xG Laundering Money?

Hello. Welcome to my Blog about xG Technology. We know it's a scam (that's obvious!) so I'm more interested in the why and how of it. How are they scamming? Who are they scamming? The below was originally a post on the xG board on iii.co.uk, but they've obviously been warned off and keep deleting posts that are negative about xG. To be fair they also delete posts from a prominent wanker-ramper Mr Marc Dannenberg and those of his gimp Paul.

This was to another PR/ramper merchant called Gurgle who claimed it unlikely that xG were manipulating stock or Laundering money.

Gurgle,

From the stuff I've been reading both here and on wirelessexpressions.com, there seems to be some evidence for it. Here's a company without a working product, with a highly dubious history both in terms of the principals and their past technology, whose name is splashed all over the internet with 'fraud' next to it, who cannot even organize a simple demonstration of the product, who has missed deadline after deadline, who misled the market over $57M of orders, who blew deals with Skytel/National Grid/Gama/Telefonica, whose own engineers are criticizing and suing them, whose former directors have been sued for fraud, whose current directors actively shorted the stock, and who seem to be unable to even make one true factual statement in a press release. They are a laughing stock.

BUT

They are still able to somehow attract investment of (apparently) millions, upon millions of dollars. How come? Who would be so stupid to give this bunch of sharks hard won dollars? Then you dig a little deeper, try to peel of the wrapper, and you get mysterious companies based on Turks and Caicos (the mecca for drug money) who are linked to porn companies. There's a mysterious 'Billionaire' Mr Bohman who has bought 1000 worthless boxes. Why? The technology is worthless. Idiots may argue that Mr Bohman and Mr Perrystone have 'seen inside the box' and have had demonstrated to them that xMax works as described. That's quite obviously ridiculous, BECAUSE if they could demonstrate it to them, then they could demonstrate it to everybody - and Rick Mooers would be the richest man on the planet. Hasn't happened, and it won't.

AND

And then there's the 10k, 20k, 50k worth of shares that seem to go round and round usually being bought/sold at the middle of the spread. Sometime they mixed it up, and bought one day, sold the next. For over a month and a half the price was rooted to $5. Absolutely stuck like glue despite over average volume. Dig deeper and you'll find a $5 sp values the company at $500M precisely the valuation where huge bonuses get paid if the company is sold. Hmmm. With all the negativity out there (and on here) about xG do you honestly believe those were private investors actively trading this pup of a company? I knew you wouldn't. Those shares were being traded to give the impression of liquidity, and a veneer of volume.

HAVE

A look at wirelessexpressions blog, and there's a very telling part where one of the guys has got hold of Marc Dannenberg's phone records. (I assume that must've been Okey's son who's been arrested for that sort of thing). Anyway Dannenberg takes a call from the MONEY LAUNDERING part of the Swiss Police, THEN makes the following calls straight after: Frederick Wahlman, Rick Mooers, ACH. Those names ring bells right? Why should Dannenberg be calling those names in connection with MONEY LAUNDERING?

ALSO

Now consider ACH themselves. Two - count them. Two former employees there have been directors at xG. Now ask yourself why would a technology company based here in the states pick up the phone and call a dealing company in Switzerland and ask if anybody would like to be a director of a VOIP company. No experience required. No expertise needed. Just come along and we'll make you a director. Obviously they don't. The only explanation is that ACH were raising funds for xG, and the deal was those guys came on board. Why didn't xG ask a bank, or venture capitalist, or even a US/UK based dealer to come on board? Why these guys? Why ACH? Hmm....WAIT! I know the answer. It's because ACH are as fly as....

SO

Here is my theory. It's just a theory from what I've read. But I hope you guys realize why I came to this conclusion. In fact I think it's the only thing that does make sense about this crazy company.

Firstly you've gotta totally divorce the guys in the lab from all of this. They'll carry on trying to headbutt their way through the Shannon Bound without success. Most have wised up already. They are just a smokescreen. They are the proverbial corner store that Al Capone hid his yobs behind.

Secondly you've gotta realize there were two threads to their fraud:

i) The primary one was so so simple: Sell the company. Sell it for loads. The plan being to whip up some pump about the company, get the Internet bulletin boards frothing, drop names that so-and-so is bidding. Hopefully the buyer would be in such a hurry that they wouldn't actually bother checking to see if xMax actually worked. When they found it doesn't - well too bad. Have a look at the company's articles of association, on almost every page there's a reference to 'If the company is sold', '$500M valuation', '$1B valuation'. Have a check back at some of the early 2005 or so internet stuff. They're all hinting at offers for the company. Company members are rewarded bonuses to keep the SP over these valuations. It's just so blatant. It could've worked too, after all there's mugs buying oil exploration companies every year that haven't got a hope in hell of finding any oil. I doubt they even bother to look most of the time.

ii) So, xG haven't been sold. Not even to Google. The bull market's ended, and Rick Mooers is still sitting on millions upon millions of 'restricted' shares. What does he do? Give up? Nah! Not his style. He's still raking in his LEGAL salary of $70k a MONTH. (Why are shareholders so stupid as not to complain about this?) But there's no buyers, and the geeks haven't shat a miracle.

C'mon guys don't feel sorry for him. He's already planned for this. His buddies at ACH have already planned for this. They're in Switzerland (as the Swedish government has kicked them out for silly things like breaking the law) and Switzerland has advantages because there's always some Nazi, or drug lord, or tax evader who wants to clean some money. And now they have a perfect vehicle for doing so.

So imagine this guy with pots of filthy money. He can't spend it, the FBI would be all over him, but he's willing to trade 10%, 20%, of it to someone, or some company that can clean it for him. So through ACH he buys shares in xG. What he actually receives is the restricted shares from the holding of Mr Mooers. The cash gets put in a SPV in Iceland. Then ACH goes to work. Has anyone noticed that xG are THE ONLY COMPANY on AIM to use a clearing system called SIS (SegaInterSettle)? In essence it means that a broker like ACH can sit at his computer screen and trade xG shares with a like-minded partner all with the settlement being done instantly electronically. So he could, buy and sell, sell and buy, all with the same pot of money and manipulate the price to, let's say $5. He controls the price totally. He is the bid and he is the ask. (Unless a third party actually sells, but there aren't many of them) He could also slip through a few sales of these freshly laundered shares, a bit at a time, to help the poor criminal out in his retirement - the money coming out of the SPV.

Now here's a clever bit. If the share price falls it benefits xG/ACH! Imagine (for ease of math) that the criminal buys a million shares at $10 a share. So $10M goes into the SPV, with everyone taking their slice out of it. Then the price moves to $8 and ACH buy back the million for $8M, and Rick has got his shares back. They've effectively shorted their own company and made $2M. This can then be used to buy some token shares and make press releases like 'Director increases his position' or some such rubbish. And the criminal has brand new sparkling money. Everyone's a winner. If in the very unlikely event that the price rises then good for Mr Criminal, he just has to find a mug to buy his shares - but it sure as hell isn't going to be ACH doing the buying. I'd imagine the bid would collapse like a stone.

But now ACH are gone, and Rick Mooers has lost his playmate. He'd better find a new one soon as ACH's millions of shares will have to be sold by the liquidator. Who the hell is going to buy those? Is there money in the SPV to put in a bid and then find another broker to play ball? Damn Maddoff is out. So's Stanford. Hmmm......