Monday, July 16, 2007 11:34:31 PM
Some people have asked me to login and join the conversation here. I cannot do so at this time. I will login and post legal pleadings and public documents to keep people informed.
Here is what was mailed to the Court on Friday by my office.
Do not ask me questions by private message, I will not and cannot respond. You may contact me at my email address listed in my profile.
UNITED STATES BANKRUPTCY COURT
WESTERN DISTRICT OF TEXAS
SAN ANTONION DIVISION
In re: § Case: 07-10940
§
PRIVADA INC. § Chapter 7
f/k/a NETCO INVESTMENTS, INC., §
§
Debtor. §
KEITH MAYDAK’S OPPOSITION TO MOTION TO DISMISS BANKRUPTCY
Petitioning creditor Keith Maydak (“Maydak”) opposes the motion to dismiss for the following reasons:
1. The debtor before this Court was once a multi-million dollar telecommunications carrier known as Telatinos, so says its press releases. See Exhibit A. Now, the debtor lacks the assets to protest this case and has been named in a federal interpleader suit in New York but has no legal counsel to aid it. Yet, subordinate creditor Corey Ribotsky, doing business as AJW Partners LLC, New Millennium Capital Partners II LLC, AJW Qualified Partners LLC, and AJW Offshore Ltd. (collectively “Ribotsky”) moves this Court to dismiss the bankruptcy citing a convoluted tale that demonstrates that the present corporation should either be liquidated under Chapter 7 of the United States Bankruptcy Code, or reorganized if possible under Chapter 11.
2. Ribotsky claims that his “offshore” funds are owed hundreds of thousands of dollars in unpaid notes that are convertible to stock. Ribotsky complains that he was unable to convert his notes into common stock. See Ribotsky’s Motion to Dismiss at 16-17.
3. Ribotsky objects to the bankruptcy. He, incredibly, states that the purpose of the bankruptcy is to “destroy” the debtor. Id, at 49. However, this appears nonsensical because under Chapter 7, the independent trustee would research the assets of the debtor and, if assets existed, collect them for the benefit of the creditors and shareholders. If no assets could be located, then the bankruptcy would be terminated and the debtor would be in the exact state it was in prior to the filing of the action. In fact, unless Ribotsky received a distribution, his convertible note – if valid at all – would still be valid after the termination of the bankruptcy.
4. Apparently, the real reason Ribotsky objects is because his claims, based on an agreement to provide him stock, would be subordinate under 11 USC §510. See, e.g., Rombro v. Dufrayne, 461 F3d 251 (2d Cir. 2006)(finding that executive’s claim based on his non-receipt of stock “arose from” the purchase of securities and was subordinate); In re: Telegroup, Inc., 281 F3d 133 (3d Cir. 2002)(claim that debtor failed to convey its stock as required by agreement subordinate under 11 USC 510); In re: Betacom of Phoenix, Inc., 240 F3d 823 (9th Cir. 2001)(same).
5. One thing appears certain from Ribotsky’s motion – the debtor is insolvent and there is a need for this bankruptcy proceeding. By Ribotsky’s own admission, the debtor failed to provide him with the payments, in the form of stock, that he demanded. If the debtor is indeed obligated to provide the stock to Ribotsky, the assert demonstrates that the debtor is not fulfilling its obligations to Ribotsky.
6. At no point in Ribotsky’s motion to dismiss does he aver that the debtor has the funds to continue business. Apparently, Ribotsky does not care about this so long as he receives his shares of stock – apparently because his intent is to sell them to unwitting investors on the open stock market.
7. Ribotsky cites a battery of cases where bankruptcies were filed in bad faith. Usually, those bankruptcy actions were filed against companies that were operating legitimate businesses or had the ability to pay creditors. In this case, Ribotsky does not make any such claims. Rather, Ribotsky seems to allege, citing some inadmissible coincidences about a missing internet file in an unrelated litigation, a commonality of fonts in litigation templates, and whacky messages on a stock bulletin board, that a person claiming control of the company in an interpleader action is the petitioning creditor, Keith Maydak, in this action.
8. The undersigned, knowing full well the penalties for violating Bankruptcy Rule 9011, affirmatively states and represents that he has never acted as the defendant in the aforementioned litigation, Marco Chavarria. Moreover, the undersigned affirmatively states that he has never used the name belonging to Mr. Chavarria for any purpose. That is not to say that he does not know of Mr. Chavarria. Indeed, Creditor Maydak’s connection with the debtor is admitted by virtue of the filing of the instant bankruptcy petition. The only bona fide officer and director of the debtor was and may still be Petitioning Creditor Rodrigo Calderon. Calderon is a petitioning creditor in this case, and he is also the person who caused the indebtedness to Maydak. With that in mind, it can be said that there is a connection between each and every creditor of the debtor.
9. Although patently false and misleading, Ribotsky’s objection to this bankruptcy demonstrates that need for judicial intervention as to the debtor. The undersigned has not been able to locate a person who will admit that they are officially an officer or director of the company.
10. In the cited litigation in New York, which Maydak is not a party to, Chavarria asserted a claim to control. The debtor’s attorney then moved to withdraw and included a letter from a person known as Paul Taylor that he did not “object” to Chavarria’s claim. However, in documents filed previous to the non-objection, the debtor’s stock transfer agent averred that Mr. Taylor was the “contact” person of the debtor. The last bona fide officer was Petitioning Creditor Calderon, but he was apparently removed by the resolution of Arnoldo Pacheco.
11. The undersigned’s agent contacted Mr. Pacheco, and the undersigned listened to the conversation. Mr. Pacheco stated that somebody used his name and he vehemently disavowed engaging in any activities involving the debtor. Mr. Pacheco said he cannot stop people from using his name.
12. In documents filed with the Secretary of the State of Texas, Marco Chavarria signs as “authorized officer. However, Ribotsky disputes Chavarria’s status and, assuming the dispute has merit, there is no present officer to control the company. See Exhibit C.
13. Thus, the Court has before it a debtor that apparently has no officer and no director.
14. Looking at Ribotsky’s motion to dismiss, there is no claim that bona fide representatives of the debtor exist.
15. Thus, the debtor appears not only to be insolvent, but to lack a control person that will take responsibility to reorganize or act for the debtor for the benefit of the creditors, shareholders, or even for Ribotsky.
16. Ribotsky does not state that he will take control of the company and reorganize it for the benefit of the creditors and shareholders without judicial intervention. Ribotsky does not aver who should control the debtor and, this alone, makes the motion to dismiss problematic.
17. Looking further into Ribotsky’s motion to dismiss, he asserts that the Petitioning Creditors have no non-contingent, undisputed claim against the debtor.
18. However, Ribotsky provides no evidence of this. He does not explain how the creditors’ claims are frivolous or lack merit. He has personally taken the prospective trustee’s job and made boilerplate allegations that no bona fide claim exists.
19. Maydak possesses several claims against the company, and he will file a clear proof of claim in this proceeding. The crux of the claims relates to a consultancy agreement that was entered at a time when the company did not have any dispute as to who the officer was. Ribotsky does not mention this because, as a simple creditor of the company, he does not have full knowledge of the inner workings and operations of the debtor.
20. Ribotsky’s mere suggestion that “there is no reason to believe that Maydak, Duszak, and Banks can establish a prima facie case that they have non-contingent, undisputed claims against the Debtor.” But there is no explanation why this is so and no discussion of the debtor’s dispute.
21. On the contrary, Ribotsky chooses to personally attack the Petitioning Creditors using comedic newspaper articles and he infers that the petitioners are generally bad people. But Ribotsky’s own business practices have been cited in major publications as being questionable. See Exhibit B. Ribotsky provided no evidence that he actually paid the money in his so-called convertible notes. Ribotsky demands evidence about a non-party’s consideration in connection with a note (a note that was filed in the State of Texas and has been accepted by the District Court in Austin, Texas, without challenge by the debtor), but he provides none for his alleged notes.
22. In other words, this Court has an involuntary petition for bankruptcy filed against a debtor that did not respond to the summons despite service on its statutory agent. The only person contesting the bankruptcy is a subordinate creditor who avers only a tale that, if true, would be all the more reason for this Court to take control of the debtor.
23. This is not a case of taking the ball and going home, as the anonymous internet poster surmised in support of Ribotsky’s motion to dismiss – rather, this is a case of placing a corporation under control of the Court so an independent trustee can investigate where millions of dollars disappeared to. In the alternative, if somebody with an interest is willing to come forward and file a petition to convert, then the debtor can be reorganized and can determine, with the aid of the Court, where its own assets went.
WHEREFORE, Petitioning Creditor Keith Maydak respectfully demands that this Court deny the motion to dismiss, issue an Order for Relief, and immediately appoint a trustee.
Respectfully submitted,
______________________________
Keith Maydak
ul. Chopina 2a/4
Elblag, Poland 82-300
+48-22-389-6930
k.maydak@k2send.com
PETITIONING CREDITOR
EXHIBIT A – PRESS RELEASE BY DEBTOR ABOUT 2005 REVENUES
Telatinos Estimates Company Performance For 2005
Distribution Source : Prime Newswire
Date : Tuesday, January 18, 2005
MIAMI, Jan. 18, 2005 (PRIMEZONE) -- Telatinos Inc. (Pink Sheets:TLTD), a Latin American VoIP and communication service provider, today announced the Company's estimated revenues from all sources for 2005 to be approximately $85,000,000.
-- Internet Service Provider (ISP) revenue.
The Company services approximately 500,000 ISP clients,
which equates to about $22 million for 2005.
-- Communication Consultancy (Consultancy) revenue.
The Company has hired seven new sales/technical
consultants. We approximate consultancy revenues of
about $12 million for 2005.
-- SME Purchase, Implementation and Maintenance (Sales) revenue.
The Company has booked contracts valued at approximately
$51 million for 2005.
In addition, the Company has completed its GAAP audited financials for 2002 and 2003 and will shortly complete audited financials 2004.
About IPxes Inc.
IPxes, a wholly owned subsidiary of Telatinos Inc., is a business class, highly scalable communications service that provides broadband data, voice and wireless service using multiple integrated T-1 lines with a layer-2 private network. Our proprietary technology and integration provides our SME customers with dedicated Internet access, customizable business solutions for voice, data, wireless, Internet, and secure communications channels between the SMEs' offices, all partners, vendors, customers and employees without the use of a firewall or encryption devices. IPxes has a growing network presence in South America, including network facilities in Brazil, Peru, Colombia, Costa Rica, and Miami, Florida.
IPxes' proprietary technology, XRF link(r), remote network locations may be connected through IPxes' network enabling secure and direct transfer of communication, documents, databases, and virtually any other information between a client's headquarters and their remote locations. Each location is provided with dedicated access and extended services resulting in maximum efficiency. The XRF link solution allows data to be delivered at the fastest and most efficient speeds available today. In addition, unlike traditional encryption-based virtual private network technologies, XRF link avoids the use of the public internet for transferring secured information between locations. Secured information travels on a private network. IPxes clients experience the highest level of speed, security and efficiency.
About Telatinos Inc.
Telatinos is an emerging Latin American ISP and communications service provider offering full-featured, cost-effective, high-quality local, long distance and international telephone services -- including 911 and E911 -- to both businesses and private residences in Latin America.
Learn more about our Company at www.telatinos.com.
Forward Looking Statement
This release may be deemed to contain forward-looking statements, which are subject to the safe harbor provisions of the Private Litigation Reform Act of 1995. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results due to a variety of factors, including: business and economic conditions and growth trends in the VOIP industry and Latin America; in the geopolitical environment; overall information technology spending; the growth of the Internet; levels of capital spending on Internet-based systems and other risk factors. Telatinos results of operations are not necessarily indicative of Telatinos operating results for any future periods.
EXHIBIT B – FORBES ARTICLE ABOUT MOVANT RIBOTSKY’S BUSINESS DEALINGS
Sewer Pipes
Hedge funds are posting nice returns from deals
that may involve ex-cons, stock scammers--even the Mob.
Forbes.com
By Nathan Vardi
January 26, 2007
If your entrepreneurial venture were desperate for capital, would you get it from a hedge fund? Sometimes that's not such a good idea. Consider Laurus Master Fund. The Cayman Islands hedge fund opened with $5 million under management in 2001 and has grown to $1.6 billion making investments in so-called PIPEs, or private investments in public equities.
In those deals the fund invests in a cash-starved, thinly traded public company. In exchange it gets securities--notes that charge interest, warrants and options--convertible into common shares of the company. Laurus claims it has achieved an annualized net return of 18.5% since inception. The people running Laurus from New York--brothers Eugene Grin, 49, and David Grin, 37--are making out pretty well, too. In addition to the standard 2% of assets and 20% cut of profits, they also collect a closing fee, an average 3.5% of each deal, which they liken to points on a mortgage. As for the companies they invest in? Not so well. On average they lose 30% of their stock price within a year of signing a Laurus pipe, says PlacementTracker, a San Diego research service.
PIPEs are a big business, drawing $28 billion last year from hedge funds. Some of the companies raising the capital are large, but most are desperate indeed, too small or too weak financially to raise money with a public stock offering. Some of the hedge funds providing the money are not financiers that you would select if you had a choice.
Originally from Ukraine, Eugene Grin became a vacuum cleaner salesman when he landed in the U.S. in 1979. Then he worked as a broker of penny stocks, among other investments, at F.N. Wolf & Co., the boiler room shut down by regulators in 1994. At Wolf one of Grin's clients was Gilbert Bornstein, a 54-year-old unemployed man who invested $32,000 with Grin after being convinced he could safely double his money through penny stocks. (Grin says he never made that claim.) Bornstein was soon stuck with $27,000 in losses. Nine years later a New York State judge determined that Grin owed Bornstein $40,000. Grin has yet to pay that bill, and the judgment remains outstanding. "He was superwealthy," Grin shrugs, by way of an excuse. "There was money in the family."
Today Grin and his younger brother, David, still traffic in penny stocks. But they do so through PIPEs. Hedge funds love these deals because the shares they get are often priced at a discount to the market to compensate for the fact that they can't be traded until they are registered with the Securities & Exchange Commission, which can take months. Meantime, though, hedge funds can value those PIPE warrants and options pretty much any way they want and calculate their net asset value accordingly. The larger the gain in a fund's NAV, of course, the more attractive it is to new investors.
And the more attention these deals may draw from regulators. "Improper trading practices in connection with PIPEs is a concern," says David Markowitz, an SEC assistant regional director in New York. "It's an area that SEC enforcement is looking at." The feds have so far focused on the improper shorting of stock. It is mighty tempting for a PIPE buyer to double-cross the company it is investing in by shorting the company's stock and using the conversion privileges with the PIPE investment to cover its short position. That earns the investor a quick spread but wrecks the target's ability to raise more equity capital. Such shorting is forbidden by Section 5 of the Securities Act. In September a U.S. Attorney charged Hilary Shane, a former hedge fund manager, with insider trading, accusing her of shorting Compudyne's stock after learning that Compudyne was contemplating a pipe fundraising. On Jan. 4 Joseph Spiegel, a onetime portfolio manager for a New York hedge fund, settled SEC allegations of his using PIPE shares to cover short trades and paid a $110,000 penalty.
Andrew Worden, 41, runs Barron Partners, a $150 million hedge fund that has invested $85 million in pipes since 2003. The fund flogs its expertise in microcap companies. It doesn't promote the fact that Worden in 1994 pleaded guilty to wire fraud--he stiffed brokers on shares they bought for him that decreased in value--and served two years' probation. "I was 23 years old," Worden says of his indiscretions, which were not prosecuted for five years.
In March 2005 Barron Partners invested $1.5 million in Cordia Corp., a Winter Garden, Fla. Internet-phone outfit 54% owned by Alexander G. Minella, who in 1993 was sentenced to up to six years in prison. Minella, then president of broker Wakefield Financial Corp., pleaded guilty to having "secretly rigged the trading in certain Nasdaq securities" by getting brokers to trade among themselves to manipulate prices.
Corey Ribotsky, 36, heads N.I.R. Group, a handful of Roslyn, N.Y. hedge funds with $630 million under management. His first business partner successfully sued him for stealing away their marketing and consulting firm. The florist at Ribotsky's wedding filed a $7,275 claim against him for failing to pay the bill.
So how does he do as a hedge fund manager? A Ribotsky PIPE, on average, precedes a stock-price drop of 54% a year after the deal, according to PlacementTracker. That still works for Ribotsky because of the way he structures a PIPE: He receives debt securities convertible into discounted stock, in an amount determined by dividing the principal by the price of the shares at the time of conversion, less a steep discount. The further a stock falls, the more shares he gets.
Since Ribotsky invested $1.5 million in 2005, shares in Med Gen are down from $1 on the OTC Bulletin board to a fraction of a penny. The Boca Raton, Fla. company had less than $1 million in sales from an antisnoring spray, diet pills and supplements. (Its biggest shareholder and chief executive is Paul B. Kravitz, the former president of AppleTree Cos., who paid a $25,000 penalty in 1996 to settle SEC claims that he failed to tell investors in an AppleTree offering that he planned to invest $250,000 in a gambling casino.) Ribotsky converted the debt into 171 million shares of Med Gen, at discounts of 40%, by September 2006. Did he sell his stake, triggering the stock-price plunge? N.I.R. lawyer Jonathan Schechter declines to say. "It is not us that makes a company lose its value--maybe a company hasn't executed its business plan," he says, adding that N.I.R. never shorts a stock.
One of Ribotsky's PIPEs, a $1 million investment in Roanoke Technology, a Rocky Mount, N.C. Web site designer, allowed N.I.R. to purchase newly issued shares at a discount of 50%; Roanoke's shares then traded hands on the OTC Bulletin board at 12 cents. After Ribotsky sued Roanoke when it didn't meet its loan payments, Roanoke countersued, claiming that N.I.R.'s selloff of shares was destroying the company.
Indeed, trading volume of Roanoke stock jumped from 180,000 to 2.4 million shares on the days Ribotsky's funds filed conversion notices, say court documents, and the stock price plunged to less than a penny. Both suits were settled. Roanoke chief David L. Smith Jr. ended up leaving the company and settling SEC charges in August 2006 that he improperly issued stock to consultants who sold them for $7 million and kicked back $4 million to him. Smith has been barred from acting as an officer or director of a public company.
When it comes to dicey partners, though, few are as accomplished as the Grins. They financed Francis O'Donnell, who has gotten to know the feds pretty well. Taking over as chief of Searchhound.com, an OTC Bulletin board stock in 2003, O'Donnell changed its name to Coach Industries, quickly built up a controlling stake in the Cooper City, Fla. firm and started acquiring limousine companies. Laurus backed him with a $6 million loan. On Jan. 5 O'Donnell pleaded guilty to being an associate of the Genovese crime family. The indictment also claimed that an FBI agent posing as a drug dealer was asked to launder proceeds through Coach in exchange for a fee. In addition O'Donnell is accused of luring a victim to his office, where Clement (Clemmie) Santoro allegedly held a gun to his head and demanded a $1.5 million payment.
The Grins invested $1.5 million in April 2004 with Magic Lantern Group, which marketed Canadian educational videos. Their introduction to the company came through National Financial Communications , owned by Geoffrey Eiten, a Needham, Mass. newsletter writer who flogged companies and claimed to show readers "how to make 5,000%" on their money. Magic Lantern's biggest backer was Lancer Management Group, a New York City hedge fund that blew up amid accusations of fraud.
Magic Lantern, which lost $15.9 million on sales of $2.7 million in 2004, began to disintegrate. Eiten was sued in September 2006 by William Galvin, Massachusetts secretary of state, for engaging in "widespread 'pump and dump' transactions by publicly promoting certain stocks at the same time he was selling them." Galvin released chummy e-mails between Eugene Grin and Eiten's company suggesting they team up to sell Magic Lantern shares. Eiten denies any wrongdoing. Laurus managed to eke out what it calls "a nominal profit" before Magic Lantern's stock collapsed.
In November 2004 Laurus agreed to lend Thomas Equipment, which makes skid loaders and hydraulic equipment in Canada, $22 million to finance acquisitions and operations. At the time the stock traded at 88 cents. Most of Laurus' loans were convertible into stock at prices of $1.50 a share; the Grins also bought 2 million shares for a penny each and received options to purchase 4 million more for a cent apiece. Helped by a steady stream of press releases, Thomas shares touched $8.99 in January 2005 on light volume.
What was driving the stock? James Patty, former interim chief executive at Thomas and a current board member, says that David Grin was constantly focused on Thomas Equipment's share price, even though the lack of liquidity in the stock meant that Laurus could not sell too many shares without driving down the price. Word came down from David Grin, says Patty, "that he couldn't allow that type of hit to his portfolio." Why? "My assumption would be he was looking at a valuation of the company in order to attract additional money into his fund," Patty says.
Ridiculous, says Eugene Grin. The effect of Thomas' high stock price on Laurus' net asset value "was never material." His valuation model, he claims, discounts severely for the lack of trading volume in a stock like Thomas. A good thing for Laurus: Thomas Equipment's two main units have filed for insolvency in Canada; it was yanked off the American Stock Exchange and now trades for 8 cents.
Eugene Grin says he never shorts a stock. He also insists that Laurus provides a valuable service--and is more like a bank than a hedge fund. "We have tens of thousands of people working because of our investments," he says. "It's a beautiful thing."
CERTIFICATE OF SERVICE
I, Keith Maydak, certify that I caused to be sent a true copy of the foregoing to all parties that have appeared in this action:
Rodrigo C. Araya
Apartado 3124-1000
San Jose Costa Rica
Added: 05/30/2007
(Petitioning Creditor)
PRO SE
Frederick Banks
P.O. Box 5000
Yazoo City, MS 39194
Added: 06/12/2007
(Petitioning Creditor)
PRO SE
Malgorzata Duszak
ul. Chopina 2a/4
Elblag, Poland 82-300
Added: 05/30/2007
(Petitioning Creditor)
PRO SE
New Millennium Capital Partners II, LLC
Added: 06/26/2007
(Creditor) represented by Patricia Baron Tomasco
Brown McCarroll, L.L.P.
111 Congress Avenue, Suite 1400
Austin, TX 78701
512-479-1141
512-226-7320 (fax)
ptomasco@mailbmc.com
Assigned: 06/26/07
Privada, Inc.
Netco Investments, Inc.
100 Congress Center, 200
Austin, TX 78701
Tax id: 00-0000000
Added: 05/29/2007
(Debtor)
PRO SE
Susan Taylor
16421 Via Venetia East
Delray Beach, FL 33484
Added: 07/11/2007
(Interested Party)
United States Trustee - AU12
United States Trustee
903 San Jacinto Blvd, Suite 230
Austin, TX 78701
(512) 916-5330
ustpregion07.au.ecf@usdoj.gov
Added: 05/29/2007
(U.S. Trustee)
This 13th day of July, 2007.
______________________________________
Keith Maydak
Here is what was mailed to the Court on Friday by my office.
Do not ask me questions by private message, I will not and cannot respond. You may contact me at my email address listed in my profile.
UNITED STATES BANKRUPTCY COURT
WESTERN DISTRICT OF TEXAS
SAN ANTONION DIVISION
In re: § Case: 07-10940
§
PRIVADA INC. § Chapter 7
f/k/a NETCO INVESTMENTS, INC., §
§
Debtor. §
KEITH MAYDAK’S OPPOSITION TO MOTION TO DISMISS BANKRUPTCY
Petitioning creditor Keith Maydak (“Maydak”) opposes the motion to dismiss for the following reasons:
1. The debtor before this Court was once a multi-million dollar telecommunications carrier known as Telatinos, so says its press releases. See Exhibit A. Now, the debtor lacks the assets to protest this case and has been named in a federal interpleader suit in New York but has no legal counsel to aid it. Yet, subordinate creditor Corey Ribotsky, doing business as AJW Partners LLC, New Millennium Capital Partners II LLC, AJW Qualified Partners LLC, and AJW Offshore Ltd. (collectively “Ribotsky”) moves this Court to dismiss the bankruptcy citing a convoluted tale that demonstrates that the present corporation should either be liquidated under Chapter 7 of the United States Bankruptcy Code, or reorganized if possible under Chapter 11.
2. Ribotsky claims that his “offshore” funds are owed hundreds of thousands of dollars in unpaid notes that are convertible to stock. Ribotsky complains that he was unable to convert his notes into common stock. See Ribotsky’s Motion to Dismiss at 16-17.
3. Ribotsky objects to the bankruptcy. He, incredibly, states that the purpose of the bankruptcy is to “destroy” the debtor. Id, at 49. However, this appears nonsensical because under Chapter 7, the independent trustee would research the assets of the debtor and, if assets existed, collect them for the benefit of the creditors and shareholders. If no assets could be located, then the bankruptcy would be terminated and the debtor would be in the exact state it was in prior to the filing of the action. In fact, unless Ribotsky received a distribution, his convertible note – if valid at all – would still be valid after the termination of the bankruptcy.
4. Apparently, the real reason Ribotsky objects is because his claims, based on an agreement to provide him stock, would be subordinate under 11 USC §510. See, e.g., Rombro v. Dufrayne, 461 F3d 251 (2d Cir. 2006)(finding that executive’s claim based on his non-receipt of stock “arose from” the purchase of securities and was subordinate); In re: Telegroup, Inc., 281 F3d 133 (3d Cir. 2002)(claim that debtor failed to convey its stock as required by agreement subordinate under 11 USC 510); In re: Betacom of Phoenix, Inc., 240 F3d 823 (9th Cir. 2001)(same).
5. One thing appears certain from Ribotsky’s motion – the debtor is insolvent and there is a need for this bankruptcy proceeding. By Ribotsky’s own admission, the debtor failed to provide him with the payments, in the form of stock, that he demanded. If the debtor is indeed obligated to provide the stock to Ribotsky, the assert demonstrates that the debtor is not fulfilling its obligations to Ribotsky.
6. At no point in Ribotsky’s motion to dismiss does he aver that the debtor has the funds to continue business. Apparently, Ribotsky does not care about this so long as he receives his shares of stock – apparently because his intent is to sell them to unwitting investors on the open stock market.
7. Ribotsky cites a battery of cases where bankruptcies were filed in bad faith. Usually, those bankruptcy actions were filed against companies that were operating legitimate businesses or had the ability to pay creditors. In this case, Ribotsky does not make any such claims. Rather, Ribotsky seems to allege, citing some inadmissible coincidences about a missing internet file in an unrelated litigation, a commonality of fonts in litigation templates, and whacky messages on a stock bulletin board, that a person claiming control of the company in an interpleader action is the petitioning creditor, Keith Maydak, in this action.
8. The undersigned, knowing full well the penalties for violating Bankruptcy Rule 9011, affirmatively states and represents that he has never acted as the defendant in the aforementioned litigation, Marco Chavarria. Moreover, the undersigned affirmatively states that he has never used the name belonging to Mr. Chavarria for any purpose. That is not to say that he does not know of Mr. Chavarria. Indeed, Creditor Maydak’s connection with the debtor is admitted by virtue of the filing of the instant bankruptcy petition. The only bona fide officer and director of the debtor was and may still be Petitioning Creditor Rodrigo Calderon. Calderon is a petitioning creditor in this case, and he is also the person who caused the indebtedness to Maydak. With that in mind, it can be said that there is a connection between each and every creditor of the debtor.
9. Although patently false and misleading, Ribotsky’s objection to this bankruptcy demonstrates that need for judicial intervention as to the debtor. The undersigned has not been able to locate a person who will admit that they are officially an officer or director of the company.
10. In the cited litigation in New York, which Maydak is not a party to, Chavarria asserted a claim to control. The debtor’s attorney then moved to withdraw and included a letter from a person known as Paul Taylor that he did not “object” to Chavarria’s claim. However, in documents filed previous to the non-objection, the debtor’s stock transfer agent averred that Mr. Taylor was the “contact” person of the debtor. The last bona fide officer was Petitioning Creditor Calderon, but he was apparently removed by the resolution of Arnoldo Pacheco.
11. The undersigned’s agent contacted Mr. Pacheco, and the undersigned listened to the conversation. Mr. Pacheco stated that somebody used his name and he vehemently disavowed engaging in any activities involving the debtor. Mr. Pacheco said he cannot stop people from using his name.
12. In documents filed with the Secretary of the State of Texas, Marco Chavarria signs as “authorized officer. However, Ribotsky disputes Chavarria’s status and, assuming the dispute has merit, there is no present officer to control the company. See Exhibit C.
13. Thus, the Court has before it a debtor that apparently has no officer and no director.
14. Looking at Ribotsky’s motion to dismiss, there is no claim that bona fide representatives of the debtor exist.
15. Thus, the debtor appears not only to be insolvent, but to lack a control person that will take responsibility to reorganize or act for the debtor for the benefit of the creditors, shareholders, or even for Ribotsky.
16. Ribotsky does not state that he will take control of the company and reorganize it for the benefit of the creditors and shareholders without judicial intervention. Ribotsky does not aver who should control the debtor and, this alone, makes the motion to dismiss problematic.
17. Looking further into Ribotsky’s motion to dismiss, he asserts that the Petitioning Creditors have no non-contingent, undisputed claim against the debtor.
18. However, Ribotsky provides no evidence of this. He does not explain how the creditors’ claims are frivolous or lack merit. He has personally taken the prospective trustee’s job and made boilerplate allegations that no bona fide claim exists.
19. Maydak possesses several claims against the company, and he will file a clear proof of claim in this proceeding. The crux of the claims relates to a consultancy agreement that was entered at a time when the company did not have any dispute as to who the officer was. Ribotsky does not mention this because, as a simple creditor of the company, he does not have full knowledge of the inner workings and operations of the debtor.
20. Ribotsky’s mere suggestion that “there is no reason to believe that Maydak, Duszak, and Banks can establish a prima facie case that they have non-contingent, undisputed claims against the Debtor.” But there is no explanation why this is so and no discussion of the debtor’s dispute.
21. On the contrary, Ribotsky chooses to personally attack the Petitioning Creditors using comedic newspaper articles and he infers that the petitioners are generally bad people. But Ribotsky’s own business practices have been cited in major publications as being questionable. See Exhibit B. Ribotsky provided no evidence that he actually paid the money in his so-called convertible notes. Ribotsky demands evidence about a non-party’s consideration in connection with a note (a note that was filed in the State of Texas and has been accepted by the District Court in Austin, Texas, without challenge by the debtor), but he provides none for his alleged notes.
22. In other words, this Court has an involuntary petition for bankruptcy filed against a debtor that did not respond to the summons despite service on its statutory agent. The only person contesting the bankruptcy is a subordinate creditor who avers only a tale that, if true, would be all the more reason for this Court to take control of the debtor.
23. This is not a case of taking the ball and going home, as the anonymous internet poster surmised in support of Ribotsky’s motion to dismiss – rather, this is a case of placing a corporation under control of the Court so an independent trustee can investigate where millions of dollars disappeared to. In the alternative, if somebody with an interest is willing to come forward and file a petition to convert, then the debtor can be reorganized and can determine, with the aid of the Court, where its own assets went.
WHEREFORE, Petitioning Creditor Keith Maydak respectfully demands that this Court deny the motion to dismiss, issue an Order for Relief, and immediately appoint a trustee.
Respectfully submitted,
______________________________
Keith Maydak
ul. Chopina 2a/4
Elblag, Poland 82-300
+48-22-389-6930
k.maydak@k2send.com
PETITIONING CREDITOR
EXHIBIT A – PRESS RELEASE BY DEBTOR ABOUT 2005 REVENUES
Telatinos Estimates Company Performance For 2005
Distribution Source : Prime Newswire
Date : Tuesday, January 18, 2005
MIAMI, Jan. 18, 2005 (PRIMEZONE) -- Telatinos Inc. (Pink Sheets:TLTD), a Latin American VoIP and communication service provider, today announced the Company's estimated revenues from all sources for 2005 to be approximately $85,000,000.
-- Internet Service Provider (ISP) revenue.
The Company services approximately 500,000 ISP clients,
which equates to about $22 million for 2005.
-- Communication Consultancy (Consultancy) revenue.
The Company has hired seven new sales/technical
consultants. We approximate consultancy revenues of
about $12 million for 2005.
-- SME Purchase, Implementation and Maintenance (Sales) revenue.
The Company has booked contracts valued at approximately
$51 million for 2005.
In addition, the Company has completed its GAAP audited financials for 2002 and 2003 and will shortly complete audited financials 2004.
About IPxes Inc.
IPxes, a wholly owned subsidiary of Telatinos Inc., is a business class, highly scalable communications service that provides broadband data, voice and wireless service using multiple integrated T-1 lines with a layer-2 private network. Our proprietary technology and integration provides our SME customers with dedicated Internet access, customizable business solutions for voice, data, wireless, Internet, and secure communications channels between the SMEs' offices, all partners, vendors, customers and employees without the use of a firewall or encryption devices. IPxes has a growing network presence in South America, including network facilities in Brazil, Peru, Colombia, Costa Rica, and Miami, Florida.
IPxes' proprietary technology, XRF link(r), remote network locations may be connected through IPxes' network enabling secure and direct transfer of communication, documents, databases, and virtually any other information between a client's headquarters and their remote locations. Each location is provided with dedicated access and extended services resulting in maximum efficiency. The XRF link solution allows data to be delivered at the fastest and most efficient speeds available today. In addition, unlike traditional encryption-based virtual private network technologies, XRF link avoids the use of the public internet for transferring secured information between locations. Secured information travels on a private network. IPxes clients experience the highest level of speed, security and efficiency.
About Telatinos Inc.
Telatinos is an emerging Latin American ISP and communications service provider offering full-featured, cost-effective, high-quality local, long distance and international telephone services -- including 911 and E911 -- to both businesses and private residences in Latin America.
Learn more about our Company at www.telatinos.com.
Forward Looking Statement
This release may be deemed to contain forward-looking statements, which are subject to the safe harbor provisions of the Private Litigation Reform Act of 1995. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results due to a variety of factors, including: business and economic conditions and growth trends in the VOIP industry and Latin America; in the geopolitical environment; overall information technology spending; the growth of the Internet; levels of capital spending on Internet-based systems and other risk factors. Telatinos results of operations are not necessarily indicative of Telatinos operating results for any future periods.
EXHIBIT B – FORBES ARTICLE ABOUT MOVANT RIBOTSKY’S BUSINESS DEALINGS
Sewer Pipes
Hedge funds are posting nice returns from deals
that may involve ex-cons, stock scammers--even the Mob.
Forbes.com
By Nathan Vardi
January 26, 2007
If your entrepreneurial venture were desperate for capital, would you get it from a hedge fund? Sometimes that's not such a good idea. Consider Laurus Master Fund. The Cayman Islands hedge fund opened with $5 million under management in 2001 and has grown to $1.6 billion making investments in so-called PIPEs, or private investments in public equities.
In those deals the fund invests in a cash-starved, thinly traded public company. In exchange it gets securities--notes that charge interest, warrants and options--convertible into common shares of the company. Laurus claims it has achieved an annualized net return of 18.5% since inception. The people running Laurus from New York--brothers Eugene Grin, 49, and David Grin, 37--are making out pretty well, too. In addition to the standard 2% of assets and 20% cut of profits, they also collect a closing fee, an average 3.5% of each deal, which they liken to points on a mortgage. As for the companies they invest in? Not so well. On average they lose 30% of their stock price within a year of signing a Laurus pipe, says PlacementTracker, a San Diego research service.
PIPEs are a big business, drawing $28 billion last year from hedge funds. Some of the companies raising the capital are large, but most are desperate indeed, too small or too weak financially to raise money with a public stock offering. Some of the hedge funds providing the money are not financiers that you would select if you had a choice.
Originally from Ukraine, Eugene Grin became a vacuum cleaner salesman when he landed in the U.S. in 1979. Then he worked as a broker of penny stocks, among other investments, at F.N. Wolf & Co., the boiler room shut down by regulators in 1994. At Wolf one of Grin's clients was Gilbert Bornstein, a 54-year-old unemployed man who invested $32,000 with Grin after being convinced he could safely double his money through penny stocks. (Grin says he never made that claim.) Bornstein was soon stuck with $27,000 in losses. Nine years later a New York State judge determined that Grin owed Bornstein $40,000. Grin has yet to pay that bill, and the judgment remains outstanding. "He was superwealthy," Grin shrugs, by way of an excuse. "There was money in the family."
Today Grin and his younger brother, David, still traffic in penny stocks. But they do so through PIPEs. Hedge funds love these deals because the shares they get are often priced at a discount to the market to compensate for the fact that they can't be traded until they are registered with the Securities & Exchange Commission, which can take months. Meantime, though, hedge funds can value those PIPE warrants and options pretty much any way they want and calculate their net asset value accordingly. The larger the gain in a fund's NAV, of course, the more attractive it is to new investors.
And the more attention these deals may draw from regulators. "Improper trading practices in connection with PIPEs is a concern," says David Markowitz, an SEC assistant regional director in New York. "It's an area that SEC enforcement is looking at." The feds have so far focused on the improper shorting of stock. It is mighty tempting for a PIPE buyer to double-cross the company it is investing in by shorting the company's stock and using the conversion privileges with the PIPE investment to cover its short position. That earns the investor a quick spread but wrecks the target's ability to raise more equity capital. Such shorting is forbidden by Section 5 of the Securities Act. In September a U.S. Attorney charged Hilary Shane, a former hedge fund manager, with insider trading, accusing her of shorting Compudyne's stock after learning that Compudyne was contemplating a pipe fundraising. On Jan. 4 Joseph Spiegel, a onetime portfolio manager for a New York hedge fund, settled SEC allegations of his using PIPE shares to cover short trades and paid a $110,000 penalty.
Andrew Worden, 41, runs Barron Partners, a $150 million hedge fund that has invested $85 million in pipes since 2003. The fund flogs its expertise in microcap companies. It doesn't promote the fact that Worden in 1994 pleaded guilty to wire fraud--he stiffed brokers on shares they bought for him that decreased in value--and served two years' probation. "I was 23 years old," Worden says of his indiscretions, which were not prosecuted for five years.
In March 2005 Barron Partners invested $1.5 million in Cordia Corp., a Winter Garden, Fla. Internet-phone outfit 54% owned by Alexander G. Minella, who in 1993 was sentenced to up to six years in prison. Minella, then president of broker Wakefield Financial Corp., pleaded guilty to having "secretly rigged the trading in certain Nasdaq securities" by getting brokers to trade among themselves to manipulate prices.
Corey Ribotsky, 36, heads N.I.R. Group, a handful of Roslyn, N.Y. hedge funds with $630 million under management. His first business partner successfully sued him for stealing away their marketing and consulting firm. The florist at Ribotsky's wedding filed a $7,275 claim against him for failing to pay the bill.
So how does he do as a hedge fund manager? A Ribotsky PIPE, on average, precedes a stock-price drop of 54% a year after the deal, according to PlacementTracker. That still works for Ribotsky because of the way he structures a PIPE: He receives debt securities convertible into discounted stock, in an amount determined by dividing the principal by the price of the shares at the time of conversion, less a steep discount. The further a stock falls, the more shares he gets.
Since Ribotsky invested $1.5 million in 2005, shares in Med Gen are down from $1 on the OTC Bulletin board to a fraction of a penny. The Boca Raton, Fla. company had less than $1 million in sales from an antisnoring spray, diet pills and supplements. (Its biggest shareholder and chief executive is Paul B. Kravitz, the former president of AppleTree Cos., who paid a $25,000 penalty in 1996 to settle SEC claims that he failed to tell investors in an AppleTree offering that he planned to invest $250,000 in a gambling casino.) Ribotsky converted the debt into 171 million shares of Med Gen, at discounts of 40%, by September 2006. Did he sell his stake, triggering the stock-price plunge? N.I.R. lawyer Jonathan Schechter declines to say. "It is not us that makes a company lose its value--maybe a company hasn't executed its business plan," he says, adding that N.I.R. never shorts a stock.
One of Ribotsky's PIPEs, a $1 million investment in Roanoke Technology, a Rocky Mount, N.C. Web site designer, allowed N.I.R. to purchase newly issued shares at a discount of 50%; Roanoke's shares then traded hands on the OTC Bulletin board at 12 cents. After Ribotsky sued Roanoke when it didn't meet its loan payments, Roanoke countersued, claiming that N.I.R.'s selloff of shares was destroying the company.
Indeed, trading volume of Roanoke stock jumped from 180,000 to 2.4 million shares on the days Ribotsky's funds filed conversion notices, say court documents, and the stock price plunged to less than a penny. Both suits were settled. Roanoke chief David L. Smith Jr. ended up leaving the company and settling SEC charges in August 2006 that he improperly issued stock to consultants who sold them for $7 million and kicked back $4 million to him. Smith has been barred from acting as an officer or director of a public company.
When it comes to dicey partners, though, few are as accomplished as the Grins. They financed Francis O'Donnell, who has gotten to know the feds pretty well. Taking over as chief of Searchhound.com, an OTC Bulletin board stock in 2003, O'Donnell changed its name to Coach Industries, quickly built up a controlling stake in the Cooper City, Fla. firm and started acquiring limousine companies. Laurus backed him with a $6 million loan. On Jan. 5 O'Donnell pleaded guilty to being an associate of the Genovese crime family. The indictment also claimed that an FBI agent posing as a drug dealer was asked to launder proceeds through Coach in exchange for a fee. In addition O'Donnell is accused of luring a victim to his office, where Clement (Clemmie) Santoro allegedly held a gun to his head and demanded a $1.5 million payment.
The Grins invested $1.5 million in April 2004 with Magic Lantern Group, which marketed Canadian educational videos. Their introduction to the company came through National Financial Communications , owned by Geoffrey Eiten, a Needham, Mass. newsletter writer who flogged companies and claimed to show readers "how to make 5,000%" on their money. Magic Lantern's biggest backer was Lancer Management Group, a New York City hedge fund that blew up amid accusations of fraud.
Magic Lantern, which lost $15.9 million on sales of $2.7 million in 2004, began to disintegrate. Eiten was sued in September 2006 by William Galvin, Massachusetts secretary of state, for engaging in "widespread 'pump and dump' transactions by publicly promoting certain stocks at the same time he was selling them." Galvin released chummy e-mails between Eugene Grin and Eiten's company suggesting they team up to sell Magic Lantern shares. Eiten denies any wrongdoing. Laurus managed to eke out what it calls "a nominal profit" before Magic Lantern's stock collapsed.
In November 2004 Laurus agreed to lend Thomas Equipment, which makes skid loaders and hydraulic equipment in Canada, $22 million to finance acquisitions and operations. At the time the stock traded at 88 cents. Most of Laurus' loans were convertible into stock at prices of $1.50 a share; the Grins also bought 2 million shares for a penny each and received options to purchase 4 million more for a cent apiece. Helped by a steady stream of press releases, Thomas shares touched $8.99 in January 2005 on light volume.
What was driving the stock? James Patty, former interim chief executive at Thomas and a current board member, says that David Grin was constantly focused on Thomas Equipment's share price, even though the lack of liquidity in the stock meant that Laurus could not sell too many shares without driving down the price. Word came down from David Grin, says Patty, "that he couldn't allow that type of hit to his portfolio." Why? "My assumption would be he was looking at a valuation of the company in order to attract additional money into his fund," Patty says.
Ridiculous, says Eugene Grin. The effect of Thomas' high stock price on Laurus' net asset value "was never material." His valuation model, he claims, discounts severely for the lack of trading volume in a stock like Thomas. A good thing for Laurus: Thomas Equipment's two main units have filed for insolvency in Canada; it was yanked off the American Stock Exchange and now trades for 8 cents.
Eugene Grin says he never shorts a stock. He also insists that Laurus provides a valuable service--and is more like a bank than a hedge fund. "We have tens of thousands of people working because of our investments," he says. "It's a beautiful thing."
CERTIFICATE OF SERVICE
I, Keith Maydak, certify that I caused to be sent a true copy of the foregoing to all parties that have appeared in this action:
Rodrigo C. Araya
Apartado 3124-1000
San Jose Costa Rica
Added: 05/30/2007
(Petitioning Creditor)
PRO SE
Frederick Banks
P.O. Box 5000
Yazoo City, MS 39194
Added: 06/12/2007
(Petitioning Creditor)
PRO SE
Malgorzata Duszak
ul. Chopina 2a/4
Elblag, Poland 82-300
Added: 05/30/2007
(Petitioning Creditor)
PRO SE
New Millennium Capital Partners II, LLC
Added: 06/26/2007
(Creditor) represented by Patricia Baron Tomasco
Brown McCarroll, L.L.P.
111 Congress Avenue, Suite 1400
Austin, TX 78701
512-479-1141
512-226-7320 (fax)
ptomasco@mailbmc.com
Assigned: 06/26/07
Privada, Inc.
Netco Investments, Inc.
100 Congress Center, 200
Austin, TX 78701
Tax id: 00-0000000
Added: 05/29/2007
(Debtor)
PRO SE
Susan Taylor
16421 Via Venetia East
Delray Beach, FL 33484
Added: 07/11/2007
(Interested Party)
United States Trustee - AU12
United States Trustee
903 San Jacinto Blvd, Suite 230
Austin, TX 78701
(512) 916-5330
ustpregion07.au.ecf@usdoj.gov
Added: 05/29/2007
(U.S. Trustee)
This 13th day of July, 2007.
______________________________________
Keith Maydak
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