Greenwich, Connecticut radio station owner Michael Metter being investigated by SECBy Claudette Rothman
Posted in Back Country, Connecticut, Greenwich, courts, crime
The president and co-owner of the only radio station in Greenwich, Connecticut, is facing federal securities investigations and multiple lawsuits.
According to reports, last October the Securities and Exchange Commission temporarily suspended trading in Sponge Tech Delivery Systems Inc. a company co-owned by Greenwich resident Michael Metter, who is also co-owner of WGCH radio station.
The Wall Street watchdog commission halted the trading after questions were raised about the accuracy and adequacy of the company’s financial disclosures.
Two months after those concerns were raised; the SEC issued a notice to the company that makes a car wash sponge made of soap, that they intend “to recommend that the commission bring civil injunctive actions alleging violations of federal securities laws.
In addition to their SEC problems, the company is also facing lawsuits from investors and Madison Square Garden for non-payment of advertising bills.
PLEASE SEE:
BUSINESS TALK RADIO.NET OWNER
USES THE CAPITAL MARKETS AS AN ATM
SELLING STOCK AND RASING CASH AS THE
NEXT SPONCERSHIP DEAL IS STRUCK
The SEC wants to examine the books of a major sports advertiser
—and here’s why.
By Roddy Boyd
Over the past year, tens of millions of American sports fans have asked themselves the same questions at some point: “What is that Spongetech sign doing in the outfield?” followed closely by “What the hell is Spongetech?”
Let’s handle the second question first. Spongetech (SPNGE) is a Manhattan-based company whose product seeks to answer a question no one has ever really cared to ask before, something along the lines of: “How do I cut out the bucket part of the equation when I wash my car or dog by hand?” Voila! Behold the soap-infused sponge, which at $9.95 is both biodegradable and can be used several times......
.......But to a certain sort of capital markets observer, Spongetech is something else, not seen in a long while: a full-bore pump-and-dump scheme that will, when all is said and done, likely have harvested the wallets of thousands of penny-stock speculators and earnest individual investors who thought they had found the proverbial "next thing."
It may not be the worst of such schemes. Unlike most pump-and-dumps, in which a few in-the-know sharpies drive a stock’s price to the moon and then sell it down to the basement, Spongetech has an actual product. Whatever is left of this company in the end, there will be something that someone—presumably the legion of bucket-haters among the do-it-yourself set—can dust off and sell in the market......
Still, the Securities and Exchange Commission didn’t initiate a formal investigation of the company and its management last week for nothing.
The company’s filings lead the skeptical reader to some pretty clear conclusions. The first is that Spongetech exists primarily to sell stock, and pretty much everything else comes second. At one point in early spring the company had more than 1.2 billion shares outstanding. Late Friday, as the pump collapsed, it had increased the authorized share count to 3 billion. By way of comparison, in the spring, the company—with reported sales of about $5 million a year—had roughly the same amount of shares outstanding as eBay (EBAY); with 3 billion shares issued, they would have a slightly larger float than Procter & Gamble (PG).....
......To keep the troops rallied, or, more accurately, to keep a new stream of suckers lined up, Spongetech went to the Internet stock promoters whose “investor relations” work churns out a steady stream of dubious e-mails and faxes promising trading riches to the inept, clueless, and the delusional.
They came up with some doozies.
There was the multiply SEC-sanctioned Larry Isen, a partner in the TGR Group LLC, which touted Spongetech stock in return for $30,000 in cash and 750,000 restricted shares. In an e-mail, Isen said he was only a minority partner in TGR with a small stake in the company and does not recall if he economically benefitted from Spongetech in any fashion.
He said he wrote about the company purely out of interest in its prospects. In addition to the five or so other promoters, there was the king of SEC-flouting touts, Jonathan Lebed, whose fee of 1,250,000 free-trading shares was footed by an investor named Doug Furth. Lebed did not respond to e-mailed questions.......
......Furth is no ordinary investor, however. The Solon, Ohio-based Furth is the owner, via his Signature Equity Fund, of 41 million shares or 5.1 percent of the company, as of last November.
An activist of sorts, Furth is a mainstay of the Yahoo Finance Spongetech investor message boards, where, as he admitted to me, he posts as “Alfie31555.” Furth insists that he disclosed his ownership stake on the Yahoo forum. A verbal bomb-thrower of the highest order, Alfie31555 brooks no criticism of Spongetech and has saved his bitterest vitriol for short-sellers and the reporters he sees as being used by them.
For example, Furst’s ire was aroused on Sept. 22, when the New York Post reported that a former lawyer of Spongetech had written a letter to the SEC claiming that his signature was forged on dozens of corporate documents he had not written nor had even seen. In a post on Sept. 23 at 10:48 p.m., Furth described Post reporter Kaja Whitehouse as “Nothing more than a paid whore for the shorts” and described her reporting as “giving life to their skunkworks as their puppet.”
Presumably Furth was no happier with Whitehouse’s subsequent article exposing the fact that five of Spongetech’s six largest customers are impossible to track down with addresses and phone numbers that appear to be fake. To top it off, Whitehouse discovered that a Web hosting service that specialized in concealing contact information created Web sites for three of the six customers on the same day three weeks ago.
Furth, who, ironically, is the general partner of a fund seeking to finance clean and wholesome family movie production, declined comment on why he hired Lebed......
.....the company booked $4.9 million in net income yet used $170,000 in cash, leaving it with a paltry $34,570 in the till.
The culprit for Spongetech’s weak cash position is the $14 million in accounts receivable balance as of the last quarterly report, but this misses the broader point: Even with so many sales being done overseas — the five customers who cannot be tracked down are all based abroad.....
.....If someone really is buying all of these sponges abroad—despite a marketing effort that is 100 percent focused on the American consumer—the company is stretching out their payment cycle way past the standard 30-day, or even 90-day, cycle...
.....I called and e-mailed the company and its public relations firms—Lippert Heilshorn, which resigned from the account late last week.....
.....So, since I live near Spongetech CEO Michael Metter, I stopped by his lovely Greenwich, Conn. house on Saturday afternoon for an impromptu chat. A gruff, bald fiftysomething man came to the door and insisted that Michael Metter was not home.
When I showed him a picture of Michael Metter I had printed from the Internet and pointed out that he looked almost identical, he became irritated. He refused to answer questions about the SEC investigation, the Post articles, or Michael Metter’s background as the head of a penny-stock boiler room insisting that “Metter is not going to do any interviews.”......
.....When I noted that he sure knew a lot about Michael Metter and his thinking, he walked away.
As I left, I knocked on his window and said, “Hey, Mike, can I leave my contact info?”...
PLEASE ALSO SEE:
New York Post
By KAJA WHITEHOUSE
A former attorney for SpongeTech, a New York company known for making soap-filled sponges it sells through infomercials, says the company forged dozens of legal documents tied to its issuance of stock......
...The accusations of forgery and "identity theft" come from Norfolk, Conn. attorney Joel Pensley, who said in a letter to the Securities and Exchange Commission that he was "dumbfounded" to learn that his name was being used in "as many as one hundred opinion letters for various shareholders."
Pensley told the SEC that he would not have written such letters. "I question the legality of the transactions," he wrote.
A copy of the letter obtained by The Post shows it was addressed to Robert Khuzami, head of the SEC's enforcement division......
....."I am shocked and aggrieved that my name and reputation could be sullied in this manner," Pensley said in the letter to Khuzami. Pensley said in the letter that he learned of the forgery from New Jersey stock services company Olde Monmouth Stock Transfer Co.
A letter from Olde Monmouth's attorney, Richard Fox, also addressed to Khuzami, said the forged documents relate to stock issued to RM Enterprises, SpongeTech's largest shareholder. RM Enterprises is controlled by the company's executives, including Moskowitz and CEO Michael Metter, according to SEC filings. Metter recently denied to The Post that he's a director or officer of the company.
Fox, when reached by The Post, said he couldn't comment before abruptly hanging up the phone.
MORE FORM THE NEW YORK POST:
By KAJA WHITEHOUSE
Someone appears to be pulling the strings on the biggest clients of New York sponge maker and US Open sponsor SpongeTech.
In its third-quarter SEC filing, SpongeTech said that six customers "accounted for 99.4 percent of sales" -- nearly $31 million in revenue -- for the first nine months of its fiscal year.
The firms are SA Trading Company, US Asia Trading, Dubai Export Import Company, Fesco Sales Corp., New Century Media .......
......Their addresses cannot be verified, phone numbers were disabled within hours of calls from The Post, and the Web sites for three of the companies were created on the same day two weeks ago.
......The Post's request, SpongeTech provided addresses, phone numbers and contacts for its largest customers through its outside investor relations firm, Lippert Heilshorn & Associates.
But efforts by The Post to verify the information fell flat.
Take, for example, Dubai Export Import Co. According to the document SpongeTech provided, it is located at 235 Peachtree St. NE, Suite 400, in Atlanta.
"They don't have an office here," said Julie Gudger, vice president of sales for Crown Office Suites, which leases offices in that building, including Suite 400. Gudger also had never heard of Ahmed Elsayed, the contact SpongeTech provided.
Gudger dismissed the notion they might have a virtual office. "I would know," she said.
A call yesterday to the Dubai Export Import number that Spongetech provided led to a receptionist who took a message for Elsayed. Within a few hours, the number was "disabled." ......
......Calls to the phone numbers SpongeTech provided for the other four companies also led to receptionists who took messages. They were all disabled shortly afterwards.
Misty Ryals, a receptionist for Select Office Suites, which rents out offices on the 5th floor of 116 W. 23rd St. in Manhattan, where SpongeTech says Fesco is located, said she has no record of Fesco Corp.....
.......SpongeTech said SA Trading is located at 111 NE 1st St., 3rd floor, Miami. A woman who works for Downtown Miami Partnership, which manages the property, said, "We have no other business on the 3rd floor but Excellent Executive Offices."
Carlson Ortiz, who answered the phone at Excellent Executive Offices, said, "I've been here for two years and I've never heard of that name," when asked about SA Trading.
Web sites for Fesco, Dubai Export Import and SA Trading also shed little light. All three sites were created on Sept. 10, 2009, using Domains by Proxy, a service that blocks information about the site's owner.
PLEASE ALSO SEE THIS BLOG POST ABOUT
MICHAEL METTER OF GREENWICH:
.......this has all the earmarks of the penny stock pump and dump schemes I used to pursue. It’s possible the poor guy’s the victim of nefarious outsiders seeking to profit at his expense. It’s also possible that Frankie Fudrucker will conduct his next political campaign dressed in a full burka. I’m betting I’ll witness Frankie’s comely form draped and hidden from sight before SpongeTech clears its name......
Besides, Metter ruined a dinky radio station that, while irrelevant, did once have its uses, like announcing snow days for the schools.
Did you know that WGCH doesn’t have an Arbitron rating now because the audience surveyors could find no one who admitted listening to the station?
I’m not sure if any of you are spending money on ads on WGCH but you could do just as much good by sending me the cash – I’ll take better care of it, I promise.
Bob Greenberger said....
Nothing like reporting old news. I am sure he appreciates having his name out there in a negative fashion by a reporter who has taken absolutely no time to do any research on the subject or to contact him or the company.
Great job. It is at the same level as woodward and bernstein. I hope you are as anxious to publish old news if he is cleared.
Chris Fountain responds.....
“Old news”? I would say it’s developing news, unless the SEC investigation is over, which it is not. There’s a stock fraud going on here, whether perpetrated by insiders or outsiders is yet to be determined, but someone is being hosed. I look forward to following this story.
You Can Comment On This Story At
The Greenwich Topix Message Board:
GREENWICH -- Michael Metter, president and part-owner of Greenwich radio station WGCH, is facing a federal securities investigation and multiple lawsuits against another business concern, his penny-stock company SpongeTech.
Metter, who lives on Tinker Lane in the backcountry, co-founded SpongeTech Delivery Systems Inc. in 1999 ......
.....Metter, reached overseas on vacation Tuesday, told Hearst Connecticut Newspapers that his counsel is in talks with the SEC and suggested that the matter could yet be settled or dismissed. He insisted SpongeTech would continue to be publicly traded, and he said he planned to distribute the company's products nationwide through Walmart stores..
SpongeTech's investor relations phone line goes to a voice mail message, saying the company is not talking with shareholders at this time except through news releases .....
.....SpongeTech's sales line is still operating, telling callers they can find the company's products at CVS stores or online. Calls by Hearst Connecticut Newspapers indicated the products were not for sale Tuesday at CVS, but Metter said the drugstore chain reordered last month.
The problems with SpongeTech have not affected the radio station, where revenues are up, according to Metter and the station's manager.
Metter, along with a few silent partners, bought the news-talk format WGCH in 2003 from John Becker. He is not the majority owner but is the corporation's president.
AND NOW FOR YOUR
ENTERTAINMENT PLEASURE.....
HERE IS MICHAEL METTER"S
HOT SPONGTECH YOUTUBE VIDEO
HERE IS THE PG VERSION:
HERE IS A SPONGE TECH SEGMENT ON CNBC:
HERE IS AN INTERVIEW WITH MICHEAL METTER AND STEVEN MOSKOWITZ:
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2 comments:
Spongetech is great company!
Spongetech? Great company!
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