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A "Pump-and-Dump" Fraud from Brain Games - 2006/07/29 21:32
A "Pump-and-Dump" Fraud from Brain Games
By David Levy
During the period February-July 2000 two Londoners, Chess Grandmaster
Raymond Keene and businessman Alan Lubin, perpetrated various frauds relating to a UK company called Brain Games Network plc. Within that short period the company's investors lost all of their 3 million pounds investment. These same individuals are currently engaged in the early stages of what appears to be a very similar "pump and dump" scam, using a US company called RTG Ventures Inc as the vehicle. RTG
Ventures Inc is supposedly based at 185 Madison Avenue, New York, and is traded in the USA as an over-the-counter bulletin board stock.
Several "amazing coincidences" have been revealed linking the creation of RTG Ventures Inc and the fraudulent methods used to set up the now bankrupt Brain Games Network plc. Some of these "coincidences" were published in the UK Magazine Private Eye (number 1093, November
14th-27th 2003). It was also Private Eye that exposed the previous frauds perpetrated by the very same people who are now involved with
RTG Ventures Inc (see, for example, Private Eye number 1050, from which the relevant article is attached here). A more detailed account of the frauds may be found in the Internet article: "Is Fraud a Brain
Game?", which appeared on Garry Kasparov's (now defunct) web site
www.kasparov.com and was reproduced elsewhere.
The first two stages of the Keene/Lubin methodology consists of acquiring most of the shares in a newly formed or otherwise impoverished public company through a share swap with other valueless companies, and then to hype their new company's prospects in order to encourage potential investors.
In the spring of 2000 Keene and Lubin fraudulently hijacked 88% of the shares in Brain Games Network plc (BGN) while selling the remaining
12% to a group of hapless investors for 3 million pounds. That particular scam involved Keene and Lubin "selling" to BGN the share capital of three worthless companies. In return for all this useless paper Keene and Lubin snatched 22 million out of 25 million BGN shares while almost simultaneously selling the remaining 3 million shares to investors at 1 pound each (total = 3 million pounds). It is now only four months since BGN went into liquidation; Einstein Group plc, the
UK company to which BGN sold off its chess "assets", has since gone into administration (which is similar to Chapter 11). Yet already history appears to be repeating itself, and this time the sale of shares to unfortunate investors seems to be planned for the USA as well as for the UK.
After the BGN investors had lost all of their 3 million pounds it was discovered that a large slice of money had been siphoned off by Keene and Lubin, mostly into the account at Bank Cantrade of Lubin's Swiss company Giloberg Finance Ltd. With RTG Ventures, which appears to be about to change its name to Far East Challenges, the share acquisition has already taken place (see below) and the hyping process is now under way.
The hyping process itself is very much in line with one of the classic methods used in "pump and dump" scams - the company puts out several press releases designed to create interest in the market. Typically these press releases contain a mixture of false, misleading and unverifiable statements to the marketplace. In the case of RTG
Ventures, their supposed business activities will lie in the Far East and it is difficult to see how prospective investors can hope to verify the company's statements, for example those about agreements it already claims to have or is negotiating with the Chinese Sports
Ministry.
The acquisition of shares in RTG Ventures is described in a change of control document (Form 8-K) filed with the Securities and Exchange
Commission in Washington on June 5th 2003: "On May 21, 2003 we entered into an Agreement for the Exchange of Common Stock with MJWC, a British Virgin Islands corporation, the result of which MJWC became our wholly-owned subsidiary. On the same day, we entered into an Asset
Transfer Agreement with Brain Games Asia, Inc., a British Virgin
Islands corporation, in which we acquired all of the assets of Brain
Games Asia, Inc. Pursuant to the two Agreements, the Company will be issuing a total of 26,475,000 shares. At the closing of the transaction, the Company will have a total of 31,683,000 shares issued and outstanding shares. As a result of this transaction, the shareholders of Brain Games Asia, Inc., and MJWC control approximately
84% of the issued and outstanding shares of the Company's common stock." This modus operandi is virtually identical to that used in the Brain Games Network scam. With a quick swap of paper Brain Games
Asia, largely owned and controlled by Lubin (through Giloberg Finance
Ltd) and by Keene, became the proud owner of most of RTG Ventures Inc.
Their 84% of RTG Ventures is almost as large a holding as their 88% stake was in BGN.
The SEC Form 8-K also gives RTG's explanation of why anyone would want to own MJWC and Brain Games Asia. "MJWC has a contract with Chinese
Sports Ministry to organize and promote the world Chinese Poker
Championships until 2009. MJWC owns all the multimedia and Internet rights to the championships and the events leading up to it. MJWC also has contracts to organize and promote the world Mah Jong Championship until the games 2009." These particular claims are somewhat mysterious to those in the world of mind sports, given that the World
Mah Jongg championships take place in Japan and not in China! And as for Chinese Poker, what world championships? Google knows of none, nor do any of the mind sports experts contacted by Private Eye. Equally dubious is the claim that: "Because of these contracts MJWC has access to a database containing in excess of 30 million online players of the above games." In excess of 30 million!! Really?? Anyone planning to invest in RTG would do well to conduct more than a little due diligence before parting with their dollars.
In the case of Brain Games Asia, RTG describes its sole asset as: "the rights to organize and promote the Chinese Chess championships." But
BGN announced at its Annual General Meeting in December 2001 that
Brain Games Asia owned "the worldwide multimedia rights to the Beijing
Opera"? What has happened to that particular asset? Did it ever exist or was that simply another lie?
Other recent announcements from RTG raise more questions than they answer. Firstly there is the company's Chief Financial Officer,
Barrington Fludgate, who is also Chief Executive Officer of Xborder
Corporate Services Inc, a company that shares the same office address in New York as RTG Ventures. A quick glance at the web site
www.xbordercorp.com reveals the names of Xborder's management, including that of David Massey. And who was the CEO of Brain Games
Network from Spring 2001 until the company went into liquidation in
July 2003? Right first time - it was David Massey.
A New York Business Wire announcement on October 8th stated that RTG
"has partnered with MVI NOW Limited, a London-based streaming video speciality company" which will allow RTG to "provide live 'buy now' coverage by mobile phone of all semi-finals and the finals of the
Chinese Chess Championship". This seems extremely unlikely to happen, given that BGN's last foray into Chinese Chess left the company owing some US$92,000 to Apco Asia Ltd in Hong Kong (as revealed in Private
Eye number 1,044). But that is not the only surprising aspect of RTG's partnership with MVI. On their web site http://www.mvinow.co.uk, MVI claims to have developed a unique process "that enables quality video pictures to be viewed on 2.5G mobile phones c" How the company developed this amazing technology so quickly is not explained - documents filed at Companies House in the UK show that MVI was incorporated as recently as June 13th 2003, the very same day that BGN announced that it would be going into liquidation! When I went to
MVI's office address in London recently I was told that the company had moved out two days earlier and had not left a forwarding address.
Their telephone rings and rings - no reply and no voicemail facility.
My attempt to find out more about RTG Ventures by visiting its
"office" on the 10th floor at 185 Madison Avenue was also frustrated.
The company's name does not appear in the lobby on the list of occupants of the building, nor does that of Barrington Fludgate's company Xborder Corporate Services (whose web site proudly gives the
Madison Avenue address, 10th floor). When I telephoned the number given on the Internet for both companies, my call was answered by a law firm, Raice Paykin Krieg. At first their telephonist said she had never heard of RTG Ventures but on being pressed she suddenly remembered that her firm took messages for RTG but had no idea where the company is located. When I asked about Xborder I was told the same thing - the company is not located there, she did not know where it is located, but Raice Paykin Krieg take messages for them. Finally I asked her if Barrington Fludgate was a client of her company and she confirmed that he is.
So RTG Ventures appears to have no offices, XBorder Corporate Services appears to have no offices and MVI Now Ltd is uncontactable. How strange!
What does all this mean? The recent flurry of press releases from RTG
Ventures Inc appears to be part of a classic attempt to create public interest in the company and thereby to find investors unwise enough to buy the remaining 16% of the company's shares for millions of dollars?
Preparations for such a sale might also explain the company's pretence that its assets - its "rights" in China - have real value. And why the claimed tie-up with MVI Now Ltd? Presumably this is to help convince any prospective investors in RTG that the company has access to some technology with huge earning potential, just as BGN claimed in its
Private Placement Memorandum in March 2000 that it would develop a web site to attract huge pay-per-view revenues, which BGN never did.
Where exactly do Lubin and Keene fit in this new venture? It is partly through their beneficial ownership of equity in RTG, acquired via their respective ownerships of much of Brain Games Asia. But this is not the only connection. RTG announced on October 22nd that its
"trading nameh in Europe and China is Far East Challenges. A quick search of the UK Companies House web site reveals that Far East
Challenges is much more than a mere trading name - it is a UK public company, registered at the office of Sinclair Silverman, the very same accountants in Golders Green Road, London, where Lubin and Keene registered BGN and various other companies! The directors of Far East
Challenges plc are listed as Linda Perry of London SW3 (who also happens to be the CEO of RTG Ventures Inc in New York), Sir Brian
Wolfson and Stephen Clifford.
Yet another coincidence is the address of the recently opened London office of RTG Ventures (also known as Far East Challenges plc). The company is located on the second floor of Berkeley Square House, in
London's fashionable Mayfair district. This is the very same building and the same floor where Einstein Group plc's London office was located. Truly amazing! And when Private Eye telephoned the Far East
Challenges office on October 31st to verify that Alan Lubin works there, the caller was told that Lubin was not answering his phone and must have "just popped out, probably for lunch".
As for Keene - a press release on October 27th stated that: "RTG
Ventures, Inc. (RTGV: O , the interactive gaming company focused on the Far East, has appointed Raymond Keene, OBE, Games Consultant to the Company. Mr. Keene is the chess correspondent for the London Times
the worlds leading expert on chess and mind games." But RTG is partly owned by Brain Games Asia which in turn is partly owned by Keene, so
RTG's praise of Keene's expertise presumably comes straight from his own mouth.
The press releases from RTG Ventures continue with one dated November
6th, relating to the companyfs claim that it is "working with the
Chinese Sports Ministry" to stage a three day convention in Beijing in
May 2004, during which Keene "will simultaneously play 100 of China's best players including 10 Masters and five Grandmasters, all under the age of fifteen." As with most pump and dump press releases and SEC filings it seems impossible to verify many of the company's statements, while other of its statements are simply lies. The claim regarding players "all under the age of fifteen" in the November 6th release is one such lie - China has not a single Chess Grandmaster under the age of fifteen, as Keene surely knows.
About the Author
David Levy is an International Master at Chess and the author of several Chess books. He is founder and Chief Organiser of the annual
Mind Sports Olympiad (www.msoworld.com), founder of the annual
Computer Olympiad and President of the International Computer Games
Association (both www.icga.org). He lives in London..
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Never in the field of human conflict was so much owed by so many to so few. - Winston Churchill, 1874 - 1965
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