Universal Express Inc fka USXP

[jking1999]

Today's story in the Palm Beach Post about USXP and SEC. Interesting to note that RA stated that Luggage Express moves 40 bags per day. Amazing. At 100.00 per bag, drumroll please, that comes up to 1.5M per year in revenue. Yikes.

Also, he compares the USXP situation with the Nazis forbidding Jews from owning businesses in 1939. And threatens a "business Waco" situation should anyone try and take over the company.

The man is not stable...


Days may be numbered for Boca businessman wrestling with the SEC
By RANDY DIAMOND

Palm Beach Post Staff Writer

Monday, July 30, 2007

BOCA RATON — Never mind that a federal judge said in Februarythat Richard Altomare, chief executive of Universal Express, had "repeatedly and brazenly" committed fraud. Forget the $21.9 million fine handed out to Altomare and the company's chief counsel along with it, and the fact it barred either man from working again as director or officer of a public company.

Finally, disregard the July 3 request of the Securities and Exchange Commission that the judge incarcerate Altomare for ignoring the order.

Altomare said he is fighting the ruling of federal Judge Gerald Lynch of the Southern District of New York and has filed a notice of appeal. In the meantime, he is still running the company.

''If they wanted to come and seize control of this company they're going to watch another Waco," he said in an interview at the penny-stock company he has run for 13 years. "They're going to have a corporate Waco. Let them come in.''

It's unclear if Altomare, 58, is serious about Waco, a reference to the standoff in Texas in 1993 against federal law enforcement in which dozens of people died. He speaks colorfully about his companies and the civil case against him, comparing his situation to 1939 Berlin when the Germans barred Jews from owning businesses. He admonishes the skeptical to ''Remember the Duke lacrosse players."

But one way or another, the four-year legal battle between Altomare and the SEC is winding down. On June 21 the SEC requested that the court appoint a receiver to take control of the Boca Raton-based company and then on July 3 asked to have Altomare and Universal's New York-based chief counsel Chris Gunderson jailed, unless they resigned.

Altomare, a natural-born showman, has a flair for the dramatic. He also has a broad entrepreneurial spirit that has resulted in interests in more businesses than there are acts in a circus. Divisions of his company do everything from moving freight to selling Michael Jackson memorabilia at auction.

But make no mistake about the securities fraud charges against him: The SEC is wrong. "This is an agency that has gone bad," he said.

The SEC declined to comment on Altomare's case.

Many small companies

Universal Express is an umbrella for a number of companies, most of them involved with the transportation of luggage or baggage. It's best known enterprise is Luggage Express, which picks up traveler baggage at their homes and transports it ahead of their airline flight. A new division, Luggage Express Lost, specializes in returning luggage lost by airlines to hotel rooms or homes.

But Universal Express' interests aren't exclusively luggage. Another division provides services to postal stores. Yet another, run by Altomare's son, moves the belongings of college students to dormitories. Altomare said he is negotiating to buy a New Jersey gas and oil wholesaler who owns and operates in excess of 38 retail gasoline and diesel oil stations. Altomare's plan: nothing less than a national network of gas stations.

Another recent acquisition: A stake in a Boca Raton charter aviation company.

The Universal Express office occupies two small floors of a Boca office building. It has 37 full-time employees, many of whom work in the crowded call center there.

Many of the employees are focused on the work of Luggage Express, sending luggage - 40 bags a day, Altomare says - across the United States and the rest of the world.

Altomare, a former Marine, sees a major company with thousands of employees in the future. He thinks big and believes in cross selling. He started a coalition that seeks to have all luggage sent separate from airline passengers in the name of security - something that, if it were to happen - would boost his businesses enormously.

So far, however, none of his businesses is flying high. Altomare said the company has turned a profit some years but acknowledges that in almost two decades of business, the company has primarily lost money. Universal, according to its SEC filings, lost $18.9 million in 2006 with revenue of $1.1 million. ''We are building something and are proud of our losses,'' he said.

He has been building a long time. Altomare's involvement with the company dates to 1994. That's when he was appointed by a federal bankruptcy judge in New York to serve as trustee of Packaging Plus Services. At the time he was an investment banker. He ultimately brought the company out of bankruptcy and renamed it Universal.

Selling unregistered stock

How can Universal keep losing money and continue to stay in business? By selling more stock.

To run the money-losing enterprise, the penny stock company continues to issue unregistered stock without the SEC's permission - almost 21 billion shares in 2007. The stock was selling for as low as one-fifth of a penny last week on the over-the-counter bulletin board, according to a review of trading boards.

It is the sale of $500 million of unregistered shares between 2001 and 2003, followed by "false or misleading" news releases that the company had received $885 million in new funding, that is at the core of the SEC case against him. The statements had the effect of boosting the share price.

Universal received between $8.5 million and $9 million from the sale of the unregistered stock from April 2001 through December 2003, the SEC said. Altomare profited from selling the stock to the general public. According to the SEC, Altomare also made a direct profit, diverting $1 million of it to his personal accounts or using the money to cover personal expenses.

Altomare said the issuance of new stock without SEC permission was approved by the federal bankruptcy court as part of Universal's reorganization - in 1994. Judge Lynch in his February decision called the assertion that the bankruptcy allowed shares to be sold into perpetuity "baseless."

Further, Universal counsel Gunderson said, Altomare's using the $1 million was proper because he had not been paid a salary for six years because of Universal's financial problems.

Altomare claims the real issue is a grudge against him on the part of the SEC. He said Universal asked the SEC for help when a stock scam victimized the company in the late 1990s but the agency refused to help.

Altomare said he started issuing news releases attacking the SEC in late 2003 for doing nothing about naked short selling. That process, which involves the sale of unowned shares for less than their current value in a wager that share prices will fall, was how Universal's stock price had been manipulated, he said.

Indeed, documents show juries awarded Universal $338 million in July 2001 and $137 million in April 2003 for harm done it by specific investor groups in the late 1990s. Altomare said the company received little of the award.

Court records also show Universal filed suit against the SEC in federal court in Miami in March 2004 seeking damages for the commission's failure to help Universal. The suit also accused the SEC of harassment. Universal's lawsuit against the SEC was dismissed in 2005 and the decision affirmed in appellate court in 2006.

While the SEC case got filed after Altomare's criticism, the SEC maintains it had begun its investigation four months prior, according to court documents.

Universal's legal and financial problems haven't harmed Altomare's finances. Last year Universal's board gave him a $50,000 raise, pushing his salary to $650,000. As Universal's only board member, Altomare approved it himself.

Also in 2006, his wife, Barbara Halpern, who serves as Universal's vice president of administration, received a $906,000 advance, according to the company's 2006 annual report.

"Without Barbara there would have been no Universal Express," Gunderson, the company's chief counsel, wrote in an e-mail. "Barbara's initial loan of over $250,000 from her IRA saved the Company years ago."

Altomare said he intends to beat the SEC. "I should be CEO of the year," he said.

Not everyone is so sure. If Judge Lynch grants the SEC's ruling for a receiver for the company, Universal Express' life will probably be short-lived, said Jim Sallah, a former SEC attorney in Miami, who now is a defense lawyer.

Sallah said that given the company's huge losses, chances are the marshal will pay off debtors and shut the place down. "It will likely be good night for Universal Express,'' he said.

Staff researcher Niels Heimeriks contributed to this story.

http://www.palmbeachpost.com/business/content/business/epaper/2007/07/30/a1bz_universal_0730.html