Showing posts with label The enron of MMA. Show all posts
Showing posts with label The enron of MMA. Show all posts

Sunday, July 11, 2010

Xyience, Zuffa, Fertitta Enterprises, Zyen FULL DISCLOSURE Report

XYIENCE WOES CONTINUE: A “FERTITTAGATE” FULL DISCLOSURE REPORT

By: Rich Bergeron

It’s a story of a Forbes 500 family sunk deep into casino interests, the Ultimate Fighting Championship, and their parent company Zuffa, LLC. And that’s just the half of it. These billionaires have business interests and connections with all kinds of bustling financial institutions.

They wouldn’t engage in corporate bigwig bullshit with that kind of money on the line, not personally. They could have some friends do it for them, though. They could bring in criminal masterminds in tailored suits who were already experienced in manipulating the stock market. Those guys could tweak the numbers and set the stage for bankruptcy before bailing out the back door. That way, one roll of the dice could make them all fat and happy.

It’s a disgraceful and despicable mode of business that takes a company and puts it under the kind of assault Xyience has since suffered. Though the ones left holding the bag may ultimately bear the brunt of the most pointed criticism, this situation was created by a whole host of other interconnected players. Each and every one of them saw something they could steal from Xyience, and they capitalized on their opportunities without hesitation. They didn’t imagine how the stockholders would feel, how the public would ultimately judge their devious actions, or how they would later account for their insatiable greed. They just did it because they thought they could get away with it and because they knew it would make them a ton of money.

Left holding that final bag but not completely “owning it” Fertitta Enterprises and a few friends formed ZYEN, Inc. and a whole lot of UFC and Xyience business went down right after that. Company sales suffered, no further capital came in, and the usual suspects dismantled the whole operation piece by piece to promote huge profits for themselves through the process of setting the company up for a public April Fools Day auction.

There were Xyience layoffs during the holidays, stockholders were wiped out and it all became extremely ugly almost overnight. All the while Fertitta Enterprises and the new Xyience board of directors made a killing.

I had the great pleasure of attending UFC 78 on Xyience’s dime. I saw what I thought were better fights than the media gave them credit for, but more importantly I sat down with the CEOs beforehand. Spouting “Scorched Earth” and woe-is-me-no-hope attitudes, they had already planted the bankruptcy seed. A scant two months and a few weeks after Fertitta Enterprises invests in Xyience it’s going bankrupt all of a sudden? That’s no coincidence.

Why would anyone pump money into a company and then kill it? One reason would be the potential for contract defaults. Their goal is to wipe it all out and start free and clear. They want to be on the other end collecting the check when it’s over, passing the problem child to the highest bidder and getting everything they put in right back. If they can manage a tidy profit on top of that, the charade is a success in their eyes, no matter how many people they had to hurt in the process.

The Fertittas have billions of dollars at stake as operating partners of Station Casinos, and they know how to make business deals work to their advantage. This was not some sloppy oversight on the part of Fertitta Enterprises GM Bill Bullard and the leadership plants they put in place to be the fall guys. This was an orchestrated collapse meant to line the pockets of the principal players and ruin the lives of the rest of the folks who helped put Xyience on the map. Click here for my motion to suspend the bankruptcy and all THE EVIDENCE.

UFC 78 was ironically dubbed “Validation.” That strikes me funny in so many ways since it was the last event in which the UFC used the Xyience logo in the middle of the cage floor. Over the course of the next few months the full extent of the fraud that took place at Xyience would be validated by my own stories and the follow up articles of other independent MMA media outlets.

My Xyience junket to New York City marked the first time I met officially with any representatives of Xyience, and they sold me a bill of goods I couldn’t stomach. What made matters worse for me was the trip back to the airport. Sitting in the back seat of a huge SUV coach service car, I watched New York City’s hustle and bustle go past and couldn’t help but think about how many everyday working people would be screwed by the final Xyience accounting if the bankruptcy did go through as planned. I then caught a glimpse of one of the saddest sights I’ve ever witnessed.

A haggard, aging black woman with a few missing teeth and virtually no meat on her bones sat leaning against a lamp post on a random corner with a tiny blanket wrapped around her. Sobbing and carrying on, she appealed to passers by and received nothing but cold stares and glances of disapproval. I was really dismayed by that dose of hard reality. Here were thousands of people milling about, and none of them bothered to do anything to alleviate this woman’s suffering. Too busy making their way to their favorite restaurant, bar, shopping outlet, or entertainment venue, New Yorkers and tourists alike passed this woman by like she was nothing more than a scattered piece of trash.

This is the all too familiar climate created by capitalism at its worst in this country. The wealth is concentrated and conglomerated under the people and profitable businesses that could easily go without it if they had to. Yet, the poor and downtrodden, the “huddled masses” the inscription on the Statue of Liberty calls to our shores, and all of us working class public citizens slaving to maintain our day jobs are left listlessly wandering the world with no real purpose or direction. One day it may be one of us on that street corner, wailing away in despair, rattling a few pennies around in a paper cup.

This is the kind of suffering my "Enron of MMA" story series puts in perspective. Xyience was never the kind of company that would ever be in the same league as the famous energy trader corporation gone bust, but there are parallels. The situation in which Xyience was raped and left for dead by a few of the prime players at the top was almost a mirror image of the Enron scandal on so many levels. The basic structure of the fraud, the motivating factors for it, and the power of sheer greed to corrupt the whole process was nearly identical in both situations.

The only investment the Fertitta-led investment group made in Xyience was supposed to go right back to the Fertittas through the UFC sponsorship. Any leftovers would later be set aside for acquiring the assets and remaining product while trying to account for none of the other debt. Maintaining a marketing agreement alone was crucial to being able to sell all the cans of Xenergy with the UFC logo already printed on them. Yet, the Xyience brass set up a situation in which Xyience’s first major transaction under Fertitta control was a multi-million dollar title sponsorship deal Zuffa would later default on. That deal would leave nothing in the way of any capital behind to actually purchase product to promote any cash flow whatsoever.

It appears that Xenergy product is now key. It seems to any honest observer that paying for that product should have been the first priority. While in a position to call the shots at Zuffa at the same time they were de facto owners of Xyience, Fertitta Enterprises should have been able to hammer out a workable and affordable deal that would have satisfied both parties as far as the product licensing. However, they instead chose to enrich themselves with a much larger sponsorship than Xyience could afford.

That all makes sense until you consider the true facts. First of all, a marketing agreement is a much different animal than a title sponsorship. If all that was needed was a simple marketing agreement, the octagon advertising portion of the deal should have been set aside. The multi-million dollar fiasco of the UFC/Xyience 3-year contract extension was just smoke and mirrors designed to create a domino effect of other potential post-Xyience sponsors paying above and beyond Xyience’s going rate to get their businesses in the middle of the UFC mat. It was a shrewd way of creating a bidding war for the space. The problem with the process is that it was all built off the back of a bogus, over-inflated company.

All the while, even Zuffa’s own fighters, the guys who fought and LITERALLY shed blood all those years over that Xyience logo, got screwed out of their Xyience money. We're talking guys who literally wore the Xyience logo on their sleeves, over their hearts, or on their shorts, and they got shafted. Chuck Liddell had one-million shares of Xyience stock according to 2005 and 2006 audit numbers from A.J. Robbins. Creditors in the Xyience bankruptcy case include: Travis Lutter; Rich Franklin, Inc.; Matt Serra; Heath Herring; Evan Shoman; and Anderson Silva Enterprises, Incorporated. Bankruptcy paperwork lists several other UFC fighters with Xyience financial issues. The company says they "may be in payment default" in regards to: Michael Bisping ($2,000); BJ Penn ($25,000); Forrest Griffin ($43,333.35); Matt Hughes ($49,999.98); Rich Franklin ($21,000); Josh Koscheck ($21,666.68); Chuck Liddell ($165,000); and Mike Swick ($28,083.35). Other MMA personalities sponsored by Xyience have also been hung out to dry. Payments have also been neglected for: Cung Le ($40,664) and Xyience Model Rachelle "Leah" ($50,000).

The list of Xyience's 280-plus creditors filed in the bankruptcy case covers every letter of the alphabet, except two coincidental characters of the English language: X AND Y. They owe everyone from AC NIELSEN to ZYEN, LLC. Xyience even owes their cleaning staff (3D Janitorial). Some big names on the list: State of Nevada DMV; T Mobile USA, Inc.; The Fight Network, Inc.; United Parcel Service; USA TODAY; Professional Bull Riders, Inc.; MTV Networks; Nevada Department of Taxation; OFFICE DEPOT; Pitney Bowes; MDK MOTORSPORTS, LLC; Missouri Department of Revenue; MMA Training Centers, Inc.; L.A. STARS, LLC; Howard Hughes Properties, IV; Fedex Freight, Internal Revenue Service; Dymatize; Cott Corporation; Dell, Inc.; Discovery Communications; Verizon Wireless; Washington State Department of Revenue; World Poker Tour Enterprises, Inc; and Zuffa Marketing, LLC..

Now that the company is in bankruptcy, acquiring the Xenergy product is such a seriously high priority that the licensing fee imposed by Zuffa to facilitate the Xenergy product recovery is being imposed as a matter of paramount importance.


So why is it that now a smart deal gets hammered out post-bankruptcy when the best time to make this happen was the moment Fertitta Enterprises pumped in $12 million in capital? The answer to that question will surely emerge during the discovery process, but it’s easy to see that a conflict of interest created this whole dilemma. When you have a company like Xyience in the hands of the principal owners of a company Xyience sponsors, you’re bound to have situations in which the controlling players want to make sure their original company makes out a whole lot better than the new company. Add to the conundrum the evidence of all this being part of the grand fraud of the Fertittas buying Xyience specifically to bankrupt it, and what you have is all the explanation you need.

As if it weren’t bad enough that they used their own money to sponsor their own company, they initiated the whole scheme to get more sponsors signed and to make it appear as if the covenants of their $350 million financing package for Zuffa were not in breach at all.

Now embroiled in tons of controversy revolving around some of the details of this shady, raw deal, Xyience bankruptcy documents seem to point to clear damage control methods now being employed by Fertitta Enterprises and their new Xyience board of directors. Now, all of a sudden they’ve justified that huge sponsorship deal as a necessity of doing business.


The first bidder to make a play for the company is connected to Cott through two former Cott executives. Cott is the maker of the stockpile of Xenergy stamped with the UFC logo, as mentioned above.

The UFC defaulted on Xyience’s big sponsorship package in December. Officially, Xyience has no sponsorship interest beyond the UFC logo on the Cott cans from the way it appears. The bankruptcy filings are seriously troubling. Since I am now facing bankruptcy attorneys I’ve waded into their world, and it makes me shudder. The paperwork I’ve compiled has the kind of dirt in it that makes you want to take a shower after you read it.

So, let’s go back in time to the big money 3-year-deal Xyience did with the UFC that went out to press with the numbers all laid out for all to see. Didn’t that set the stage for the domino-effect advertising add-ons of Lumber Liquidators, Harley Davidson, and Bud Light? Didn’t Zuffa have only Xyience as a big-time “real-deal” sponsor at the time they applied for their $350 million loan and credit package? Why did everything Zuffa’s financiers touch turn to shit all of a sudden? PRIDE fell apart, Station Casino workers are up in arms over payment disputes, Randy Couture left the UFC, Tito Ortiz is leaving, Free Agent Fedor ain’t touching the octagon with a ten foot pole. Yet, they are still hyping this thing as the big leagues by touting the big names of Bud Light and Harley Davidson, who had their sponsorships negotiated after the Xyience kickback came in. Like a stack of money at the end of a yo-yo string, Fertitta Enterprises put the capital through the back channel to pay their own sponsorship through investing in Xyience. The only creditor they thought they owed anything to was their own organization.

They might tell you that only means they created their own destiny. They did what they had to do. They came in acting like they cared, wanted to set things straight, and wanted to give so that someday all the stockholders could receive a better day down the line. That’s what they were squawking when they put up the $12 million. They then negotiated a sinister, easy to back out of deal, and they kept Xyience propped up only long enough to engage in the sponsorship deal. All the while they had to know Xyience was on its last legs before they put anything into it. They saw a way they could exploit a bankruptcy, and they took advantage of it. They dropped a “Roofie” in Xyience’s drink and had their way with her.

As long as big business can continue to operate in this selfish, twisted manner without being held accountable, everyone suffers. I only hope that my case in the hands of the bankruptcy courts will result in justice for all, not just the ones with the deepest pockets.

MORE RELATED DOCUMENTS:

ZUFFA CONFIDENTIALITY AGREEMENT

ZYEN/XYIENCE/FERTITTA ENTERPRISES WARRANT AGREEMENT

ZYEN/XYIENCE/FERTITTA ENTERPRISES SECURITY AGREEMENT

XYIENCE PRESIDENT OMER SATTAR FIRST DECLARATION (JANUARY)

OMER SATTAR FINAL DECLARATION (FEBRUARY)

AMENDED SHAREHOLDER COMPLAINT NAMING FERTITTA ENTERPRISES AS DEFENDANTS(PART ONE)

AMENDED SHAREHOLDER COMPLAINT NAMING FERTITTA ENTERPRISES AS DEFENDANTS(PART TWO)












XYIENCE RESPONSE TO FNU INVESTIGATIVE REPORTS REACHES NEW LOW

By: Rich Bergeron

It is so often a grim reality in our society that those with money and power can get away with whatever they want. It has become so pervasive that many people tend to just stand by and get run over, never even letting out a peep about how unfair they’re being treated. It’s understandable as much as it’s disturbing, because even the loudest cries tend to fall on deaf ears.

Yet, what so many of us in this day and age don’t realize is there is tremendous power in the truth. It’s not always easy to expose that truth, and people don’t always believe it when they hear it, but in the long run truth always trumps the lies.

Those at the highest positions within Xyience, Inc. had a chance to defend the company from my investigative reporting on countless occasions. Yet, instead of presenting their side of the story and explaining their perspective professionally they chose to spout more lies and mount an obvious, calculated smear campaign against me. Confronted with the stark and unavoidable truth, they spat back at me like a bunch of ignorant children with a non-stop flow of baseless insults. While I always put my name on everything I produced on these pages, they hid behind false names and fabricated profiles to jab at me with nothing but total crap.

It’s easy to see their weak, pathetic attempts to badmouth me in my own comment section. They’ll likely launch more of the same on this story. They have even found folks with the same name to slander. Yet, even in their feeble attempts to attack me they reveal a complete and utter lack of evidence. They actually make themselves look more guilty because they are unable to find a shred of real, documented evidence with which to question my character. They stupidly suppose that because I have worked as a photographer and house painter I must be a dishonest person. They point to my personal MySpace profile as if there’s damning evidence there of some secret plot to destroy them.

I have always publicly stated I do not want Xyience as a whole to suffer because of the few people connected to this company who have chosen to use it as their own corrupt get rich quick scheme. Working with people on the inside and relying on evidence given to me by people in a position to know what is really going on behind the scenes, I have narrowed down the names of those within the inside circle. I know exactly who is behind the deepest, most troubling deception and fraudulent activity at the company, and I can prove it.

I refuse to stoop to the level of those attempting to slander me and attack me. I don’t have time to be petty. It is time for action and time to clear up this mess so the sport of MMA can move on without this baggage attached to it. Xyience has been good to a lot of fighters and provided a lot of income to help some of the best professional fighters prosper. If they ever hope to reclaim a good reputation, the people ruining it for everybody need to be removed from the company.

It is time for the fans of MMA to unite in solidarity and stand up for the sport. It’s time to be counted and tell the powers that be that you won’t let an innocent man get run over just for doing his job. It is time to put the spotlight on the guilty parties here.

I am just one man, and I can’t do it alone. So, I am publicly asking for help here. I am being bombarded with legal fees that are detracting from the smooth operation of my site. This site has always been and always will be in place to give something to the fight fans they’ve never had. It is an independent, invigorating, and fresh take on the fighting sports. In this whole series we have proven how much we love this sport. We are willing to fight the biggest dogs infected with the worst case of Rabies if it means winning will help keep MMA clean.

I have avoided asking for any assistance up to this point and have actually spent a great deal of my own money already on the investigative process alone. However, I have to admit now that what I’m trying to do is going to take much more of a collective effort. I have set up a legal defense fund that will help me fight this case and any future case that arises to try and silence my reporting. I have decided not to seek any relief of any kind in this suit, because I never did any of this to make money. It is more important to me to help provide documented evidence to this court of law that might someday inspire a formal federal investigation that is long overdue.

If anyone can help out, please click on the link below. Any donation will be used to clean up this sport and help make sure Fight News Unlimited will be able to continue to provide you great news without having to worry about being shut down for exposing the truth. Also, if anyone knows of any legal channels I can pursue or can assist with my defense in any way, I could definitely use a hand with all of this. I am one man against a corporation here, and I need all the help I can get. Anything our loyal fans can spare would be much appreciated.






Please take the time to review all the information available on-line in our XYIENCE SERIES so you can see exactly what I have compiled in the way of solid evidence and what Xyience has been relentlessly trying to hide by repeatedly slandering me.

Wish me luck as I go forward with this fight, and please spread the word. The future of Fight News Unlimited depends on getting this whole mess cleaned up, and the sport of Mixed Martial Arts will be better off if sponsors like Xyience can clean themselves up and start acting responsibly. You can help inspire that. Thanks in advance for anything you can offer.


Saturday, April 7, 2007

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'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.


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.

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.

CLICK HERE TO COMMENT