Correction to post 4116:
Post 4116 is unnecessarily confusing because I messed up on an html tag. Here is the correctly formatted version.
Financeguy, you are truly a worthy adversary. Now, let’s look point by point at what you said:
1) I stated that Pulitzer Prize winner and former HQNT treasurer Jack Anderson has said that Doug Cohn is “untrustworthy”. I also provided a link to the story that quoted Anderson. You replied:
Have you spoken to Jack Anderson? Has anyone you know talked to him? No. He's on his deathbed. Doug and Jack were friends for 18 years and partners for 5. Jack's family hasn't allowed anyone to contact him. There's no proof he even said it. Or, if so, what the context was. So, this point is irrelevant. But, it makes such good copy to keep bringing it up, doesn't it?
Wrong!!! There is proof that Jack Anderson said Cohn is “untrustworthy”. All you had to do was click on the link I provided. Let me point out the relevant part of the story. This is what Howard Kurtz, a staff writer for the Washington Post wrote:
Now, for the first time, the 81-year-old journalist, disabled by Parkinson's disease, has broken his silence. In a frail voice, Anderson, who uses a wheelchair, said from his Bethesda home that he does not want Cohn to continue the column because "he has proven to be untrustworthy, I regret to say." The column should survive only "if my heirs feel they can continue in some way."
It is obvious that Kurtz spoke to Jack Anderson. He even described Anderson’s voice as “frail”. That is not the type of detail that a reporter for the Washington Post would make up. And if Cohn thought Kurtz was making up bogus details for his story then I’m sure he would have sued the Washington Post for libel. After all, who has done more damage to Cohn’s reputation—Max Jones who asked embarrassing questions on a bulletin board that was read by probably no more than a few hundred people at most, or the Washington Post—a highly regarded news source that is read and believed by millions?
If Cohn had any reason to believe that Kurtz was making the story up then surely he would have filed a libel suit against both Kurtz and the Washington Post. After all, he filed a SLAPP suit against Jones in order to shut him up for exposing Cohn’s questionable business activities. Why wouldn’t he sue Kurtz and the Washington Post if he thought they were guilty of making up a story that held him up to ridicule nationwide? Oh, I know—maybe he went after Jigfish because it was easier to sue a 69-year old man with heart problems who would have trouble scraping up the money to mount a legal defense than it was to go after a powerhouse like the Post that would have the legal firepower to blow him out of the water.
2) You claim that HQNT lost the OHA lawsuit because it never had its day in Court. Judge Frost heard that excuse and he didn’t buy it. And Cohn had LOTS of time to cough up the banking records that OHA demanded in its discovery. OHA’s first demanded documents from HQNT on June 5, 2002. HQNT delayed and delayed and delayed and refused to either cough up the records or provide a valid objection to OHA’s demand for documents. The Court did not hand OHA a default judgment against HQNT until July 1, 2003—more than a year after OHA’s initial demand for documents. Cohn and HQNT moved that the Court set aside or ammend its default judgment on the grounds that their lawyer was grossly negligent. Judge Frost agreed with Cohn that his lawyer was grossly negligent, but he refused to set aside the verdict because Cohn himself was negligent as well. You can read the final order here.
http://www.our-street.com/Finalmotion.pdf
I thought the following form page 8 was especially telling:
The above facts, established by Mr. Cohn’s affidavit, can only be explained as Mr. Cohn’s “inadvertence, indifference, or careless disregard of consequences… The
facts of Mr. Cohn’s case are analogous to factual situations where courts have found that a defaulting party willfully chose not to conduct its litigation responsibly.
This is from page 10:
As the proceeding discussion shows, Defendant Cohn willfully chose to disregard the litigation in which he was a party . . . Regardless of what Mr. Cohn actually knew, it is clear that Mr. Cohn disregarded his responsibilities to opposing counsel and to the Court.
And on page 11, Judge Frost said Mr. Cohn was very much a part of the discovery failure that led to the Court’s default judgment.
3) I stated that you conveniently failed to mention that the jury in the Rao case thought that Cohn was such a sleazeball that they ended up rewarding the Raos even more money than they were demanding. You replied:
Interesting viewpoint. The Jury gives a bigger award and you assume it's because they felt Doug was..how did you put it..."Such a sleazeball"...sounds like a dispassionate statement. You can't prove that...but it makes a great headline huh? Yes, you're good at what you do.
All right, I admit that I made a slight interpretation of the jury’s opinion of Cohn. It is very unusual for a jury to award the Plaintiff more money than he had asked for. I assume that the jury awarded Rao et al such a large award because they found that Cohn’s behavior was particularly egregious. I think that this is a safe assumption. And most people would say that someone who has committed an especially egregious act of conversion is a sleazeball. Maybe you don’t feel that way, Financeguy, but I think most people would agree with my opinion. So it is not that far a leap to assume that the jury must have thought Cohn was a sleazeball. I stand by my statement, but I want to emphasize that my statement is a reasonable opinion based on known facts.
4) I will come back to the issue of the SGD trade credits at the end of this post. However, I do note that you did not refute that Cohn issued false and misleading press releases which overstated earnings and which announced the closing of a deal to acquire Information Resource Products Inc, when no such subsidiary was acquired.
5) You stated: Speaking of trade credits, you made a little freudian slip there Timothy...you mentioned that no one have been able to refute YOU'RE evidence. You must mean the "Evidence" you posted on Our-street. Say, how is the lawsuit with the SEC, HQnt, the company in Colorado and the company in Illinois going? Wow, 4 major lawsuits with lawyers representing you in 4 different venues. That must get expensive, huh? Tough on a guy unemployed in Slovenia. Say, who's paying those legal bills again?
I have no idea if what you say about Timothy Miles being in Slovenia is true or not. And I have no idea what the status of his lawsuit is. I AM NOT TIMOTHY MILES . Nor do I work for Miles, nor have I had any contact with Miles or Our Street other than voting for Cohn to win Our-Street’s Scammy Award. Yet you raised this accusation on the flimsiest of evidence because it suits your agenda to portray me as the Our Street Boogeyman. When I stated that no one has been able to refute my evidence that Cohn lied about the trade credits, I was referring to the evidence I raised in posts 3327, 3470, 3678, 3908 and 3946. Your willingness to portray me as an evil, law-breaking shorter on such flimsy evidence reminds me a lot of Cohn’s accusation in his complaint against Max Jones that Jones was posting negative comments about the company “to support a fraudulent scheme to short sell HQ stock.” As far as I know, Cohn had no reasonable basis for such a claim and I have seen absolutely NO evidence presented that would cause one to believe that Jigfish was involved in such a scheme. Do I detect a theme here? Do HQNT supporters make up bogus accusations to smear their opponents when doing so furthers their agendas?
6) You stated: 6) Yes, in April and May the financials were promised. That was just before the Rao suit was filed. And you know how agressive the Rao's attorneys were. Forensic auditors. Papering Hqnt to death with discovery questions. Dominating Hqnt management and it's auditors with request after request. Given the acquisition of Stewart and Shaw and the excessive burden of discovery heaped upon hqnt, it's not at all surprising that the financials have been delayed.
Oh boy! A new excuse! Let’s see how many excuses Doug has used to delay the financials. At the July 12, 2004 stockholders meeting he blamed it on the Stewart and Shaw acquisition and he said he didn’t want to release the financials because he wanted HQNT to be on the Pinksheets. He said that if he published the financials it would help those nasty shorters who were shorting it on the Berlin Exchange. Then he blamed it on the burdensome Sarbanes-Oxley reporting requirements. Now the Raos are the new excuse. I guess the next excuse for delaying the financials will be the Connors lawsuit. Here is a rule of thumb, Financeguy: The more excuses that are given, the less believable the person giving the excuses becomes. Witness the little boy who says to his teacher “I couldn’t turn in my homework because my computer crashed. No, wait, my dog ate it! No, wait, it was destroyed when my house burned down. Well, if you don’t believe that, would you believe I was bringing my paper to school when a bully stole it from me?”
You claim that the discovery under Rao was excessively burdensome to the point where it paralyzed HQNT and its auditors from completing the financials for roughly a year. I find this hard to believe. If the Rao’s requests were this burdensome then you would think that the Court would limit discovery under Federal Rule of Civil Procedure 26 (b) (2).
http://www.law.cornell.edu/rules/frcp/Rule26.htm
(2) Limitations.
By order, the court may alter the limits in these rules on the number of depositions and interrogatories or the length of depositions under Rule 30. By order or local rule, the court may also limit the number of requests under Rule 36. The frequency or extent of use of the discovery methods otherwise permitted under these rules and by any local rule shall be limited by the court if it determines that: (i) the discovery sought is unreasonably cumulative or duplicative, or is obtainable from some other source that is more convenient, less burdensome, or less expensive; (ii) the party seeking discovery has had ample opportunity by discovery in the action to obtain the information sought; or (iii) the burden or expense of the proposed discovery outweighs its likely benefit, taking into account the needs of the case, the amount in controversy, the parties' resources, the importance of the issues at stake in the litigation, and the importance of the proposed discovery in resolving the issues. The court may act upon its own initiative after reasonable notice or pursuant to a motion under Rule 26(c).
In light of Rule 26 (b) (2), “the Raos ate my financials” sounds just like one more sorry excuse.
But even if the Raos were relentless in their discovery requests, then Cohn should have responded by hiring a CFO to help him prepare the financials and to provide the documents that the Raos requested. But he has not hired a CFO, despite the fact that he issued the following press release:
H-Quotient Record Audited Financials Scheduled
5/26/2004 2:41:00 PM
VIENNA, Va., May 26, 2004 (BUSINESS WIRE) -- H-Quotient, Inc., (OTC Bulletin Board:HQNTE), announced the impending release of its annual audited financial statement. The financials, which were delayed due to the Company's recent major acquisition which began last year, will soon be released.
The earnings will be record-breaking.
Meanwhile, the Company has implemented new accounting systems and plans to add a chief financial officer in the near future, all of which will impact future financial reporting. The current CFO is also the CEO.
President and CEO Douglas Cohn said, "We are very pleased with the progress of the Company, and the financial statements will validate this opinion. It has been an eventful and complex year, factors that delay financial reporting, but bode very well for the future."
As I see it, there are only three possible reasons for Doug's failure to hire a CFO.
a) HQNT is not nearly as profitable as Doug would have you believe and they can't afford to hire a CFO.
b) Doug doesn't really want to hire a CFO because he fears having someone else muck around in his books and discover he's been pulling off a massive fraud.
Or
c) No qualified candidate wants the job. Competent candidates can detect an odor eminating from this company a mile away and they don't want their names associated with it.
So you tell me, Financeguy, if the Raos were as burdensome as you say they were, then Cohn would have had an especially strong incentive to hire a CFO. Why did he fail to do so? And why did he announce the “impending release” of the financials in his May 26 press release, and why did he emphasize that they “will soon be released.” That makes it sound like the financials were nearly completed. And what stopped him from releasing the financials between May 26 and the July 12 stockholders meeting? Certainly not the Rao suit, because Doug never mentioned that as the reason for the delay at his meeting.
7) You wrote: 7) Musky Don praised the software which proved to be flawed. Hqnt's own tech guy had to fix it to the tune of about $385,000. Ok, so we didn't use Musky Don to help fix the software. He may have lost money in hqnt. So, no one else can invest here now?
You missed my point about Musky Don. You are obviously a bright guy, Financeguy, so I suspect you deliberately missed my point. Anyone is free to invest in HQNT if they like what they see. I have never said otherwise. I brought Musky Don up as an example of someone who had once been favorably impressed by HQNT who has now turned against Cohn because he thinks he was lied to.
8) You wrote: James Connors was paid about $83,000 in legal fees for representing hqnt. Now he wants more. It's not going to be settled on the internet and you know it. They'll just have to work that out. What does that have to do with anything? Oh yeah, I forgot...makes a good headline. Keeps up the selling pressure. BTW, I heard Doug doesn't drink. Can we come up with something juicy on that? Like, he a recovering alcoholic? Hmmmm, wanted for public drunkeness in Utah? Work on it, I know you'll come up with a good one.
I made no claims that Connors’ lawsuit had any merit. In fact, I stated I don’t know if Connors is telling the truth or pulling this out of his a_ss, and neither does anyone else here. I brought Connors up because he was just one more person who has called Cohn’s credibility into question. We now have Judge Frost of the OHA case, Jack Anderson, the Rao jury, Musky Don and Professor Kaupert, and James Connors all questioning Cohn’s credibility. Combine this with the false and misleading press releases and it does not paint a pretty picture.
And I have no reason to cast aspersions on Doug’s private life. I have no desire to make up stuff about him being a recovering alcoholic or a druggie or any other such nonsense. In fact, I recognize and salute him for the noble things that he has accomplished in life. He has served his country well, having earned two Silver Stars and a Purple Heart for his service in Viet Nam. But his national service does not get him a free pass for criticism when he does something wrong in his capacity as CEO of a public company.
9) You wrote: Doug IS a nationally syndicated writer. His works still appear in various respected journals. And he does respect the first amendment...just not yelling fire in a movie theater. That is criminal behavoir. There's a difference. But, you know that already
I stand corrected when I said Doug WAS a nationally syndicated writer. However, Jigfish wasn’t yelling fire in a movie theater. He was questioning the truthfulness of HQNT’s press releases—an activity protected by the First Amendment. And even if he was yelling fire, he does not seem to be alone. We now have Judge Frost of the OHA case, Jack Anderson, the Rao jury, Musky Don and Professor Kaupert, and James Connors all claiming they smell smoke (metaphorically speaking). When that many people smell smoke then a fire is usually nearby.
10) You wrote: Hqnt bought Intelliservices. They bought the stock from the Intel. shareholders under a contract that they warranted the disclosures to be true and accurate. The $385,000 judgement against Rao proves he made false statements. When the problems with the software came to light, giving it back was an option which was considered. But, who says they had any money left or that they wanted it back? They'd just passed off a bill of goods. They were happy. Cohn went about fixing the software at considerable time and expense. They would have benefitted by Hqnt ultimate success...but they wanted $12 MM instead. Hey, it's a free country, you can sue anybody for any amount. And, btw, thanks for the free legal advice about how Cohn should have handled this. I'm sure he or his attorneys never thought about the course you recommended...damn! Well, if you'll give us your name and phone number we'll be sure to call you first next time.
The Raos may have sold Cohn a bill of goods, but Cohn still found value in what he received and he apparently did not make a good faith payment to reflect that value. Arguing that he did not owe the Raos anything because he was swindled is like arguing that the guy who buys a house can refuse to pay for it because he was not informed about a leaky roof that cost him $30,000 to replace. The unfortunate new homeowner has several options. He can refuse to move in and go to court to have his contract cancelled. He can sue the previous owners for the $30,000 it costs him to repair the roof. Or he could deduct the $30,000 for the roof’s repair from the payments he makes to the previous owner. He does not have the option of refusing to pay altogether. (OK, I know this analogy is weak because he would be paying off the mortgage to a bank instead of paying the old owners directly. But you get my point.)
Now I will get back to the SGD credits you mentioned in point 4. You wrote: The trade credits exist. They from to a company called Oncorp (sp?). The 10,000 sq ft building may have fallen through. So what?
And why should I believe the trade credits exist? Because some anonymous source, whose other claims are dubious, said so on the internet? How did the SGD trade credits become Oncorp trade credits? And how can we verify that Oncorp exists, is a totally independent entity from HQNT, and has the financial capacity to honor those credits? A cynic might claim that Doug could have created a shell company named Oncorp which then “purchased” HQNT’s SGD trade credits with trade credits of its own right before SGD went bankrupt, thus leaving HQNT with “valuable” Oncorp trade credits. How could one prove such a cynic wrong?
The existence of the SGD trade credits has been called into question since September 9, 2003 when Timothy Miles published his complaint to the SEC. Cohn could have cleared up the confusion by issuing a press release and filing a statement with the SEC explaining what happened to the SGD trade credits and how they became Oncorp trade credits. Had he provided public, verifiable information documenting the existence of the trade credits then he would have deprived the bashers of one of their most potent weapons and put this issue to rest. Instead, he has come up with sorry excuse after sorry excuse to explain his failure to file any financial statements since November 20, 2003. His failure to file any financials only increased the appearance that if and when the financials are released, they will contain a nasty surprise such as a write-down of the trade credits.
Thus, I do not believe you when you say that the trade credits exist, Financeguy. However, I will acknowledge the remote possibility that they could exist, so I will refrain in the future from reposting my claim that Doug intentionally lied when he stated the credits were worth $2.6 million in the quarterly report he filed in November 2003. If Doug wants me to apologize for those posts then he need only file documents with the SEC and/or issue a press release providing verifiable information about how the SGD trade credits became Oncorp trade credits. If it can be verified that Oncorp is not tied at the hip to HQNT or controlled by Douglas Cohn or anyone else associated with HQNT, then I will gladly apologize for my claim that Doug lied.
Finally, you closed with the following pump: So, all you shorts out there, get ready for a punishing blow when the financial statements finally reveal what good things have been happening way, way off radar.
I hope for the sake of the stockholders that your prediction that the financial statements will be released and will reveal good news is more accurate than your prediction that a short squeeze would drive SNDH up to $100 a share.
Posted by: financeguy
In reply to: Awesomeseating who wrote msg# 1556
Date:4/8/2005 4:39:47 PM
Post #1558 of 4115
NO WAY!!!
That means 2 million shares of sndh must be bought? SNDH is going to the moon. Fasten your seat belts, boys, we're going ballistic. $100 a share is not out of the question.
This is without a doubt the most amazing, short punishing manuever I have ever witnessed.
Cohn will accomplish more with this than all the talk in Washington about ending illegal short selling. I've never seen anything like this in 30 years of investing.
It might just form the template that companies will use to fight back against illegal naked short selling.
Posted by: financeguy
In reply to: Resectorman who wrote msg# 1561
Date:4/8/2005 4:59:25 PM
Post # 1565 of 4115
Yes, it appears that Cohn tried to get justice from the shorts in court, but finally decided to just get justice by working the rules of the free market. If he holds out for $100 a share, he'll pocket $200 million dollars and strike a blow that will reverberate around the short selling world.
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