A curious name has popped up among the financial backers of Fort Lauderdale-based gay publisher Multimedia Platforms Inc. headed by Bobby Blair which puts out NEXT Magazine in New York and The Agenda in South Florida.
The publicly-traded company's (OTCQB: MMPW) quarterly filing with the Securities and Exchange Commission for the period ending June 30, 2015 states that on "April 22, 2015, the Company entered into a Securities Purchase Agreement with Melvyn I. Weiss ('Weiss'), for the sale of an unsecured, 9% convertible promissory note in the principle amount of $100,000 (the 'Weiss Note') and 333,332 stock purchase warrants allowing Weiss to purchase up to 333,332 shares of the Company's common stock."
It's unclear whether the Melvyn I. Weiss identified in Multimedia's quarterly filing is the same individual who co-founded class action law firm Milberg Weiss. In 2008 attorney Weiss was convicted on a racketeering count for his role in an alleged decades-long conspiracy in which serial plaintiffs were paid kickbacks out of the court-approved attorneys' fees for filing their shareholder lawsuits. Weiss was sentenced to thirty months in federal prison, and disbarred from practicing law.
The Intelius database reveals only one Melvyn I. Weiss -- the 80-year-old residing in Boca Raton, FL who is the convicted racketeer and disbarred attorney -- and Multimedia Platforms to date has not answered this author's inquiries, first made on August 31, whether he is the same one identified in their quarterly filing as the holder of the Weiss Note. Valter M. Pinto, a partner with Capital Markets Group which apparently serves as Multimedia's investor relations, advised by email dated September 2, 2015 that "we are working on responses to your questions." However, no response yet has been forthcoming even after this author followed up by email dated September 4 asking "is it possible that on behalf of Multimedia Platforms you could provide answers to and comment on my questions by the end of today." A telephone message left on Mr. Weiss's answering machine at his residence has not been returned.
Multimedia's most recent acquisition was Next Magazine which it acquired from RND Enterprises, Inc. according to the quarterly filing for the period ending June 30, 2015:
[O]n June 17, 2015, the Company entered into an asset purchase agreement (the "Asset Purchase Agreement") with RND Enterprises, Inc. (the "RND"), pursuant to which the Company purchased substantially all of the assets of RND from its sole shareholder Mr. David Moyal, for a purchase price of $1,000,000, consisting of $200,000 in cash and $800,000 in shares of common stock. Immediately prior to the transaction, the 5% shareholder of RND transferred all his interests in RND to Mr. Moyal for nominal amount. In consideration, the Company agreed to pay to the minority shareholder $30,000 in cash and issue 750,000 shares of common stock valued at $0.40 per share. In aggregate, the Company completed the acquisition transaction for an amount equal to $1,330,000, consisting of $230,000 in cash payable at closing and $1,100,000 in the restricted shares of the Company's common stock, valued at $0.40 per share for a total of 2,750,000 shares. The transaction was closed on June 17, 2015. 750,000 shares of common stock valued at $300,000 were unissued as of June 30, 2015. RND is engaged in the business of publishing an LGBT culture magazine known as Next Magazine.
This author further inquired in his August 31 email to Multimedia Platforms and Capital Markets Group whether "the 5% shareholder of RND" to which the quarterly filing refers was Robert N. DeBenedictis. In 2010 Mr. DeBenedictis settled a class action lawsuit in California for $30 million involving the hair loss remedy Avacor, and included with the court-filed settlement agreement was an asset schedule as of June 30, 2009 which identified him as a fifty percent owner of RND Enterprises. This same document further identified Messrs. DeBenedictis and Moyal as then among the "owners, officers or directors" of the West Side Club at 27 West 20th Street which has been characterized by some as a gay bathhouse. Multimedia Platforms has not yet responded to this author's inquiry concerning the identity of "the 5% shareholder of RND" in its quarterly statement.
Mr. DeBenedictis has had ownership interests in many other gay establishments since the mid-1970s including the East Side Club at 227 East 56th Street which also has been characterized by some as a gay bathhouse. Funny enough, Paul D. Young, a former partner at Milberg Weiss, was sued by New York City in November 2006 for alleged criminal nuisance as the landlord to reputed "gay S&M sex club" El Mirage as then reported by Roger Parloff for Fortune. Although El Mirage operated out of Young's building at 253 Houston Street, the certificate of incorporation for the club identified its principal executive office and address for service of process c/o the accounting group at 227 East 56th Street which is the same building out of which the East Side Club operates. At least at that time Mr. DeBenedictis had ownership interests in both the East Side Club and the building out of which it operated although it's unknown to this author whether he further had any interest in El Mirage.
There are no allegations or suggestions of any wrongdoing; rather, this author simply wants to know if disbarred attorney Melvyn I. Weiss is the referenced holder of the Weiss Note in Multimedia Platforms, and whether gay businessman Robert N. DeBenedictis was the referenced "5% shareholder of RND."
Apparently in 2007 and 2008 DeBenedictis and Blair both were investors and/or officers in a gay Fort Lauderdale gym at 1164 E. Oakland Park Blvd. through Oakland Park Gym, Inc. and BBG Associates, Inc. according to corporate records filed with the Florida Department of State. Among the others involved with the venture according to the filed documents was Ancil Brown who previously was the reported manager of the Wall Street Sauna at One Maiden Lane in New York's financial district. The Wall Street Sauna was founded by DeBenedictis in 1974, and shut down by city authorities in 2004 as then reported by Jonathan Lemire and Helen Peterson for the Daily News: "'these crazy sex acts that the city is claiming happen here do not, and I am really shocked and appalled that they are trying to shut us down,' said manager Ancil Brown, adding it was unclear whether the owners would appeal." Ancil Brown further has been identified in corporate documents from 2009 as an investor in East Side Sauna at 227 East 56th Street and the West Side Club at 27 West 20th Street with DeBenendictis and others although of course ownership interests in those establishments could have since changed.
Alan Sheinwald, the apparent founder of Capital Markets Group which is identified as Multimedia Platforms' investor contact in its press release announcing the acquisition of Next Magazine, recently was the subject of an enforcement action by the U.S. Securities Exchange Commission. In 2012 the SEC brought a civil complaint against Sheinwald and his investor relations firm Alliance Advisors LLC for allegedly acting as unregistered brokers by receiving transaction-based compensation in exchange for actively soliciting investors to participate in securities offerings for two companies, including China Yingxia International, Inc. which collapsed in 2009. Without admitting or denying the Commission's allegations Sheinwald and Alliance Advisors last year consented to the entry of final judgment by a New York federal court which permanently enjoins them "from future violations of Section 15(a) of the Securities Exchange Act of 1934, and orders Sheinwald and Alliance Advisors to pay disgorgement in the amount of $177,166 plus prejudgment interest of $18,022, and civil penalties of $25,000 to be paid by each Sheinwald and Alliance Advisors." Based on the final judgment the SEC issued an Order that bars Sheinwald and Alliance Advisors by consent "from association with any investment adviser, broker, dealer, municipal securities dealer, or transfer agent, and from participating in any offering of a penny stock, with the right to apply for reentry after two years."
A month after Multimedia Platforms acquired Next Magazine research firm SeeThruEquity initiated coverage on the company with a price target on its stock of $3.19. SeeThruEquity "appears to be run by . . . Amit Tandon and brother A.J. Tandon" according to a Seeking Alpha article.
Apparently Amit Tandon previously was CEO of New York Global Group which was involved with controversial reverse Chinese mergers, and NYGG's founder and president Benjamin Wey and his Geneva-based banker Seref Dogan Erbek were indicted last month by federal prosecutors for securities fraud according to a Justice Department press release. FBI Assistant Director-in-Charge Diego Rodriguez said:
"The illegal manipulation of stock prices causes significant losses for innocent investors and creates sizeable profits for fraudsters. Wey and Erbek allegedly falsified the true sales volume, demand, and price of stocks in the over-the-counter marketplace through a series of reverse merger transactions involving shell companies. They are believed to have profited in the tens of millions, while victim shareholders were left holding the bill. The FBI and our partners will continue to investigate and prosecute those who cheat the system in this way."
Amit Tandon has not been accused of any wrongdoing. In 2006 Amit Tandon apparently was a one-time defender of NYGG against some critical stories, and reportedly said in a NYGG press release "we intend to avail ourselves of all available remedies to stem the damage caused by these irresponsible and demonstrably false reports."
The $3.19 target predicted by SeeThruEquity for Multimedia shares seems absurd given that that there are nearly 50 million outstanding shares and barely 1,000 are traded over-the-counter each day which long has been characterized by many as an inefficient market. The Form 10-Q for Multimedia Platforms filed with the SEC for the quarter ended June 30, 2015 warns that the "ability of the Company to continue as a going concern is in doubt." Although SeeThruEquity cites with pie-in-the-sky enthusiasm that corporate advertisers spend $300 million in print media to target the $850 billion purchasing power of the LGBT market it's unclear how any of this meaningfully benefits Multimedia Platforms. Heck, a lottery ticket probably has a better chance of hitting the powerball numbers than Multimedia Platforms has of obtaining sufficient dollars from corporate advertisers in order to make it a profitable operation. For example, Multimedia Platform's Form 10-Q states that "during the six months ended June 30, 2015, the Company recognized net revenue of $422,526," and "incurred a net operating loss of $4,851,521." Moreover, it seems unlikely that growth through acquisitions from weak publications such as Next Magazine which has been around for two decades in New York -- one of the largest LGBT markets -- can save Multimedia Platforms. Next Magazine's former publisher RND Enterprises brought in only $800,000 in revenue, and suffered a $250,000 net loss according to its financial statement for the year ended December 31, 2014.
But hey . . . a dollar and a dream! Or in other words: a fool and his money are soon parted.
Timothy S. Hart is the CFO of Multimedia Platforms, and in an SEC filing Multimedia Platforms cites his "over thirty years of accounting and finance experience including 10 years with KPMG." Hart apparently was among three KPMG accountants at the firm's Fort Lauderdale office sanctioned by the SEC allegedly for engaging "in improper professional conduct during the 1987 and 1988 audits of Sahlen & Associates, an international private investigative company with headquarters in Deerfield Beach, Florida" according to the SEC News Digest:
They failed to adequately test work-in-progress, to adequately confirm and scrutinize massively increasing receivables, and to search for irregularities. They failed to establish adequate allowances for aging receivables when collections were minimal. They relied on fraudulent sales of receivables and last-minute, defective attempts at confirmation which were falsified by management. At least $45 million of the receivables were fictitious and Sahlen was forced into liquidation.
Hart reportedly was "suspended from appearing or practicing before the Commission with a right to reapply after . . . 11 months." KPMG paid out tens of millions to settle investor lawsuits following the collapse of Sahlen & Associates as then reported by Charles Lunan for the Sun Sentinel.
Given that Multimedia Platforms and its investor relations previously have not responded to prior inquiries, this writer has not contacted it to confirm whether CFO Timothy S. Hart is the same as the one previously sanctioned by the SEC for the Sahlen & Associates auditing work performed by KPMG. The Florida Department of Business & Professional Regulation Division of Certified Public Accounting identifies only one Timothy S. Hart in its online database who appears to be the same one as the CFO at Multimedia Platforms.
Timothy Hart also is the CFO of Continental Rail Corp (OTCQB:CRCX) which is a short line and regional freight railroad holding company with a business plan to make strategic acquisitions. Continental Rail discloses in an SEC report for the quarter ended June 30, 2015 that it's "in the early stages of implementing our business model and we presently do not own any ancillary or complimentary operations for short line or regional freight railroad companies or any rolling stock for lease to railroads or shippers." The stock price for CRCX is well off its historic highs, and the last trade was for well under a buck. Continental Rail's quarterly report raises "substantial doubt about the Company's ability to continue as a going concern," and further cites that "we have incurred net losses of $4.89 million since inception through June 30, 2015" and "we do not have sufficient capital to fund our current operating expenses for the next 12 months." In January 2014 Continental Rail and Timothy Hart were among the co-defendants sued in a Broward County, FL court by a major shareholder alleging breach of fiduciary duty, tortious interference with business relations and a fraudulent transfer of assets. The defendants deny the allegations.
Further reading that may be of interest: