Millionaire.com Is No Blue-Blood Company: Christopher Byron
8/16/00 (New York)
(Commentary. Christopher Byron is a columnist for Bloomberg
News. The opinions expressed are his own.)
Weston, Connecticut, Aug. 16 (Bloomberg) — Everyone knows
it’s great to be a millionaire. But forget about Regis Philbin
for a minute and just think instead about how much greater your
life would be if you could celebrate your seven-digit financial
status by owning a magazine devoted exclusively to the greatness
of millionaire-dom itself.
Impossible? Well, a mere $5.26 million looks to be the
current going price for exactly that opportunity — to see your
name at the top of the masthead, as owner, editor, publisher, or
whatever you might want to call yourself, of what else but
Millionaire magazine.
Does that sound like a deal to you? Since Millionaire
magazine happens to be owned by a company calling itself
Millionaire.com, whose 8.76 million shares outstanding are
currently selling for 60 cents each on Nasdaq’s OTC Bulletin
Board market, the prize would appear to be within the grasp of
the lowliest wretch clinging to the bottom rung of the
millionaire ladder.
Think of it. A mere $5.26 million and you’ll not only get
100 percent ownership of a magazine that features Bo Derek on its
current cover and is speckled with ads for all the stuff
presumably to be found in your typical millionaire’s toy box, but
you’ll also get a functioning Web site bearing the name of
what else but Millionaire.com. There’s even an actual bona fide
auction “venue” in South Carolina in the deal. This is where
millionaires presumably can come from far and wide to auction off
the diamond encrusted Patek Philippe watches they no longer want.
`Get Me Ivana’
In short, you could be the person who fills the shoes left
empty by the departure of the late, great Malcolm Forbes, and
lift high the media world torch for rich folks seeking life’s
true meaning in a Streetrod golf cart with a tilt steering wheel
and a Kenwood CD/cassette stereo rig in the dash.
You could be the publishing world reincarnation of Robin
Leach. You’ll get to pick up the phone and say, “Get me Wayne
Huizenga …” or “Get me Ivana Trump …” and then get
yourself invited to lunch to discuss cover possibilities. You’ll
get to approve layouts, say witty things, hire a secretary named
Tiffany who doesn’t wear underpants. You’ll get to “take a
lunch,” schedule an “investigative piece” on Bohemian Grove,
talk about your friends at Allen & Co. You’ll get to claim to be
pals with Tina Brown. It’ll be champagne kisses and caviar dreams
24/7 (or was it the other way around?). Whatever. It’ll be great.
First, however, there are a few things you should know. As
is the case with many penny stocks, this one is connected to
people you most definitely won’t be wanting to put on the cover
of Millionaire magazine, and once you step in what these folks
leave behind them, you’ll never get the stink off your shoe.
We’re speaking in this case of one Abraham Salaman of
Philadelphia.
Yiddy Bloom’s Friend
If the name Abraham Salaman rings the faintest of bells
with you it is perhaps because of a story I did on the old goat
back in December of 1997 when the market was really beginning to
boil and penny stocks everywhere were making new highs.
For anyone too young to remember the infamous Magic Marker
Corp. stock swindle that shook Wall Street a quarter century ago,
Abe was one of the men behind it. Back in those days Abe headed a
Philadelphia brokerage company called Delphi Capital Corp. His
buddies included Harry Blumenfeld (a k a “Yiddy Bloom”), a top-
ranked money man for the mob in Miami, who in turn was a friend
and business associate of the Mafia’s ultimate Mister Moneybags
himself, Meyer Lansky.
With these resources, Abe helped to set up and run a price-
rigging conspiracy that eventually involved over 20 individuals
who artfully — and illegally — manipulated the price of Magic
Marker’s shares from $6.50 to $30 over a 10-month period
beginning in 1971.
Nolo Contendere
In time, the conspiracy collapsed and Abe wound up pleading
nolo contendere to a 31-count criminal indictment brought by
prosecutors for an organized crime strike force in Philadelphia.
He was charged with conspiracy, mail fraud and other related
charges. His nolo plea got him three years’ probation, a $5,000
fine and a three-year ban from involvement as a broker-dealer in
the securities industry.
Since then, of course, Abe has returned to the securities
business, and has been one way or another linked to a number of
penny stocks that have soared to nosebleed heights, then abruptly
crashed. He hasn’t been charged with anything, and is doubtless
as pure as new-fallen snow. Yet he just keeps turning up in these
curious deals.
There’s been an outfit called Neurocorp Ltd., which soared
from $1.13 to $20 in 1995-96 on plans to open a chain of memory
loss treatment centers. As soon as it hit $20, the stock keeled
over and collapsed, and is today selling for roughly $2.50 a
share. Abe was a big investor in the stock.
American Interactive Media
In addition to his investment in Neurocorp, there’s been his
involvement in American Interactive Media Inc., which yo-yo’d
between $1 and $10 throughout the mid-1990s on plans to “allow
consumers to access the Internet over their television sets.”
Shares in the New York based company have since collapsed and are
now selling for 14 cents apiece. The company was founded by Mr.
Salaman’s son, Michael, and Abe himself hired a Florida stock
promoter to pump up the shares.
There’s likewise been World Wireless Communications Inc.,
which rose from $2 to $12 in 1997 on a telecommunications story,
then crashed and is now selling for $3. Abe held a big chunk of
that one too, as he did with others that erupted out of nowhere,
spurted into orbit, then crashed.
Now, it turns out, Abe was instrumental in putting together
Millionaire.com as a public company, helping to arrange for the
magazine, headed by one Robert White (the original creator of
Robb Report magazine), to be merged into an OTC Bulletin Board
company bearing the name Charter Investor Relations of North
America Inc. The deal was announced in December of 1998 and the
company’s stock soared almost instantly thereafter from $4 to
almost $26 per share. Then just as abruptly, it crashed, and 20
months later is now selling for 60 cents a share.
`Fully Reporting’
Abe and a man who has turned up in various other Salaman
deals — one Lynn Dixon — were investors in the deal … all of
which we may know thanks to the company’s filing of a so-called
10-SB form with the Securities and Exchange Commission last
December. Through the filing, Millionaire.com, based in Hilton
Head, South Carolina, is requesting to become a so-called “fully
reporting” company, which is to say, to avoid being thrown off
even the OTC Bulletin Board and get dumped into the so-called
“pink sheets” where the most dubious investments on all of Wall
Street are to be found.
But whether the SEC will grant them full-filing status is
not yet certain. Subsequent to the December filing,
Millionaire.com has filed three separate amendments to the
document, the most recent of which is dated July 20, suggesting
that the SEC keeps raising questions about what it is being told
by the company.
SEC Investigation
There’s good reason to do so, too, since even a casual
canter through the latest document reveals activities about which
investors in these shares might want to know more. It turns out,
for example, that Millionaire.com is currently the focus of an
SEC investigation. Company documents have been subpoenaed and
testimony from employees has been taken. Investors might want to
know what that’s all about, but the 10-SB filings give no further
details.
For what it is worth, my own hunch is that the SEC probe has
to do with the bizarre run-up — and equally sudden collapse —
in Millionaire.com’s shares between December of 1998 and March of
1999. At around that time, the Wall Street Journal reported that
Millionaire.com had been using the services of a Florida-based
stock promoter named Steven Samblis to handle its investor and
public relations, and noted that Mr. Samblis had earlier been
sued by the SEC for allegedly saying he was an independent stock-
picker when he was in fact getting paid by companies.
What the Journal did not report — doubtless because it
didn’t know of it — was an apparent link between Mr. Samblis and
our old friend Abe Salaman. The evidence? An autumn of 1997
newsletter published by Samblis that contained a glowing write-up
on Abe’s son’s company (the above-mentioned American Interactive
Media), suggesting that it could be “the next Microsoft.”
Thereafter, American Interactive began a rise that carried it
from around $3 to almost $9 a share, before crashing.
The Financial Numbers
As revealed in the 10-SB, Millionaire.com’s financials are
exactly what you’d expect from a company with a total market
value of barely $5.26 million. The company has $578,000 of cash,
roughly $600,000 of negative working capital, and no net worth at
all. In the year ended December 1999, it collected net revenue of
less than $3.4 million and 20 percent of it went straight into
the pockets of the top four men as cash compensation and bonuses.
In the process, the company racked up operating losses of $6.2
million as $3.8 million of operating cash flew out the window.
So it comes down to this: For $5.26 million you can become a
pint-sized Malcolm Forbes and run around celebrating the triumph
of seven-digit wealth. And for a whole lot less than that you can
piggyback aboard the efforts of Mr. Robert White and his
fascinating backers to do precisely the same thing. Just
remember, you’ll be buying into more than you’re ever likely to
read about in the pages of Millionaire magazine — a lot more.
