mPhase Technologies, a developmental stage hi-tech company has some exciting products they claim to be working on. One of the featured technologies they proudly mention on their website is the magnetometer. The magnetometer is similar to something you would see in an unrealistic film sci-fi movie. Of course this technology is “real”. The magnetometer can detect different metals that management says will help future security threats in and other high security locations. What is baffling is the example they use to explain why the magnetometer is so great is that it was able to detect a crowbar from 10 meters away. This should lead to high skepticism.
One will not find this information in their 10-Q’s but in YouTube videos, which are also displayed on the front page of their website. Surly this is a way for management to pump the stock to show would be investors how great their technology is.
Senior management have a long history together. They used to run a company called PacketPort.com, which was a pump and dump from 2005. A simple search of the SEC Litigation page will return several hits.
“The Securities and Exchange Commission filed an enforcement action on November 15, 2005, charging six individuals and four companies with securities fraud and other violations in connection with a scheme to pump and dump the stock of PacketPort.com, a company based in Norwalk, Connecticut. The SEC alleges that three PacketPort.com officials and two stock touters, aided and abetted by a registered representative, executed the pump and dump, which obtained more than $9 million in illicit proceeds.”
Top management, Ronald Durando and Gustave Dotoli are certainly a management team shareholders may want to think twice about.
“The Complaint alleges that Ronald Durando, a 48-year-old resident of Nutley, New Jersey, privately acquired a majority stake in an insolvent public company, then called Linkon. His stake in Linkon consisted of restricted shares. With the help of his colleagues, Gustave Dotoli, a 70-year-old resident of Nutley, New Jersey, and attorney Robert H. Jaffe, a 69-year-old resident of Mountainside, New Jersey, Durando took control of Linkon and changed its name to PacketPort.com. Durando became president and CEO, and Jaffe and Dotoli became directors. Durando, Jaffe, and Dotoli laundered restrictive legends from Durando’s share certificates so that the restricted shares could be passed off to the public as “free trading.” Durando then paid IP Equity, Inc., a private California corporation that operated an Internet-based stock newsletter, and its principals, M. Christopher Agarwal and Theodore Kunzog, to publish false publicity and bogus recommendations about PacketPort.com in order to pump up the stock price. The share price more than quadrupled following the false publicity, rising from about $4.75 to a high of about $19.50.”
Durando and Dotoli also happen to be running mPhase Technologies. These crooks aren’t just unethical but from a very bird’s eye view downright stupid. Perhaps they should realize that committing similar crimes for something they have already been accused for in the past would hurt them in court; mPhase is PacketPort.com déjà vu. Unfortunately past litigation and investigations into management’s former affairs should lead one to believe they will never have the opportunity to use a magnetometer as it makes sense to conclude that this product is only an mPhase shareholder’s delusion created by a YouTube video.
