Scott Brown, The F-Word, & The Game of 9's - Granite Grok

Scott Brown, The F-Word, & The Game of 9’s

Why would Brown associate with a shell company?
Why would Brown associate with a shell company?
Updated with more links – thanks, Globe.

F-Word? Not the one you think: The word is “FRAUD”

Also, learn why Scott Brown might want to avoid the number “9” in future, and why New Hampshire should learn a variant on the old Cain refrain: “Nein, Nein, NEIN!”

First, about that fraud – we had previously questioned the judgement of a lawyer who always reads the the details of the bills (he says), and yet totally failed to perform due diligence on a company with an obviously checkered past and transparent signs of being a pump and dump penny stock operation. (A company which claims to have opened up a new line of business, hypes it with splashy news releases, drives up the stock price, and then cashes out before the ‘investors’ figure out they were ripped off.)

High powered advisers joined 'Last Summer'
High powered advisers joined ‘Last Summer’
There was no question that GDSI Inc was a shell corporation, whose declared line of ‘business’ was purely incidental to the primary task of generating buzz to push up the stock price – this much was clearly visible in their financial statements, and in the stock price chart which leapt upwards last year as the company entered a new line of business, and aggressively hyped their shiny new advisers.

Where Brown’s judgement really gets called into question is this easily located lawsuit, where (roughly) the principals of GDSI (Sullivan and Loppert) are accused of bad faith and securities fraud by promising a company they were acquiring, Argo Digital, a whiz-bang IPO (Initial Public Offering – what every startup wants), and then issuing a vast amount of new shares of Argo and sliding those shares into the shell company, rVue, Inc. I hate to say it, but HuffPo has a good account of the situation, and the updated information that GDSI’s execs finally settled with the plaintiffs, last month.

But wait, there’s more! In the spirit of Pump-N-Dump, last October 8th, GDSI announced that its Airtronic acquisition had obtained a $95M international arms order from an undisclosed purchaser – just the thing for pumping up the stock price. One little problem – the CEO of Airtronic, Dr. Merriellyn Kett, was shocked to hear about the order, which had never been received, and was obviously beginning to feel queasy about being acquired by crooks. No surprise, then that GDSI soon sued Kett for obstructing the merger (January 2014). These additional red flags should have been a clear signal to such an astute lawyer as Brown, that he should be LEAVING!!

(Thanks to the Boston Globe for collecting these legal documents on the tussle.)

Shirley, we must be joking? Leave? When his accelerated vesting schedule had just kicked in? No, Brown toughed it out until he actually came under fire from his home town paper, the Boston Globe – then he ran away – first from reporters, then from GDSI and his, now toxic, stock grant.

What’s this “Game of 9’s” about then? It turns out that a lot of fateful dates for Brown, where this sordid affair intersects with his plans for triumphant return to the Senate, have fallen on the 9th of the month – let’s play:

  • 9th of July 2013 – the report of the easily located lawsuit, against his new friends, Sullivan and Loppert.
  • 9th of September 2013 – Brown joins GDSI as an adviser, to much fanfare.
  • 8th of October 2013 (OK close enough for government work) – that fraudulent claim of an order for Airtronic.
  • 9th of January 2014 – the first of Brown’s shares vest (4 months from Sept 9th)
  • 9th of January 2014 – GDSI Sues Airtronics’ CEO, Dr. Merriellyn Kett (see above).
  • 9th of May 2014 – GDSI files their 10Q, from which the Boston Globe got the details of Brown’s stock grant, and which, after a brief glance, convinced me that GDSI was an empty shell.
  • 9th of August 2014 – the delayed date by which Brown has arranged to file his financial disclosure form.
  • 9th of September 2014 – The NH primaries – NOW would be a good time to reconsider!

Hmmm. Time for a resounding chorus from the NH voters: “Nein, Nein, NEIN!” (With apologies to Herman Cain)

You know, I had been wondering if two or three conservative candidates vying against Brown for the nomination might be a distraction that would hand the nomination to Brown. Now, I’m not so sure – I think that Brown is a distraction from our task of selecting the best conservative to defeat Shaheen, and he ain’t the one!

Memo to NHGOP and Papa Sununu – You own this mess – whether you brought him in, or he bought his way in is beside the point. What matters is that you did as little due diligence on Brown, his lack of adherence to the party platform, and his background, as he did before he lent his formerly good name to GDSI. You now have a toxic candidate, whom the highly experienced Shaheen will dispatch into oblivion with the panache that will make LieAwatha Warren look like the amateur she is.

I’m not calling Brown a crook – he’s too genuine and too nice a guy for that, but I am saying that he hung out with crooks and didn’t notice – not a great advertisement for his moral compass.

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