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

STATION CASINOS, FERTITTA ENTERPRISES, KIRK SANFORD AND A BUNCH OF ZEROES

By: Rich Bergeron

It's been a while, but I created this nice new blog and wanted to formally update the Xyience saga. Right now there has been no action in my own legal matters in the adversary case in more than 6 months. I'm preparing a few filings of my own to change that.

Meanwhile, I've been reading up on what's going around about all the old "Usual Suspects." While the UFC is seemingly still doing smashingly well, Station Casinos is facing resistance from all fronts. Whether it is the culinary union with a bone to pick (pun intended) or the company's major creditors, adversaries and critics are popping up everywhere to claim the casino chain is being shady. Just check out a few of these links if you don't believe me:

NATIONAL LABOR RELATIONS BOARD COMPLAINT AGAINST STATION CASINOS AND OTHER FILES
Station Casinos bondholders renew interest in suing over deal
Propco/Opco: Playing With the House’s Money?
Bankrupt Casino Goes On With Fireworks as Usual

This is just a small sampling of what I've been reading out there about Station Casinos and the "stalking horse bidder" ploy the Fertittas will use to get the best out of this deal at auction, just like they did for Xyience.

Consider this: When Xyience went bankrupt there was a stalking horse bidder for that company, too. What was that company's name???

GOOD THING THE INTERNET REMINDED ME IT WAS MANCHESTER CONSOLIDATED CORP, WHO "bought" THE COMPANY FOR $15 MILLION.

Over the course of the bankruptcy there were a lot of name changes. The company that was the chief lienholder of Xyience going into the BK process was a company dubbed Zyen, LLC when Fertitta Enterprises General Manager Bill Bullard signed the paperwork in 2007. When Manchester walked into the picture, the name became MANZEN. Then it appears Manchester's backers defaulted on the purchase, so it looks as if Fertitta Enterprises, through Zyen, LLC outright owns the company now. Check out these listings from the Nevada corporate entity search engine:

http://nvsos.gov/sosentitysearch/CorpDetails.aspx?lx8nvq=2ryhJA1g38vr4wHvjZ4vJA%253d%253d&nt7=0

http://nvsos.gov/sosentitysearch/CorpDetails.aspx?lx8nvq=N2lDhJztZVB8V0F%252bccSz1w%253d%253d&nt7=0

Gordon and Silver is Gregory Garman's firm. Garman (image below) is the main attorney in my case for Fertitta Enterprises:



"Manzen" only has one manager now: Zyen

And who manages Zyen? BILL BULLARD AND FERTITTA ENTERPRISES:

http://nvsos.gov/sosentitysearch/CorpDetails.aspx?lx8nvq=w2mQRKtvYIQG5%252bRhxnaqMA%253d%253d

Meanwhile, Xyience is accordingly in "default."

http://nvsos.gov/sosentitysearch/CorpDetails.aspx?lx8nvq=n5MCm0RnmZ2bAWvCkO5bRg%253d%253d

What now looks obvious on paper should have been so obvious from the beginning when I was trying to warn of the conflict of interest involved in the Fertittas owning Xyience. I tried to stop the bankruptcy process before it got too far underway, but at that point I had too little legal experience. Still, my Motion to Suspend the Bankruptcy is true Nostradamus-quality stuff looking back now and comparing it to a more experienced legal mind's take on things.

The Fertittas always hid behind a smaller, more obscure company to do their dirty work with Xyience, but now it's clear who owns everything. The fog is clearing, and the fraud will be exposed in the long run.

Yet, without a few key players like Adam Frank and Kirk Sanford, the Fertittas and their GM William Bullard would not have been able to take control of things in Xyience's darkest hour. Adam Frank signed the bogus declaration that got the whole complaint against me started in Nevada. Frank and Sanford met with me in NYC prior to UFC 78 in Newark, NJ. This was after we had this conversation:

CLICK HERE TO LISTEN TO XYIENCE Co-CEOS ADAM FRANK AND KIRK SANFORD TELL RICH HIS WEB-SITE IS A GREAT RESOURCE ON XYIENCE

Sanford and Frank both pulled off crucial moves that helped sink any hopes the shareholders had of retaining any interest in the company after the Fertittas put their cash in. Frank seemed fully aware of the "Scorched Earth" policy advocated by Sanford and discussed at length during our meeting in Times Square back in November of 2008. Someone on the inside at Xyience found out about my meeting and sent me series of emails that broke the case wide open for me, detailing how plans were made to destroy the company piece by piece. I was bombarded with emails warning me about Frank and Sanford's master plan when I got back from the UFC trip. These dispatches had plenty of facts and insider information exposing the ongoing fraud. Tracing the motives of the main parties who perpetrated it all became much easier over the next few months.

Eventually Kirk Sanford's troubles at his former company, Global Cash Access, would become public knowledge when the Arizona authorities issued a scathing report about the company's troubled past with "mis-coding" issues related to credit card transactions and commissions owed to casinos that were never paid. So, it seems Sanford and his friends were bringing too much heat. Those still close to Sanford that still remained had to be ousted.

Then, Sanford set out to create a new GCA called "Sightline Payments." Here's an interesting advertising post for the company: Sightline Payments: Bunch of Zeros.

Well, I know they've got at least one zero, and his name is Kirk Sanford. He is a slick scam artist who is pegged accurately in circulating complaints about his character outside of the Arizona report. He even went as far as acting like an outsider looking in on the fraud parade he was the grandmaster of at GCA. He actually turned around and filed a ridiculous multi-million dollar lawsuit against his former employer. He claimed GCA's promise not to do business with Sanford and his friends was done as a deliberate attempt to smear his name so as to hinder him from developing a competing company. As if Sightline was going to sprout up overnight into a multi-billion dollar conglomerate? What dream world is Kirk Sanford living in, or what drugs is this guy on?

Kirk Sanford and his crooked track record would have been exposed one way or another, and GCA's willingness to distance themselves from him wasn't the only nail in the coffin. There's a thing called Google you might not be aware of, Kirk. Do a simple search for Kirk Sanford on any search engine. How far do you have to go to find links to his whole fraudulent history? And that's not even giving any creedence to the gossip saying he's a drunk to boot. I suppose you have to drink a great deal of alcohol to be so completely dishonest and deceptive to such good people.

The depth of that kind of conniving is really astounding to me. It's been such a long and painful process to prove everything, but it's all there now in the public eye. Yet, still, people like Kirk Sanford are able to go on and do business like nothing ever happened. Fertitta Enterprises is able to waltz right in and take control of Xyience, the company that sponsors their cash cow: THE UFC. They're able to claim bankruptcy even though the family itself is worth billions. The Fertittas are meanwhile still flying on their private jets, enjoying their lavish lifestyle, and filling up their deep pockets any way they can. The Fertittas found a way to cash in on bankruptcy with Xyience, and now it's obvious that they are trying to duplicate that whole process with Station Casinos.

When will justice be done? What will it take for a wise judge to step up and say enough is enough with this scam after scam mentality? How many people have to be hurt in the long run before the corruption stops?

When the wheels are greased, they don't squeak. Something tells me the Fertittas can be true bastards all their lives. They get a free pass to never be held accountable for their ruthless business practices. Just the mantra of their mob association and lineage is usually enough to keep them safe from getting truly busted. Nothing will get in their way, and they will envision and execute larger schemes that screw more people. It's inevitable that greed and power corrupts, and this is one brotherhood that is built on greed.

Perhaps the only saving grace in the long run will come when some of their fortune has to be handed back over to the victims they swindled to get it. The 18th of July, 2010 marks the 3rd anniversary of the initial filing of Xyience's $25 million defamation suit against me. I've done a lot since then to fight back and fight for the shareholders who lost family trust funds, college funds for their kids, and retirement income they needed to stay afloat. I've done my best to keep telling the story and keep fighting the legal fight no matter what. It's been a while, and I've had a bit of a break from it all, but now I'm back, and I'm not letting up until the job is done on all fronts.

ACCESS DENIED: Fertitta Friendly Global Cash Access May Lose Arizona License

By: Rich Bergeron



Arizona's gaming authorities recently took a bold stand against a company called Global Cash Access by filing a notice of intent to deny state certification for the merchant services company, which has suspiciously tight connections with Station Casinos and Fertitta Enterprises. Most news reports about the Arizona developments barely scratch the surface and can't fully quantify the WHOLE REPORT.

The bottom line? This is a big domino to be falling at this moment in time and this juncture in the history of Station Casinos.

The timing couldn't be worse for the Fertitta family as their casino empire steams toward bankruptcy despite one extension after another given to the struggling company by the banks and lenders they owe. Now, it seems their friendly bedfellows from Global Cash Access (GCA) are in a heap of trouble, and more has been revealed through an intensive investigation into how the company was run under the control of Former GCA CEO Kirk Sanford, also a central figure in the Xyience bankruptcy scandal I have been writing about here.

I met with Kirk Sanford myself at a Times Square restaurant just prior to UFC 78 in Newark, NJ. At the time he was Co-CEO of Xyience and had just been ousted from Global Cash Access due to an emerging scandal related to casino payout discrepancies. He specifically used the term "scorched Earth" to describe his plan to bankrupt Xyience.



As it turns out from the timetable emerging in new documents, at the time of that meeting Sanford and GCA were allegedly involved in a massive mis-coding scandal as well as a scheme to defraud casinos of bonuses owed to them. Though the new paperwork does not reveal which particular casino properties GCA allegedly denied due bonuses to, clearly Fertitta Enterprises was impressed by these GCA converts for some reason, and Station Casinos extended their contract with GCA even after the scandal leaked out.

It would ultimately take a great deal of GCA Founder Karim Maskatiya's money and all of Former GCA CEO Kirk Sanford's cunning to perpetrate the Xyience bankruptcy. Karim Maskatiya's nephew Omer Sattar and former GCA executive Kathryn Lever (still with GCA to this day) also made the Xyience transition and played roles in the bankrupting of the company.

The big question I find myself asking over and over again is WHY did Fertitta Enterprises bring these GCA folks in to bankrupt Xyience? There are only two possible answers in my mind:

1.) Fertitta Enterprises officials may have been conscious of the GCA skimming operation and impressed by it, and they needed similar skills to bankrupt Xyience through the perfect group of scapegoats.

.....or.....

2.) Fertitta-owned Station Casinos was on the list of casinos GCA skimmed from, and company officials were so upset that they forced the GCA rejects to pay their penance through bankrupting Xyience for them.

Looking at the whole risk and reward setup, there's no other explanation in my mind for the GCA and Fertitta Enterprises partnership. If you go to my ENRON OF MMA PAGE you can read about why the UFC needed to keep Xyience viable long enough to get a huge loan package and create a middle of the mat bidding war for potential UFC sponsors. Yet, they also needed to make their involvement in Xyience as limited as possible so as not to raise conflict of interest eyebrows. This is why they needed a few devoted fall guys to take key positions, guys who would be really compelled to do this dirty work and take all the risks involved. Yet, why these fall guys? What made GCA so special, and why risk the backlash of hiring folks so fresh off a scandal?

Global Cash Access perhaps came to be tied to the UFC and Xyience because criminal minds think alike. Consider the fact that Frank Fertitta, Junior is the on-paper CEO of Fertitta Enterprises. Yet, Frank Junior has been kept away from Station Casinos operations by his associations in the past with known organized crime figures. The Nevada Gaming Commission would rather Frank Junior's unclean past stay buried. It is widely reported that Frank Fertitta Junior helped operate a massive Vegas skimming operation glorified in the movie "Casino."



Frank Junior's history is fascinating, but his new hobby is even more intriguing. Fertitta Enterprises may not have all that much to do with Station Casinos, but it does healthy consulting work to help other casinos get started all over the country. No matter what controversy is stirred up, the folks behind Fertitta Enterprises seem to be able to squeak unwanted developments through on technicalities wherever they go.

The Fertitta family wields incredible power and influence in the Casino industry, and it shows. Even the Fertitta-led suggestions that a pre-packaged bankruptcy of Station Casinos would be the best way to go have been met by very little criticism, if any. It is my personal opinion that the Xyience bankruptcy was a trial run for the Station Casinos pre-packaged collapse. The Fertitta family has promised to put $244 million into the reorganization pot for Station Casinos, and despite the company's struggles, Frank Fertitta III just bought a $28 million home in Orange County, CA's Emerald Bay. Station Casinos just financed one of the largest 4th of July fireworks displays in Vegas history to boot.

Don't forget things are only so bad for Station Casinos because the Fertitta Brothers went on an overzealous expansion spree resulting in too much overhead and not enough income. Also, like a teenager with his first credit card, they hid the problem by pursuing loan after loan and credit facility after credit facility. The latest estimates put the company in debt more than $5 billion.

the Arizona investigation is mind blowing as far as the conclusions that could be drawn from the associations between GCA, Fertitta Enterprises, Xyience, the UFC, and Station Casinos. This latest GCA bombshell could be the straw that broke the camel's back with Station Casinos, and it could raise some regulator eyebrows in Nevada. Ironically enough, a witness to the Xyience collapse recently informed me that the scheme to bankrupt Xyience was primarily the work of "the two Franks." This report made a great deal of sense since Frank Junior and "Frankie Three Sticks" are really consumed in many ways by the Casino industry business and lifestyle. Meanwhile, Lorenzo Fertitta has over the years been more partial to his work with the UFC and recently left Station Casinos to help Dana White expand the UFC.

Having such intimate knowledge of the casino operations, "the two Franks" should have known it if the GCA Executives were bilking them. These are two men known for their shrewd business practices and sharp minds.

So how did this whole Xyience bankruptcy plan get hatched and why did all these folks end up working together? The exact manner in which all these "usual suspects" came together under a common banner is really an unknown at this point, but their basic motivations seem plain as day now that these new GCA documents have been revealed.

It seems to me we have a classic case of "like father, like son" going on here.

Frank Fertitta Junior never went to jail for his part in casino skimming or any other organized crime endeavor he took part in over the years. Like the "Teflon Don" John Gotti, nothing stuck to Frank Junior, and he was allowed to ride off into the sunset untainted by a prison record and able to buy his first casino for just a buck as the legend is told. Frank Junior's buddies rotted in jail while he built his fortune in gaming and created a dynasty he could pass onto his sons.

Frank Fertitta III had to take the reigns at an early age when his father had no other choice but to pass the buck. Like his father, maybe Frank III devised a new-wave skim with help from GCA, or maybe he and his father muscled in on the GCA scam and took a percentage.

Either way, even a tenuous association of the Fertitta family with what looks to be a massive and purposely designed and perpetrated electronic skimming operation executed by GCA is troubling to say the least. The fact that Fertitta Enterprises would provide ousted GCA officials immediate positions in the soon-to-be-bankrupted Xyience adds more fuel to the conspiracy fire. There are a great deal of whys to be asked in this context.

Looking from the outside in, there is only one logical conclusion as to why all these entities and individuals were perpetrating this massive fraud together. It was all about the money, of course, and while all the loosely associated businesses owned by these individuals were doing well on their own, they could do better conglomerated. They would do even better than that working together under the radar as if they were still being operated by completely separated and unrelated entities and/or individuals.

These culprits had to scatter the blame and obscure the ownership connections as much as they could, and the pattern emerging now shows that they were successful at getting away with these tactics for a long time. If you look closely you can see all the lines of connectivity between these businesses, but on paper and from a distance the names are all different and the associations are hidden. The casual observer doesn't pick up on it.

Global Cash Access made recent moves to further distance itself from GCA Co-Founders Karim Maskatiya and Robert Cucinotta, both having emerged in recent months as suspects playing integral roles in the massive conspiracy run through the company and other offshoots owned by Cucinotta and Maskatiya. The most involved scheme allegedly netted in excess of $26 million based on fraudulent fee rigging by the company. The Arizona license denial paperwork claims GCA officers were not only conscious of the fraud but actively worked to conceal it, knowing that the fine would be minimal if caught in the act.

BREAKING DOWN THE DOCUMENTS

The Arizona Notice leaves room for Global Cash Access to contest the conditions for denial and prove that they are a new and improved entity, but the sheer weight of the allegations included in the document are staggering and might possibly be insurmountable.

In a release issued by GCA officials about the notice, the language is purposely vague:

"The notice summarizes the basis for the department's intention and alleges that GCA, its founding stockholders and certain of GCA's management undertook actions that demonstrate that GCA is not suitable under the department's standards to act as a provider of gaming services to Native American tribes conducting gaming in Arizona," Global Cash said in the 8-K regulatory filing.

The company also harps on the stipulations that make this move by Arizona gaming regulators a preliminary one and not really a final say, explaining that they will fight for their state certification:

"The notice provides GCA with the right to an informal settlement conference as well as a formal hearing before an administrative law judge in Arizona. GCA intends to seek the holding of the informal settlement conference prior to July 15, and the holding of the formal hearing, if necessary, as soon as possible thereafter. In the meantime, absent further action by the department that prohibits GCA from doing so, GCA intends to continue its operations in Arizona in the ordinary course of business," Global Cash said.

"GCA takes the notice and the allegations made therein very seriously. GCA believes that it has taken appropriate actions during the prior 20 months that will permit GCA to fully demonstrate that it should be considered suitable for certification by the department. Many of these actions involve the termination of GCA's relationships with certain affiliated parties and have been previously publicly communicated and provide the basis for GCA's belief that GCA is in fact suitable to act as a provider of gaming services to Native American tribes conducting gaming in Arizona," the release further explains.

The Arizona report goes beyond the alleged actions involved in the perpetration of the skimming operation. Regulators also allege a conscious plan to deceive gaming regulators in Michigan in 2004 and in Arizona in 2005 by not disclosing all the required information about the mis-coding issues:

"GCA deprived a regulatory agency of material information needed to make an informed suitability determination," the Arizona report said of the Global Cash case in Michigan. Company founders Karim Maskatiya and Robert Cucinotta "both attempted to mislead the investigators to hide GCA's interchange fee fraud and their involvement in it," the Arizona report says.

Above all other allegations, charges of Maskatiya and Cuccinotta failing to disclose their questioning in the murder of Maskatiya's wife are most shocking. Here is the text of an Oakland Tribune article printed at the time of the Maskatiya murder:

=====================================

Oakland Tribune March 24, 1982

Police rule out burglary as motive in murder

Fremont- Police said Tues the fatal shooting of Laila Maskatiya was not the result of a burglary in her home because there were no signs of forced entry and nothing was taken.

Detective Dan Fuller said no motive has been established in the slaying, and there is no suspect.

Maskatiya's husband, Karim, told police he arrived home from work at 7:30 Monday evening and found his 29 year old wife in the bedroom in their $350,000 home on Guadalupe Terrace.

She had been shot twice in the head with a hand gun and several empty cartridges were found near the body. Police said the couple's 4 year old son slept through the shooting.

============================================

The Arizona documents say, "Police detectives questioned both Maskatiya and Cucinotta regarding the murder. Both were read their Miranda rights. The detectives felt that Maskatiya and Cucinotta gave inconsistent statements and did not cooperate with the investigation. They also felt that Maskatiya knew, but would not reveal, the identity of the murderer," the Arizona report said.

Yet, both men answered 'no' when asked by Arizona regulators if they had ever been questioned by a law enforcement agency, the report went on to explain.

The Arizona Gaming Department said Maskatiya and Cucinotta were on the GCA board of directors until June 2008, but resigned six weeks after being interviewed by the department. It says they continue to hold more than 25 percent of the company's stock. However, an SEC filing dated July 7, 2009 indicates Cucinotta holds no voting rights and seemingly has no control or major stock value anymore in regard to GCA.

In February, 2009 documents filed with the SEC, Maskatiya and Cucinotta both still retained more than 9 million shares in GCA. Yet, while it appears that Cucinotta may be on his way to being completely muscled out of the company he co-founded, Maskatiya unloaded 2,768,800 of his own company shares at a rate of $6.25 each as recently as a month ago (6/10/09).

In a section of the report called "ongoing matters of concern," the Arizona regulators say:

==> Global Cash Access has never acknowledged or taken any action in regard to its wrongdoing.

==> Global Cash Access has continued contacts with people and companies involved in the Visa fee fraud.

==> The former Global Cash Access principals failed to disclose information about the murder investigation to regulators in Arizona and Mississippi.

==> Cucinotta and Maskatiya failed to disclose other information including their ownership of various companies.

==> Global Cash continues to have problems with payments of fees to casinos and with payments to casino patrons.

==> Global Cash principals had contact with gaming regulators that created an appearance of impropriety.

"GCA has committed a theft, fraud and concealment," the Arizona report alleges. "It has conspired in these actions with (related company) USA Payment Systems. It has demonstrated a willful disregard for compliance with gaming regulatory authorities and has misrepresented and concealed material facts, documents and information in its dealings with the department and others."

"Casino vendors providing electronic fund access must be reputable, honest, diligent and effective. GCA has proven itself to be none of these," the report said. "Allowing GCA's continued participation in gaming in Arizona damages the public's trust in Arizona casinos and casino regulators. Casinos cannot properly operate where patrons continually suspect or assume they are being cheated, and regulators are assumed to be either involved or incompetent."

In other words: Who wants to play a game everyone knows is rigged? It seems fitting that Arizona has the designation AZ, because for Global Cash Access Arizona could be the first on an A to Z list of officials and operations who may soon 'Just Say No' to the type of underhanded tactics GCA is generating a reputation for.

It is a new era in America as the recession revealed some of the worst fraudulent transgressions against honest taxpayers and shareholders. Bernie Madoff might be the biggest of all the frauds, but he was certainly not the only massive con man involved in the economic collapse. He was not the only one making money off misrepresenting his business practices. GCA appears to be a company that grew fat off the same spirit of fraudulent activity, never worrying about getting nailed with the petty fine. They jobbed the system and got away with it, but they still expect to hold the public's trust. Arizona may only represent a small percentage of GCA's worldwide business operations, but this kind of taint could make lots of other dominoes fall.

Taking a closer look at current operations at GCA, it is clear that even if the company ousts Maskatiya and Cuccinotta from direct public roles with the company, GCA will still be intimate with the other companies these accused frauds also run and/or retain principal positions in. Consider the full text of another SEC filing from earlier this year, indicating some possible behind-the-scenes infighting going on at the company:

Item 1.02. Termination of a Material Definitive Agreement.

On February 13, 2009, Global Cash Access Holdings, Inc. (the “Company”) received written notice from USA Payments of the termination of the Amended and Restated Agreement for Electronic Payment Processing, dated as of March 10, 2004, by and among Global Cash Access, Inc., USA Payments and USA Payment Systems (the “Agreement”). The Company disputes the alleged breaches of the Agreement upon which the notice of termination was based, as well as the right of USA Payments to terminate the Agreement.

To the Company’s knowledge, Karim Maskatiya and Robert Cucinotta directly or indirectly hold significant ownership interests in, and serve on the boards of directors of, USA Payment Systems and USA Payments. Messrs. Maskatiya and Cucinotta are former members of the board of directors of the Company, and to the Company’s knowledge, they collectively hold approximately 23.6% of the Company’s outstanding common stock. At the time that the Company entered into the Agreement, Messrs. Maskatiya and Cucinotta were members of the Company’s board of directors and controlled a majority of the outstanding equity interests in the Company.

Pursuant to the Agreement, USA Payments and USA Payment Systems performed for the Company electronic payment processing services relating to credit card cash advances, point-of-sale debit card transactions and ATM withdrawal transactions, including transmitting authorization requests to the relevant networks or gateways, forwarding transaction approvals or denials to the Company, and facilitating the settlement of all funds in connection with approved and consummated transactions. Pursuant to the Agreement, USA Payments and/or USA Payment Systems were subject to a service level guarantee; were required to enter into agreements with card associations, networks, gateways and financial institution sponsors necessary to provide services to the Company; were entitled to fixed monthly fees plus volume-based transaction fees; and, subject to limited exceptions, were prohibited from providing similar services to third parties in the gaming industry.

This Agreement was to expire according to its terms on March 10, 2014. In its notice of termination, USA Payments alleged that the Company breached the Agreement due to two technology issues involving one of the Company’s other business partners. The Company has worked diligently and closely with the affected business partner to ensure that all necessary technology remediation has been performed. USA Payment Systems and USA Payments have acknowledged their obligation pursuant to the Agreement to continue to provide services to the Company during a 180-day transition period. The Company disputes the right of USA Payments to terminate the Agreement. If this dispute is resolved with the mutual agreement of the Company and USA Payments, the Company may continue to receive services under the Agreement or a successor agreement with USA Payments or USA Payment Systems. If the Company and USA are unable to resolve the dispute, the Company will transition to another provider of electronic payment processing services in the 180-day transition period. To prepare for the potential need to transition to a new provider, the Company is already engaged in discussions with an alternate provider.

So it seems USA Payment Systems sought to separate from GCA rather than the other way around. Perhaps this was a tit for tat response to the company trying to shut out Cucinotta. At any RATE (pun intended), whatever decision Arizona ultimately makes regarding GCA could completely transform the merchant services industry. If the appropriate attention is paid to this disaster, the needed regulation and oversight to prevent a repeat of this behavior could save billions of dollars in bogus fees in the long run.

To learn more about the GCA, Fertitta, Zuffa, & Xyience scandal you can check out XYIENCESUCKS.COM or my other stories here.

Global Economic Crisis Devestating Worldwide Gaming Interests

by: Rich Bergeron

Over the past few months the economic crisis gripping our nation hit with full fury and is promising to only get worse. From corporate giants to Casino barons, everyone is feeling the pinch. The Fight Industry and Sports in general will no doubt be a hard hit sector of the economy as we lapse into 2009, even if Barack Obama turns out to be a miracle worker.

Lately, some of the main culprits and corporate crooks behind the economic collapse have reared their ugly heads. As these individuals and business enterprises emerge as the forces behind the culture of corruption, they always seem to have the same strategy. They grease the wheels, they make powerful friends, and they step on the toes of everyone they can to make themselves a buck. The recent revelation that Bernie Madoff bilked tens of billions from investors and financial institutions around the world should be no surprise in this vulture capitalist economy. Guys like Madoff should have been busted years ago but managed to breeze through previous investigations on cruise control.

And should we really be so shocked that a governor would resort to selling a senate seat? We live in a nation built by pork barrel projects and fat cat capitalists, and influence peddling is the number one sport of those who want to shape their position in the scheme of things.

The worst aspects of the Bush Administration nation have ultimately resulted in the bailouts of gargantuan investment firms, banks, and foreclosure-strapped mortgage brokers. Business as usual in Washington quickly tried to show it was fixing the problem but only scratched the surface of the massive fraud that made it all happen.

In the throes of this economic landslide, it is important to look at some of the characters the major news networks don't normally focus on but perhaps should. The collapse of global gambling and casino interests ranks among the most intriguing untold stories of the financial crisis we face right now. Hundreds of billions change hands in casino deals, and it's not just Mobsters behind the glitz and glamor anymore. Gaming interests and income can be so substantial that they have the power and juice to fuel massive money laundering efforts, counterfeiting, and even terrorism.

Gambling in Macau has a rich history, but it only recently became wide open to outside investors, and those wanting to branch out beyond Vegas came with their billions to develop the next big boom town:

The world's financial picture has changed drastically from the time when the above reports were produced: May of 2007. Macau's casinos are now dealing with a Chinese government crackdown on visitation to the island.The stress being felt by international markets, the high debt to capital ratios of many of the world's casinos conglomerates, and the smash and grab corruption schemes all helped ravage Macau in addition to the Chinese Government's moves. The future does not look bright for the Eastern gaming enclave according to this Washington Post piece.



Still, Macau is an imposing and formidable force in the worldwide casino picture. There are more than just a handful of casinos there, and not just one or two are owned by American casino corporations. Vegas East will no doubt continue to see declining numbers as the worldwide gaming sector suffers, and the original article City of Sin may be in for an even more profound fall from grace.

Las Vegas, Nevada is one of the hardest hit cities in the nation due to the ongoing housing crisis. While banks and big businesses get the bailout money first, there's still a long delay getting relief to cash-strapped homeowners who can no longer afford their overblown mortgages. Las Vegas, which had experienced an overwhelming influx of new citizens in the last two decades, is now reeling as real estate prices plummet. So many property-owners there are either upside-down and stagnated by debt or on their way out, abandoning the dusty desert for other locales where the crisis isn't so pronounced.

Yet, for the casino owners there is no easy way to pack up shop and leave town. Even the biggest of the bunch are facing a dismal 2009 outlook. There are different strategies being employed to weather the storm. Some casinos will have to sell off assets. This article outlines the details behind the recent sale of the Treasure Island Hotel and Casino.

Other casinos just might face an even worse fate. As we have been reporting here at Fight News Unlimited in recent weeks, Station Casinos may be the first big Vegas enterprise to declare bankruptcy in these troubled times. We have also reported that gaming interests in Australia were feeling the pinch already. Just today I stumbled across this article detailing Station Casinos' ties to Australian Billionaire James Packer:

Crown's $414m US investment 'worthless'



Packer's lost nearly a billion dollars in net worth in these lean times for gambling. Like the Fertitta Family in Vegas who partially owns Station Casinos and represents the managing partner of the Casino chain, Packer has friends in the media. The Fertittas are partners on some of their developments with the Greenspun family, which operates much of the local Vegas media scene from newspapers to television stations. Packer cut out the middle man in Australia by having a direct ownership position over much of the country's media industry. Packer's approach seems aimed at acquiring as much control as he can over his country's media landscape.



James Packer's had an incredibly rough year. His international gaming enterprise Crown Limited has been his albatross as the world's financial picture transitions from bad to worse. Packer's only big break of late was when his 25% interest in PBL Media was saved by a last minute rescue package, which was just announced overnight. Packer's luck may not be as good as Station Casinos' in their recently failed attempts to recapitalize. Hover, it seems that Packer's personal fortune is not just tied to Vegas and Australia. Packer also coincidentally has interests in Macau that are also suffering:

Melco Crown Offers Macau Casino Staff Unpaid Leave (Update1)



One of Packer's biggest competitors in Macau is Dorchester, Massachusetts Native Sheldon Adelson, chief executive of Las Vegas Sands. It is certainly a small world, as Dorchester is where I also spent my younger years growing up in Massachusetts. At any rate, Adelson's ventures in Macau are still in motion and bolstered by the grand pomp and circumstance that surrounded the opening of the $2.4 billion Venetian Macau.

Though this recent report has shares in Las Vegas Sands losing 94 percent of their value this year, the company has a solid buy rating according to a Goldman Sachs analyst.


The rating was attributed to recent cost cutting measures including the elimination of hundreds of Vegas jobs.



Even Adelson's home state of Massachusetts is reconsidering the expansion of state gambling interests as a remedy for its fiscal problems. The Boston Globe recently detailed how New England is by no means immune from the global casino collapse.



Perhaps in the long run if the casinos continue to suffer and the housing crisis continues to worsen along with the global economic picture, a perfect world scenario could emerge. The reeling casino hotels could be mandated to provide their rooms as affordable housing to all those put out by the mortgage mess. That would be fitting of course, but don't bet on it.

What's more likely is that there will be some real financial casualties, jobs will be lost, and people will lose their personal fortunes. The corrupt will survive somehow and go right on corrupting. But, unless enough Americans start to realize that the late local news isn't covering all the bases and the 24-hour news networks are dropping the ball on all the stories behind the crisis, there is no end in sight to this "recession" that is looking more and more like it could become a depression each day.

As 2008 comes to a close in Las Vegas, it may just be up to Robbie Knievel to resurrect the hope and the spirit of the community when he does a death-defying jump of the brand new MGM Mirage Volcano as part of a New Year's Eve special planned for The City of Sin. If not, maybe the planned $50 million Mob Museum will save the day. Either way, it's going to be a while before Las Vegas really gets back on its feet again.

More Related Links:

Casino stocks plunge to new lows in late October



Primm hotel rates for locals: free



Casinos again loosen up on rooms, meals



Another institutional investor ups LV Sands investment



Treasure Island deal seen as early holiday present for industry




Nevadans tell congressional panel bailout has not filtered down

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."

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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