The Xcelera Fraud
from the amazing,-but-true dept
I'm positive I'd written about the whole Xcelera/Mirror Image fraud thing before, but I can't seem to find any posts having to do with it. If you didn't know about, the whole story is explained in that article, but basically some guy built up a huge valuation for his content caching startup by sending out a ton of press releases, and somehow getting big name investment banks to buy into his scam and predict ridiculously huge earnings. While all of this was going on, he sold enough stock to make himself half a billion dollars. Most of this has already been discussed before. The reason this is now news again is that (thanks to Caymen Island securities filing rules) he didn't actually have to file an annual report for year 2000 until now. So, the annual report for the year 2000 showed that the company made less than $300,000. Total. Morgan Stanley had predicted the company would make $27 million in the year 2000. $27 million. $300,000. I think there was a breakdown in communication. The article hints that perhaps Morgan Stanely (and PaineWebber) were in on the scam, since all of the transactions that Alex Vik (the guy who masterminded the whole scam) made were through those brokerages. So they made some money off of this as well.
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