I was just cautioning him for the sake of the site. I hope the site does not go down - I work in a business that deals with intellectual property and some owners are just more sensitive than others. Crains' for example is.
Riverside Info » About Riverside
Fiscal Emergency / Wextrust / Arcade Building
(176 posts)-
Posted Friday Jan 23, 2009 15:30 #
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As I said, no problems so far. I don't think it is a good idea to post entire newspaper articles, but some people also appreciate the traffic it gets them. Folks have been doing it for years anyway.
Posted Friday Jan 23, 2009 15:33 # -
Well I'll try to remember to do that. When I lioved in California I once met a lawyer that did nothing but attempt to get involved in dog bite cases, even harassing people whose dogs barked at them when they walked by, so i guess there are lawyers that will do anything for a buck.
Posted Friday Jan 23, 2009 15:53 # -
Links are no problem as the owners often hope to turn the occasional viewer into the regular viewer. More eyes mean more money from advertisers that most press type companies need.
Posted Friday Jan 23, 2009 16:01 # -
Right. My problem is if I copy something verbatim, I then paste it in here, and I have to post it before going back to copy the page URL, then come back and open the "edit" on the postto paste it in. I can't do both because on my Mac whenI don't post and go back to copy a link the first part disappears. So it's a two-step. Maybe there is another way to do it but I'm not a computer guy...
Posted Friday Jan 23, 2009 16:07 # -
From Law 360...
Wextrust Investors Blocked From SEC Fraud Suit
Law360, New York (February 03, 2009) -- Investors with millions bound up in Wextrust Capital LLC commodity pools have been prevented from intervening in the federal securities receivership case against the company in the hope of freeing their investments as the prosecution of the alleged Ponzi scheme progresses.
Judge Denny Chin of the U.S. District Court for the Southern District of New York blocked the bid by several Wextrust commodity pool investors to horn in on the action,...
Posted Wednesday Feb 4, 2009 21:52 # -
The next WEXTRUST???
Houston - Texas Billionaire Under Investigation As Possible Next Biggest Ponzi Scheme
Published on: Today at 11:50 AM News Source: Wall Street Journal ReutersTexan billionaire Sir Allen StanfordHouston - An offshore bank at the center of two U.S. federal investigations recently curtailed financing commitments to two small American companies, regulatory filings show.
Stanford International Bank Ltd. of Antigua recently failed to provide some $16 million in funding to a small Florida telecommunications firm, while a small Alabama health-care firm said it was unable to complete a roughly $62 million merger after funding fell through. Stanford International had previously planned to provide funding to complete the deal, according to the health-care firm.
Brian Bertsch, a Stanford spokesman reached Saturday, declined to comment.
The disclosures raise new questions about the activities of Stanford International Bank, part of a sprawling financial-services network controlled by Texas businessman R. Allen Stanford. As reported, the Federal Bureau of Investigation and securities regulators are examining the bank's marketing of high-interest certificates of deposits through affiliates in Texas and elsewhere.
Advertisement:Some Stanford International representatives have been recently advising clients that they can't redeem their CDs for two months, a person familiar with the matter said. The bank says it has over 30,000 investors and more than $8.5 billion in assets, though it also says the larger group of which it is a part manages over $51 billion in assets. A spokesman for parent company Stanford Financial Group, based in Houston and St. Croix, U.S. Virgin Islands, said depositors may withdraw funds in accordance with the terms of their accounts.
In a December letter to customers posted on its Web site, (stanfordinternationalbank.com) Stanford International described its investment politicies as "conservative," saying it "had no indirect exposure to the securitized debt or subprime meltdown." The bank also distances itself from the Bernard Madoff hedge fund scandal, in which a New York financier is accused of running a so-called Ponzi scheme that may have cost clients billions of dollars.
"We want our depositors to know that SIBL had no direct or indirect exposure to any of Madoff's investments...Also, SIBL has never made a structured loan or a commercial loan. All loans are cash secured and to SIBL clients only at a maximum 80% loan to 100% cash collateral ratio."
But SEC filings show that the Antigua bank also holds majority stakes in a handful of thinly traded American firms.
The Florida firm losing $16 million in financing from Stanford International is called Elandia International Inc. of Coral Gables, which trades over-the-counter on the so-called pink sheets. Elandia says it controls a collection of small telecommunications firms in Latin America and the South Pacific. Regulatory filings show that the Elandia's chief financial officer is James M. Davis, who is also chief financial officer of both Stanford International Bank and Stanford Financial Group.
Efforts to contact Elandia executives by phone and e-mail were unsuccessful.
In a new SEC filing, Elandia also said Stanford International Bank had also agreed to convert an outstanding $12 million loan it had made to Elandia into shares of Elandia equity. Such debt-equity swaps often take place when borrowers lack the cash to pay loans back.
Stanford also owns a majority of the shares of Health Systems Solutions Inc. of New York City, which is traded on the OTC Bulletin Board. In October the firm agreed to acquire Emageon Inc. of Birmingham, Ala, but the deal was terminated Friday with Emageon attributing the development to Health Systems' inability to obtain funding on or before the closing deadling of Feb. 11. Executives of Emageon couldn't be reached for comment and Health Systems executives didn't respond to requests for comment.
In mean time according to Bloomberg the company has Blamed ‘Former Disgruntled’ Workers in the ProbeNot Surprising ! Says:
Why are we surprised? It appears that to have been successful in the financial business, all you needed to do was promise large returns and the cash would flow in no questions asked. Here is some advice: Only invest in public companies that are listed on a major stock exchange such as NYSE and NASDAQ. They are audited by International CPA firms. I know several Kollel friends who invest in these pink sheet nothing companies which are nothing but manipulated shares by brokers and are close to fraudulant. Another friend lost $100,000 investing in Wextrust Diamond Mines !!! Crazy. And then we read how families can't afford children or Yeshiva tuition? Come on.Posted Monday Feb 16, 2009 20:11 # -
Latest chapter on Wextrust...
Fed case may force Crown Plaza Metro sale
Phoenix Business Journal - by Lynn DuceyThe fate of the Crowne Plaza Phoenix North Metro Center is tied up in a criminal and civil case against two East Coast men who authorities say bilked investors out of $255 million.
The hotel likely will be sold.
The U.S. Securities and Exchange Commission and the FBI have frozen the assets of Wextrust Capital LLC and jailed co-founders Joseph Shereshevsky of Norfolk, Va., and Steven Byers of Oak Brook, Ill.
As federal prosecutors pursue the criminal case in U.S. District Court in Manhattan, N.Y., the SEC has appointed a receiver to monitor and inventory the assets and finances of the firm and its related companies, according to SEC documents.
Chicago-based Wextrust Capital operated a number of companies and portfolio funds, including Wextrust Equity Partners, Wextrust Securities, Axela Hospitality and Crowne-Phoenix Investors LLC, which owns the 250-room Crowne Plaza hotel at 2532 W. Peoria Ave.
As part of the SEC investigation, a receivership was established last August to control all Wextrust Capital entities, including the Phoenix hotel. Wextrust Receivership intends to put the hotel up for sale, according to documents filed with the SEC.
While attempts to speak with Wextrust Receivership officials were unsuccessful, Monica Smith, a spokeswoman for the InterContinental Hotels Group, said the hotel remains open despite its impending sale.
InterContinental Hotels, the property’s longtime management firm, will continue in that role through March 31, Smith said. The hotel’s 91 employees have been notified of the proceedings and the possibility of layoffs.
Smith said, however, that workers will have an opportunity to apply for jobs at other IHG properties and will receive their full pay, benefits and extended medical options under the Consolidated Omnibus Budget Reconciliation Act.
SEC spokesman Kevin Callahan declined to discuss the charges or details of the case because it is an ongoing investigation. But SEC officials have said Shereshevsky and Byers used their connections to the orthodox Jewish community to attract investors to a range of their products.
Wextrust Capital’s assets — including loan and securities portfolios as well as property holdings, such as retail and residential developments — have been calculated at $364 million so far, according to receivership documents.
The firm’s other hospitality assets include the Axela Baltimore Hotel and the now-closed Park View Hotel in Chicago.
Attempts to reach representatives of Shereshevsky and Byers were unsuccessful.
Posted Thursday Feb 19, 2009 18:29 # -
Wextrust Oak Brook hotel to go on the market
By Alby Gallun, Jan. 21, 2009
(Crain’s) — A court receiver plans to sell the Wyndham Drake Hotel, a 160-room property in Oak Brook formerly controlled by an affiliate of Wextrust Capital LLC, a Chicago-based investment firm accused of running a Ponzi scheme.
The Wyndham Drake is one of more than 20 Wextrust properties the receiver wants to sell to recover as much money as possible for victims of the alleged $100-million pyramid scheme, according to court documents. The receiver also plans to hand back several local residential developments to lenders, moves that will wipe out Wextrust’s equity stakes in the projects.
Timothy Coleman, who was appointed receiver of the Wextrust portfolio back in August, filed his plan for the Wextrust properties Jan. 15 and expects to begin marketing many of them for sale as soon as next month. Yet finding a buyer for the Wyndham Drake won’t be easy, with many lenders sitting on the sidelines and many buyers fearful of a prolonged downturn in the hotel market.
Adding to the challenge, the hotel is struggling financially.
“Although the hotel is generating cash flow, it is insufficient to cover debt-service payments and the renovations needed to maintain competitiveness in the hospitality market,” a court document says. “Recent market conditions affecting business and recreational travel have worsened the cash crunch.”
Given the state of the market, it’s unlikely that the hotel, at 2301 York Road, will fetch close to the $20 million a Wextrust affiliate paid for it last January. Wextrust, which financed the acquisition with a $14.1-million loan from Regions Bank, planned a major renovation of the hotel, including a 60-room addition, but that plan is on hold.
Instead, the receiver has entered into a forbearance agreement with the lender, the court document says. Terms of the agreement were not disclosed, but the receiver is in talks with Regions Bank to extend the pact.
One hotel investor who asked not to be named estimated that the Wyndham Drake is worth about $12 million, which would mean Wextrust’s investors in the hotel wouldn't get any money back.
Federal prosecutors and the Securities and Exchange Commission charged in August that Wextrust and its principals set up a Ponzi scheme by raising money from investors for specific investments and diverting at least $100 million of it to other, unauthorized purposes. Since then, Northbrook-based Hilco Real Estate LLC has been conducting an analysis of Wextrust’s properties to determine which ones to sell and which ones to keep.
The receiver’s office did not respond to a request for comment. A Hilco spokesman would not answer specific questions about the Wextrust assignment.
The sale list includes the 194-room Park View hotel in Lincoln Park, which also is estimated to be worth less than the debt owed on the property.
Related story: Bank trying to sell loan on former Wextrust hotel
Other local Wextrust properties going on the market are:
• A 55,100-square-foot retail/apartment/medical office building at 1770 First St. in downtown Highland Park purchased for $13 million in 2004.
• A 6,100-square-foot retail/office building at 45 S. Washington St. in Hinsdale purchased for $1.8 million in 2006.
• A 17,600-square-foot retail/office building at 116 N. York Road in Elmhurst acquired for $3.7 million in 2005.
The receiver also expects to agree to non-judicial foreclosures on several of Wextrust’s local residential developments, the largest being the Hamptons of Hinsdale, a 116-unit project in Hinsdale, according to court documents. In a non-judicial foreclosure, or deed-in-lieu of foreclosure, a borrower usually hands over a property to the lender voluntarily, avoiding an often expensive foreclosure process through the courts.
Other local candidates for non-judicial foreclosures include:
• Stonebridge Woods, a proposed 28-unit single-family home development in southwest suburban Homer Glen that’s currently in default.
• An unfinished 48-unit condominium project at 2435 W. Belmont Ave. on Chicago’s North Side.
• A parcel at 2825 N. Oakley Ave., also on the North Side, where Wextrust and a partner planned 19 townhomes.Posted Monday Feb 23, 2009 21:24 # -
More on these crooks...
Diamonds aren't forever
JOHN GROBLER - Feb 24 2009 06:00About 1 400 foreign investors, mostly of Orthodox Jewish persuasion, have been left holding the can after R740-million they invested in South African and Namibian diamond mines went astray in the hands of high-flying Pretoria businessman Michael van der Merwe and his Pure Africa Mining (PAM) group of companies.
Van der Merwe, a former Armscor manager, and his disgraced accountant Sybrand Hanekom have for the past month been facing down liquidators of Wextrust Capital, a Chicago-based investment fund closed down last August by the Securities Exchange Commission for running an illegal pyra mid or Ponzi investment scheme.
Liquidators appointed by a New York federal court found Wextrust had raised $313-million in 70 separate offerings between 2003 and 2008, but had used the money raised from later investors to repay earlier investors. Wextrust's principals Steve Byers and Joe Shereshevsky were arrested on August 5 last year and face several criminal charges.
About $74-million of the $313-million was to be invested in diamond mines PAM had acquired outside Lichtenburg in South Africa and on Namibia's Skeleton Coast and the Orange River.
But only $40-million (about R400-million) reached PAM; the rest appears to have been siphoned by Van der Merwe into a crow's nest of front companies controlled by himself and his family and cronies, sources close to the case say.
Details of the alleged embezzlement emerged from court applications filed in New York, Pretoria and Windhoek by US lawyers seeking to seize control of more than 30 companies set up by Van der Merwe and Hanekom.
The pair are facing a Section 417 inquiry -- set up in the event of bankruptcy under suspicious circumstances -- held in Pretoria before the master of the high court.
The inquiry came after Van der Merwe refused to cooperate with the US authorities, instead liquidating PAM himself in an attempt to put its assets beyond the reach of the Wextrust liquidator, Chicago lawyer Timothy J Coleman of Dewey & LeBoeuf.
As a result, Coleman successfully applied for the winding up of at least 30 companies Van der Merwe had set up between 2005 and 2008.
Former associates said Van der Merwe had "spent money like it was water", acquiring dozens of luxury properties such as houses and game farms, which were registered in the names of members of Van der Merwe'sfamily.
Van der Merwe, a former Armscor manager, Hanekom and lawyer Chris Lombaard now face interrogation from a 13-strong team of Wextrust lawyers over the whereabouts of the R400-million.
All have denied culpability, but all could face criminal charges of fraud -- Hanekom, for one, was disbarred from his profession in 2001 for embezzling R1-million from a client, official records showed.
Wextrust, starting in 2005 when Shereshevsky joined Byers in business, had offered seemingly watertight investments in US real estate and, starting in 2007, investments in diamond mines outside Lichtenburg as well as the Toscanini diamond mine on the Skeleton Coast and Block III on the Orange River.
Most of the money was raised by Shereshevsky from Orthodox Jewish communities in the US and Israel, which had considered him to be an upstanding member as the son of a former rabbi.
Evidence obtained by the US Securities and Exchange Commission suggested that Shereshevsky and Byers hoped the diamond mines would produce the kind of profits that would cover their mounting losses back home, running at about R10-million a month by middle 2008.
"Under the worst […] scenario, I got to get enough money out of the diamond mines to pay the other investors," Byers wrote in an internal email dated June 26, which was intercepted by the FBI.
But production at the mines faltered after an initial good start, mostly because of Van der Merwe grossly overcharging for labour he had hired out to PAM, a former employee said.
Of the R400-million Wextrust had transferred to PAM, only a fraction reached the mines, documents showed. For example, Wextrust had raised about N$110-million from individual investors to invest in Block III, but former managers said only a fraction of that amount was ever committed to exploration and production.
At the same time Van der Merwe had acquired several game farms, houses and a fleet of BMW sports cars -- some of which were bought well after Wextrust was closed down.
Posted Tuesday Feb 24, 2009 21:37 #
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