising due to bankruptcy.

In an interview recently on CNBC with former Disney Head Honcho Michael Eisner, White promised the UFC would be announcing some brand new corporate sponsors within the next few months.

Xyience is still bankrupt for all intents and purposes. They cannot serve their debt under current arrangements. It’s only a matter of time before they have to admit their plan to take the company under. Someone will end up foreclosing, and it appears the most likely scenario is the Fertitta Enterprises group gaining control over the bulk of the company’s interests and assets in the advent of any insolvency.

Then they will have to change the name and reconstitute the business.

“We look forward to our future endeavors together as both of our companies continue their explosive growth,” Dana White said back when Xyience and the UFC extended their sponsorship. Xyience was on its way to bankruptcy and just received a huge infusion of capital to keep it from going under, yet White calls this condition "explosive growth?"

If you could know what I know, you’d completely understand. Let me slow down and get to the point at the same time. What has befallen this company under Russell Pike has been written to death. This is the new chapter, the unfolding of everything, the great reveal.

The new players are some richly people to say the least. For research purposes, here’s a list to familiarize yourself with:

ADAM FRANK
CO-CEO

KIRK SANFORD
CO-CEO

OMER SATTAR

COO

BILL BULLARD OF FERTITTA ENTERPRISES



KATHRYN LEVER



PATRICK BRAUCKMAN

MORE ON BRAUCKMANN



ADAM ROSEMAN



BILL UNDERHILL



MICHAEL EISNER



KARIM MASKATIYA



JEFF DASH

Gregory Garman

Kirk Sanford's sudden departure from Global Cash Access and the stock's nosedive in mid-November leave more questions than answers, and now Sanford is at Xyience with all the players he was closest to at GCA.

GCA's operation in Macau was allegedly set up to create kick-backs from skimming and mis-coding of transactions for Karim Maskatiya. He is the person who insiders say put Kirk, Kathryn Lever and Omer, his nephew, into management at Xyience. Maskatiya also reportedly put $5 million of his own money into Xyience. About half of the board of directors for Xyience now has some connection to the casino industry.

On top of everything, the Fertittas’ Station Casinos is one of GCA’s most significant accounts. Station Casinos also endorsed Judge Timothy Williams for his campaign to get a district court bench. Williams just happens to be the judge overseeing Xyience's $25 million case against me in Clark County, Nevada. Williams also coincidentally oversaw the case of Fishman Companies vs. Dream Stage Entertainment (DSE). Just before the Fertittas could be deposed in the case, it was settled. Soon after that settlement, the UFC'S purchase of DSE (PRIDE) became official.

While Williams has been quick to act and set hearings for the Xyience
motions on the docket and graciously approved the other side's proposed
orders, my own motion to dismiss has been sitting on the docket for
longer than a month now. Even in the face of Xyience's lawyer withdrawing from the case, the judge refuses to acknowledge
that the whole $25 million litigation is a farce.

Also of interest is the case Xyience Founder Russell Pike has filed against Kirk Sanford and Adam Frank.

To get a better understanding of what has been happening to the company and the shareholders, you have to understand the relationship with the legal counsel of Xyience: Eisner and Frank.

Michael Eisner of Eisner and Frank was brought to Xyience in December of 2006 by Adam Roseman, the CEO of ARC Investment Partnersand Jeff Dash, the Xyience CFO at that time. ARC Investment Partners and Eisner and Frank are both based in Beverly Hills, CA.

In November of 2006, Roseman, who was introduced to Xyience by Jeff Dash, introduced Patrick Brauckmann to Xyience. Roseman reportedly told management that he and Brauckmann would be able to raise $25 million in order to capitalize the company and retire the defaulted $10 million Brush Monroe note and buy back the 7 million shares of Xyience stock held by the AA Capital receiver.

Reports say in January of 2007, Roseman insisted on becoming CEO and Chairman of the Board of Xyience and appointed Adam Frank to the board stating that he needed the executive positions and Frank to help raise the $25 million. Adam Frank also reportedly promised to invest $1 million into Xyience.

At the end of January 2007 members of the board of directors of Xyience consisted of: Adam Frank; Adam Roseman; Russell Pike; Peter Rinato; and Michael Clark. By February of 2007 the Brush Monroe note, held by the AA Capital receiver, was convertible into 16 million shares of Xyience stock. With the 7 million shares already held by the receiver.

So, whoever purchased the receiver’s position would get 23 million shares of stock.

CORPORATE RAIDERS OF THE LOST "ARC"

Eisner and Frank, Jeff Dash, Adam Roseman and Adam Frank, along with Patrick Brauckmann, allegedly put together an intricate scam where they went behind the backs of Russell Pike, Peter Rinato and Michael Clark, and the majority on the board of directors, to purchase the Brush Monroe note and the stock from the AA Capital receiver in February. They then reportedly sold Xyience stock to investors for $2.50 a share, stock that they did not have, telling the investors that the money was going into the company.

Actually, they were putting the money into Key Management, an entity set up by Brauckmann, to buy the note and stock from the receiver for $10 million for themselves.

They would get 23 million shares from the receiver and give the people they sold the stock to 4 million shares, while keeping 19 million shares of Xyience stock for themselves.

The receiver entered into negotiations with Brauckmann to sell the note to Brauckmann’s Key Management in January. The other Xyience board members: Pike, Rinato and Clark, found out about the court hearing and sale the day before the hearing and tried to stop the sale. But as Dash, Frank, Roseman and Brauckmann had starved the company of funds, the company had no money to buy the note and stock from the receiver.

After two hearings and a compromise, the judge let the sale go through when Brauckmann stated that he would fund Xyience with $20 million. Brauckmann later reportedly never put up that promised money.

The compromise gave Jeff Dash, Adam Frank, Adam Roseman and Patrick Brauckmann over 10 million shares of stock and stock options and a $5 million note at no cost to themselves.

Not only did Eisner and Frank not appear in court to try to stop this scam, they also tried to stop legal counsel hired by Peter Rinato
from representing the shareholders and the company at the court
hearings. This scam effectively diluted the shareholders’ stock by
almost 30 percent. The lack of funding grinded production to a halt and made sales in February of 2007 the worst in almost a year.

This all happened while Xyience was publicly making sales claims
their own analytics firm questioned.

After the compromise, Adam Roseman resigned from the board and Adam Frank stayed on the board. Karim Maskatiya, a large shareholder of Xyience, founder and chairman of the board of Global Cash Access, was given authority to appoint two people to the board. By the end of May, Karim had appointed Kirk Sanford and Kathryn Lever to the board.

Michael Kurdziel, manager of Adam Roseman’s ARC Investment Partners, represented Roseman’s and Brauckmann’s interests,
and only Bill Underhill represented the shareholders.

Arc Investment Partners later sued Brauckmann for problems related to
another deal they corroborated on.

THE LAST HURRAH

After having the wool pulled over their eyes by Brauckmann and
company, the good people left at Xyience were put in the hands of yet
another abuser to be victimized yet again. The new regime hopes this
third try to get something of value out of the mess Xyience has become
will be an unqualified success. Yet, to obtain that goal the new powers
that be will have to alienate the shareholders that put Xyience on the
map with their early funding. There will be layoffs and auctions, misery
and loss. Kirk Sanford likes to call this approach "Scorched Earth."

From June 2007 on, Kirk Sanford and Adam Frank controlled the company, and it seemed apparent to insiders that these men would not raise any capital. They, with Kurdziel and Lever, controlled the board.
It was up to them to save the company while they still could.

Adam and Kirk reportedly gave themselves 600,000 shares of stock each and 3 million stock options for themselves and their new Xyience team. Yet, they thwarted every attempt by Bill Underhill to bring in financing. They postponed the June scheduled shareholders meeting until the third quarter. On July 11 and 12 Adam and Kirk had six investor conferences in two days and stated at these conferences that they would “establish robust reporting to shareholders” and that “material strategic and financing decisions must have complete visibility.”

Reports confirm Sanford and Frank have not called a complete shareholder meeting recently (although one is scheduled for December 15), and they refuse to give any disclosure to shareholders. I sent Sanford a list of questions recently, and he refused to provide answers publicly.

"You had some good questions," he wrote in response. "But, we decided it would be better if we communicated directly to the shareholders ourselves first. Once we've done that, I am sure they will send you a copy (like they always do)."

By the middle of summer, once again, production was halted because of lack of funding, and sales suffered. This cost the company millions of dollars in sales and earnings. Kirk and Adam still did not seem eager to pursue any funding of Xyience, except with Bill Bullard, President of Fertitta Enterprises.

Insiders say the co-CEOs ignored all other funding opportunities and evenallegedly spoke disparagingly about the company to other potential investors.

By the beginning of October Kirk and Adam were threatening bankruptcy. If the major shareholders did not give in and authorize the Fertitta funding that Bill Bullard, Adam Frank and Kirk Sanford had put together, Adam and Kirk said they would put the company into bankruptcy.

Adam Frank even sent out a cessation of operations e-mail without calling a board meeting.

By this time they also had crammed down all vendor payments by threatening bankruptcy. What they proposed was a $12 million one year 15% senior note from Fertitta Enterprises.

But, the funding did not sustain the company at all. What it did was make the entire arrears payment to the UFC of $6.5 million, paid off a note to Fertitta Enterprises for $1 million, paid Adam and Kirk $500,000.00 for their notes, paid Fertitta Enterprises an initiation fee of $240,000.00 and paid Eisner and Frank--Rosemann’s lawyers that helped orchestrate the February scam--almost $300,000.00.

All these were paid while note holders, who had notes that were past due and payable, had received nothing or just partial payments. Other legal fees and payables also remained outstanding.

Xyience's case against me has not even been funded. In addition, 7.3 million stock options were attached to the funding for Adam and Kirk, and Fertitta Enterprises received 10% of all Xyience stock outstanding in warrants for one cent a share.

Another and even more incredible provision was that Fertitta Enterprises would receive default warrants for another 100 million shares for one cent a share if the shareholders voted to change the board of directors.

In other words, Fertitta Enterprises would pay themselves and the UFC and receive 60% of Xyience. Frank and Sandford were rewarded for lying to shareholders by promoting a deal for the Fertittas to help save Xyience when all along the deal only served to destroy the company.

On October 2, 2007 Frank and Sanford informed Russell Pike, William Pike and Michael Clark, shareholders who represented 25% of the shares outstanding, that if they did not sign the funding consent form for the Fertitta funding and give up their voting rights, Adam and Kirk would put the company into bankruptcy. On October 3, under duress, the Pikes, Clark and other major shareholders signed the consent forms.

Only eleven shareholders, who represent over 50% of the shares outstanding, ever saw the funding agreement. Over 300 shareholders are
reportedly still being kept in the dark by Adam Frank and Kirk Sanford as to their investment. So, the UFC, Fertitta Enterprises, Adam Frank, Kirk Sanford and Eisner and Frank were paid in full, and Fertitta Enterprises, Adam Frank, Kirk Sanford, Karim Maskatiya and Patrick Brauckmann were given total control of the company--all while sales and relationships with major customers were reportedly destroyed.

The scam can only ultimately be pulled off if the Fertittas remain virtually invisible. This is why there has been no press release. You won't see Lorenzo Fertitta at any podium proclaiming the UFC now has an indirect financial interest in one of their main sponsors. The situation screams conflict of interest. They have instead left it up to Adam Frank and Kirk Sanford to sink the ship and command the expedition to salvage the wreckage.

Xyience lost $56 million in 2006 according to their profit
and loss statement for that year.

Zuffa had to bail Xyience out indirectly so they would not default on a $325 million loan that primarily provided profit-sharing opportunities for the principals. They basically just put a second mortgage on their whole company to line the family pockets. The question that remains is simple: How much can you really do with $325 million, minus of course what ZUFFA paid for PRIDE? Can you resuscitate a dead company? Can you right a wrong?

Can you erase the past?

Only time will tell.

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