any one else read this?
Originally Posted by TheSaint
From another board--a good view of what really happened:
Posted by: harvard homeboy Date: Monday, September 28, 2009 8:35:32 AM
In reply to: Charlie48 who wrote msg# 214106 Post # of 220376
Charlie 48,
Thanks for the kind words.
With respect to your question, it seems pretty transparent but I'll say it nonetheless. SA Trading, Dubai Import Export and the other related entities are part of a fraud and were capitalized by and are controlled by Moskowitz and Metter.
That's right.
Moskowitz and Metter took some of their own money and capitalized those companies themselves. Those companies then submitted purchase orders to Spongetech for multi-million dollar orders that were commission-laden, and those commissions, in turn, were kicked back to Moskowitz and Metter, outside of Spongetech. That's why this company has tons of orders but no cash flow, or at least no operating cash flow to speak of.
From an audit trail standpoint, however, you have all the necessary ingredients to pass muster with a third-rate accounting firm like Drakeford & Drakeford: shell companies that are remote from Spongetech's headquarters; a string of purchase orders that convey the appearance of being real and have the characteristics of an arms-length transaction; money flowing from the vendors to the company; actual bank account deposits for Spongetech from product sales that can be verified; product being shipped from Warehouse A to Warehouse B along with appropriate Bills of Lading and freight invoices, and so forth.
Along the way, Moskowitz and Metter actually took some of the cash they'd received and let it flow through the company, mainly to buy ads for additional stock sales. Think about it. When was the last time you saw an ad for a product made by a company like Johnson & Johnson, Proctor & Gamble, or Church & Dwight that had the ticker symbol in the ad?
Never?
That's right, never.
But hey, why kill the cow when you can milk it for some unknown number of years? Back in May, 2007 when SPNGE announced their first multi-million order the stock was at $0.14 and now here we are, nearly two and a half years and many, many millions of shares of insider stock sales later.
Anyway, that's the reason Moskowitz and Metter are being deceptive about identifying SA Trading, Dubai Import Export and so forth. They have probably come to the realization that with the additional scrutiny under which they're now operating, not to mention the fact that the SEC is hot on their paper trail, they can't afford to say anything that gives the SEC or the DOJ a link to an electronic trail that can be traced back to them.
It's also the reason the SEC used the term "and/or" in the subpoena. They want to see all of Spongetech's bank account records and you can count on the fact that they're going to want to see copies of all the deposit slips, wire transfers of funds coming in and going out, and will then pull copies of the account holder cards for those accounts as well, especially for SA Trading and Dubai Import Export and the other control entities.
They'll then look for the names on the signature cards and engage the FBI's handwriting experts if need be.
And they're going to want to interview the CPA at Drakeford who supervised the audit last year, along with any other accountants who had billable hours working for Drakeford during the audit. Same thing with Robison, Hill. That's yet another reason for the incusion of the "and/or" term in the subpoena.
The problem, of course, with white collar crime is that you leave a paper trail a mile wide and a hundred miles long to begin with.
I'm glad that these guys are in the process of getting hung, but feel sorry for the shareholders/victims of this company.
GLTA
