World Surveillance Group Inc (fka WSGI)

[nilremerlin]

Chris Byron once again proves he's an idiot:

March 20, 2006 -- U.S. CHAMBER SAYS SEC ENFORCEMENT IS JUST TOO ZEALOUS
IS the U.S. Securities and Exchange Commission re ally run by a bunch of government storm troopers looking for the next opportunity to mug some poor corporate CEO and strip him of his civil rights in the name of law and order on Wall Street?

That's what the folks at the U.S. Chamber of Commerce seem to think - at least if one is to judge from a copiously footnoted, 43-page "report" on the SEC that the chamber released last week.

Basically, the document is junk, belied by a mountain of accumulating evidence that shows just how understaffed and out-gunned the SEC really is when it comes to coping with the finaglers of Wall Street.

This week we'll update you on the activities of one such company, GlobeTel Communications Corp., which trades on the American Stock Exchange and seems forever on the verge of some earth-shaking new marketing breakthrough at the frontiers of technology.

Eight months ago, GlobeTel's big story featured aluminum blimps above the jungles of South America. Now the excitement centers around plans for a wireless network connecting the 30 largest cities of Russia.

We'll get deeper into this eclectic mix of businesses in a minute, as well as the interesting collection of businesspeople behind it.

But first let's look more closely at the aforementioned Chamber of Commerce report, which ignores the hundreds - and even thousands - of companies like GlobeTel that are running free through the stock market every day, and chooses instead to single out the SEC itself as the only Wall Street miscreant worth discussing. What bunk!

In reality, the chamber's report amounts to little more than a collection of weakly reasoned potshots in the group's continuing campaign to free Wall Street from the presumed burdens of government regulation.

But the chamber's noisy embrace of laissez-faire capitalism has already claimed at least one SEC scalp, with the resignation last year of SEC Chairman William Donaldson. He was hounded from office by a chamber-led campaign of business groups for having had the temerity to insist that hedge funds not be treated as above the law.

So it's always possible that the chamber's latest anti-SEC rant will find a sympathetic audience as well, making things tougher than they already are for Donaldson's successor as chairman, Christopher Cox.

AMONG the nuttier charges being hurled at his agency in the report: that it is simply outrageous for the SEC Division of Enforcement to come right out and actually punish a company when it breaks the law. (The chamber's preferred approach seems to be for the regulators to sit down and have a nice heart-to-heart talk with management to make sure that the lawless behavior doesn't recur at some point in the future.)

In fact, of course, the real problem with the SEC is not its presumed zealotry, which is all but non-existent, but its crippling lack of resources to get the job done. Not only does the enforcement division have fewer people on the payroll than it did two years ago, but the commission's staff attorneys are now increasingly compelled, by the sheer constraints of manpower, to plead out nearly every litigation case they pursue in order to avoid going to trial.

The SEC also lacks the authority to bring criminal cases on its own, so it must depend on the willingness of the Department of Justice to take up any cases referred to it for prosecution. And since the DoJ already has its hands full with terrorist related cases, cases sent over by the SEC are rarely at the top of anyone's list at DoJ.

Add to that the difficulty prosecutors have in showing "scienter" (guilty intent) in white-collar crime cases, and it's small wonder that the SEC is widely viewed on Wall Street as little more than an annoyance.

In the least, it has hardly curbed the promotional zeal of the crew at GlobeTel Communications, which we last reported on eight months ago in this space.

THIS never-say-die penny stock company began life a quarter century ago as a Nevada homebuilder, then morphed into a company in the shock ab sorber business. After that came the syphilis detection business, and finally (and most bizarrely of all) the aluminum blimp business.

The company's grand plan for the blimps: suspend them 65,000 feet in the air over the jungles of Colombia and use them to relay wireless cell-phone signals around that country.

Now frankly, this seemed a tad ambitious an undertaking for a 44-employee company with just $3.8 million in the bank. And a press release announcing that a Miami investment group called Apogeo Enterprises planned to invest $50 million in the project didn't provide comfort for long either, since nearly a year has now passed and the Globetel financials show nary a hint of that $50 million or indeed any portion thereof.

Meanwhile, however, GlobeTel has morphed yet again - in spirit if not in name - and since last December the company has been gearing up (and gearing up, and gearing up) to knock us all dead with plans for a new $600 million cell-phone network connecting the 30 largest cities in Russia.

The very first press release touting this mega-project - issued by the company on Dec. 30 - seemed to carry all the assurance any investor would want regarding the project's bona fides. The most comforting part of all: language that described the deal as a "binding agreement" between GlobeTel and an impressive-sounding outfit called LLC Internafta.

Investors were certainly impressed because Globetel's stock surged more than 76 percent, on five times normal volume, when news of the deal was announced.

Unfortunately, in the three months that have passed since then, the $600 million Russian deal has begun to look rather like a replay of the $50 million aluminum blimps deal, with the "binding agreement" giving way to a series of increasingly lengthy and tediously detailed press releases explaining why GlobeTel hadn't yet received the first dime of anything from its Russian partners.

By the start of last week, even GlobeTel seemed to be growing weary of all the explaining and issued a press release stating that if the Internafta people didn't come through with something solid by the end of the week, the whole deal was off.

Well, not quite. On Friday, came yet another release, this one explaining, in a confused sort of way, how no one needed to worry because everything was kind of sort of back together, so to speak, so the deal was still on - at which point nervous investors scrambled back into the sliding shares and they abruptly began to climb all over again.

Who has been calling the shots in this obviously fishy situation is by no means clear.

Just don't expect the SEC to look into that (or any other) question about this home builder turned syphilis tester turned aluminum blimp and Russian cell phone company that won't call it quits.

If the Chamber of Commerce were right about the way the SEC operates, a goon squad from the enforcement division would have kicked down Globetel's door long ago. But that hasn't happened, and no one expects it to either - which is why the penny stock market still thrives, why GlobeTel is still in business and why the chamber's report on the SEC is 43 pages of B.S. [e-mail]

http://www.nypost.com/business/61245.htm

nilremerlin