Conversion Solutions Holdings (fka CSHD)

[mastaflash]

D. Elzinga says: "From March 15, 2006 to the current date, I observed trading activity in the $500 million Venezuelan bond issue. In fact, trading in these bonds continues to this day. Based upon my experience it is unlikely that any trading would occur if the bond issuance were owned by a single investor"

The size of the bond on Mar 15, 2006 was $753M....not $500M.

http://www.secinfo.com/dsvRq.13Eg.d.htm

I point this out to cast doubt on Elzingas knowledge of the bond market, and therefore reasonable doubt must be cast on his testimony. This the crux of the case.

Now really the size of the bond is not the important issue. It is the fact that Elzinga assumes CSHD claimed to own $500M in that issue. That is not the case and never was. To own it, they would have to pay for it. We can be pretty sure it was not a gift. The bond is fact DEPOSITED with CSHD for use in pulling down credit against it. This is not unlike how a bank works. It uses depositors money as leverage to finance other projects. You still own the money...but they use your money as they see fit.


From the GFA:

"Conversion Solutions, Inc. agrees to accept, and the Agreement Holder agrees to pay or cause to be paid to Conversion Solutions, Inc., for value on the Effective Date, the
Net Deposit (as specified in the Annex). All funds received by Conversion Solutions, Inc. under this Agreement shall become the exclusive property of Conversion Solutions,
Inc. and remain a part of Conversion Solutions, Inc.'s general account without any duty or requirement of segregation or separate investment. This Agreement shall become
effective only upon the receipt by Conversion Solutions, Inc. or its designee of the Net Deposit and or investment grade securities."

Note is a deposit, as in bank deposit.

From the Irrevocable Trust: "The SETTLOR hereby irrevocably assigns, conveys and gives to the Trustee, in Trust, the following asset: blah blah blah"

Again, CHSD did not OWN the issue, but ACTED as owner. I doubt any of us knew at the time the distinctions spelled out in the GFAs...we went by the PRs...and assumed....as the SEC did, that CSHD bought the bonds at current value. The company was destroyed on that basis, which IMO, is bogus.

From the GFA: "Conversion Solutions, Inc. shall pay upon receipt and validation of the instruments by the banking institution, 5% of Face value to the Agreement Holders within 14 banking
days of receipt and execution of note purchase contract, Conversion Solutions, Inc also agrees to pay at the direction of, the Agreement Holder 50% of all profits originated from
Notes purchases and sale"

So in return for using the bond to pull down credit, which is then used to fund whatever, the depositor gets %5 of face value and 50% of any profits gain by use of those funds. %5 is $25M dollars...don't know if that was paid on any of the agreements or even intended to be paid. Now I don't know if the terms of any of the GFAs was met or not, but clearly after the SEC clusterfluck, the bonds deposits would be returned from whence they came. Hard to say what would have happened had CSHD been left alone.

IMO, it was a great business plan. Too bad it didn't work out.


Ven. bond US922646AT10 Current Status

http://anleihen.onvista.de/snapshot.html?ID_INSTRUMENT=351351