Tuesday, October 13, 2009

Fish Broth: The Plot Thickens In GetFugu Investment Drama

Here are the two latest developments in this ongoing saga...

1) On October 1st GetFugu, Inc. filed a form 8-K with the SEC in response the lawsuit filed against it by SpongeTech (SPNG) earlier that same day. In the document the company acknowledged the legal action, dismissed it as being without merit and announced that it had terminated its relationships with both SpongeTech Delivery Systems, Inc. and Vanity Events Holdings, Ltd. (VAEV). The company also maintained that it had a "fiduciary obligation to retain the funds" it had received while it investigated "potentially illegal activities" perpetrated by these investors that are "jeopardizing GetFugu and its continued viability." GetFugu's allegations from the filing are listed below:
  • We have reason to believe that you have been engaging in short selling of Company stock in anticipation of your proposed investment in the Company in violation of federal securities laws.
  • SpongeTech has been publicly accused of forgery and identity theft in connection with attorney opinion letters allegedly forged by SpongeTech.
  • In addition, in researching these events, it came to our attention that the payor in each of the electronic wires described above was RM Enterprises International, Ltd., not SpongeTech or Vanity. We are unsure about the connection of RM Enterprises with SpongeTech or Vanity. RM Enterprises was never considered by GetFugu to be a party to the proposed investment, and we were previously unaware of the existence of RM Enterprises. We find troubling the fact that monies have come from this entity, rather than SpongeTech or Vanity as originally intended and as publicly announced by all parties.
2) Then, on October 9th Vanity Events Holding, Inc. announced that it had determined not to proceed with its previously announced $1mil investment in GetFugu, Inc. (no great surprise).
  • “After further consideration, the Company determined that, at this time, it was in its best interest to rescind the plans to invest in GetFugu and its technology,” commented CEO of Vanity, Steven Moskowitz. “We do believe their technology is exciting and could change the way consumers purchase products via their mobile phones and we wish them well on their launch.”
  • Contrary to any press releases or other statements issued by GetFugu, the transaction was canceled prior to the execution of any definitive documentation between the parties and no funds were advanced or invested by Vanity.
I must say, as information continues to emerge on this story, and as I read on multiple investor discussion boards about the reputations of the overlapping directors of SpongeTech, Vanity Holding and RM Enterprises International (mentioned in the GetFugu 8-K filing) as stock promoters (which some think is good), the more I feel that this whole transaction could use a healthy scrubbing with one of SpongeTech's products. Fundamentally, in what world does it make sense for mini microcap companies in the soap-infused sponge and touring swimsuit model businesses (the latter doesn't even have a website) to invest in an enhanced mobile search marketing company? (Clue: It doesn't) I get the sense that all of these companies, including GetFugu, are primarily in the business of making management (and early stage investors) wealthy in the very short run, rather than creating quality products and/or services to form the basis of sustainable companies that can hire employees, benefit consumers and generate income for a large number of investors over the long term. Is building a real business an anachronism? I hope not. Unfortunately, there are still far too many companies in the mobile entertainment space, and in the broader entrepreneurial economy, wedded to poisonous, dotcom era (everyone's gonna be a millionaire) thinking that validated and glorified the creation of companies where the most important component of the business plan was the exit strategy, with its associated payday. It's way past time to move on. It's time to celebrate real business.


  1. Hi,
    Got your blog through Google Alerts, Very well written.
    Since you have been keeping track of GFGU, what do you think of the pre 14c filed the other day for the company to "RE-"incorporate under the Delaware laws, and dumping their Nevada registration?
    Personally as a GFGU shareholder (not a big one but enough that I would be peeved to loose it all) I think the move is good as the regulations in Delaware seem to be more stringent and more interested in shareholders rights as well.
    Nice article, I will post the link on the GFGU google finance page if you don't mind.


  2. One does need to agree on concept, but allow me to throw a theory out there on the spnge investment. sponge needed to earn a pile of money in a short amount fo time , why not jump in on the next google,problem is gfgu didnt release the shares, and spnge couldnt profit
    but i would be willing to bet that sponge directors did on their personal portfolio
    dumping the stock then shorting on the way down
    they may have slowed the fugu but did not stop it

  3. I was thinking about investing in some Getfugu shares…UNTIL I saw this in the European papers!
    It would appear that Mr Carl Freer has a lot to answer for before he gets my buck!
    A bit of Due Diligence reveals all...
    Do your own and read all about it...(In Danish) (translate it with google)

    The Serial Fraudster Mikael Ljungma’s one time partner in crime… Carl Freer has more than a few skeletons in his very deep cupboard …and the door of deception it seems is now well and truly opening up according to articles appearing almost daily in Scandinavia.
    A number of documents that the financial police, the U.S. fiscal and curators have been sent, and which newspaper Børsen has seen, indicates that several of the 12 companies at one time or another has been given shareholdings in publicly traded U.S. IT company Getfugu,
    At the beginning of April this year it had a value of 2.7 billion kroner, but has since collapsed to a market capitalization of a small half billion kroner, …As published in Børsen on Monday.

    If the information in the documents are correct,( neither Boris Frederiksen and financial police has yet confirmed the data), it appears that Mikael Ljungmans Swedish business partner Carl Freer control a larger part of the listed company, than previously reported for the stock market.
    (SEC where are you?) It would at least appear this is a theory that the U.S. Banking and Finance, Securities and Exchange Commission has been asked to investigate.

    One of the other theories, as curator Boris Frederiksen, according to Dagbladet Børsen information also is by getting tested is whether the value of the listed Getfugu is actually built on the assets that Carl Freer and Mikael Ljungman owned under the auspices of Media Power. Furthermore, it must now be determined whether it managed both to build up assets using scam money from IT Factory scandal and in fact had money flowing into Media Power, coming in to the U.S. through its subsidiary Ecommerce.

    Mikael Ljungman in late August last year set up the company Sovereign Corporate Services with offices in Dubai and in the English kanalø Isle of Man to create the many companies needed, this is clear from correspondence between Ljungman and Sovereign Corporate Services.

    These are the 12 companies Lynx Holdings (Cayman) Ltd., Mandalay Investment Ltd., Stone Harbor, Ltd., GR International Limited GmbH, Lynx Overseas Holdings Limited, Spetchlet Global Assets Limited, CJF Overseas Holdings Limited, Lombard LCM Capital Management GmbH, Gate International Investment Ltd, LF Investments Ltd, Ganesha Holdings Ltd and Northern Star International Ltd, located in Switzerland.
    GETFUGU and Carl Freer have a lot of explaining to do in the face on mounting evidence connecting him to massive criminality and illegal activities to move Get Fugu on the US market.

  4. Carl Freer involved? I remember that name... he was involved in the hilarious Gizmondo (presumably not hilarious if you happened to be an investor).

    Here's a refresher on Gizmondo for anyone who missed it at the time:

    Gangland connections, crashed Ferraris, illegal guns, impersonating police officers, paying friends and relatives hundreds of thousands from the company payroll... the only money I'd give that man would be some I wanted laundered...


    Getfugu Inc is another Carl Freer public company that has run up staggering losses for the nine months ended September 30, 2009 totaling $35,272,071.

    Carl Freer, Getfugu Inc and its Directors track record will come under the spotlight in one of the largest Civil RICO actions filed in America.

    The case filed on 25th November at United States District Court, Central District of California, Central Division. Case No CV09 - 8724.

    You can get a copy by contacting the Clark's Office on 213 894 3863 or via email at records_cacd@cacd.uscourts.gov