Zer01 Fails To Deliver Again; Blames Everyone Else, Dumps Buzzkirk, Threatens Legal Response To Reporters

from the well,-let's-see-now dept

Thu, Aug 13th 2009 1:21pm — Mike Masnick

Last month, following an excellent investigative report by Nancy Gohring on a hyped up mobile service company called Zer01, our own Derek Kerton weighed in with his own findings about the company. It all added up to an awful lot of questions. There were numerous claims that were not substantiated. Promises that were not lived up to. Business partners with troubling histories. And a whole lot more. One of the many questionable aspects of the story was Zer01's relationship with Global Verge, a multi-level marketing company that had signed up a bunch of people to sell the service, which resulted in totally ridiculous claims about the service. Some of those who had bought into the Global Verge/Buzzkirk plan were still peppering our comments last week with promises of amazing wealth to come.

But, the story keeps getting worse. Last week, Laptop Magazine, whose "best of show" award at CTIA the company had been leveraging for credibility, rescinded the award, noting not just the questions raised by the various reports, but also Zer01's own promise to deliver them a working phone weeks ago. It's been a week and Zer01 still hasn't taken down the award from its website, where it's prominently placed and promoted. Oops. But, a much bigger deal was that the company, once again, promised to start shipping the phones August 10th and to start paying the "sales commissions" to all those people who "earned" them via the MLM plan. Of course, the week's almost over and no phones yet... Update: to be clear, these statements were made by Global Verge, but considering that they were the official marketing partner of Zer01, you have to think they would not promise delivery of the phones had Zer01 not told them they were ready. Besides Zer01 has also been promising phones to people for weeks.

On top of that, Gohring has continued to dig into the story and reports that Global Verge appears to have fired a bunch of execs, including the one who was promising that the phones and commissions would be delivered this week. Now that he's no longer working there, he says that "it'll be a miracle" if they actually pay the commissions. There are also lots of questions about the supposed "reasons" for the delay. One exec claimed the SIM cards need to be "defragged," though a SIM card expert Gohring spoke to had never heard of "defragging" a SIM.

But this morning, the story got even more odd. First, Zer01 blasted out a press release announcing that it had dissolved the relationship with Global Verge. I'm not quite sure what that means for all those "associates" who have paid up a bunch of money, but I'd bet it means despite their eager insistence, they won't be seeing those phones any time soon.

From there, however, Zer01 uses the press release to bash everyone who has been reporting on this story and to threaten legal action against all of us:

During the three-month business relationship between Zer01 Mobile and Buzzirk Mobile, questions by the general public and journalists were raised about the business agreement and Buzzirk Mobile's ability as a distributor. "Overall, there were a number of news articles and blogs that misreported a lot of the facts about each company and its services," commented Ron Dresner, Zer01 Mobile spokesperson. First, Zer01 Mobile and Buzzirk Mobile are two very separate and distinct companies, only joined by this now dissolved agreement. Previous reports erred in applying facts about the questionable background of Buzzirk Mobile executives to Zer01 Mobile team members; Second, industry 'insiders' commented about the new Zer01 Mobile service stating their doubts about the credibility of the service because no details about the interconnect agreements were released. From the start, Zer01 Mobile stated that it needed to protect and honor the confidentiality of its business partners and could not release this information. It has invited any and all industry 'insiders' to visit with Zer01 Mobile at any of the upcoming industry conferences and use a Zer01 Mobile phone; Third, Zer01 Mobile has never promoted or mentioned facts regarding its service that were misleading. News reports specifically quoted Buzzirk Mobile sales associates sources as to communication speed rates and frequencies; and fourth, questions about Zer01 Mobile's patent pending technology in the news are totally unfounded and motivated by marketplace competitors. Any visit to the patent office will prove Zer01 Mobile's VMC technology registration."

"We hope that our actions and statements put many concerns to rest. We believe that statements made publicly about the nature of our relationship with certain entities and the legitimacy of our mobile products by certain third parties are erroneous and untrue and are not based upon sufficient knowledge of the facts involved. Currently, our counsel is in the process of preparing a response to these false and misleading statements. Our company reserves all its legal rights and remedies that may arise from any and all erroneous and untrue statements made by third parties. We consider the reputation and integrity of Zer01 Mobile to be of utmost importance to our future success and we intend to vigilantly defend it," concluded Dascotte.

Well, well, well. So it seems that part one of the plan is to throw Buzzkirk/Global Verge under the bus. That's a good step -- though they haven't explained why it didn't happen back when the problems were first reported on. The rest, however, simply raises more questions. In mocking the so-called 'insiders' who are welcome to use a phone at any upcoming industry conference, it ignores the fact that Derek tried to do exactly that at CTIA and was not allowed. It also doesn't explain why it's failed to deliver promised test units to reporters like those at Laptop magazine. If the phones really are ready, why are they only ready at trade shows? In another part of the press release, Zer01 insists the reason it can't explain its wireless network agreements is due to confidentiality agreements. That's nice... except that the two national GSM providers both have denied working with Zer01. Perhaps they have other agreements in place, but given all the other questions raised without answers, hiding behind "confidentiality agreements" isn't particularly convincing.

As for the patents, that's a nice dodge as well. First of all, it's quite easy to file a provisional patent, so we don't doubt that the company may have filed something. But we asked what that patent application was for, and notice that it doesn't respond. All it says is that we can find out if we visit the patent office. The thing is, the questions are on Zer01's side, and they could put this all to rest by actually showing the application to people.

Finally, if the company really believes that its reputation and integrity are of the utmost importance, rather than threatening reporters and industry folks who have questioned them, why not... um... actually prove them wrong? If Xer01 actually comes out with a phone and service that does what they promised it would do, it would be quite newsworthy, and we'd be more than happy to write it up and retract the earlier questions raised about the service. But attacking those who raised those questions -- which the company still hasn't answered, other than with its passive aggressive attacks in this press release -- we're still left wondering why the company won't actually answer those questions.

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Filed Under: multilevel marketing
Companies: buzzirk, global verge, zer01

27 Comments

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Ima Fish (profile), 13 Aug 2009 @ 1:33pm

Here's a question that the editors of Laptop Magazine need to answer:

Why did your magazine give a "Best of Show" award to a product you never actually used or even saw?!
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aguywhoneedstenbucks (profile), 13 Aug 2009 @ 1:34pm

Re:
It makes me want to jump up and down yelling 'LIAR LIAR, PANTS ON FIRE!'.
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Free Capitalist, 13 Aug 2009 @ 2:00pm

What Parker and Stone Said...
"Any further questions may be directed to this brick wall..."

I forget the exact wording from the old South Park episode... but I'm pretty sure Dasscotte took a page from Matt and Trey here.
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Len Clements, 13 Aug 2009 @ 2:05pm

Global Verge Expose'
Mike,

You got 99% of this right on. However, Global Verge, which was not Zero1, promised the phones and commissions by Aug. 10th. I've never heard anyone from Zero1 cite this date for the phones, and Zero1 had no control of rep commissions via GV.

Check out these recent podcasts for a lot more details...

http://www.marketwaveinc.com/radioshow.asp

Len Clements
Founder & CEO
MarketWave, Inc.
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Anonymous Coward, 13 Aug 2009 @ 2:27pm

Clearly the computerworld article was not an investigative report since computerworld is not a newspaper.
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Dark Helmet (profile), 13 Aug 2009 @ 2:36pm

Wow:
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Dark Helmet (profile), 13 Aug 2009 @ 2:36pm

Wow:
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Dark Helmet (profile), 13 Aug 2009 @ 2:37pm

Wow
That was one massive pluasable deniability fuck you, wasn't it?

I've never actually seen it take two fully fleshed out paragraphs to say, "It wasn't us it was them."
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Alan Gerow (profile), 13 Aug 2009 @ 2:42pm

Re:
Can you explain how a newspaper has exclusive rights to investigate a news story?

It seems that if someone does some investigating on a subject, and then writes a report or story about it, then regardless of who they work for, they just wrote an investigative report.

Please explain how being printed in a newspaper is a prerequisite to be an investigative report.
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DJ (profile), 13 Aug 2009 @ 2:51pm

Re: Re:
it's simple: the AC in this case, is a newspaper "journalist" and has his head stuck so far up his own ass, he looks normal.
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some old guy, 13 Aug 2009 @ 3:12pm

Re: Re: Re:
or your sarcasm detector needs to be recalibrated. Come closer, I can fix that. *gets out monkey wrench* This will only hurt for a second.
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Rich, 13 Aug 2009 @ 3:18pm

Glad its finally over! This was an evident scam last month. GV and Zero1 have been working together all along in this Scam and they just can no longer continue it. So this is the easist way to end it and try to escape Fraud charges. I hope the FBI goes after those scumbags Piilani and Petchel. Thier intention had always been to defraud the GV associates, plain and simple!
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Trails, 13 Aug 2009 @ 3:26pm

Ha ha ha
"We hope that our actions and statements put many concerns to rest."

Swing and a miss.
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SomeYoungGui, 13 Aug 2009 @ 4:05pm

the funny thing
the zer01 mobile site has a security hole.

go to http://zer01mobile.com/distributors.php

put the company field as a single quote '
fill out the rest of the required fields with whatever you want
submit
get an SQL error

this means the inputs aren't being scrubbed.

For reference sake:
http://xkcd.com/327/
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Sallo (profile), 13 Aug 2009 @ 4:24pm

coverage map
Is it just me or does the zer01 coverage map look like the map Sprint was using before they bought nextel and changed there colors from red to yellow?
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Trails, 13 Aug 2009 @ 4:45pm

Re: coverage map
Actually, it's just a slightly photoshopped version of AT&T's, who claim to have no relationship of zer01.
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Derek Kerton (profile), 13 Aug 2009 @ 8:01pm

I've remained mostly mum on this since my posts last month, because I found there was very little left to say. I know that on Scam.com, and other MLM sites, the legitimacy of Zer01 and Buzzirk/Global Verge are still hot topics. However, these discussions seem to me much like people on the sinking Titanic arguing about whether the ship is sinking by examining details such as whether the tables are sliding down the deck or not. Really, the mountain of evidence is in, what's the point of fiddling with details.

This whole thing is a bit of a repeat of prior scams that involved Mark Petschel and prior iterations of a magic phone, that also did not appear. We have:

- convicted (now fired, Petschel) felons at the helm,
- a shell game of ownerships, liability, buck passing, fake addresses, exec restructuring
- Ben Piilani's resume is mostly lies if one just scratches a bit below the surface
- they are promising a magic phone that has amazing technology, but have no labs, no engineers, no real office facilities besides a PO box?
- the premise of the technology is implausible
- the premise that any carrier would allow Zer01 to offer unlimited data on the same networks where they limit data to 5GB is preposterous.
- MLM is a dubious business model, but is well suited for grifting money in a pyramid format
- GV couldn't get a credit card processor in the USA, but had to get one in Antigua. Or is it because the US processors wouldn't take part in the shady business? Or is it because if the business is a scam, since it was done in Antigua, they can keep the booty. Not sure here, but Antigua it is.
- GV is processing dues of MLM "marketers" who want a shot at selling the fantasy phones. Collecting money when the product isn't there??? And only supplying continuous streams of excuses, delays, and promises. The execs sure are building up a nice little nest egg of dues! Wonder where that money is.
- Not paying commissions of MLM sellers yet for signing up more sellers. Many are waiting.
- their coverage map is stolen from AT&T, with photoshopped on Zer01...but AT&T denies any relationship
- the distributors lied and continue to lie

Now I've seen some triple-suckers trying to say that all startups have their hiccups, and the naysayers just don't understand business or have no entrepreneurial spirit. Baloney! My mother started 8 businesses, my brother built his own company and employs about 50, I have a top 10 MBA (a real one, not like a Piilani credential) own/run my two businesses (which I won't ask you to re-sell for me), and in my work I consult for and see hundreds of technology startups EVERY YEAR. I know startups. I think I can claim to be an entrepreneur. Zer01, Buzzirk, GV all appear very different from the standard startup, and not in good ways. They look scammy. When you dig into them, they look scammier. They look bush league: the quality of writing, collateral, communications is terrible. Their management team is awful, shifty, shady, lying, boastful. The management of the firms seems disorganized, poorly thought out, and terribly executed. Don't tell me that all startups go through these phases. Even the bad legitimate ones don't look this bad. If these firms are as the appear, they are scams, if they are legit, they are terrible, terrible startups.

So can we, please, move on from the debate over whether this is real. (The debate isn't raging at Techdirt, since most of our readers "get it" regarding the technology, but it is raging on other sites).

I'd like to note that I predicted in my article last month that the likely outcome would be that these two companies would part ways, sans phone, and that GV/Buzz would be able to say, "Sorry, no phone due to circumstances beyond our control", and there would be no liability for a Pyramid scheme, because it's not GV/Buzzirk's fault the phones didn't arrive, and GV/Buzz still has Electricity Savers to MLM sell. This is still my prediction. Behind the scenes these grifters are all working together, though, and will make off with the money. Not sure if they'll get away scot free, though. That's what will be interesting to watch for me.
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The Infamous Joe (profile), 13 Aug 2009 @ 8:10pm

Just FYI
If Xer01 actually comes out with a phone and service that does what they promised it would do,

That should be a Z, not an X.. Wouldn't want to soil the company Xer01's name, now would we? :)
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Derek Kerton (profile), 13 Aug 2009 @ 8:13pm

Also Funny
When the Laptop Mag Best of CTIA award was rescinded, as Mike noted, the Zer01 homepage retained the award at the top of page. A couple of days later, I went by to check myself, and it was still there, but it hyperlinked to a Laptop Magazine page where Laptop discussed pulling the Award due to lingering doubts about Zer01.

It was funny that Zer01 was stupidly linking to an damning admission from Laptop about an award that was rescinded.

And it is funny today that I noticed the Zer01 site HAS now been updated. Did they remove the award from the homepage? No! Did they mention that it was rescinded? No! Did they just remove the hyperlink to the mea culpa from Laptop mag? Yes!

I love it. They took the time to update their site...but pretty much illustrated how they are consistent liars.
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Trails, 13 Aug 2009 @ 8:21pm

The question
I think the question is what's their exit strategy?

They know this won't last more than a couple more weeks to a month at most.

Do they assume they'll just get away with it?

I think part of the problem is they got too much attention. When this whole thing finally folds, they are going to be a LOT of angry dupes screaming for blood. If I were Pilaani, I'd be worried I was being setup for the patsey. After all, they can point all to all his statements claiming it works, and blame everything they ever said on him.

My guess: at the end of this Pilaani will setup to fall. If I were him I'd start talking to prosecutors now.

Aside, Derek, thanks for the great article last month. I only came across it recently, but it was quite an interesting read, and very in depth and well thought out.
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staff1, 14 Aug 2009 @ 8:45am

stop the shilling!!!
"As for the patents, that's a nice dodge as well. First of all, it's quite easy to file a provisional patent, so we don't doubt that the company may have filed something. But we asked what that patent application was for, and notice that it doesn't respond."

Why should they respond. We all know you are but a hired gun for invention thieves -a toy gun that is.
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Kathy, 14 Aug 2009 @ 11:22am

Re: Rich's comment
Well said Rich - I think they did it for the advertising exposure - and what about the fees all the associates paid - do you think they will get their money back?
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A.J Stallings, 17 Aug 2009 @ 2:34pm

Re: Also Funny
Well dummy!!! They did win the award. So, technically they did win the award and that what it says on the website. It show honesty to me that they left the link on the page. Are you biased against Zer01. It does not say the award is still in effect. It seems that you are on every blog tearing this company apart. I did some research on you. It seems you have been pissed off at them because they did not give you preferential treatment at CTIA.
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_Arthur (profile), 17 Aug 2009 @ 4:01pm

VOIP feasability ?
Derek, can you tell us about the technological gotchas in using VOIP to carry cell phone voice ?

0) Let's assume Ze01 has a carrier, and we'll have to assume further that this carrier charge them peanuts for unlimited use of their cell phone towers. Yes, admittedly this is quite unrealistic.

1) Is there any point in converting voice to "VOIP" ? All voice signal is carried as digital packets already for all current cell phones.

2) Won't the VOIP trick degrade sound quality ? With IP packets, there no guarantee all packets arrive on time and in the right order, yes ?

3) How does the cell phone process the VOIP conversion, is this done at the hardware level, or packet-per-packet by a JAVA routine ? If so, running that much JAVA code in real time may really use up battery life, IMHO.

4) Where does the VOIP goes ? Regular phones cannot receive VOIP as such, so there must be one or several servers to convert it back to regular voice telephone signal. Does Zero01 have one single datacenter to decode the expected millions of VOIP streams, or one in each US region ?

5) Zer01 has alluded several times to its technical team: how many enginers have they, where is their lab located, and what's the name of Zer01 CTO ?
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Shadow, 19 Aug 2009 @ 2:52pm

Zer01 - Who's Conning Who
Almost 50,000 GV associates ready to purchase a phone plan and Zer01 can't deliver. If they had the product they claimed, it would have been a windfall for them.

If they had just supplied LapTop and PC magazine with a phone They would not have to blame everything on GV and Buzzirk.

I wonder how much Piilani's group along with his Pr man Ron Dresden have milked from investors. Dresdens good at putting the spin out.

Was Pervasip in on the the con, their stock is in the outhouse. They endorsed Piilani and Zer01 or was that more of Dresdens BS.

Well GV and Buzzirk are coming out with a unlimited plan anyway just as good as it was advertised - Stay tuned for the rest of the story.
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_Arthur (profile), 21 Aug 2009 @ 10:22am

The scam.org thread got DELETED.

The latest news I saw, Verge was telling its associates not to worry about Zer01 severing its relationship with Buzzirk and Verge, they would have ANOTHER phone peddler lined up real soon now, in a matter of days, at the same conditions, $79.99 UNLIMITED everything.

So, after bragging of Zer01 unique proprietary technology for months, and of it backbone ownership and its billions of virtual capitalization, they say they can turn around and find another company with the SAME product ? I don't think so.

Oh, and they tell their associates not to worry, their checks are in the mail; as long you keep paying your $49.99 every month, you'll receive $1 for every chump you signed and who keeps paying $49.99 for nothing at all.

No phones to peddle.
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Derek Kerton (profile), 8 Jan 2010 @ 5:16pm

Re: Re: Also Funny
I get preferential treatment from just about no one, so that means nothing to me.

And by every blog, you must mean 3-4 blogs. And I did it as a public service, because honest people are being duped into wasting their money.

I AM biased against Zer01...after researching them thoroughly. We at Techdirt voice our opinions. There is no prejudice. In the best case, they have failed to do as they said, over, and over, and over. Bad enough right there.

And, why call me dummy? In the rubber/glue debate category, you'd lose. Do you even know the meaning of the word "rescinded"?

As to your and my credibilities. Time has proven me right, and a quote like "It show honesty to me that they left the link on the page" pretty much defines your ability to reason.
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