Resources:
http://www.scribd.com/doc/37761821/Exhibit-10-Stanley-Morris-Letter-July-21-2010
http://www.scribd.com/doc/37761933/Exhibit-13-Points-and-Authorities-Yao-vs-FUnd
Finally found it:
http://www.scribd.com/doc/37761933/Exhibit-13-Points-and-Authorities-Yao-vs-FUnd
Haha, this pretty much sorts it all out. This is definitely a stock loan agreement as I had hypothesized. Tony Gentile looks to me to be a professional scam artist… looking to close out and retire on this 1 deal. To CNAM longs: we’re good to go.
It is obvious to me that Tony Gentile probably saw an opportunity to do the following:
1. Find a stock with a small float
2. Give a stock loan.
3. (illegally) Sell all your stock on one day and try to drive the price down so far that the stock loan triggers and defaults (thus crisnic would be able to keep the difference in money).. usually with a stockholder loan there is a price that if it closes below the firm guaranteeing the loan gets to liquidate and flush the toilet on your stock and keep the proceeds. unfortunately, it appears that gentile tried to preempt driving the price down this far and came up short…. hence step 4
4. Fail on step 3, panic, don’t finish the loan, threaten lawsuits, break laws, push money into off-shore accounts and duck and run! the next step is to crash your websites and disappear into the cayman islands or some place like that with a briefcase full of cash. after all, if he can ever get the stock price of CNAM to drop below (i’m guessing $1.92), then he can come out of this one ahead by liquidating the rest of CNAM and sending Yao his money… and then writing the agreements after the fact, but i’d say this is unlikely. i’ve talked to several longs out there, we’re really locking up the float between just a few of us… maybe i should call my brokers and ask them to stop loaning out my shares? haha.
why a stockholder loan?
http://www.stockholderloan.com/about.php
why did i guess this?
because i’ve almost done them in the past. i’d love to do a stockholder loan on some of my stocks…
anyway, yeah. so Gentile didn’t even draft a final contract. they took Yao’s shares, illegally unrestricted them, and began liquidating them, and then cut a check for $1M to Yao.
how is this behavior remotely close to legal? it’s not. based on this and all the other dealings Tony Gentile has been involved with,
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=53185613&txt2find=gentile
i’m going to argue in favor of CNAM on this one.
FYI:
I had tried to do a stockholder loan in the past:
1. Transfer unrestricted shares to loan agent.
2. Receive a percentage of the market value of the shares as cash
3. For a given preagreed upon period of time you still have rights to the shares upon expiration of the loan agreement as long as the stock stays above a preagreed upon price. If the stock goes below that price within the time frame, the stockloan agent can liquidate the security, as the security is collateral.
Just imagine that the stockholder loan is like pulling equity out of your home… I believe they call it a home equity loan. Where, at the end of paying off the loan payments, you still own the home — at least in regards to participating in upside home appreciation.
That’s why it’s appealing, it’s a way to margin securities that are not marginable… Usually there are agreements such as: “you can’t use the proceeds to buy back into any security, etc.”
In regards to your question:
Yao didn’t anticipate being ripped off by this guy. I’m sure Yao likely took 50% of the all-time CNAM low as a reasonable figure that the CNAM price would not drop below. (or some margin of safety, hence the low price)
Crisnic cannot sell restricted shares. In fact, if you read the agreement. They are deceptive in a multitude of ways, so long that it’s not really worth my time listing. That said, to answer your specific question:
“Crisnic’s agent paid a New York attorney to erroneously opine that Yao’s restrictions could be removed” – PAge 3
“Some yahoo poster” is right…. lol, Barron Worden’s recent purchase has 0 relation to this. It’s a month of difference.
Yahoo posters are likely short. They’ve been trying to create aliases and post here, I’ve blocked them all (at least when it’s obvious and it’s a new account with it’s first post being 100% biased towards spewing negativity and poorly planned rumors)
It is worth noting here the positives.
I figured that maybe Yao had funded his large Form 4 purchase with the Crisnic money, but if Crisnic never paid him any money…. well then he did it right out of pocket!
That’s even more bullish, haha.