A Useful Summary

Craig Malthus has written a piece on xG that they are trailing on their website (right-hand column). I made a comment a few days ago, and Craig asked for more info, which I have now provided. For those who are catching up on the xG story I thought it may make a useful summary:

"Hi Craig,

Thanks for the reply. Sure. I'll back up what I said. The beginning is probably a good place to start:

In the late '90s xG was called iDigi, run by the same directors; Rick Mooers, Roger Branton, and the inventor Joe Bobier. Besides that it had three major similarities to xG:

1) It sold similar high-tech broadband radio-modulation products, which would 'revolutionise' the market, but were 'so secret' nobody could ever know how they worked. This was because in common with the early xG modulation - they DIDN'T work. At least at anywhere near the capabilities they claimed to investors. In fact with iDigi their main investor discovered that they had actually cheated in their demo - pre-recording video on computer hard-drives that was supposedly broadcast by their system. (Link a). Link b)).

Compare this with early xG claims that their modulation was special and worked. This (link c)) analysis shows that their claims of special modulation are entirely bogus. Any number of systems could have easily achieved what they claimed was special. (Also see this entire blog by a Professor of Electrical Engineering - link d)). xG's supposed advantage lay within two inventions: their 'special' filter called the 'wavelet pass filter', and 'flash signal'. The two patents backing these up have been shown to show a laughable lack of basic communications theory. (link e, link f)). When iDigi's main investor (Icelandic pension fund LN) found out, well obviously they sued for FRAUD. Mooers obviously couldn't fight it so settled out of court, for $5m.

xG evidently knew about the problems with their modulation system, as witnessed by these emails (link g, h)), and this BER curve they put up on their web-page and later took down (link i)). Yet they continued to tell their investors who had put in their hard-earned money nothing - in direct contravention of AIM rule 11.

a)http://tinyurl.com/2w2fsko
b)http://tinyurl.com/2vx96wb
c)http://www.ka9q.net/xmax.html
d)http://tinyurl.com/3x2wtpw
e)http://tinyurl.com/29ntyvs (pdf file)
f)http://www.ka9q.net/tristate.html
g)http://tinyurl.com/39p5jm8
h)http://tinyurl.com/356884p
i)http://tinyurl.com/2bpz73p

2) In common with iDigi, xG's funding was...ummm...unusual. As you've been told instead of the usual route of showing their incredible system to any number of major institutions who would've undoubtedly cut each others throats to get a piece of it, they chose...wait for it...a boiler-room to market their stock.

With iDigi the boiler-room was, unusually for a company based in the USA, one based in Spain, the Costa del Crime: N.C.R. Capital. (I will leave it to your imagination to decide whether they chose this one to be out of reach of US legislators.) Of the funds raised destined for iDigi 50% ended up in offshore accounts never to be seen again. Did Rick Mooers know it was a boiler-room? Did he know only pennies in the dollar from investors money was going to iDigi? Well, yes he did:

"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."" (link b), page 6, also see link a)).

When iDigi folded it left the FBI and the court administrator chasing up to $30m that had gone missing. None has been recovered to my knowledge.

The link with NCR continues to this day. Palmi Sigmarsson a current xG director worked with NCR to bring in LN, via his company Spectra Kapital. Spectra promoted mainly penny stocks and have now been closed down by the finance inspectorate. The contact list for NCR was allegedly sold on to Spectra...Incidentally this same director made upto $2.25m shorting xG - his own company, as well as allowing stock he controlled to be sold for half the market rate whilst under the lock-up period. That shows confidence in xG, huh?

With xG the story is similar but the boiler-room changes to ACH securities in Geneva. (Again you will note outside US jurisdiction.) ACH were a Swedish brokerage, but have the unusual distinction of being expelled from Sweden for various shady deals (link j)). Two directors of ACH were at one time or another also directors of xG. ACH have now also been closed down by the authorities, but not before they were able to lap the share-price from $4.50 to $18...

After ACH closed, xG were left to mainly rely on unregulated stock promoters like Fredrik Walhman (mentioned in court document - link k)) page 25 onwards) to sell shares. Which he did with some success bringing in $34m investment from a millionaire called Johan Bohamn (who is also not without a 'colourful' history himself..)

Doubts raised at the beginning of the float weren't chased up.(link kk)



j)http://www.highbeam.com/doc/1G1-122629851.html
k)http://tinyurl.com/2wrsper
kk)http://tinyurl.com/35zbxqs

3)The third major similarity involves accounts, so I thank Mr Rotondo for bringing it up. In both companies Rick Mooers dramatically overstated to companies balance sheets. With iDigi (from link b) page 7):
"Mooers never fully disclosed where the money was coming from . which left all of us very uneasy," Heimann said.

He also claims that Mooers and another partner, Roger Branton, wanted to "adjust" entries in the 1999 year-end financial figures "that would show investments in the $10s (of millions) and $100 millions range by valuing their contributions at exorbitant amounts, without any reference to reality."

"They wanted to show iDigi Communications was valued at a very high level," Heimann said. ". Mooers committed fraud in several ways: by falsifying records and inflating financial statements and misleading investors with respect to the value of the company they were investing in .

"No. 2, by setting up all sorts of covert schemes with offshore entities that ended up siphoning off 50 cents on the dollar on average, of monies investors paid."

Mooers, for his part, denied those allegations and claimed Heimann "embezzled from the company."

With xG Rick was up to his old tricks - valuing the company exorbitantly. This may have been justified if the miracle modulation was real - but as I've shown they knew it wasn't, or was unworkable. The 'sales' and 'deals' they announced were really nothing of the sort. The former were mainly just adjustments to the accounts receivable (with, presumably, the knowledge of Johan Bohman) - if you do as Mr Rotondo suggested and check the last few years' accounts you'll see they've just been shifted to debt owing after one year. Very little, if anything, was actually sold in the true sense. The 'deals' were mainly just letters of intent to look at the system. There were by my count 11 such 'deals' - no business ever resulted - despite the 'miracle' nature of their technology.

All in all it paints a very bad picture of the attitude that Mr Mooers has to his investors. This is why the latest announcements (links l), m), and n)) of MBTH being involved is such a bad sign for investors. Now Mr Moores has a mechanism to cheat all the investors quite legally. No wonder Ceinwen Lloyd (xG director, and wife of Johan Bohman) is upset. She realises that the $35m they've put in is hanging in the balance.

l)http://tinyurl.com/36s7hn7
m)http://tinyurl.com/33cm4js
n)http://tinyurl.com/38fa4jx

Finally I should say that it may well be true that xG now have a cognitive radio that works. I'll leave that to people like yourself. But this must be weighed up against the appalling behaviour of Mr Mooers, and his attitude to investors and stock-market regulations. Praise must go to Rick Rotondo for putting an acceptable face to xG, and him having the honesty to say they have had a change of technology (link o)). But all this is too little, too late - it should've come years ago through the appropriate channels - the stock market regulations.

There's so much I left out - enough to write a book - but I think you'll get the picture. I can be contacted at john.prescott.dpm at gmail.com

Regards John.

o)http://tinyurl.com/39lzx62 (in comments)"

Getting Interesting.

My apologies for lack of action on the blog, I’ve been involved in quite a few other projects.

Finally, some interesting news, and like waiting for busses you wait for one, then several come along at once. Victor out! Manipulating stock! Wow!

Here’s the inside line to recent developments:

1. Victor Suno, and James Woodyatt (until last week both xG Directors) according to a source close to the Swiss Police, have both got warrants out for their arrests. They have been wanted for questioning by them for quite some time in connection with xG securities fraud following from the case of Bank Hapoalim.

2. Woodyatt, who used to work for one of Maddoff’s feeder funds, left for Miami without informing the Swiss authorities of his whereabouts. Maybe the Rick could help them by dropping them a line on ++41 (0)31 323 11 23? You know it makes sense Rick. They are looking for Victor in Spain...

3. The FSA have been investigating xG for at least 6 months. I know of several Swiss lawyers who have been contacted by the FSA with regards to securities trading via ACH, and for other matters. It seems like this investigation has prompted the recent expulsion of Victor who, as we know, was also an employee of ACH.

4. Some of the former investors of iDigi (xG’s previous incarnation) are in the process of suing the xG directors in a class action suit. An estimated 30 million USD was lost in iDigi…Seems like some people want their money back.

5. Rick and Roger have both have been taken by the FBI to a Grand Jury questioning in Washington DC into investigations regarding the iDigi fraud.

6. Just to confirm the sort of people we are dealing with, Kevin Flessner, the former CEO if iDigi has recently been prosecuted for ‘Flipping’ fraud. A story about is says “he was sued in October 2001 along with his former partners, Richard Mooers and Roger Branton, for allegedly participating in a scheme to "siphon off" and "pirate away" iDigi's assets for their own benefit.”

7. The Bohman v Kromka is old news but further enquiries suggest that the deal for extra investment that Kromka secured was dependent into a specialist team at General Dynamics doing a thorough investigation of the technology. Rick couldn’t let that happen, for fear that as we all know, xG have nothing special, so he shopped Kromka to Bohman.

The interesting thing is – why admit it now? They’ve known for years that there have been ‘issues’ surrounding ACH’s share trading. (Not to mention sales of restricted stock.) They knew that ACH was dodgy, must have (I said it here several times), and yet they still invite an ACH employee to become a board member. Evidently it stinks. The difference is, now to then, that the FSA’s investigation is closing around the necks of Rick and Roger. So they give Victor as a scapegoat, and claim they knew nothing about any share manipulation. Well, back in iDigi days they knew their financing partners were a boiler room, and in the xG days they also knew that ACH were a near-boiler room. The funny thing is, they didn’t complain when the shares got lapped all the way up to $15. You can’t have it both ways boys.

Update: Ian Hammar is following the story over here. With some extra juicy detail. I tried to post this on iii.co.uk, but got immediately banned. How childish. Someone doesn't want this info out there....

Going Cheap: 100,000 xG Shares

Interesting story in today’s press. It seems that although there are several Swedish owners of xG stock, none of them is declaring it to the Finance Inspectorate. I wonder why not? It came to light as a guy called ‘Maths O Sundqvist’ who has a company called Skrindan has defaulted on a One Billion SEK loan with Carnegie Bank. Among the assets of the fire sale auction was 100,000 xG shares. I love the way his employee Peter Lind tries to distance himself from ACH, claiming they bought them elsewhere (even though they also had stock in Central Asia Gold too…!), and I also LOVE the way they call xG a ‘Bubble Company’.

And has Vic Suno left xG? It says he was a director ‘until this January’? Rats and sinking ships eh? [Edit: It's been pointed out on iii that this is incorrect. The article actually says he was a Director (of xG), and an employee of ACH until January. My bad. Poor Swedish.]

”The speculative bubble company XG Technology has attracted many venture investors shares. It now turns out that even financier Maths O Sundqvist got in on the company.

The large holdings in Maths O Sundqvists empire is well described. It includes large holdings in established listed company like Industrivärden, Fabege and SCA. During his financial crisis, other parts of his portfolio were in a forced sale, like his holdings in Hexagon and Öresund.

But it is not just the kind of reputable shares included in the portfolio. Carnegie Bank released information before the auction of his Skrindan Company on March 17 that shows the company owns shares in crisis company Central Asia Gold and contentious XG Technology.

According to Peter Lind who worked at Skrindens he bought the 100 000 xG shares in March 2007 for about $ 10, which means a total of about 7 million SEK at the then exchange rate. Peter Lind bought 10,000 himself at the same time..

This means that Sundqvist went into XG-shares near the top. Since 2007, the XG price has fallen to 88 cents as of last Friday, which values the holding at 800 000 SEK.

Several other Swedes are among the major owners of XG Technology. The Swedish-controlled banking firm ACH in Switzerland is one of them. ACH has according to xG's website almost 10 percent of the shares. ACH recently went bankrupt. And for Peter Lind, it is important to distance themselves from the banking firm that is already blacklisted by the Stockholm Stock Exchange, even before the bankruptcy.

”I want to emphasize that we did not buy shares in XG by ACH, but the investment was carried out after a presentation of the company where its future prospects were presented. We saw on a similar investment that we would have done at Sandvik and Volvo.”

Other major shareholder in the company director Mats Wennberg, which increased its holding in the autumn. He bought shares over the past six months stock prices and now owns about 2.6 million shares (2 per cent of the shares). Victor Suno, xG director until January this year , and an employee at ACH, owned under the last known data 250 000 shares.

xG shares have carefully avoided established and regulated fund ownership Sweden. It is clear from the statistics that Finance Inspectorate prepares quarterly. Among Swedish equity funds, which are under the supervision of Finance Inspectorate, there isn’t anyone who owns any xG shares. “

So, as well as ACH’s shares being dumped, this guys 100k will too by the looks of it. Going down. Next stop $0.01?

ACH - Dirty Deeds Done Dirt Cheap

If you had any doubt as to the downright dodgyness of ACH allow me to put that doubt to rest. Theirs is a tale of insider-trading, outright fraud, stock manipulation, and the launches of bogus companies. Let’s start out with a little background.

ACH Securities was founded by a bunch of Swedes, including Olof Hedengren, former CEO of Fischer Partners. He started the firm together with two colleagues from Fischer, the head of asset management, Peter ‘The Turk’ Andersson, and Dennis Carlsson. Other Fisher people who had both been fired for unauthorized trading joined them: Patric Sjölund, and Norwegian Pål Mørch (who later would become a partner in ACH with 12 percent of the company). You’ll come to realize that when someone is caught out insider trading, or doing dodgy deals, they end up in one of three places: ACH, EFG private bank, or prison. These places covet the skills only found in the dregs of the financial world.

As we know ACH were thrown out of the Stockholm market in 2004 for refusing to disclose the identities of person’s insider trading Skandia shares. However they continued to act as if nothing had happened, they had the same mostly Swedish customers, they used the same brokers, the only difference was that the Swiss Privacy laws meant that they could be even more brazen.

Soon enough a hard-core network of people like Bernhard von der Osten-Sacken, Edvin Austbø, and Norwegian financier Arne Fredly would be using ACH to do the deals that no-one else would do. We know that Osten-Sacken has been arrested. Fredly has just won a libel case against a Norwegian newspaper because they couldn’t come up with enough hard evidence for his dealings, but…just because no-one would squeal does not mean he didn’t do it.

Their deals included:

· Insider trading on a number of Electrolux trades
· Insider trading on the Findexa bid on Eniro.
· Insider trading in Gambro before the bid for medical technology company became known in April 2006
· Insider trading on SSAB's acquisition of the North American steel company Ipsco for 56 billion kronor.
· And as recently as October ’08 Arne Fredly bet 500 million on a short position in Ericsson shortly before a profit warning. Strangely, Edvin Austbø made exactly the same trade, at exactly the same time. What a co-incidence.

All these deals were done by ACH. In fact an insider there said to the Dagens Naeringsliv newspaper that they knew what their quarters’ sales were going to be even before any of the sales had happened!

Osten-Sacken was, as we’ve discussed also involved in the Allokton fraud (along with our other old pal Johan Bohman of EFG, and xG via Casper Holdings). When Police were looking to question him about the insider trading he fled – to Switzerland, where he rented a villa in Verbier. He was joined there by Andreas Forsell, the former Finance Director of Allokton, who found another job waiting. Guess where? Yep, ACH Securities!

ACH, despite being banned in Sweden, have worked hard there in the IPO’s of some fairly dodgy companies These include Central Asia Gold, Malka Oil and not least the outright scandal that is TMG International (TMGI).

They punted this company to investors, and then – here’s the nasty bit – were revealed to be responsible for huge short trades in the company from our motley crew in collusion with the owner Jostein Eikeland. The Company lost 96% of its value, and made some people even richer. Eikeland is now being investigated by the Norwegian Economic Crimes Bureau for serious fraud.


Now what is interesting about this is not the dodgy deal, but how it mirrors what could have gone on in xGT. ACH bought TMGI’s shares at a massive discount, and then sold them on the open market for ‘face value’. This is a process known as a ‘Chop-House’ trade, where one buys at literally pennies in the pound. At one stage at the end of 2005/2006 ACH was TMGI's largest shareholder with 65 million shares, that’s around a third of the company. But three months later ACH has disappeared from the shareholder register.

Where did the stock go?

They ended up registered at… SIS Segaintersettle! From there the shares were either sold, or ended up back at TMGI. In effect ACH were using SIS as an extra layer to disguise who the real physical owner of the stock is, just like a computer hacker uses as proxy terminal. It’s very difficult to find out who bought the stock and who sold it (and what chopped price they paid). And if it’s the same person doing both buying and selling then that’s more difficult to detect too…

It seems that it was common practise for ACH. The same pattern was used with Central Asia Gold, listed on the NGM Stock Exchange. [N.B. Who is a MAJOR shareholder of NGM? – Our friend Fredrik Wahlman!] In 2005, there were 50 million shares registered with ACH. Six months later, ACH has disappeared from the shareholder list. Instead, SIS Segaintersettle comes up with 90 million shares, about 40 percent of the company!

Then one looks at Malka Oil, the ‘sister company’ to Central Asia Gold: and one third of the shares end up registered at SIS. Chairman of Malka Oil is Mikhail Malyarenko. He is also a board member of Tomsk Refining with Pål Mørch, partner at ACH. (Look out for the IPO of Tomsk Refining – coming to a Chop House near you…!) Obviously the same motley Crew, with ACH, were merrily insider trading at all these companies.

Now lets remind ourselves of the situation at xG, and see is it fits the pattern:

1. Discounted ‘Chop-House’ issue? – Check!
2. Use of SIS Segaintersettle? – Check!
3. ACH holding masses of stock? – Check!
4. Insiders selling with prior knowledge of stock movements? – Check!
5. Involvement of these insider trading people? Well, we don’t know, BUT Johan Bohman, AND Fredrik Wahlman move in all the same circles…..
6. Collusion between the company’s principals and ACH? – I’ve no doubt whatsoever. Just follow the money.

Now that ACH is closed I’ll make a prediction: Most, if not all of the above names will end up connected with, or working for, EFG Private bank. They are the only other company that can truly appreciate their ‘special’ talents. EFG is owned by one of xG’s major shareholders – Johan Bohman.

Stock Lapping

One of Falt's accusations was that ACH were 'Lapping' in order to manipulate the price of xG Technology's stock. What is 'Lapping', and does it fit in with our observed behavior of the trades of XGT's stock?

The following diagram demonstrates what lapping is:



Lapping is essentially 'robbing from Peter to pay Paul'. In financial fraud terms it utilizes the fact that the fraudster has access to multiple accounts, and that it's usual for large firms to send out monthly statements alphabetically, so people with surnames starting with A gets theirs sent on the first of the month, those with B on the second etc. This is useful to them because funds, or stocks, can be 'borrowed' from an account and won't be missed for another thirty days.

Usually a dummy account is set up, which we will call account A. Money or shares, are diverted from a regular account, B, and in order to hide this, funds from account C are put into B, C's loss is covered by D, and so on. This juggling of accounts can have a number of aims:

Firstly it enables people to simply steal money from account A, and cover this by continued transfers.

Secondly, when one is dealing with stocks, it means that the volume is multiplied significantly. If one has 30 accounts to lap through, then the volume is multiplied 30 times. If as we said before ACH are both the bid and the ask of any one trade it could theoretically increase the price every time. However the bubble bursts when at these inflated lapped prices there are more sellers than buyers from outside the lapping circle.

Does that fit our observed picture? HELL YES!
1. After IPO xG's stock price rockets.
2. There's dozens and dozens of unusual trades; selling below the bid, and buying above the ask,
3. And then when people like Marc Dannenberg boast of selling at $18/$15 a share, the price crumbles.

Summary: Falt was right, and ACH and xG are thieving bastards

Another thing is, in the recent press-coverage of the ACH bankruptcy an 'insider' said that they had ONLY 50 active customers and 2-300 actual proper accounts. That's a staggeringly small number. The rest of ACH's 6000 customers were in the pyramid/MLM scam called the Bridge Group. Bridge is, like ACH, banned in Sweden. It claims to offer the opportunity to 'buy-in' to companies *before* IPO. Like ACH its customers seem to be mostly Swedish, but as Bridge don't have a license in Sweden, when they complain about having been ripped off there's nothing the Swedish authorities can do. Each bridge member had to pay to open an account at ACH, as well as a $1,800 joining fee - And then watch what they bought plummet up to 90%....

Total Bridge customer deposits at ACH were only $7.6M. (Thankfully all of that is covered by the Swiss guarantee scheme as they are all small customers with <$80k each under deposit.) So if 6,000 people only had on average $1,250 or so on deposit, that must mean the other 300 customers are HUGE, right?

It seems that ACH weren't as large as they made themselves appear. Nothing wrong in that - a bit of salesmanship. Olof Hedengren of ACH said in the press the other day that only a 'very small' number of people would lose money in the Bankruptcy because everyone else had under the $80k threshold. Naturally as a brokerage the majority of customers would have their holdings in stock, but even so maybe there's only $30-40M in cash. [Edit: The press now reports their assets to be ONLY $10-16M!]

It does make the $10.8M that Olof borrowed from UBS a little while back in order for them, and their customers to buy stock in xG Technology seem like a MASSIVE amount! It would make xG a huge part of ACH's business. Is it any wonder they were keen to play ball with a little manipulation?

Free the Geneva One!

David Falt gave an interview to the Swedish press today. Although he's been questioned by the Swiss Police on two occasions he's been released both times, and has not been charged with anything. It seems that it's part of a bigger investigation involving many more people and organizations. In the press interview Falt undertook to show xG Technology (and ACH) to be the lying thieving rats they are, and to correct some of the newspaper's earlier mistakes, like not being charged or having been in Jail in 2009. When asked why did he leave xG and ACH he said that he’d found out some things that made it impossible for an upstanding honourable man like him to stay connected with these companies. What are these things? Why are ACH and xG so keen to have him silenced?

I think we should remind ourselves of what Goyard (who Marc Dannenberg claimed was Falt) wrote on the iii.co.uk board around that time…

“This a company with lots of bad stuff in there past and quite a lot of bad stuff that is about to surface.

First shareholders where subject to fraud in Idigi Communications LLC and 30 million USD was lost. This funds ended up in Gibraltar and Bahamas. They where all transfered via Austrian Banks. How ever there are still outstanding claims and major legal issues pending. This may or may not be solved through settlements time will tell. Talks have been going on for years. xG is diverting the problem to Iceland again. There is E&Y SPV on Iceland dedicated to take care of this. This is done to avoid disclosure issues, how ever as xG board members are active in this it will be hard for xG as a company to deny knowledge of theses issues prior to the IPO. If this group sue xG or if there claim is sold to some one who will then sue the company I think xG and its board will all be found guilty of wrong full disclosure.

Then we have the Swiss Bank who is owned by the largest Israeli Bank who is suing xG and its CEO and CFO. Information that is out is indicating that a major (top 5) US law firm has done a study on the Banks case against xG and it will hit media with in weeks.

Then we have the core technology and its viability. Some significant Swedish Scientists at KTH [believed to be Prof Zander] and other private companies have been running computer simulations on the "field test" done in 2005 based on the public information plus material published by Dr Mandelbum. This simulations are interesting and will at some point hit the public spotlight.

The demo that was "done" in Iceland during the Idigi day was later found out to be a pre-recorded demo. No live signal was ever sent. This was secured evidence by the pension fund done in forensic studies of there own servers used by Idigi for the demo. How ever as the case was settled out of court this information was never made public.

Then we have the inflated stock price. [At the time he wrote this it was around $12. Now it’s $0.50] Due to pending legal matters xG was forced to pull the IPO and issue a convertible bond. Lucky for them as the share issue was far from subscribed for due to lack of trust in management and technology. This is a strong indicator that the share price should be around tops 4 USD post transaction and post funding. The boiler groups around xG and the CEO and CFO are all driving this pricing by lapping shares and issuing press releases with questionable content. For example the last issue about the "deal" in Turkey is just a LOI and NDA with some on with no track record in communications. Its not a deal with a spectrum owner or operator/ISP. Any one can do "deals" like that. In this context its also important to know that all the retail investors (no professional investors participated in any of the first PP) who has funded xG so far all have a average price per share at about 1.5 USD. So look out for major price adjustments in November when lock up agreements are history and all of the want out.

The last issue I see is the total lack of responsible and professional management and board. There is not one single communications expert or any one who has built a global or even national company before. The lack of experienced operations guys is a major joke I would say given the targets and claims they make.”

Interesting stuff eh? Especially considering his statement in today's press. In the interview he claims that, as I speculated, he was issued a load of shares by xG’s CFO (Roger Branton), and then they broke the deal. Seems like they tricked him as the certificates issued didn't reflect the name change from XG Technology LLC to XG Technology Inc. Dirty eh? He sued and was counter sued – he believes to try to shut him up. He also says that the sale of shares to the Israeli bank was done by another person in the bank.

But here’s why I’ve suddenly got so fond of David Falt: He says he was arrested as a part of a WIDER INVESTIGATION involving MANY MORE people. Like you, I’m wondering how many of those people are linked to xG, and ACH…

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......