Sunday, November 27, 2005 8:19:34 PM
Affidavit of Gabor S. Acs
To be read into any court documents to be filed and included in a complaint with the SEC, DOJ, IRS and other law enforcement agencies involved in re the investigations of the parties mentioned hereinbelow.
For the public records:
Shortly after we arrived in Washington, D.C. after
living in Fort Worth, Texas for about two years, where
our third attempt at starting up a non profit
foundation and raising funding for a unique mortgage
program had failed, I established the Free and Clear
Foundations of America, Inc., a not for profit
corporation which was according to our business plan
had been modeled after a blueprint which laid out a
national organization which could and would eventually
revolutionize the national mortgage industry.
The ultimate mission would be to provide a public
service in order to educate the poor and homeless and
to provide the middle class with a means to become
free and clear of interest bearing debt through a zero
interest housing finance program.
Realizing that such a vision would require very large
contributions of capital I set about coming up with
various ways and means of acquiring the same while at
the same time maintaining our lower middle class
lifestyle, providing for the education of our
children, and maintaining the healthy survival of our
growing family.
At the same time I established a personal holding
company, which initially was half owned by our family
and half owned by the Foundation, but after running
into a personal dispute with the Securities and
Exchange Commission, the entire holding company was
transferred in terms of ownership to the Foundation.
As part of my feeble attempts to provide a service to
publicly traded companies through unique venture
capital raising programs (not so unique in light of
the history of the US Securities markets, but more on
that later) we formed another wholly owned subsidiary
of that holding company and started accepting clients
and charging them $3,600 per hour for our advisory
services and to retain us as financial consultants.
The dispute over whether or not I committed a fraud
by contributing to false press releases relative to
two public companies was lost between myself
personally and the holding company, which had both
been served with a $644,000 judgment by the Securities
and Exchange Commission and the Superior Court in
Reno, Nevada.
My foray into penny stocks had cost our organizations
and us well over a million dollars.
Defending ourselves without adequate, competent and
proper legal counsel against a mountain of accusations
involving several penny stocks we had acquired on a
highly leveraged basis was frustrating, very stressful
and extremely exhausting.
In fact it was this period of extreme emotional
distress, which had triggered my addictions to act out
one last time, and was the beginning of my most recent
ultimate demise and third miserable failure in
business. My binge would last approximately five
months.
The wholly owned subsidiary eventually evolved into a
financial consulting firm that would be hired by firms
seeking capital at the rate of $3,600 per hour.
Within a year this new subsidiary had built up its
accounts receivable to well over $3 million and had a
dozen clients, all seeking to raise between $10 to
$100 million dollars for various technologies, real
estate and other business ventures.
We had been paid retainers of between $3,600 and
$11,000 by most of these clients, including Blue
Horizon Pictures International, Inc., headed up by the
person who would ultimately become my nemesis.
It was the initial retainers on each contract executed
by our clientele, and the sales of penny stocks which
we had managed to acquire one way or another, which
had permitted us to cover our operating expenses both
as a business and as a family, maintain our good
credit, purchase two new cars, pay the rent and
provide our children with a private Montessori style
education while we lived in Reno.
Between the time we left Washington DC and the time I
blew out of Reno for my interstate binge, I had
generated over a quarter million dollars in cash
revenues for the holding company in a period of a
little over 18 months and had wracked up credit card
and other business debts in excess of $5 million while
struggling along in attempting to build up the
Foundations assets.
In fact, by the time of the judgment was issued in
favor of the SEC, the Foundation had reported assets
of well over $72 million, but they were not easily
converted to cash.
The assets could not be convertible to cash unless our
business plan was followed and the restricted stocks
we had in our portfolio could become registered within
two years of the date we acquired them as free trading
shares.
Eventually, as the case with the SEC proceeded over a
long and protracted legal process that stretched over
a period of 24 months, our holding company and I
personally lost the case by default.
I could no longer raise the funds to defend the
corporations and myself from the mountains of
pleadings and accusations coming from the government’s
attorneys. I had become totally desperate, depressed
and completely despondent.
I could not easily focus on getting new clients to
keep going beyond the mountain of trouble I had
managed to create for our organizations and myself. I
was thoroughly overwhelmed and my life had become
entirely unmanageable.
rsonal holding company to the Foundation in Washington
DC, but I was handed a judgment for $624,000
personally as well as to the holding company which to
date I have not taken the steps to settle with the
Superior Court of Nevada, in Reno, nor was there any
means by which I could possibly recover the assets
that were taken from our Foundation without obtaining
a very competent, high power, extremely intelligent
and well connected lawyer.
Because we had used up all the available cash on our
36 credit cards, we could not by then afford
additional legal counsel to adequately defend
ourselves.
I had been more focused on providing services to the
existing client base, running a race against time like
some mad hatter, and my life had become such a
delusion as in Alice in Wonderland, that despite
spending countless hours at the same time trying to
defend us against the accusations and prosecution by
the SEC lawyers who were completely relentless and
very uncompromising in their prosecution of the case,
I was entirely defeated and exhausted of financial
resources, mental resources and I had become
spiritually bankrupt.
We had no new income coming in from new contracts,
despite my having raised over $100,000 in cash by
selling preferred non-voting stock in another
subsidiary of the holding company that was
incorporated in Nevada.
After settling up on all our short-term debts, and
bringing everything current from this initial capital
raised through one of our clients who had high hopes
of raising $10 million for a sports arena in New
Jersey through our affiliations, the money was gone
within 3 months and we were again under water
financially.
I could not manage the finances, the family, the home
front, and the shoestring business I had built from
nothing without help.
All during this period the stresses and strains of
maintaining the survival of our family, defending
against the SEC and working on cleaning up the public
company we had acquired voting control of had for me
reached massively, overwhelming and totally
unmanageable proportions.
My escape from these harsh realities was drugs and sex
but such escapades were merely illusory for I had by
then fallen into becoming a godless, helpless and
hopeless drug addict.
The final blow came around early March.
Though I had resigned myself to accepting a $644,000
default judgment against both us personally and the
holding company I had felt there was still hope in
clearing my name and settling the matter either
through an appeals process or through proper
negotiations by competent legal counsel.
Between the time that the SEC had begun it’s
investigation and final process of persecution through
prosecution, and the day of final judgment, I had
managed to acquire the voting and controlling interest
in a publicly traded software management and
development company that had become insolvent during
the dot com bust of the early part of the new
millennium.
On May 15th, 2003, after almost a full year of
negotiations the holding company acquired, for the sum
of $10 and other valuable consideration including the
assumption of over $5 million in liabilities, 7,500
Series C preferred convertible preferred shares of a
Delaware Corporation known publicly and traded on the
pink sheets, an over the counter market trading
system, as Telynx Inc. At the time the company traded
under the stock symbol TLXX.
Later, with the approval of the new Board of
Directors, the holding company acquired an additional
92,500 preferred shares and allocated some of them to
the new directors as well as the people who were
helping behind the scenes build up and clean up the
company. Regardless, after these allocations of the
preferred, the Foundations still beneficially and
indirectly controlled 90,000 of the series C Preferred
Convertible stock of the company.
rivileges granted by the previous Board of Directors
and stockholders, each share of the Series C preferred
stock was convertible into 80,000 shares of common
voting stock.
Each share of the convertible preferred also carried
with it the right to 540,000 votes, giving the
Foundations indirect supermajority voting control over
all other common stockholders for the management and
direction of the company.
On the day we signed the contract, May 15th, 2003, the
old Board resigned and I began the search to bring on
a new management team and began appointing people to
the new Board of Directors.
Many of the people who were brought on Board were also
clients who had reviewed our business plans, our
business philosophy and strategy, and were willing to
contribute to cleaning up and rebuilding up the public
company for use as a vehicle toward raising additional
capital for their own projects.
On the closing date the common stock of the company
was trading at .0001 per share with 420,000,000 common
voting shares issued and outstanding. The total market
capitalization of the company was about $42,000 on the
date we acquired voting control.
As we continued to bring in new management, and search
for capital for our clients through the other
subsidiary which by then was known as Advanced Capital
Services, with each new announcement of a new board
member, the value of the stock rose incrementally so
that by the time of the SEC judgment, and other
internal exchanges of assets which were fully detailed
in a lengthy prospectus as to the future plans of the
company and the various affiliated corporations which
the Foundations then beneficially controlled directly
or indirectly, the stock price had risen to a level
that the value of the preferred Series C shares owned
and controlled by the Foundations through the holding
company had reached $72 million.
Our preferred shares were convertible into
7,200,000,000 common voting shares which at their peak
price of 1.4 cents per share before the stock was
fraudulently conveyed came to a value of around $72
million on the date that we had discovered the massive
fraud that had been foisted upon our Foundation by two
of the clients who had learned a tremendous amount of
inside information under signed confidentiality and
non-circumvention agreements.
I was not so much concerned about the SEC as I was at
that time in trying to be totally focused on building
the business plans of the company and managing its
continued growth through expansion of its interests in
becoming a diversified publicly traded conglomerate
holding company conglomerate.
Had we had the cash available, we would have retained
legal counsel to negotiate a settlement with the SEC
but I had to chose between either paying the rent, the
schooling for the children and putting food on the
table and I chose the latter.
The company, after many months of my absence and what
I will describe in greater detail on the following
pages as the nightmare that followed currently trades
under the symbol TLYN and a quote can be obtained
through the Internet at Pinksheets.com.
A “finder” whom I had signed up to represent Advanced
Capital Services as an independent agent brought
Telynx, Inc. to my attention. At its peak the stock
had traded as high as $8.00 per share with a market
capitalization of around $300 million.
It had an existing contract with Egypt Telecom as an
indirect result of an International Aide for
Developing countries financing by the US Government,
which had been won by Hewlett Packard, and Telynx had
been retained as a sub contractor.
After acquiring the controlling voting stock on May
15th of 2003, a gentlemen by the name of Paul Mataras,
who had signed up as a client of Advanced Capital,
agreed to serve as the corporate secretary of TLXX,
its’ trading symbol on the pink sheets at that time.
We had planned on moving from Reno to Oakland,
California and I had arranged for Mr. Mataras to move
into a home, which we had planned to purchase from a
Doctor and stockholder in our Nevada subsidiary.
We had entrusted Mr. Mataras as the corporate
secretary and whose fiduciary duty required him to
handle certain corporate matters for Telynx.
Shortly after announcing Mataras’ appointment to the
Board, and his accepting the fiduciary responsibility
to the Foundations as the indirect beneficial owner
and controlling stockholder as well as Corporate
Secretary, and many months after his signing of a
confidentiality, non disclosure and non circumvention
agreement, we discovered that he had made some false
representations as to his personal business
background, in some of the offers for real estate that
we were attempting to acquire for our foundation as
well as in his representation of his past work
history.
Unfortunately, a certain amount of the corporate
records for Telynx as well as Advanced Capital
Services were left in the home where I had arranged
for Mr. Mataras to move temporally which had been the
intended new corporate headquarters location for all
our operations.
While I went to visit Mr. Safadi, the President of
Blue Horizon Pictures International in Los Angeles,
Mr. Mataras had begun making his plans to seize
control of the company by snooping through certain
personal and confidential materials left in the
upstairs bedroom of the home where we had provided him
with his own room and office space to live and
continue to work.
Prior to this he had been evicted from a tiny room
behind a newsstand and candy store in downtown Oakland
for having failed to pay his rent.
It was our benevolence toward his station in life,
which allowed us to extend him a place to live in our
friends home as we had all believed that were working
toward a common goal.
He had been given the original source code to the
software owned by Telynx as well as massive amounts of
files, which had been transferred to our organizations
by the former management and resigned Board
immediately after we closed on the agreement.
In addition, because of his technical background, as
well as his knowledge of computer technology, he was
given the authority to negotiate on behalf of Telynx
with Hewlett Packard who had requested to purchase a
source code license to the technology for Egypt
Telecom that was valued at $130,000.
When I had returned from Los Angeles it was discovered
that the corporate records for the venture capital
company were missing from the room in which we had
left them.
Mr. Mataras was the only person who had access to the
room while we were away, but unfortunately this didn’t
dawn on us until many months later.
At the same time, Mr. Mataras was in direct touch with
Mr. Safadi while I stayed at Mr. Safadi’s apartment in
Brentwood, discussing business and how we were going
to raise capital and what role his attorney would play
within the organization.
We were in desperate need of opening up a bank account
for depositing funds we planned to invest in the
company directly as well as make checks payable to
settle debts with creditors and finalize certain
contracts that had previously been put into place.
We sought out, through Mr. Safadi’s advice and through
his counsel, Ms. Beth Ochoa of Sherman Oaks, and after
several meetings we entered into a tentative financial
services consulting agreement whereby she would act as
the interim Chief Financial Officer for Telynx as well
as advise us on matters for the Foundations and
holding company.
She had agreed to legally represent the holding
company, the Venture Capital Company, and all
affiliates and subsidiaries of the Foundation,
including the public company and had represented that
she had worked for the Ahmanson Foundation for many
years as its Controller.
In fact, we were attempting to finalize an agreement
to take over the management of an existing non-profit
foundation in California, which already had its own
501C3 status, and we had intended on applying, with
Ms. Ochoa’s help for a group tax exemption for all the
Foundations being planned across the United States.
This action would have allowed us to sell shares
beginning on May 15th, 2005 after conversion into
common stock to the tune of $720,000 every quarter on
a tax-free basis and utilize the proceeds to build up
the operations of the Foundations and in its
long-range investment goals.
We had also structured a long term employment
contract, which would have provided myself and my
immediate family with an annual deferred salary of
$2.4 million, net of taxes, for having run and managed
the Foundations for the past ten years with no pay
whatsoever.
Messrs Safadi, Mataras and Ms. Ochoa were given access
to this confidential contract, as well as corporate
records of the Foundations, as part of our efforts to
acquire real estate for the corporations and
organizations which had become affiliated through our
good faith efforts to build a substantial business for
others as well as the Foundations which would serve
its mission and purpose.
Mr. Mataras was a client who had agreed to work with
us on a talent for talent exchange basis such that his
time spent with us was offset by time we spent with
him in raising capital for his Constant Innovation
Technologies Corporation or CITC.
Mr. Mataras could not raise the initial $3,600
retainer, which we normally required to work on a
consulting basis for new clients. In fact, it was not
until later we discovered that at the time we met he
was on the verge of being a homeless person. We had
accepted him at face value.
His business plan indicated he needed to raise $30
million to install wireless broadcast systems inside
baseball parks through the official channels of the
American and National Baseball Leagues which he
claimed to have inside connections to and intimate
ongoing progressive contacts with.
Prior to his involvement with our organizations Mr.
Mataras was working at the San Francisco Giants
baseball stadium as an usher with one of his partners
in his CITC startup business.
When I asked him why, he told me that he was there to
develop inside knowledge of major league baseballs’
inner workings and develop high-level contacts within
that specific industry so he could build his business
quickly once it had been financed.
Mr. Mataras also attempted to sell us on the idea of
buying the Montreal Expos, which was for sale at the
time and claimed to have high-level contacts with the
upper echelons of the Major League Baseball
Association.
He also induced us to attempt to work with the State
of Oregon which had by then approved a State Bond
financing program to build a stadium in Portland for a
major league baseball franchise and claimed to have
connections with the Office of the Governor and
various high level officials who could assist us in
buying the Expo’s franchise and move it to Portland.
When we discovered the flaws in his resume and work
history we issued a new press release so as to
immediately correct the information provided as far as
the public announcement of his background was
concerned.
By that time and unbeknownst to us, Mr. Mataras had
already begun a collusion with Talieh Safadi, the
President of Blue Horizon Pictures International,
another client who had also signed both
confidentiality, non-circumvention and non disclosure
agreements with our organizations.
Mr. Safadi had wanted to raise $30 million for a film
fund, which he would run and coordinate in the making
of independent motion pictures. His only background
was that he had successfully directed one motion
picture, which was released on DVD. He had not
achieved any great success in the film industry and
was rather young with an ambitious vision for the
independent film business. We took him at face value
as well.
Since both Mr. Mataras and Safadi, as well as Safadi’s
personal attorney, Ochoa, were given high level access
to the most confidential information within our
organizations, they became what we believed to be
trusted associates, and were delegated increased
responsibilities.
I had been working to delegate as much of the
increased work load as possible to them as far as it
related to the operation of the public company, the
non profit status of the Foundation in California, and
to the other members of the Board who were scattered
across the world with varying backgrounds and talent
but who were very interested in raising money for
their pet projects, but my judgment was completely
clouded by weekend binges of cocaine use and my
personal sexual addictions at the time.
Mr. Mataras was given an agency to act on behalf of
Advanced Capital in negotiating acquisitions of
commercially viable real estate projects and to obtain
funding for them while at the same time utilizing our
affiliate subsidiary private preferred stock as
exchange capital for down payments.
Mr. Mataras had claimed to be able to obtain funding
for real estate projects but not for his own project
because it was a start up venture and we had come to
agree on a method by which some of the donations from
the real estate proceeds under a proprietary formula
for funding would be channeled into his startup
project.
Mr. Mataras made many mistakes in the offers, over
inflating the prices of the real estate far beyond any
potential appraisal value as well as miscalculating
certain numbers required to make each offer acceptable
to the sellers and creditable with the real estate
brokers involved. His repeated mistakes, despite our
corrective actions in numerous emails irreparably
damaged our reputation, but we continued to work with
him because I was blind due to my increasing
incapacity to act rationally in all aspects of
business.
In fact, the emotional distress and stresses brought
about through Mr. Mataras actions, inactions and
constant stream of negligence and failure to comply
with repeated requests to complete various tasks and
of working against the clock only increased ten fold
and further plunged me into despair, desperation and
incapacity.
There is nothing more destructive to an organization
than having a junior staff member or trusted officer
who is undermining you at every turn and conspiring to
destroy your livelihood at the same time, while
appearing to be honest, forthright and competent.
Both Mataras and Safadi had retained Advanced Capital
to raise $30 million each for their projects. The
publicly traded company, they understood and was
explained to them, would become the vehicle through
which those funds could be raised if we were
successful in working together toward the unified
consolidated business enterprises which had been fully
detailed in our prospectus.
Mr. Mataras had actually reformatted the prospectus
and altered it to such an extent that it actually
caused us additional work to replace the material
which he had deleted and completely destroyed in his
vain attempts to help our organizations. By then I had
begun to see that it was time to eventually replace
him but there was no one in sight in the short run to
take his place so rather than fire him, I allowed him
to continue to work with us.
It did not occur to me that he had been stalling to
handle the 401K plan, had been stalling to finalize
the settlement with the IRS, stalling to complete any
number of actions which could have been completed
within days instead of taking months of repeated pleas
and orders to get the show on the road. Our daily
phone calls yielded no results and I had finally
reached the end of the rope.
By then it was too late, Mr. Mataras had taken every
document, the source code, the corporate records, the
corporate minute books, the corporate resolutions and
all the information he could possibly need and moved
out of the house without informing us.
When I had arrived to pick up the material and notify
him that he was being terminated, I thought that he
must have somehow sensed I was planning to fire him.
He was nowhere to be found, and in fact he refused to
accept any phone calls from me.
It was not until many weeks later, even after
reporting what he had done to the Oakland office of
the FBI, that I discovered that he had colluded with
Safadi and Ochoa to eliminate the Foundations from
their beneficial ownership of the stock of the
publicly traded company.
Mr. Mataras had sought a $30 million funding for a
high technology business plan which would put wide
fidelity wireless technology into baseball stadiums
while retaining the internal broadcast rights to games
for replay on laptop computers for fans to watch and
obtain vital statistical data on players
What he had actually done was embezzle the funds of
the public company by circumventing the Foundations,
going back to the resigned Board of Directors, giving
them all kinds of false information, while at the same
time giving us false information about his real
intentions and activities, recruited both Ochoa and
Safadi into his conspiracy to commit securities fraud,
and then promptly refused any further communications
with anyone connected with the Foundations.
The FBI agents we spoke with in Oakland told us that
they could do nothing about it until he had actually
taken some cash off the table, which at that point he
had not.
In a totally weakened state, mentally, financially and
due to a diagnosis by a medical doctor that I had a
hernia which resulted in a constant knowing pain in my
left side, I finally gave up the fight. I submerged
myself and went on what would become a five-month
bender.
Mr. Safadi had sought funding for a film fund which
would provide financing in Hollywood for film
producers whose projects ranged in budgets from $1 to
$3 million in the independent film production
industry.
Both Safadi and Mataras had signed term sheets and
approved various documents which had been laid out as
the foundation and cornerstone of the intended and
agreed upon business arrangement between the
Foundation, its subsidiaries and incorporated the
entire plan of operation in a 120 page prospectus
which Mr. Mataras had assisted in developing and
editing and formatting into a PDF document for
distribution to potential private and institutional
investors.
As a result of the conversion of the assets of the
Foundation, and the subsequent fraudulent SEC filings
prepared by Ochoa and her new client, namely the Board
of Directors which had fraudulently usurped the powers
and rights of the Foundations and the holding company,
Mr. Safadi and Mr. Mataras now claimed to own 45,000
shares of the Series C Convertible Preferred Super
Majority voting stock and told the public through
false press releases, and false SEC filings that they
had personally assumed all the They had even caused a
public bulletin Board to cancel our ability to post
information because they attempt to preempt any
attempt to discredit what they had done and in so
doing engaged in a covert campaign of slander and
libel against the Foundations and myself personally.
Mr. Safadi went so far as to tell my wife that I was
insane.
He told her that I needed to be put away into a mental
institution, that I was in serious trouble with the
law, and that she should testify against me as to any
of my crimes, that he was willing to purchase my
computer, with all the data on it for $400, and that
he would support her financially if she would
cooperate with him, and that if I ever showed up at
his apartment, the police would need to come pick my
remains up with a body bag, inferring that somehow he
would make it look like I was attempting to rob him
and my demise would be justified, the very thing he
had conspired with Mr. Mataras to do.
Mr. Mataras at the time was living in downtown
Oakland, and I had arranged, because of his living
situation, to allow him to move into a home in Oakland
Hills, which was then owned by Joseph Levay, a
stockholder and good personal friend.
It had been my intention to purchase the home from Mr.
Levay, but because the appraised value had come in
under the purchase price I had been in the process of
renegotiating the price when he determined he needed
to move back into the house because a business deal he
had set up in LA had fallen apart.
I had entrusted Mr. Mataras with the source code of
the software company as well as all the records and
documents, which were given to me by the former owners
as part of the purchase agreement executed by and
between PKH, the holding company by then fully owned
by the Foundations and TLXX on May 15th, 2003.
instead of returning those materials, by the time I
discovered his intentions, Mr. Mataras had colluded
with Mr. Safadi and Beth Ochoa, Safadi’s LA
entertainment lawyer, who had also agreed to serve as
the Chief Financial Officer of TLXX after protracted
negotiations, in filing false statements with the SEC
to make it appear that they now owned and controlled
TLXX whose symbol they took upon themselves to change
by conducting an illegal 10 for 1 reverse stock split,
reducing the total outstanding number of common shares
outstanding to around 42 million instead of 420
million, and issuing themselves the 90,000 Series C
preferred shares that had once belonged to the
Foundations.
We had been wondering why our filings with the State
of California had not been completed for the
Foundations to take over the management of another
non-profit org, which had been delegated, to Ms. Ochoa
despite repeated online checking with the California
Secretary of State.
By the time we discovered the fraud which had been
colluded upon, it would explain why we never received
any acknowledgement of the $1,000 we paid to Ms. Ochoa
for her services, why we had not received back the
corporate records that she had agreed to photocopy and
return to us the originals, why she did not return our
corporate minute books for both the Foundations and
the holding company, as well as other documents
related to the affiliated organizations, why she did
not provide us with any proof that she had in fact
made a filing with the State of California for the
organization of the Free and Clear Foundations of
California, and lastly why,
To be read into any court documents to be filed and included in a complaint with the SEC, DOJ, IRS and other law enforcement agencies involved in re the investigations of the parties mentioned hereinbelow.
For the public records:
Shortly after we arrived in Washington, D.C. after
living in Fort Worth, Texas for about two years, where
our third attempt at starting up a non profit
foundation and raising funding for a unique mortgage
program had failed, I established the Free and Clear
Foundations of America, Inc., a not for profit
corporation which was according to our business plan
had been modeled after a blueprint which laid out a
national organization which could and would eventually
revolutionize the national mortgage industry.
The ultimate mission would be to provide a public
service in order to educate the poor and homeless and
to provide the middle class with a means to become
free and clear of interest bearing debt through a zero
interest housing finance program.
Realizing that such a vision would require very large
contributions of capital I set about coming up with
various ways and means of acquiring the same while at
the same time maintaining our lower middle class
lifestyle, providing for the education of our
children, and maintaining the healthy survival of our
growing family.
At the same time I established a personal holding
company, which initially was half owned by our family
and half owned by the Foundation, but after running
into a personal dispute with the Securities and
Exchange Commission, the entire holding company was
transferred in terms of ownership to the Foundation.
As part of my feeble attempts to provide a service to
publicly traded companies through unique venture
capital raising programs (not so unique in light of
the history of the US Securities markets, but more on
that later) we formed another wholly owned subsidiary
of that holding company and started accepting clients
and charging them $3,600 per hour for our advisory
services and to retain us as financial consultants.
The dispute over whether or not I committed a fraud
by contributing to false press releases relative to
two public companies was lost between myself
personally and the holding company, which had both
been served with a $644,000 judgment by the Securities
and Exchange Commission and the Superior Court in
Reno, Nevada.
My foray into penny stocks had cost our organizations
and us well over a million dollars.
Defending ourselves without adequate, competent and
proper legal counsel against a mountain of accusations
involving several penny stocks we had acquired on a
highly leveraged basis was frustrating, very stressful
and extremely exhausting.
In fact it was this period of extreme emotional
distress, which had triggered my addictions to act out
one last time, and was the beginning of my most recent
ultimate demise and third miserable failure in
business. My binge would last approximately five
months.
The wholly owned subsidiary eventually evolved into a
financial consulting firm that would be hired by firms
seeking capital at the rate of $3,600 per hour.
Within a year this new subsidiary had built up its
accounts receivable to well over $3 million and had a
dozen clients, all seeking to raise between $10 to
$100 million dollars for various technologies, real
estate and other business ventures.
We had been paid retainers of between $3,600 and
$11,000 by most of these clients, including Blue
Horizon Pictures International, Inc., headed up by the
person who would ultimately become my nemesis.
It was the initial retainers on each contract executed
by our clientele, and the sales of penny stocks which
we had managed to acquire one way or another, which
had permitted us to cover our operating expenses both
as a business and as a family, maintain our good
credit, purchase two new cars, pay the rent and
provide our children with a private Montessori style
education while we lived in Reno.
Between the time we left Washington DC and the time I
blew out of Reno for my interstate binge, I had
generated over a quarter million dollars in cash
revenues for the holding company in a period of a
little over 18 months and had wracked up credit card
and other business debts in excess of $5 million while
struggling along in attempting to build up the
Foundations assets.
In fact, by the time of the judgment was issued in
favor of the SEC, the Foundation had reported assets
of well over $72 million, but they were not easily
converted to cash.
The assets could not be convertible to cash unless our
business plan was followed and the restricted stocks
we had in our portfolio could become registered within
two years of the date we acquired them as free trading
shares.
Eventually, as the case with the SEC proceeded over a
long and protracted legal process that stretched over
a period of 24 months, our holding company and I
personally lost the case by default.
I could no longer raise the funds to defend the
corporations and myself from the mountains of
pleadings and accusations coming from the government’s
attorneys. I had become totally desperate, depressed
and completely despondent.
I could not easily focus on getting new clients to
keep going beyond the mountain of trouble I had
managed to create for our organizations and myself. I
was thoroughly overwhelmed and my life had become
entirely unmanageable.
rsonal holding company to the Foundation in Washington
DC, but I was handed a judgment for $624,000
personally as well as to the holding company which to
date I have not taken the steps to settle with the
Superior Court of Nevada, in Reno, nor was there any
means by which I could possibly recover the assets
that were taken from our Foundation without obtaining
a very competent, high power, extremely intelligent
and well connected lawyer.
Because we had used up all the available cash on our
36 credit cards, we could not by then afford
additional legal counsel to adequately defend
ourselves.
I had been more focused on providing services to the
existing client base, running a race against time like
some mad hatter, and my life had become such a
delusion as in Alice in Wonderland, that despite
spending countless hours at the same time trying to
defend us against the accusations and prosecution by
the SEC lawyers who were completely relentless and
very uncompromising in their prosecution of the case,
I was entirely defeated and exhausted of financial
resources, mental resources and I had become
spiritually bankrupt.
We had no new income coming in from new contracts,
despite my having raised over $100,000 in cash by
selling preferred non-voting stock in another
subsidiary of the holding company that was
incorporated in Nevada.
After settling up on all our short-term debts, and
bringing everything current from this initial capital
raised through one of our clients who had high hopes
of raising $10 million for a sports arena in New
Jersey through our affiliations, the money was gone
within 3 months and we were again under water
financially.
I could not manage the finances, the family, the home
front, and the shoestring business I had built from
nothing without help.
All during this period the stresses and strains of
maintaining the survival of our family, defending
against the SEC and working on cleaning up the public
company we had acquired voting control of had for me
reached massively, overwhelming and totally
unmanageable proportions.
My escape from these harsh realities was drugs and sex
but such escapades were merely illusory for I had by
then fallen into becoming a godless, helpless and
hopeless drug addict.
The final blow came around early March.
Though I had resigned myself to accepting a $644,000
default judgment against both us personally and the
holding company I had felt there was still hope in
clearing my name and settling the matter either
through an appeals process or through proper
negotiations by competent legal counsel.
Between the time that the SEC had begun it’s
investigation and final process of persecution through
prosecution, and the day of final judgment, I had
managed to acquire the voting and controlling interest
in a publicly traded software management and
development company that had become insolvent during
the dot com bust of the early part of the new
millennium.
On May 15th, 2003, after almost a full year of
negotiations the holding company acquired, for the sum
of $10 and other valuable consideration including the
assumption of over $5 million in liabilities, 7,500
Series C preferred convertible preferred shares of a
Delaware Corporation known publicly and traded on the
pink sheets, an over the counter market trading
system, as Telynx Inc. At the time the company traded
under the stock symbol TLXX.
Later, with the approval of the new Board of
Directors, the holding company acquired an additional
92,500 preferred shares and allocated some of them to
the new directors as well as the people who were
helping behind the scenes build up and clean up the
company. Regardless, after these allocations of the
preferred, the Foundations still beneficially and
indirectly controlled 90,000 of the series C Preferred
Convertible stock of the company.
rivileges granted by the previous Board of Directors
and stockholders, each share of the Series C preferred
stock was convertible into 80,000 shares of common
voting stock.
Each share of the convertible preferred also carried
with it the right to 540,000 votes, giving the
Foundations indirect supermajority voting control over
all other common stockholders for the management and
direction of the company.
On the day we signed the contract, May 15th, 2003, the
old Board resigned and I began the search to bring on
a new management team and began appointing people to
the new Board of Directors.
Many of the people who were brought on Board were also
clients who had reviewed our business plans, our
business philosophy and strategy, and were willing to
contribute to cleaning up and rebuilding up the public
company for use as a vehicle toward raising additional
capital for their own projects.
On the closing date the common stock of the company
was trading at .0001 per share with 420,000,000 common
voting shares issued and outstanding. The total market
capitalization of the company was about $42,000 on the
date we acquired voting control.
As we continued to bring in new management, and search
for capital for our clients through the other
subsidiary which by then was known as Advanced Capital
Services, with each new announcement of a new board
member, the value of the stock rose incrementally so
that by the time of the SEC judgment, and other
internal exchanges of assets which were fully detailed
in a lengthy prospectus as to the future plans of the
company and the various affiliated corporations which
the Foundations then beneficially controlled directly
or indirectly, the stock price had risen to a level
that the value of the preferred Series C shares owned
and controlled by the Foundations through the holding
company had reached $72 million.
Our preferred shares were convertible into
7,200,000,000 common voting shares which at their peak
price of 1.4 cents per share before the stock was
fraudulently conveyed came to a value of around $72
million on the date that we had discovered the massive
fraud that had been foisted upon our Foundation by two
of the clients who had learned a tremendous amount of
inside information under signed confidentiality and
non-circumvention agreements.
I was not so much concerned about the SEC as I was at
that time in trying to be totally focused on building
the business plans of the company and managing its
continued growth through expansion of its interests in
becoming a diversified publicly traded conglomerate
holding company conglomerate.
Had we had the cash available, we would have retained
legal counsel to negotiate a settlement with the SEC
but I had to chose between either paying the rent, the
schooling for the children and putting food on the
table and I chose the latter.
The company, after many months of my absence and what
I will describe in greater detail on the following
pages as the nightmare that followed currently trades
under the symbol TLYN and a quote can be obtained
through the Internet at Pinksheets.com.
A “finder” whom I had signed up to represent Advanced
Capital Services as an independent agent brought
Telynx, Inc. to my attention. At its peak the stock
had traded as high as $8.00 per share with a market
capitalization of around $300 million.
It had an existing contract with Egypt Telecom as an
indirect result of an International Aide for
Developing countries financing by the US Government,
which had been won by Hewlett Packard, and Telynx had
been retained as a sub contractor.
After acquiring the controlling voting stock on May
15th of 2003, a gentlemen by the name of Paul Mataras,
who had signed up as a client of Advanced Capital,
agreed to serve as the corporate secretary of TLXX,
its’ trading symbol on the pink sheets at that time.
We had planned on moving from Reno to Oakland,
California and I had arranged for Mr. Mataras to move
into a home, which we had planned to purchase from a
Doctor and stockholder in our Nevada subsidiary.
We had entrusted Mr. Mataras as the corporate
secretary and whose fiduciary duty required him to
handle certain corporate matters for Telynx.
Shortly after announcing Mataras’ appointment to the
Board, and his accepting the fiduciary responsibility
to the Foundations as the indirect beneficial owner
and controlling stockholder as well as Corporate
Secretary, and many months after his signing of a
confidentiality, non disclosure and non circumvention
agreement, we discovered that he had made some false
representations as to his personal business
background, in some of the offers for real estate that
we were attempting to acquire for our foundation as
well as in his representation of his past work
history.
Unfortunately, a certain amount of the corporate
records for Telynx as well as Advanced Capital
Services were left in the home where I had arranged
for Mr. Mataras to move temporally which had been the
intended new corporate headquarters location for all
our operations.
While I went to visit Mr. Safadi, the President of
Blue Horizon Pictures International in Los Angeles,
Mr. Mataras had begun making his plans to seize
control of the company by snooping through certain
personal and confidential materials left in the
upstairs bedroom of the home where we had provided him
with his own room and office space to live and
continue to work.
Prior to this he had been evicted from a tiny room
behind a newsstand and candy store in downtown Oakland
for having failed to pay his rent.
It was our benevolence toward his station in life,
which allowed us to extend him a place to live in our
friends home as we had all believed that were working
toward a common goal.
He had been given the original source code to the
software owned by Telynx as well as massive amounts of
files, which had been transferred to our organizations
by the former management and resigned Board
immediately after we closed on the agreement.
In addition, because of his technical background, as
well as his knowledge of computer technology, he was
given the authority to negotiate on behalf of Telynx
with Hewlett Packard who had requested to purchase a
source code license to the technology for Egypt
Telecom that was valued at $130,000.
When I had returned from Los Angeles it was discovered
that the corporate records for the venture capital
company were missing from the room in which we had
left them.
Mr. Mataras was the only person who had access to the
room while we were away, but unfortunately this didn’t
dawn on us until many months later.
At the same time, Mr. Mataras was in direct touch with
Mr. Safadi while I stayed at Mr. Safadi’s apartment in
Brentwood, discussing business and how we were going
to raise capital and what role his attorney would play
within the organization.
We were in desperate need of opening up a bank account
for depositing funds we planned to invest in the
company directly as well as make checks payable to
settle debts with creditors and finalize certain
contracts that had previously been put into place.
We sought out, through Mr. Safadi’s advice and through
his counsel, Ms. Beth Ochoa of Sherman Oaks, and after
several meetings we entered into a tentative financial
services consulting agreement whereby she would act as
the interim Chief Financial Officer for Telynx as well
as advise us on matters for the Foundations and
holding company.
She had agreed to legally represent the holding
company, the Venture Capital Company, and all
affiliates and subsidiaries of the Foundation,
including the public company and had represented that
she had worked for the Ahmanson Foundation for many
years as its Controller.
In fact, we were attempting to finalize an agreement
to take over the management of an existing non-profit
foundation in California, which already had its own
501C3 status, and we had intended on applying, with
Ms. Ochoa’s help for a group tax exemption for all the
Foundations being planned across the United States.
This action would have allowed us to sell shares
beginning on May 15th, 2005 after conversion into
common stock to the tune of $720,000 every quarter on
a tax-free basis and utilize the proceeds to build up
the operations of the Foundations and in its
long-range investment goals.
We had also structured a long term employment
contract, which would have provided myself and my
immediate family with an annual deferred salary of
$2.4 million, net of taxes, for having run and managed
the Foundations for the past ten years with no pay
whatsoever.
Messrs Safadi, Mataras and Ms. Ochoa were given access
to this confidential contract, as well as corporate
records of the Foundations, as part of our efforts to
acquire real estate for the corporations and
organizations which had become affiliated through our
good faith efforts to build a substantial business for
others as well as the Foundations which would serve
its mission and purpose.
Mr. Mataras was a client who had agreed to work with
us on a talent for talent exchange basis such that his
time spent with us was offset by time we spent with
him in raising capital for his Constant Innovation
Technologies Corporation or CITC.
Mr. Mataras could not raise the initial $3,600
retainer, which we normally required to work on a
consulting basis for new clients. In fact, it was not
until later we discovered that at the time we met he
was on the verge of being a homeless person. We had
accepted him at face value.
His business plan indicated he needed to raise $30
million to install wireless broadcast systems inside
baseball parks through the official channels of the
American and National Baseball Leagues which he
claimed to have inside connections to and intimate
ongoing progressive contacts with.
Prior to his involvement with our organizations Mr.
Mataras was working at the San Francisco Giants
baseball stadium as an usher with one of his partners
in his CITC startup business.
When I asked him why, he told me that he was there to
develop inside knowledge of major league baseballs’
inner workings and develop high-level contacts within
that specific industry so he could build his business
quickly once it had been financed.
Mr. Mataras also attempted to sell us on the idea of
buying the Montreal Expos, which was for sale at the
time and claimed to have high-level contacts with the
upper echelons of the Major League Baseball
Association.
He also induced us to attempt to work with the State
of Oregon which had by then approved a State Bond
financing program to build a stadium in Portland for a
major league baseball franchise and claimed to have
connections with the Office of the Governor and
various high level officials who could assist us in
buying the Expo’s franchise and move it to Portland.
When we discovered the flaws in his resume and work
history we issued a new press release so as to
immediately correct the information provided as far as
the public announcement of his background was
concerned.
By that time and unbeknownst to us, Mr. Mataras had
already begun a collusion with Talieh Safadi, the
President of Blue Horizon Pictures International,
another client who had also signed both
confidentiality, non-circumvention and non disclosure
agreements with our organizations.
Mr. Safadi had wanted to raise $30 million for a film
fund, which he would run and coordinate in the making
of independent motion pictures. His only background
was that he had successfully directed one motion
picture, which was released on DVD. He had not
achieved any great success in the film industry and
was rather young with an ambitious vision for the
independent film business. We took him at face value
as well.
Since both Mr. Mataras and Safadi, as well as Safadi’s
personal attorney, Ochoa, were given high level access
to the most confidential information within our
organizations, they became what we believed to be
trusted associates, and were delegated increased
responsibilities.
I had been working to delegate as much of the
increased work load as possible to them as far as it
related to the operation of the public company, the
non profit status of the Foundation in California, and
to the other members of the Board who were scattered
across the world with varying backgrounds and talent
but who were very interested in raising money for
their pet projects, but my judgment was completely
clouded by weekend binges of cocaine use and my
personal sexual addictions at the time.
Mr. Mataras was given an agency to act on behalf of
Advanced Capital in negotiating acquisitions of
commercially viable real estate projects and to obtain
funding for them while at the same time utilizing our
affiliate subsidiary private preferred stock as
exchange capital for down payments.
Mr. Mataras had claimed to be able to obtain funding
for real estate projects but not for his own project
because it was a start up venture and we had come to
agree on a method by which some of the donations from
the real estate proceeds under a proprietary formula
for funding would be channeled into his startup
project.
Mr. Mataras made many mistakes in the offers, over
inflating the prices of the real estate far beyond any
potential appraisal value as well as miscalculating
certain numbers required to make each offer acceptable
to the sellers and creditable with the real estate
brokers involved. His repeated mistakes, despite our
corrective actions in numerous emails irreparably
damaged our reputation, but we continued to work with
him because I was blind due to my increasing
incapacity to act rationally in all aspects of
business.
In fact, the emotional distress and stresses brought
about through Mr. Mataras actions, inactions and
constant stream of negligence and failure to comply
with repeated requests to complete various tasks and
of working against the clock only increased ten fold
and further plunged me into despair, desperation and
incapacity.
There is nothing more destructive to an organization
than having a junior staff member or trusted officer
who is undermining you at every turn and conspiring to
destroy your livelihood at the same time, while
appearing to be honest, forthright and competent.
Both Mataras and Safadi had retained Advanced Capital
to raise $30 million each for their projects. The
publicly traded company, they understood and was
explained to them, would become the vehicle through
which those funds could be raised if we were
successful in working together toward the unified
consolidated business enterprises which had been fully
detailed in our prospectus.
Mr. Mataras had actually reformatted the prospectus
and altered it to such an extent that it actually
caused us additional work to replace the material
which he had deleted and completely destroyed in his
vain attempts to help our organizations. By then I had
begun to see that it was time to eventually replace
him but there was no one in sight in the short run to
take his place so rather than fire him, I allowed him
to continue to work with us.
It did not occur to me that he had been stalling to
handle the 401K plan, had been stalling to finalize
the settlement with the IRS, stalling to complete any
number of actions which could have been completed
within days instead of taking months of repeated pleas
and orders to get the show on the road. Our daily
phone calls yielded no results and I had finally
reached the end of the rope.
By then it was too late, Mr. Mataras had taken every
document, the source code, the corporate records, the
corporate minute books, the corporate resolutions and
all the information he could possibly need and moved
out of the house without informing us.
When I had arrived to pick up the material and notify
him that he was being terminated, I thought that he
must have somehow sensed I was planning to fire him.
He was nowhere to be found, and in fact he refused to
accept any phone calls from me.
It was not until many weeks later, even after
reporting what he had done to the Oakland office of
the FBI, that I discovered that he had colluded with
Safadi and Ochoa to eliminate the Foundations from
their beneficial ownership of the stock of the
publicly traded company.
Mr. Mataras had sought a $30 million funding for a
high technology business plan which would put wide
fidelity wireless technology into baseball stadiums
while retaining the internal broadcast rights to games
for replay on laptop computers for fans to watch and
obtain vital statistical data on players
What he had actually done was embezzle the funds of
the public company by circumventing the Foundations,
going back to the resigned Board of Directors, giving
them all kinds of false information, while at the same
time giving us false information about his real
intentions and activities, recruited both Ochoa and
Safadi into his conspiracy to commit securities fraud,
and then promptly refused any further communications
with anyone connected with the Foundations.
The FBI agents we spoke with in Oakland told us that
they could do nothing about it until he had actually
taken some cash off the table, which at that point he
had not.
In a totally weakened state, mentally, financially and
due to a diagnosis by a medical doctor that I had a
hernia which resulted in a constant knowing pain in my
left side, I finally gave up the fight. I submerged
myself and went on what would become a five-month
bender.
Mr. Safadi had sought funding for a film fund which
would provide financing in Hollywood for film
producers whose projects ranged in budgets from $1 to
$3 million in the independent film production
industry.
Both Safadi and Mataras had signed term sheets and
approved various documents which had been laid out as
the foundation and cornerstone of the intended and
agreed upon business arrangement between the
Foundation, its subsidiaries and incorporated the
entire plan of operation in a 120 page prospectus
which Mr. Mataras had assisted in developing and
editing and formatting into a PDF document for
distribution to potential private and institutional
investors.
As a result of the conversion of the assets of the
Foundation, and the subsequent fraudulent SEC filings
prepared by Ochoa and her new client, namely the Board
of Directors which had fraudulently usurped the powers
and rights of the Foundations and the holding company,
Mr. Safadi and Mr. Mataras now claimed to own 45,000
shares of the Series C Convertible Preferred Super
Majority voting stock and told the public through
false press releases, and false SEC filings that they
had personally assumed all the They had even caused a
public bulletin Board to cancel our ability to post
information because they attempt to preempt any
attempt to discredit what they had done and in so
doing engaged in a covert campaign of slander and
libel against the Foundations and myself personally.
Mr. Safadi went so far as to tell my wife that I was
insane.
He told her that I needed to be put away into a mental
institution, that I was in serious trouble with the
law, and that she should testify against me as to any
of my crimes, that he was willing to purchase my
computer, with all the data on it for $400, and that
he would support her financially if she would
cooperate with him, and that if I ever showed up at
his apartment, the police would need to come pick my
remains up with a body bag, inferring that somehow he
would make it look like I was attempting to rob him
and my demise would be justified, the very thing he
had conspired with Mr. Mataras to do.
Mr. Mataras at the time was living in downtown
Oakland, and I had arranged, because of his living
situation, to allow him to move into a home in Oakland
Hills, which was then owned by Joseph Levay, a
stockholder and good personal friend.
It had been my intention to purchase the home from Mr.
Levay, but because the appraised value had come in
under the purchase price I had been in the process of
renegotiating the price when he determined he needed
to move back into the house because a business deal he
had set up in LA had fallen apart.
I had entrusted Mr. Mataras with the source code of
the software company as well as all the records and
documents, which were given to me by the former owners
as part of the purchase agreement executed by and
between PKH, the holding company by then fully owned
by the Foundations and TLXX on May 15th, 2003.
instead of returning those materials, by the time I
discovered his intentions, Mr. Mataras had colluded
with Mr. Safadi and Beth Ochoa, Safadi’s LA
entertainment lawyer, who had also agreed to serve as
the Chief Financial Officer of TLXX after protracted
negotiations, in filing false statements with the SEC
to make it appear that they now owned and controlled
TLXX whose symbol they took upon themselves to change
by conducting an illegal 10 for 1 reverse stock split,
reducing the total outstanding number of common shares
outstanding to around 42 million instead of 420
million, and issuing themselves the 90,000 Series C
preferred shares that had once belonged to the
Foundations.
We had been wondering why our filings with the State
of California had not been completed for the
Foundations to take over the management of another
non-profit org, which had been delegated, to Ms. Ochoa
despite repeated online checking with the California
Secretary of State.
By the time we discovered the fraud which had been
colluded upon, it would explain why we never received
any acknowledgement of the $1,000 we paid to Ms. Ochoa
for her services, why we had not received back the
corporate records that she had agreed to photocopy and
return to us the originals, why she did not return our
corporate minute books for both the Foundations and
the holding company, as well as other documents
related to the affiliated organizations, why she did
not provide us with any proof that she had in fact
made a filing with the State of California for the
organization of the Free and Clear Foundations of
California, and lastly why,
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