Quote by klplatt81
Re: THURSDAY SEPT. 11TH, 2008
Reply #80 on: Today at 07:22:28 AM »
I have attached a few pages of notes from court yesterday. I was
there for the entire proceedings and took these notes as best I could.
If you had been there yesterday, 2 things would probably have struck
you. First, is some of this stuff really true? Second, some of this seemed well-rehearsed, put on.
Regarding the first, I spoke to RPH for about an hour last night. He was cordial
and open, answering anything I asked. I would not be making this post today had I felt he was not being truthful. You don't have to take my word for it, as a matter of fact, please don't. Either move on or watch and wait. I choose the latter because I don't believe a liar would push the issues. Time will tell but I believe RPH is going to
push this like you won't believe.
Regardig the second, I tried to leave my thoughts and comments out of the notes. There are times when I wondered why they didn't ask obvious questions. There are times when it was obvious that they were trying to stress issues, especially as it related to family selling shares and their motives....for me, it was not overly convincing, however, that will be left with RPH's ability to prove his side.
I have a very busy day at work and have little time to watch the forum. There's not much
more that I can answer other than give you my opinion. You are welcome to PM me for which I will provide public answers. I will not be able to keep up on the forum today.
As a final note....the court proceedings were discouraging, however, I am not moved. No, HSM'ers or anyone else, I am not drinking kool-aid. I just believe what I believe and that is.....there is more to this than meets the eye. This was not just a complex scam....somebody is covering up. Let's see if any more punches are thrown or if this just fades away as other scams do. I believe we have just seen the end of round
one....the real fight begins now. Lee Webb will be getting the transcripts but so will RPH. Webb is predictable, but what will RPH do with them? Time will tell. I'm watching from a ringside seat and certainly not leaving now.
kevin
[klplatt81’s notes]
I am not a court reporter and failed miserably taking notes years ago while in school! These are notes taken to the best of my ability as events occurred in court.
Present at the time court began:
Alana Black, William Hicks, and another unnamed SEC employee
Witnesses: Mark (shareholder), Carol Tucker, James Orr, David Elzinga
Observers: Myself and another shareholder
Court started at 13:45 with Judge Cooper stating that he gave RPH 15 minutes to arrive. He stated that RPH was informed of the court proceedings, briefly discussed his appeal and that it was denied and then allowed Alana Black to proceed. All of this occurred within a 3-5 minute.
Alana Black first introduced either 5 or 6 depositions. I recorded 5 but there may have been a 6th. Depositions submitted as evidence were from: RPH, Ben Stanley, Darryl Horton, Mr. Benson, and an individual from Euroclear.
There were four witnesses called. I will number each witness so that you know who was speaking and in what order. The first was Mark:
1.Mark was introduced as a shareholder. He was questioned about the size of his family, whether anyone else lived with him, etc. He was asked if he had even purchased stock before and he was uncertain. He was asked about researching the stock and stated that he read on the internet that RPH was a crook and that he should not get involved. Ultimately, he said he purchased 544 shares at $1966 and then another 9000+ for approximately $28,000. I believe it was said that the second purchase came on or about 9/29. He said he eventual sold for about $20. This witness was deposed in no more than 10 minutes.
2.Carol Tucker of Merrill Lynch in Rome was the next witness. She said that on 10/2/06, Christopher Todd Harris and Faye Harris came to the office desiring to convert their Waatle shares to CSHD. It was said that Todd desired to sell some shares so that he could build an investment portfolio and to pay some bills. It was also said that Faye Harris wanted to sell some shares so that she could buy a car. Both stated that they received the Waatle shares for work performed (Todd for construction; Faye for office work but I don’t recall exact descriptions). Exhibit 31 was introduced as Todd’s cert for 250,000 shares. Exhibit 32 was Faye’s for 350,000.
Carol sent the Waatle certs to the TA electronically for CSHD conversion. She said it took 2 days. She said she did the same for Anissa Jarrett….exhibit 33 for 1,000,000 shares was introduced. Once the shares were converted, the 3 were notified and shares began to be sold.
Exhibits 34-36 were introduced. These were Faye’s, Anissa’s, and Todd’s Merrill Lynch statements for October, 2006.
Merrill Lynch compliance department instructed the office to stop trading the shares. (I am unclear as to what the witness stated triggered the compliance department intervention but believe it was because this was considered a penny stock, by their classification under $6 per share, and that a large number of shares were being sold). I have in my notes at this point that Anissa stated she wanted to sell so that she could buy a horse farm.
When the trading was halted, the witness stated that RPH called and asked why. She said she explained the circumstances and that he began to discuss high level info he knew regarding trading, stocks, etc., and said he would sue if they didn’t proceed. At this point there was some discussion about RPH’s and Anissa’s relationship. The witness said RPH and Anissa were separated or divorced, it was unclear.
The compliance department instructed the office to begin reverse sales. As the shares were bought back it left a large deficit in the accounts because the stock price had dropped. She stated that the accounts are still unsettled.
3.The third witness was James Orr of Merrill Lynch in Rome. He said that RPH seemed to be directing them as to a good time and price to sell. He said RPH interviewed him and said he would recommend his sister-in-law. It was the next day that Anissa Jarrett called. He concluded that she was single and did not tie RPH to her. He was asked if there is an attempt to associate relationships of customers; he said yes but did not expound. He repeated and confirmed much of what the previous witness stated.
He said the clients were notified that trading had to cease until the Compliance Dept. looked into the sales. “The clients became frustrated over 2-3 days.” He said they wanted to move their accounts to another broker as others were trading and willing to trade. He said the Merrill Lynch incurred a $40,000 loss and notified the clients; none has been paid back. He was then questioned about this loss. Merrill Lynch has frozen the loss until such time as the court proceedings are concluded. If not rectified, the loss becomes Mr. Orr’s personal loss.
4.The last witness was David Elzinga, a 16 year staff accountant for the Atlanta SEC office. He stated he reviewed both CSHD and RPH accounts. He said he has about a 1 foot high stack of records and has put these into spreadsheets. He stated that a 2nd CSHD account “possibly existed.” He never expounded on this statement.
He stated that the corporate account was spent on horse stables, travel, lifestyle; that much of it looked as personal use. Alana Black then should him and submitted several exhibits:
#20...Corp acct to RPH for salary from 9/05 to 3/06 for $362,200
#25…Ben’s salary from 9/05-9/06 for $251,400
#22, 23, 24 were summaries of expenses thru CSHD’s corporate acct by debit cards and checks. From 9/05-12/06, total expenses were $1,553,003 with the largest categories named as retail and business expenses with some cash withdrawals.
Exhibit 26 was listed as horse expenses. Witness stated he tied these together because “Job 1010” was listed consistently for these types of items in the memo field. These totaled $120,318.
Exhibit 27 was checks and transfers into the Corp account. Many stated payment for stock. Mr. Elzinga assumed these to be investor investments which totaled $1,990,475 from 8/05 thru 10/06.
Exhibit 30 was introduced as the total trading amount for the period of 7/06-10/06. This was a sum of $157 million.
A few final statements were then brought out in an exchange between Alana and the witness.
There is no evidence that RPH ever sold any stock.
The only asset was the UCC1 Bond brought from Waatle.
It is estimated that roughly 3,200 lost money totally some $15.7 million.
Short selling of approximately 250,000 shares---that was not a significant figure.
At this point, there was a 15 minute recess called.
When court was called back in session, Judge Cooper asked a few questions, one of which was “who is the CEO.” Alana responded that there were many confusing shake-ups and that “it would take months of legal research to determine.”
Alana then began her closing remarks. She began by introducing exhibits 37 and 38 which were some documents regarding BBAN and a Nevada case. (These may have been RPH and Ben Stanley’s statements relative to BBAN—I am uncertain). She stated that these exhibits were not signed and acknowledged that they would be considered as “court hearsay”, but felt they were relevant and admissible because RPH was CEO of this, another company.
She then referenced Benson’s deposition, that he had received his information from RPH. She stated, the “fabled UCC1 note” brought from Waatle; that this was the sole asset used to raise funds from investors buying convertible notes. She said that RPH also stated this in his deposition. This note has no value and mentioned the “Hebrew Jewish Commercial Code” ascribed in it. The described the UCC1 note as showing $300 million but is a “lunatic pleading.”
She then began to discuss the infractions stating that there was convertible note fraud and other violations. She stated RPH’s actions were grievant and reoccurring and that there was a great likelihood to repeat. It was a complex scam.
She asked for: permanent injunctive relief; that RPH be disallowed from holding the position of officer or director; for civil penalty against RPH; for civil penalty against CSHD. While discussing the civil penalty against RPH, she stated no discouragement because he and family did not or were unable to sell (she emphasized that Merrill Lynch interceded in stopping sales), but that there should be a penalty for harm to the shareholders and for the salary/lifestyle expenses RPH had. Judge Cooper asked her for a dollar range. She stated she could not give a range as the SEC had not yet voted on a figure but stated that there were 9 violations, 1 being fraud, and that each violation was finable at up to $130,000 each. Regarding the civil penalty against CSHD, she stated that there were 6 violations at a max fine of $650,000 each. She said a large fine would not benefit shareholders but the court could consider that punishing the company could discourage future fraud by acquiring shells which are publicly traded.
The Judge then called for a 5 minute recess. When he returned he quickly handed out the judgments:
RPH will not be able to hold an Officer or Director position in any filing company for a period of 7 years.
RPH was fined $1,170,000.
CSHD was fined $500,000.
Court was then dismissed.
I want to add that another shareholder and I were in the courtroom the entire time. (Witness #1 left immediately after he was dismissed from the stand). The other shareholder approached Alana and asked if she had a brief or any documents she could take back to share with shareholders. Alana responded that the information belonged to the SEC. I then stated, “RPH was fined and I’m sure he does not have the money, CSHD was fined and we know it doesn’t have the money, what did you really accomplish here today” (I was suggesting no research on naked shorting, no info on Michael Alexander and 50 million shares, AJW funding, etc.). She responding by saying that the SEC was only pursuing 4 issues and that all other items were settled. I do not know whether she was addressing was I was insinuating or whether she was blowing me off….I felt the latter. She did then address the other shareholder regarding documentation by stating that there was a blogger named Lee Webb, “from what I understand Lee Webb is going to purchase the transcripts.” We parted company with Alana at that point.
AI
