xG in the Wall Street Journal!

xG are going up in the world. Today they had a mention in the preeminent investment organ - the Wall Street Journal. The WSJ describes them pretty accurately as:

a little-known Florida company marketing Internet phone services.

The article centres on the Guy de Chimay case. Sadly for James Woodyatt it looks like he's been Ponzied and won't get his $670,000 back. What a shame. James knows all about Ponzis but he's usually the one separating the victim from their money rather than the other way round. His old company Optimal Asset services, where he was Senior Vice President was a feeder fund for the daddy of all Ponzis - Bernie Maddoff.

Document Archive - Mr Dannenberg

Since Marc thinks he’s so popular it only seems fair to add to his fame with some of his stuff in the archive (top right). In case you are one of the fortunate ones who doesn’t know who Marc Jason Dannenberg is he’s one of the unregulated stock promoters around xG. He’s also an asshole. And fat. And ugly. And a psychopath. And an unstable pot head whose Yahoo name is ‘Loverofweed’.

Originally he was employed by Monroe Parker - a mob controlled Boiler Room in New York. After some FSA warnings and fines he moved to the Costa del Crime in Spain and was employed by N.C.R - another financial institution Boiler Room. In between stuffing his face with whatever fatty products that were to hand he sold stock in the iDigi Fund to hapless investors. Here is where his connection with Rick Mooers starts:

"I raised a lot," Dannenberg said, but noted that the money wasn't headed for a direct investment in iDigi. His job for his entire 13 months at N.C.R. was selling the iDigi Fund, an offshore entity into which N.C.R. plunked 1.3 million shares of iDigi Communications that it bought from Mooers.

After an initial meeting with Zafiroff in Sarasota, Mooers traveled to Marbeya at least twice and made at least one presentation on iDigi to the N.C.R. brokers, Mooers said.

"Rick Mooers came here to Spain," Dannenberg said. "He knew all about it. He knew he was getting pennies on the dollar for iDigi. Yes, he knew it was called iDigi Ltd. He gave a speech to all of us.

He mentioned the fact that it was a boiler room. He didn't want it to be a boiler room. He was saying this was not something that was a boiler room deal, but it was. He was just giving us a story to go on."

In its suit against iDigi, the Icelandic pension fund is more specific about the N.C.R. scheme. The suit claims N.C.R. raised $10 million from numerous investors in Europe. "N.C.R. received approximately 50 percent of these funds as its commission or fee," the suit said.

So the iDigi Fund, was a scam of a scam. 50% of the cash going straight to an offshore account. This is a scheme that Dannenberg returns to again, as we shall see.

After N.C.R. was closed down Dannenberg goes freelance, selling the shares of xG Technology, whilst projectile vomiting about xG all over the internet. Some of his ramping about xG going to $100 a share would make a psychologist gasp. (Check out the back records of iii.co.uk and look for Marcsanpedro.) All the time he was ramping on the bulletin boards and attacking any critic he was selling xG shares to unfortunate investors - even though he was not licensed, or ‘officially’ employed by xG. But these shares weren’t free market shares. Oh no. These shares are ‘Regulation S’ restricted shares owned by one of the xG Directors Palmi Sigmarsson.

Let’s pause for a minute.

Let’s think just how illegal and downright dodgy that is.

These are directors shares, that can’t be sold for at least a year after lock up. Yet Marc is selling them with the full knowledge of a director. A DIRECTOR of the company. This avoids any stock market announcements about Directors dealings. He’s selling them for HALF the then market rate. HALF. How much confidence is the said director showing in his company turning a profit? Umm. None. He knows they have nothing. He’s selling up. After lock-up he then ends up shorting his own company...!

These shares, under the terms of admission of xG to AIM, cannot be sold to American citizens. Yet Marc is merrily punting them to at least two Americans that we know about.

Then Marc, goes one further. In an echo of the iDigi Fund, Marc sets up Flashcomm. A Spanish company that would buy a territory from xG. In his derranged mind, he uses this as an attempt to extort more money from his customers! Buying a territory would not only raise the xG share price, but also raise him hundreds of thousands from his poor customers.

But Marc’s greatest achievement is being a colossal asshole. A delusional, slack-jawed, lard-arse, paranoid-pot-head, asshole. A quick Google of his name will reveal the extent of his stupidity. But he’s also a nasty person. His persecution of Phil Karn who had correctly predicted that xG’s radio method was bogus is a thing of internet legend. He repeatedly called him for months, on one occasion 38 times in a single hour. Thirty Eight times. Each time threatening to kill him, or wish some misfortune on his wife. Never give this guy your ‘phone number.

Good Readin’:

Email for Restricted Stock
Receipt for Restricted Stock. (check the ‘properties of the Doc. Officina is Marc’s office. There’ll be more with this property another day..)
Some of Marc’s Customer list all have bought restricted xG Shares.
Some more, and him punting the Flashcomm idea to them.
Flashcomm introduction
Hilarious Marc Email to xG. Note how xG lied about technical claims, and how Rick has an account with shareholder monies.

Dannenberg Speaks!

"...iDigi Works as Advertised.."

Now that we have a new brokers' note, let's have a look back at the last one and compare.  In 2006 xG obtained an impressive 50 Mbps in their trials. ("These are actual figures, not theoretical" their broker Hitchens noted.) This was well in advance of any modulation available at the time. Now in 2010, following a technical review from PA consulting on behalf of Allenby, they come up with a maximum theoretical figure of 6 Mbps - that's only 12% of their previous "actual" speed...

But wait. Hindsight is a wonderful thing. This has all happened before. In 2000 iDigi were claiming 3 Mbps for their system. Again, this was well above any other figures the industry were quoting. Again, these were real figures, tested (by xG themselves - in a fraudulent demo.) But in 2001 when the system was tested by Katapult it only gave performance as low as 0.04 Mbps - that's only 1% of their claimed speeds, lower than a basic modem!

I see a pattern emerging...

What gives? Could it be that they haven't got a scoobie? Or could it be that they lie to investors to steal their money from them? I'm going with the latter, but if you are an investor the result is the same - you will lose all your cash...

Rich Tehrani: If you think xMax works "as advertised" I've got a lovely perpetual motion machine I'd like to sell you. Sure, it's only 1% efficient but...

xG Document Archive

Hello Chaps,

You'll notice to the right a new widget called "xG Document Archive". This is intended as a repository of interesting original xG documents which will be added as and when time permits. First up are some of the various court documents I had on the hard drive. You'll need a (free) Gmail account to view them.

Lots of fascinating reading - (especially for the new shareholders out there). Unauthorised Icelandic shares...a Dominion Group court-case (Ricks previous company)...Chimay's being sued by the world...xG's original share cert to Falt (and the underhand cancellation of the company to make it invalid)...

But most, most, fascinating of all is to read the original court docs of the iDigi affair. xG really is just a continuation of the last scam. Incompetence. Overstated performance. Proprietary equipment that wasn't. Same old, same new, shit that they try to pull on investors.

If anyone's got some documents they want put on the archive drop me a line.

4G

Apr 1, 2007: “We're exactly on schedule — both strategically and in terms of the timeline — with everything we said we were going to do, which is really pleasing to me,” said xG Technology CEO Rick Mooers.

“We're looking at 4G instead of 3G, so we're going to be about two years ahead of the cellular carriers,” White said

“We should still outperform other broadband systems by two to three times,” Bobier said. “They're subject to the same laws of physics that we are; we're just starting from a better footprint.”

".... 4G network system expected to be available December 2008...."

"All those big companies that have made a buying decision — like Sprint spending $3 billion on WiMAX — will change their minds once they see this.”

Aug 2010: Mooohahahaha 1... Asymptote

I was surprised to read that xMax's data rate may eventually reach 6 Mb/s...this is more than an order of magnitude less than 4G speeds..

Mooohahahah 2, Sprint launches 4G :

Recent Trades

Because I can't answer people over at iii.co.uk (I'm banned) I'll answer here.

The recent trades that have gone through are most likely the result of their broker Allenby sending out a report on the company. Reminds me of when Hitchens (another company around xG that went bust) used to send out reports. I hope these new buyers realise that the company, as well as abandoning their only key selling point - the incredible modulation, could possibly have their newMax "frequency agile" system ruined by FCC regulations too.

Fools and their money are soon parted.

Edit: I've had a chance to read it. My thoughts:

There's some fascinating things in the report, which overall strikes me as conservatively written. But as ever the devil's in the detail. What it doesn't say is infinitely more important than what it does.

It mentions the checkered history, but doesn't mention the early promise of a revolutionary 'incredible' modulation scheme. It was only on the strength of this 'impossible' scheme that the company was valued at $1.5Bn. Allenby never mention that this has been dropped, or that the offering has changed at all. This is deceitful.

Allenby never mention docket 03-201 which could pull the rug out from under xG's plans to use unlicensed spectrum in the way xG want to. They do mention that the most valuable thing about xG's current technology is the ability to use this spectrum - but not that this 'most valuable' thing could be taken away in a ruling coming shortly.

Fascinatingly the do acknowledge that Bohman has only put in $6m of the original $375m that was originally claimed, and that the 'revenues' booked are just orders from Treco, not payment. (As we suspected..)

They acknowledge the lost orders with Telefonica, Gama, National Grid and Townes, but not that the reason Townes was lost was because Mr Townes did his homework and called Rick 'a crook.' And the other companies found nothing to be excited about.

They never mention Far Reach, and how Okey found out they were a scam. How they didn't even have a clue about pricing. How the network that they and Okey built was average modulation with average performance.

They mention that the interference beating qualities may not be all that xG claim. But they don't mention that the wavelet pass filter, the 'key to xMax' according to Bobier, is no longer included in xMax. The don't mention the hilarious "military grade jamming" of their demo a few years back.

They don't mention xMax's original demo on the Florida flats could've been made by any number of modulation methods. It wasn't special - as they claimed.

They don't mention Phil Karn, and Prof Friedlander's demolition of their original claims.

They don't mention that this original tech has been changed to something standard. Something boring.

They don't mention that Rick and Roger are raping the company of $70k a month for 'services'.

They don't mention how many previous nomads xG have lost.

They mention their 'phone. But don't mention the previous handset, that was meant to have been delivered by the 'hundreds' to xG's HQ. Where are these 'phones?

They don't mention the lie of the $57m 'pre-orders', that never existed.

They don't mention the 2006 'strong demand' lie that had forced xG to up their partnership fees with those non-existent orders.

They never mention ACH Securities. Not once. Funny since a director used to work for them. They never mention how this company lapped their share price all the was from $5 to $18. They never mention the unregulated stock promoters Marc Dannenberg and Fredrik Wahlman, paid in shares by xG.

They never mention that Dannenberg was selling directors restricted stock whilst they were under lock-up. For half the market rate.

They never mention the same director Palmi Sigmarsson openly shorting his own company when he knew the first tech wouldn't work.

They never mention the ongoing court cases. How Richard Kromka, former xG Director,  found both Bohman and Mooers to be mad and unstable. How Mooers wanted to 'kill himself every day'.

The Figures presented look OK-ish. I'd love to compare them with xG's own reports and see any discrepancies :-) They show a cash-burn of $6m a year, and the only income is from Bohman.

They mention the management. But certain details are omitted. For example iDigi, for some mysterious reason, never shows on Rick, Rogers, or Joe's CV! Is it because they were sued for fraud at iDigi? Is it because they want to keep this from potential investors?

The whole iDigi thing, the: Boiler room, $33m lost, Mooers lying on the balance sheet, technical incompetence, faked demos, FBI investigation thing is just not there. Why is this? Shouldn't investors be told?

Palmi Sigmarsson (who had his broking company closed by the finance inspectorate, and sold restricted xG stock) never appears. James Woodyatt (who is hunted by the Swiss police, and was a senior man in a Bernie Maddoff feeder fund Optimal) never appears. Mrs Bohman never appears. Why is this?

I'll email Allenby and ask for comment.