The above email chain dates back to the beginning of the $25 million Xyience lawsuit filed against me in Las Vegas District Court back in 2007 by Attorney Jamie Cogburn. These exchanges came from an email recently sent to me by the brother of Xyience Founder Russell Pike, who is currently incarcerated due to a conviction for tax evasion. I will be publishing a large cache of other insider emails in the near future.
At the time these emails originated, Pike was working feverishly to get more investors to come in to keep Xyience viable. My reports were making those efforts nearly impossible. The lawsuit described investors willing to enter into financing with Xyience, but only if my articles were removed from the Internet. As soon as the case resulted in a preliminary injunction against me, Russell Pike sent a representative out to deliver copies of the injunction order to local investors. This rep wrote the following statement in an affidavit I filed in my counterclaim:
The Fertittas always denied through their attorneys that they had anything to do with the suit against me, but it's obvious from this testimony that they forced Xyience's hand. Dana White didn't end up investing anything, but before Fertitta Enterprises went through with their loan package they did get White's approval.
This email chain will be the main exhibit in a new case against Attorney Cogburn in Nevada. There will be much more to come on this front in the days and weeks ahead. Stay Tuned.
It's been a long time, but even a six-year legal battle did not deter me from continuing to report the truth about the history and current operations of Xyience. Today I can look back knowing I finally managed to get the claims against me completely dismissed. Four different judges oversaw the case over those six years, and multiple law firms and attorneys for the opposition.
The above order also allows for a summary judgment request on my counterclaim against Xyience to go unopposed, so it marks the first major judgment on my behalf in any legal action I've ever been involved in. It's all the more impressive since the opposing lawyer admitted the now-dissolved $25 million case against me had no merits.
Though this order officially releases me from any liability and confirms my efforts to expose the truth, it does not end the litigation entirely. I still have an extensive sanctions motion in play with multiple affidavits supporting that motion. My own affidavit and evidence files explain the whole situation, but after a September 19th, 2013 hearing I can honestly say I don't think that presiding Judge Lloyd King bothered to read any of that content.
Judge King certainly did not even consider the fact that the judge prior to him (Judge Mike Nakagawa) allowed me to amend the motion for the record. Judge Nakagawa would not allow me to amend a motion which had already been decided, which was the contention of the Fertitta lawyers going into this hearing.
The hearing resulted in an indefensible decision I will appeal to the 9th Circuit. That hastily-made ruling proved Judge King is biased against me to the point of believing everything the opposing lawyers contend, even if it happens to be a lie. Judge King actually made the effort to locate and read out loud an order on the motion before him, and that moment will be a major basis for my appeal. If it was a "senior moment" for the aging federal judge, his capacity to continue in such an important judicial role should be seriously questioned at this stage of his career.
Now, I'm no law school graduate, but the last time I checked a summary judgment denial is not in the same legal ballpark as a complete claim dismissal. How could any acting federal judge get as far as Judge King has without knowing the difference between those two distinctions?
Judge King read the decision on a 2008 summary judgment request in my case like it was a smoking gun for the Fertitta lawyers during the September 19th hearing. The motion he referred to is actually the most viewed document I currently have on Docstoc.com and can be accessed HERE. The Fertitta lawyers also tried to represent at the September 19th hearing that the same motion was dismissed on the merits, but the actual dismissal order concludes the dismissal is mandated by technicality, because I did not properly serve the motion on all creditors involved in the bankruptcy. I would have had to file my own bankruptcy petition in order to pay the postage alone on such notifications. I don't have the kind of budget most lawyers and law firms typically bring to the legal process. Everything I do is fueled by extremely minimal financial resources.
So, Judge King read this order denying summary judgment on my sanctions claims. He read it right out loud in court for the record right after trying to explain that it meant the whole issue had already been litigated and dealt with. Why even have a hearing in the first place if his conclusions were true? If he reviewed the record and came to the decision that the Fertitta lawyers were correct in their false representation of the record, there would not even be any basis for holding the hearing where he made this huge mistake. I immediately corrected him at the hearing, but that only made things worse for me. He continued to betray an overwhelming bias against me along with a willingness to praise and commend the opposing lawyers. He even rejected a legally feasible and logically sound request for a default judgment against all parties who did not answer the claims and did not have any representation at the hearing.
I gave Judge King multiple chances to hold a more comprehensive hearing when I could physically attend, asking for the hearing on September 19th to be considered a scheduling conference. Instead, he allowed the telephonic appearance to be my final say in the matter, and I had a great deal of issues with the court hanging up on me and not being able to hear me clearly. Judge King couldn't even be bothered to come up with any official legal background for his denial of my claims. He left that up to the main opposing attorney and his law firm.
Gordon Silver is a high-class Las Vegas law firm, and the main guy they put on this case is a managing partner named Greg Garman. This shark is a well-trained and experienced lawyer with a very esteemed position at his firm and in the legal community. So, how could he really confuse the record himself to the point that he put such incredible misrepresentations in print and then repeated them in open court after I corrected him in my reply brief? The most logical answer is that he was never confused at all and just purposely painted the record in a false light to make his case look like it could be easily dispatched on a technicality instead of actually being examined on the merits. Lawyers seem to love winning legal battles on technicalities. It saves them the trouble of actually defending against or pressing claims based on actual facts and evidence.
This time, the basis for giving Garman the win on a technicality was completely fabricated. His argument that a technicality existed at all made Judge King look like a fish out of water when he tried to take the bait.
Once again, the September 19th hearing proved to me that justice is an evil bitch. The judicial system in this country is hopelessly bogged down by patronage, abuse, waste, and incompetence. People like me were not intended to be able to even make it this far into the legal process. I jumped through every hoop my opposition put in front of me, and by some miracle I remain standing more than six years into this extensive litigation that went from an obscure district court claim to a major bankruptcy adversary proceeding. I simply could not make it to this point if I did not have the truth on my side.
Over time I learned to realize that pointing out serious flaws in the opposition's arguments and legal citations did not mean those points would even register with a judge who came into the process as a biased party. I came to appreciate how twisted the system is when it comes to pro-se (self-represented) parties. I knew at some point only an appeal examined by competent and unbiased federal judges would set the record straight. At this point, Mr. Garman hasn't even filed any order to appeal, but I'm eagerly awaiting the moment when I can actually see what the court's official decision will use for a basis in law.
Perhaps the most interesting aspect of the hearing came in the response to my opening comments (which went largely unheard due to a bad connection). Mr. Garman began his statement by confessing that the Fertitta brothers are already suffering due to my work. He did not get into specifics, but he claimed I was responsible for their recent issues with the Nevada Gaming Control Board. If their trouble with the gaming authorities is my doing, I wonder what else about the Fertittas gaming officials might need to know. I haven't even really investigated Station Casinos as much as I have researched the Fertitta involvement in Xyience.
Garman's remarks proved to me what I've always known in the back of my mind: courts are far too slow at delivering justice. Real justice comes from the court of public opinion. Exposure of inherent evil is often fatal to its ability to fester and grow out of control. Station Casinos has a history of leaving victims behind as the Fertitta brothers continue to hoard their billions in personal assets. As a gaming licensee in Nevada, these casino barons ought to have a much cleaner background than they currently do. The fact that the Fertittas brought Ultimate Poker into legal status as the first official online poker outfit in the state of Nevada is disturbing when you look at what Fertitta Enterprises is really capable of when it comes to fraud. Their connections to the illegal Full Tilt Poker operation through their ownership of Strikeforce is also egregious considering they should have known the illegal status of online poker when they made decisions to retain their sponsorship agreement with the company when it came under Zuffa control. Even worse, US prosecutors labeled Full Tilt Poker a Ponzi Scheme since the outfit's owners were allegedly pocketing player funds.
It makes sense that even a federal judge would be afraid to rule against people with this kind of power and access. They are virtually untouchable. Still, Judge King also refused to sanction me despite saying in open court that he actually felt I was the one who deserved sanctions. So, basically he admits he is not willing to even rule in favor of what he feels is actually justified.
The appeal process should be intriguing, but I also plan to report Judge King to the state bar for displaying a complete lack of ability to do even minimal research into the claims he decided so hastily. The most important development at this stage is regarding my long break from working on this site. The litigation process leading up to my departure from Las Vegas was draining and stressful, and I needed a break from all of it. The hearing designation and dismissal of all claims against me opened new doors and brought me back to the heart of the story and the need to expose the real truth here.
With no legal obstacles, I can now pursue a non-fiction book project on the case. I can also begin to plan out a documentary. At the rate I'm going, such projects will have a better potential to benefit burned Xyience shareholders than any legal action I could possibly undertake. I am also compiling an extensive report to deliver to Nevada, California, and Native American gaming authorities, which could do more to bring the Fertittas to justice than any judge in any court in this land. Someone must show these ruthless robber barons that there is a price to pay for screwing over innocent people and destroying their investments needlessly and thoughtlessly.
Although I should be disappointed upon losing the decision on the most important motion in my case thus far, I am actually thrilled. My passion for this story is renewed. My prospects for a successful appeal are promising. Judge King's bias was more pronounced than ever at this latest hearing. Over the next few weeks I will be working to revamp this site to include all the relevant information and documentation detailing the irresponsible and corrupt history behind the Fertitta family facade. Stay Tuned for more frequent updates in the days and weeks to come.
EDITOR'S NOTE:
All stories on this site are now free to read with no subscription fee required. I will be spending some time updating broken links on the site in the next few days. This is mostly due to an unfortunate issue with the loss of all customer files hosted on fileden.com. We had a ton of material hosted there that now needs to be relocated to another public server. Some of these files are now hosted HERE. We will make a formal announcement when all bugs are fixed.
(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 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 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:
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:
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:
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:
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???
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:
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:
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.
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.
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.
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.
"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.
Recently A New York City Magazine that shall remain nameless published an article about the Xyience saga I’ve been reporting on since late 2006. The reporter interviewed me for over an hour as part of her research, but her editor cut out every single quote of mine she put into her story.
Whoever decided to make the cuts was also kind enough to leave a nasty quote in the story from one of the opposing attorneys in my case.
Of course I’m used to not being backed up by most media outlets on this huge scandal. Yet, I’m also confident that eventually the media will have no choice but to start following this case. I know that with the right effort and due diligence I’ll be able to carry my case forward to a shocking resolution. David will beat Goliath in this one, and the truth really will shine through.
Judge Mike Nakagawa held a show cause hearing in bankruptcy court on September 10th related to the recording of my May 14th hearings. He probably didn’t expect the whole thing to turn into an indictment of his own actions in the case, but that’s exactly what happened.
Judge Nakagawa continued the scheduling conference in my case on five different occasions prior to the show cause hearing, and he also promised to deliver decisions on at least three different dates without following through, and I decided enough was enough. Xyience is creeping closer and closer to ultimate approval of their reorganization plan. As it is that plan only benefits the players who orchestrated the fraudulent bankruptcy. I took control of the September 10th hearing to really send the message that I’m not playing games anymore. I wanted the judge to know that he was taking things much too lightly and not paying attention to the absolute need for a full and fair investigation of the whole process.
I asked the judge to recuse himself from the case in a prior motion, and he tried to pigeonhole the request into the category of a recusal based on a previous association.
“Have you ever met me, Mr. Bergeron,” he asked.
I told him no but explained that was not the reason I asked him to recuse himself. I laid into him at that moment, outlining all the various issues with his poor management of the entire case. I called him out for all his broken promises and his allegiance to the bankruptcy attorneys. It was the most amazing feeling of my life to be so captured by the emotion of it all and to be fighting for what I believed in with all my heart. Toward the end of the hearing, I could hear the judge’s voice quiver as if my assault on his character and integrity had really rattled him. He seemed pretty eager to get to the next case on the docket.
I have since requested that the case be transferred to U.S. District Court in Boston, Massachusetts. That will be the best venue for this type of case since there’s a First Amendment issue involved and since continuing the case in Nevada leaves my opponents with all the advantage. Bringing the matter to my home state allows me to at least appear in person, and the change in venue will also ensure that the Fertitta influence factor is eliminated. These billionaires have a lot of power in the Vegas area, and it’s just plain stupid to think they haven’t tried to manipulate the proceedings somehow.
The taxpayers of our great nation are going to have to foot the bill for about $700 billion of bad banking and mortgage and securities schemes in the coming months. Who knows if it’s the bottom of the barrel or if we might actually be in for more rocky roads ahead. The Xyience debacle should teach us that greedy billionaires can buy whatever they want, even judicial influence. This is a living example of how our nation is corrupted from within.
Sometimes the little things in life are the most telling. This may seem like a little, insignificant issue to many MMA fans, but you have to think of the ripple effects. How many people have suffered as a result of the 380 or so shareholders who lost a boatload of money on this bad deal? From another perspective, the Fertittas’ role in this fraud is even more disturbing. How many people do these guys do business deals with each year? How much money do these folks control through either their personal business decisions or choices they make on major boards they’re part of? If they’re committing fraud even at the lowest level and actually bankrupting a company to make a quick buck, there’s something fishy going on behind the scenes, and you don’t have to call Colombo to figure it out. This cancer will spread to their UFC operation in due time, and the league will choke on its own ego.
And another thing… where is the SEC on all this stuff? If they can’t wrap up a simple fraudulent caper like this—even when I gave them all the evidence as it was happening—how do we expect our federal government to really clean up the bigger and badder shit going down?
Markets don’t collapse because the big boys just stop pulling their weight all of a sudden. It’s because all the little screw ups combine to make one grand one. Every level of business can contribute to a crash, and no financial giant or mom and pop store is immune. Yet, there is something intrinsically wrong with the idea that billionaires like the Fertittas are pulling scams like the Xyience bankruptcy and getting off without so much as a slap on the wrist. Where is the accountability? Where are the watchdogs and advocates for a closer look at this thing? Where is the big investigation that should ensue? What is wrong with this picture?
The problem is, the fraud always starts small like the crazy dude in some major European bank who lost billions of the company’s money on bad futures trades. Nobody ever stepped in at the right time to stop him, and he never stepped in to stop himself. The Fertitta family financial boom started off with one casino. Now they own an empire of casinos, real estate, and other luxurious property. The old time roots of organized crime run deep in the family Fertitta, and when you have that much wealth, influence, and organizational power you can pretty much do what you want these days. The mantle of “clean money” fits the Fertittas well in the circles of public knowledge, but most people who follow the UFC aren’t actually up on the family’s brutal history. So you have to ask yourself: do Family ties ever become severed just because one or two of the family members starts making more money and gaining more territory? HELL NO! The fraud gets more sophisticated, and the operation moves underground and gets entrenched. Everything has to be more subtle. Instead of the physical removal of actual cash from the casino count room, now the “corrections” to the books are being done through computer programs and failsafe loopholes in the equipment that leave most people down on their luck at the end of the night.
The partnership between Global Cash Access officials and Fertitta Enterprises is very troubling. The individuals who left Global Cash Access to head up Xyience’s bankruptcy dive were all connected to an alleged failure to report and pay out commissions for the venues where their cash machines were installed. The machines allowed casino patrons to make paperless transactions for gaming cards and other casino offerings. Fertitta Enterprises operates multiple casinos in which Global Cash Access machinery is placed. Why would the Fertitta Brothers do business with a bunch of the very same fraudsters who just potentially screwed their company out of millions? Did Kirk Sanford take over as Xyience CEO to repay his debt to Fertitta Enterprises? Was he so good at his GCA bailout that the Fertittas knew he would be a natural at bankrupting Xyience?
I feel my case is on the verge of a major breakthrough, because the time has come. This kind of thing just can’t go unnoticed anymore if we are to survive as a healthy nation. This and every penny ante scam like it should be sniffed out and stopped before it ever gets this bad. And we can’t handcuff the press for trying to warn people about what dangers lie ahead and what’s really going on behind the scenes. We can’t keep fighting for freedom in foreign lands and ignoring the lack of it in some places here. If we keep acting like freedom is something that’s passed down from the richer to the poorer, we’ll never make real progress.
Manchester Consolidated Corporation, an investment group consisting of just 4 employees, managed to gain approval to buy Xyience on April Fools Day, but the fat lady is not singing just yet. Emerging details regarding the principals, the sale negotiations, pertinent new and past litigation involving the players, and a host of other major issues will soon be revealed.
Many of the victims of this unfortunate situation might be shaking their heads and taking the woe is me approach to this sale, but it's important to remember that the sale of the company does not eliminate all culpability. Pandora's Box has been opened, and it's still producing incredible new information on a daily basis that may eventually lead to RICO Act proceedings against some of the pertinent players.
Over the next few days I will provide new updates. There is a tremendous amount of new facts emerging, and I've acquired multiple court documents I'll be posting here soon, too. Though Xyience and those who have maliciously bankrupted the company to enrich themselves may feel victorious now, they will be singing a different tune when all is said and done. Some of them may even be singing it behind bars.
From Left to right: Omer Sattar, Kirk Sanford, Adam Frank, Frank Fertitta III, Lorenzo Fertitta
BY: Rich Bergeron
Even after a sale of the company’s assets free and clear of liens, new evidence is emerging tying together all the parties that made the ongoing bankruptcy of Xyience possible in a fraudulent scheme reeking of potential RICO Act violations. Revelations released in two separate derivative complaints brought against Global Cash Access (GCA) Holdings illustrate what the company’s own internal investigation failed to report about shady activity that led to a ¾ depreciation of the company’s overall stock value in November of last year.
The plunge in company stock closely followed the departure of GCA employees Kirk Sanford and Kathryn Lever to pursue opportunities made available at Xyience under Fertitta Enterprises funding. Karim Maskatiya, who is the founder of GCA, also reportedly invested about $5 million in Xyience. Fertitta Enterprises, GCA, and Xyience are not only related by financial ties, they also share a similar pattern and history of fraudulent behavior. However, a closer look at that history related to GCA’s actions puts their transgressions in a whole new category since there is no record that Xyience or Fertitta Enterprises have yet been sued for previous RICO Act violations.
Scillacci’s whistle blowing betrayed a nonchalance of GCA officials regarding proper accounting of cash transactions at the casino booth. Her superiors attempted to blame Scillacci herself for the auditing oversight despite her claims that she had no responsibility to audit the booth in question. Rather than being rewarded for calling attention to the problem, Scillacci was suspended by the company until an internal investigation exonerated her according to her complaint. The suit further explains that Scillacci’s previous job performance was so extraordinary that her superior recommended her for the highest possible raise that resulted in two promotions in the period of one year. She subsequently became a senior customer service representative at the casino around the time of October of 2003.
The complaint starts by outlining some of GCA’s qualities and responsibilities as a company.
Scillacci goes on to detail exactly what went wrong with the company’s accounting and what happened to her when she exposed the situation of her being blamed improperly (click on thumbnail to see larger pic):
The case closed in September of 2007 without a public disclosure of how the final settlement played out.
There is also a lengthy criminal case related to Global Cash Access regarding the alleged embezzlement and money laundering of Defendant Mark Steven Miller. By a sheer ironic twist, the same day of Xyience’s public “auction” date (April Fools Day), Miller agreed to forfeit some of his family’s property and pay $30,000 in penalties with a re-sentencing hearing scheduled for May 5, 2008. The case originated on February 1, 2002.
GCA’s extensive litigation history culminates with the recent filing of two nearly identical derivative shareholder complaints against a contingent of GCA insiders including Sanford and Maskatiya as well as a class action suit filed this past Friday. Again the problem details issues with accounting and auditing. When Kirk Sanford left GCA along with Kathryn Lever to join Xyience last November, the stock took a mid-November nosedive it never recovered from. Though there was another internal investigation and earnings reports were delayed as a result, none of the findings of that investigation resulted in any culpability or accountability on the part of any company employee.
The two derivative lawsuits (#1, #2) detail accounts of possible insider trading, fraudulent activity regarding under-reporting of damaging news, failure to provide millions of dollars in deserved commissions to clients, and breach of fiduciary duty charges.
Compared to the similar litigation history of Fertitta Enterprises and their representatives, particularly with respect to the Station Casinos merger, the groundwork is there for a Civil RICO complaint against all involved parties in the Xyience bankruptcy. The GCA group and Fertitta Enterprises officials have all demonstrated an intricate pattern of fraudulent activity that they have for the most part been able to get away with thus far. Though civil penalties and legal fees might have slightly injured both groups of related individuals and their businesses in the past, criminal prosecution has never been pursued.
Our initial “Enron of MMA” report lays out exactly how the GCA contingent and Xyience cooperated and colluded with Fertitta Enterprises to bankrupt Xyience after setting up a huge UFC sponsorship deal. Since that report that predicted the bankruptcy long before it happened the nephew of GCA’s Founder Karim Maskatiya has taken the reigns of Xyience and made several declarations in bankruptcy court. Omer Sattar is now pretty much the only remaining GCA face representing the Xyience bankruptcy in the public eye. Kirk Sanford has since resigned from Xyience along with fellow Co-CEO Adam Frank. Maskatiya and Kathryn Lever have not offered any published comments on the subject.
Though Sanford and Frank were both said to be working for free in the Bankruptcy documents detailing their resignation, records show they were both actually paid hundreds of thousands of dollars as a direct result of the Fertitta funding of Xyience.
Frank, who was one of the longest standing Xyience board members when he resigned, signed a declaration that is the cornerstone of Xyience’s $25 million defamation case against me. A hearing to strike that affidavit as perjured testimony based on a contradictory recording of Frank I made last year (see below player) has been delayed multiple times by Xyience attorneys. Our Xyience page also includes copies of both the Frank affidavit and the recording of a brief, but incriminating conversation I had with Frank and Sanford prior to meeting both men during a UFC 78 junket paid for by Xyience:
Former Xyience investors claimed recently that Frank and Sanford resigned from Xyience in order to participate in their own separate bid for the company. Some sources pointed to both former Co-CEOs possibly becoming involved with Manchester Consolidated Corporation, which is the parent firm of “NEWCO,” the entity which will apparently take ownership of Xyience due to a recent approval of the sale of the company free and clear of liens.
Details of the sale process are still emerging, mostly through depositions regarding an attempt to delay the sale. Objections to the sale levied by legal representatives of the Bankruptcy case’s committee of unsecured creditors point to a possible conflict of interest in the deal. Manchester Consolidated is the only company known to have met with Xyience officials regarding a sale prior to the bankruptcy proceedings. Officers of Manchester which make up almost half of the entire company’s employees are also directly connected to Cott through their former high level employment there. Cott is the bottling plant that manufactured the stockpile of Xenergy purportedly worth $8 million that is at the heart of the bankruptcy proceedings.
Manchester representatives had at least three discussions with Xyience representatives, namely Frank and Sanford, prior to making their bid to buy the brand. Depositions in the bankruptcy also revealed that they met with Fertitta Enterprises GM Bill Bullard before the bankruptcy, too. A deposition of Sierra Consulting Group’s Ted Burr outlines other provisions of the company’s attempts to market the sale to other potential buyers. Though it seems there was a significant campaign to put the word out on the sale, Burr’s deposition does seem to indicate that more time might have been helpful in securing a better, less compromised, and more beneficial sale of the brand.
The recent revelations involving all the parties responsible for the bankruptcy betray the great potential for Civil RICO claims to be brought against the co-conspirators in defrauding and bankrupting Xyience to enrich themselves. The smoking gun of such a case would be the documents outlining the financing contract regarding Zuffa, LLC’s $350 million senior secured credit facility that three institutions provided the company last summer based on covenants that most likely falsely represented Xyience as a healthy and prosperous sponsorship partner. That financing note has taken a huge hit on trading block ever since, suffering from low ratings and declining value, which will eventually result in Zuffa having to pay much higher interest rates on the note than they initially anticipated.
On a side note, the sale of the company resulted in the local Las Vegas police being called to Xyience headquarters not long after the purchase became official. Police described the problem as a domestic disturbance, and no arrests were made. Also, a former investor reported seeing a giant dumpster in the parking lot of the building in recent days. Apparently the container was needed to dispose of a stockpile of expired inventory including old Xenergy product. The investor reported seeing some of the product leaking through the cracks in the dumpster.
As more details emerge in the bankruptcy case, and as my own case moves closer to hearings at the end of this month, I will keep putting together reports that outline the facts and back them up with documentation. The next blog on the subject will focus specifically on the bankruptcy case and what the approval of the company’s sale really means for the future of the brand.
