The Bank Hapoalim Story

Ohh, Johhhnnn. Johhhnn. Where are you John? You remember yesterday when you posted about David Falt having "lost his lawsuit against xG in which he tried to screw shares out of them"? And you remember when I took the opposite view? That it was xG that screwed Falt?

Well look what a few words of Yiddish can get you... The truth is that xG issued certificates to Falt, and others, under the name of xG Technology LLC. They then claimed they had changed their name to xG Technology INC and did the dirty on him and all the others. Here is the truth: as Realtid.se reports - HERE - Roger Branton issued the shares around March 29, 2005. Roger authorized them - 100%. Falt deposited them in the Bank of New York. Later on that year he sold some of them, but when the bank tried to get the certificates xG told them they were Null and Void. xG had stabbed him in the back. Why? Because (reading between the lines) he was disgusted at the way xG were doing business. He was dangerous to them, because he could expose them - so they tried to shut him up by suing him.

All during 2006, claims and counter claims went back and forth between Bank of New York, xG, Bank Hapoalim, Falt and the others, and Roger Branton. He claimed that the certificates HE had signed were null and void because they were issued in xG LLC, when the company was now called xG Inc. Now let's look at the letter John: You'll notice two things. Firstly you'll see that Hapoalim are siding with Falt, they are helping him. He's the one that's been ripped off. Secondly you'll notice that Hapoalim state that xG, their technology, and their principals are DODGY AS FUCK.

And to further prove just how dodgy, nasty, shallow, and vindictive xG are have a look at the two documents beneath it. They were both filed on the 9th November 2006, just four days before the date on the letter from Hapoalim. You'll see that Roger Branton - the same asshole that issued the share certificates - ONLY THEN changes the name from LLC to Inc despite the fact he'd been arguing all year that the name change had already happened! Obviously one suspects that it was only done to deny the sale of the perfectly legal certificates issued. In the writ that followed Hapaolim accused xG of FAILING to inform them of their name change from xG Technology LLC to xG Technology Inc. In fact - as evidenced here - when Falt sold the shares the certificates were perfectly valid

Rick you are a shit.
Roger you are a shit.

John? John? I can't hear you...Speak up....

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…