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Another Who's Your Daddy Inc. executive has been caught up in a criminal drug trafficking case in San Diego.

Court documents filed since our original story show that, in March, agents seized a 32-foot powerboat valued at more than $100,000 from Dan Fleyshman, one of Who's Your Daddy's founders and the current director of sponsorship.

The seizures preceded a slew of federal drug indictments that included Edon Moyal, Fleyshman's co-founder at Who's Your Daddy (OTCBB: WYDI.OB). ((link to seizure list))

Fleyshman is not a defendant in the case and has not been charged with any crimes. He told Sharesleuth that although the government seized the boat, it wasn't actually his.

"I didn't own the boat so it wasn't seized from me, nor was anything else since I'm not a part of the case," he said in an email.

Fleyshman said the boat had at one point belonged to a luxury store that he owned in downtown San Diego. He said it was purchased by one of the defendants in the drug trafficking case, which is why the government took it. However, the most current registration records for the boat still list Fleyschman's store as the owner.

The U.S. Attorney's office said it couldn't comment on a pending case.

The government disclosed the seizure after prosecutors filed a bill of particulars for all of the items and cash that were taken as part of the investigation. In all, agents seized more than $500,000 worth of cash, cars and jewelry from people connected to the case. That includes some $40,000 in cash seized from Moyal, and a little more than $4,000 seized from Fleyshman, whose name was misspelled in the court documents.

Moyal was executive vice president of marketing and brand development at the time of his arrest. He, along with a handful of others, was charged with conspiracy to distribute marijuana and possession of marijuana with intent to distribute. According to court documents, agents conducting surveillance spotted Moyal handling boxes of marijuana that were later shipped from San Diego to Maryland.

Although Who's Your Daddy said in a Securities and Exchange Commission filing in April that Moyal had resigned as an officer and director, it did not disclose his arrest or his federal indictment.

The case drew national attention when an undercover operation that was supposed to be a final bust went awry last spring and several defendants led police on high speed chase across San Diego freeways, throwing fistfuls of cash out their windows as they went.

Moyal and Fleyshman, both under 30, had been hailed in Entrepreneur and other publications for developing the Who's Your Daddy line of clothing, energy drinks and other products, and for taking their company public at such a young age.

The Securities and Exchange Commission recently brought charges against financier Michael J. Xirinachs, alleging that he helped a Florida company called Universal Express Inc. dump billions of unregistered shares on the market in 2006 and 2007. 

The SEC said Xirinachs, though two investment companies, bought more than 15 billion unregistered shares from Universal Express at a discount to the market price, then sold them to the public, generating $17.5 million in proceeds. According to the complaint, he routed $11 million of that money to Universal Express as payment.

Sharesleuth noted that one of those same investment companies entered into a consulting agreement last November with Rockwell Medical Technologies Inc. (Nasdaq: RMTI), which sells dialysis concentrates and solutions to healthcare providers.

Rockwell Medical's shares doubled in the 15 days that followed that agreement, and doubled again in the first seven months of this year. The warrants that Xirinach's company, Emerald Asset Advisors LLC, received as the sole compensation for its consulting services are currently worth $1.9 million more than their exercise price.

The consulting agreement called for Emerald Asset Advisors to introduce the company to potential licensing partners, acquisition candidates, securities analysts, stock brokers and institutional investors. 

The timing of the contract and the surge in Rockwell Medical's shares could be a coincidence. But a Sharesleuth investigation found that Xirinach has a long history with Rockwell Medical, dating back to the mid-1990s, when he was an executive with D.H. Blair & Co., a brokerage that defrauded investors by manipulating stock prices and engaging in high-pressure "boiler room'' sales tactics.

THE COMPANY

Rockwell Medical bills itself as a fully integrated biopharmaceutical company. Its products target end-stage renal disease, chronic kidney disease and iron deficiency anemia. It recently completed Phase 2 clinical trials of a new drug, Soluble Ferric Pyrophosphate, for delivering water-soluble iron into the bloodstream during dialysis treatment.

Rockwell Medical employs about 250 people, according to SEC filings, and has manufacturing and warehousing facilities in Wixom, Mich.; Grapevine, Tex., and Greer, S.C. The company, which is based in Wixom, reported $25.8 million in revenue for the first half of 2009, up 4.9 percent from a year ago. It posted a loss of $3.4 million for the first half, compared with a loss of $2.3 million a year earlier.

Rockwell Medical's shares got a boost this summer when the company was added to the Russell 2000, an index of small capitalization stocks. Rockwell Medical completed a directed offering of shares and warrants last month that netted $20.5 million in new capital. It placed the securities with a group of institutional investors led by Deerfield Management Co., a New York-based hedge fund that focuses on healthcare businesses.

Rockwell Medical's shares peaked at $9.39 on Aug. 7. They closed Monday at $6.84, giving the company a market value of $116.5 million.

(Disclosure: Mark Cuban, the majority member of Sharesleuth.com LLC, has no investment position in Rockwell Medical; Chris Carey, editor of Sharesleuth, does not trade in individual stocks and has no investment position in Rockwell Medical.)

Unlike some of the companies that Sharesleuth has written about, Rockwell Medical is clearly a real business, with growing revenue and a potentially valuable new product. For those reasons, we think that investors might want to ask why the company has maintained its relationship with Xirinachs, who figured into another SEC case in 2003 and also was sued for investment fraud last year in connection with a failed venture involving Emerald Asset Advisors.

Sharesleuth submitted written questions to Rockwell Medical's public-relations and investor-relations representatives last month about the consulting contract and Xirinachs' activities on behalf of the company. We received no reply.

EARLY INVOLVEMENT

Rockwell Medical's initial SEC filings in 1997 identified Xirinachs as one of its three founders, and said he held 24.9 percent of its stock. Proxy filings show that he also served on the company's board of directors until 1999.

Later filings show that Xirinachs or his then-wife, Patricia Xirinachs, maintained at least a 7 percent stake in the company until at least January 2006. On June 22 of that year, Rockwell sold Emerald Asset Advisors an additional 111,895 shares of stock for $500,000, or $4.47 a share, a discount of more than 30 percent from that day's closing price. 

According to the SEC's complaint, Michael Xirinachs is the sole owner and manager of Emerald Asset Advisors, which is based in Melville, N.Y.

Xirinachs' attorney, Ira L. Sorkin, declined to discuss the SEC's allegations, except to say that his client denies guilt.

"We intend to defend against the charges,'' he said.

THE CONSULTING DEAL

On Nov. 5, 2008, Emerald Asset Advisors signed a one-year consulting contract with Rockwell Medical. It got warrants to buy 300,000 of the company's shares at $1.99 each, a slight discount to that day's closing price. Between Nov. 5 and Nov. 12, when Rockwell Medical made a presentation at an investment event in New York, its stock slipped to $1.50 -- a five-year low. 

The next day, the company announced earnings for the third quarter of 2008, and its share price began rebounding on a sharp increase in volume.

Rockwell Medical reported that its revenue for that quarter rose 22 percent from a year earlier, to $13.5 million, and that revenue for the first nine months rose at a similar rate, to $38.1 million. However, the company said its losses also widened, to $2.5 million for the quarter and $4.8 million for the nine months.

From Nov. 13 through Nov. 20, more than 2.1 million shares of Rockwell Medical's stock traded hands -- eight times the average daily volume in the months leading up to the surge. By Nov. 18, the company's stock was up to $3.14 a share. Two days later, it closed at $4.54, after climbing as high as $4.79.

Rockwell Medical's shares posted those gains at the same time that the Dow Jones Industrial Average and other market indexes were plunging.  Between Nov. 18 and Nov. 20, the Dow fell more than 10 percent.

On Nov. 21, Rockwell Medical amended its consulting agreement with Emerald Asset Advisors.  It extended the contract by a year, and granted Xirinachs' firm two more sets of warrants - 200,000 exercisable at $4.54 a share and 200,000 exercisable at $7 a share.

Sharesleuth also noted that, last Nov. 19, Rockwell Medical's board of directors awarded 100,000 shares of restricted stock and 170,000 options to Robert L. Chioini, the company's chairman and chief executive.  The board also granted 50,000 restricted shares and 80,000 options to Thomas E. Klema, executive vice president and chief financial officer.

The options and restricted shares vest over three years. At current market prices, Chioni's award would be worth $1.3 million.

FRAUDULENT BROKERAGE FIRMS

When Xirinachs got involved with Rockwell Medical, he was senior vice president for investments at D.H. Blair. The New York-based brokerage shut down under regulatory pressure in 1998. A grand jury later issued a 173-count indictment against the firm and 15 of its executives and brokers.  D.H. Blair, along with its chairman and two vice chairman, entered guilty pleas in 2002, agreeing to pay $21 million in restitution.

Xirinachs was not among those charged.

In July 1997, Rockwell Medical enlisted another New York brokerage, Maidstone Financial Inc., as underwriter for an initial public offering that was to raise as much as $7.24 million. Before they could complete that deal, the National Association of Securities Dealers brought charges against Maidstone and its top executives, alleging that they defrauded investors of millions of dollars on similar offerings.

Rockwell Medical then turned to two other firms, Mason Hill & Co. and J.W. Barclay & Co. They raised roughly $7.5 million for the company through the sale of shares and warrants.

In 2002, however, then-New York Attorney General Eliot Spitzer announced the indictment of Mason Hill and five of its employees, alleging that they defrauded investors by manipulating the share prices of at least six public companies, including Rockwell Medical. And in 2003, the SEC brought civil charges against J.W. Barclay and eight of its employees, saying they either defrauded investors and failed to halt the wrongful acts.

UNIVERSAL EXPRESS

Xirinachs and Emerald Asset Advisors are among 13 individuals and companies charged by the SEC in connection with the unusual stock activity at Universal Express, a Florida company that offered point-to-point luggage shipping and other transportation and logistics services.

Richard A. Altomare, Universal Express' chief executive, has claimed in press releases, blog postings and YouTube videos  that the mysterious flood of shares that sank the company's stock price to a fraction of a penny was the work of hedge funds and other unknown parties that were engaged in "naked shorting.'' 

The SEC concluded that the company itself had issued billions of unregistered shares. It brought fraud charges in 2004 against Universal Express, Altomare and five other defendants.  The agency alleged that Universal Express relied on illegal stock sales to survive, and that Altomare used company funds for lavish personal expenses, including private jet flights, luxury hotel stays and jewelry. 

The SEC won a $21.9 million judgment against Universal Express and Altomare in 2007.

According to SEC's new complaint, Xirinachs and Emerald Asset Advisors entered into a deal with Universal Express in February 2006, under which they would buy its stock at a discount to the market price in exchange for cash.

The complaint says that, between February 2006 and June 2007, Emerald Asset Advisors bought 6.37 billion shares from Universal Express, deposited them into a brokerage account, then sold most of them on the public market, netting $11 million. Emerald Asset Advisors sent $7.9 million to Universal Express to pay for the shares.

The SEC said more than 6 billion of the shares that were offered and sold were not covered by any registration statement.

According to the complaint, Xirinachs opened a second brokerage account in September 2006 in the name of North Atlantic Resources Ltd., an offshore company domiciled in St. Vincent and the Grenadines. According to the SEC, Xirinachs acted as investment advisor for North Atlantic and had authority to buy and sell shares.

Between November 2006 and June 2007, North Atlantic Resources bought 9.2 billion shares from Universal Express, plus 350 million shares from Emerald Asset Advisors.  It sold roughly 9.5 billion shares to the public for $6.48 million, and sent $3 million of the proceeds to Universal Express.

The SEC said Xirinachs received 10 percent of the profits on North Atlantic's trades. It said none of the 9.5 billion shares were covered by registration statements.

ANOTHER SEC CASE

Xirinachs figured into another SEC case in 2003. The agency brought fraud charges against Park South Securities LLC and Todd M. Eberhard, its majority owner. According to the complaint, Eberhard misappropriated money from customers and falsified account statements to conceal his activities.

The SEC also said in court filings that Eberhard had improperly transferred $1.75 million in customer money to a purported hedge fund called Stone House Capital Partners LP, which listed Xirinachs as one of its two general partners. Xirinachs was a registered representative at Park South at the time, and worked with Eberhard at an office in Melville, N.Y.

Eberhard, who appeared frequently on financial-related television programs, was indicted on criminal charges in 2004 in connection with his activities and pleaded guilty in 2005. He acknowledged that he looted customer accounts, traded excessively and inappropriately to generate extra commission income and forged account statements and other documents. Eberhard was sentenced to more than 13 years in prison. 

The trustee assigned to liquidate Park South reclaimed the $1.75 million in customer money held by Stone House.  Xirinachs was not charged with any wrongdoing.

CIVIL SUITS

In September 2008, an investor sued Xirinachs, Emerald Asset Advisors and several other defendants, alleging fraud in a failed deal to buy a cigarette-distribution business called Tobacco Holdings Inc. The investor provided $325,000 in financing, and said in the complaint that the defendants repeatedly misrepresented their progress on the acquisition, diverted the money for other purposes and failed to repay it after the deal fell through.

Xirinachs, Emerald Asset Advisors and the other defendants settled the case last October, agreeing to pay $468,308, plus another $102,000 for legal fees and expenses.

The president of Tobacco Holdings was later indicted on charges of trafficking in contraband cigarettes, conspiracy, wire fraud and money laundering. Federal prosecutors alleged that Carlo J. Nappi, also known as Carl Nappi, had devised a scheme to ship cigarettes from New York to Michigan without paying applicable sales taxes.

The same investor filed a second suit in November 2008, alleging fraud and misrepresentation in the solicitation of funds for the development of a purported television series for HBO. Xirinachs was one of four defendants, although he was not named in the most serious counts. Another of the defendants settled the debt for roughly $61,000. The case against Xirinachs and other defendants remains open. 

Has Kyle Rowe, the barred brokerage executive behind Going Public LLC, reunited with his former boss, convicted felon Harold "B.J." Gallison?

Securities and Exchange Commission filings for three of Going Public's clients show that big blocks of their stock went to a company called Carmel Valley Corp.

Public records show that Gallison -- who pleaded guilty in 2003 to conspiracy to commit securities fraud and was sentenced to five years in prison -- once was Carmel Valley's registered agent.

They also show that the company operated from a house in Las Vegas that was owned by another of Gallison's companies, La Jolla Capital Holding Corp.

David K. Rushing, the person now listed in SEC filings as president of Carmel Valley, is the brother of one of Gallison's longtime associates.

David Rushing also is an officer of a second company that has physical and financial ties to Gallison's offshore stock exchange, called GISBeX.

Going Public, based in San Diego, Calif., helps clients gain listings on stock exchanges through stock offerings or reverse mergers.

MILLIONS OF SHARES

SEC filings show that Carmel Valley got 4.54 million shares of Omni Ventures Inc. (OTCBB:OMVE.OB) and 3.02 million shares of LIG Assets Inc. in connection with Going Public's work for those companies.

The filings did not describe what services Carmel Valley performed in return for those shares, which amounted to just under 5 percent of each company's stock.

A filing for a third company not mentioned in Sharesleuth's previous reports on Rowe shows that Carmel Valley got 1.8 million shares of its stock, or nearly 3 percent of the total outstanding. That company is American Real Estate Assets Inc., of San Diego.

Omni Ventures' stock, which traded earlier this year for more than $1 a share, is now at 44 cents, giving the company a market value of $45.2 million.

At that price, the stake issued to Carmel Valley has a market value of nearly $2 million.

Omni Ventures reported in its latest quarterly SEC filing that it had no revenue for the nine months that ended June 30, and that it finished the period with just $9,353 in cash.

The SEC has not yet authorized trading in the shares of LIG Assets and American Real Estate Assets, the other companies that issued shares to Carmel Valley through their deals with Going Public.

FAMILY TIES

David Rushing is the brother of Robin M. Rushing, one of Gallison's key lieutenants at La Jolla Capital Corp., a San Diego-area brokerage that had frequent run-ins with regulators.

Rowe also worked at La Jolla Capital, and later ran another brokerage called Salomon Grey Financial Corp., which was implicated in at least two fraud schemes.

Rowe was permanently barred by the National Association of Securities Dealers in 2006, and also was barred by the SEC (pdf).

As Sharesleuth previously reported, he legally changed his name earlier this year to Marvin K. Rowe II, a move that obscured his regulatory past.

GALLISON'S CRIMINAL HISTORY

Gallison was indicted in 2000 in connection with a "pump-and-dump'' scheme facilitated by Pacific Cortez. He pleaded guilty in 2003 to conspiracy to commit securities fraud and was sentenced to five years in prison.

At the time, prosecutor Steve Davis said he believed that Gallison was still involved in securities schemes, using other people as proxies. Davis told the San Diego Union-Tribune that Gallison had been contemptuous of regulators' efforts to halt his activities, and predicted that Gallison might continue to operate GISBeX from prison.

"'I think he is scheming right now ... I don't think he will be a changed person,' Davis said. "We will see him again."

Gallison was released from custody in 2006.

When Sharesleuth first asked Going Public whether Marvin K. Rowe II was in fact Kyle Browning Rowe, we heard back from Irving M. Einhorn, an attorney who once headed the SEC's regional office in Los Angeles.

After leaving the agency, Einhorn represented Gallison and Robin Rushing in SEC and NASD disciplinary proceedings.

When we asked Einhorn in April whether Gallison had any involvement with Going Public, he responded: "You don't have that.'' Einhorn did not respond to our follow-up questions late last month.

AN OFFSHORE BROKERAGE

GISBeX - short for Global Internet Stock Brokerage Exchange - is based in Costa Rica. It purports to be an electronic exchange that deals in all types of stocks and bonds, including certain types of restricted securities sold by U.S. companies to offshore investors.

Davis, the San Diego prosecutor, told KYC News in 2005 that his office had established that Gallison owned GISBex through a private trust controlled by his family.

Gallison's father, Harold Gallison Sr., told the San Diego Reader that same year that his son was not running GISBex. However, he identified Robin Rushing as a key operative at the brokerage.

Sharesleuth found documents that also link David Rushing to GISBeX. He has signed SEC filings in recent years as assistant secretary of Sandias Azucaradas CR S.A., another Costa Rican business.

Sandias Azucaradas has shared a mailing address with GISBeX in San Jose, Costa Rica. Its website was created and registered by the same company that created GISBeX's site, and those of a handful of GISBeX affiliates, including Evalesco Trading and Moneyline Brokers.

And, for a time at least, GISBex instructed clients who want to open accounts by wire transfer to send their money to a Panamanian branch of HSBC Bank, for credit to Sandias Azucaradas.

Sharesleuth recently obtained a letter that Sandias Azucaradas sent to a securities transfer agent in connection with shares it owned in another public company. The letter was signed by Robin Rushing, as managing director.

SEC filings show that Sandias Azucaradas owned large blocks of stock in several companies with ties to Regis M. Possino, a two-time felon and disbarred lawyer. ((see previous Sharesleuth stories here and here.

ARISA CAPITAL

The registration statements filed with the SEC by LIG Assets and American Real Estate Assets show that an entity called Arisa Capital Inc. also got big blocks of their stock. Nevada corporation filings list Cynthia A. Taylor as Arisa's president.

Taylor also is an officer of Corporate Capital Formation Inc., a Las Vegas company that has served as registered agent for 175 businesses, including Carmel Valley Corp. and four others with current or historic ties to David Rushing, Robin Rushing or Gallison.

The president of Corporate Capital Formation is Roger G. Coleman Sr., a former securities transfer agent who pleaded guilty in two different fraud-related criminal cases in 1989 and 1990.

A check of the other companies for which Corporate Capital Formation serves or has served as registered agent turned up at least six connected to Robert M. Bryson, another financial felon.

Bryson served 18 months in prison in the 1980s after pleading guilty in a securities fraud case. According to stories in San Diego, he had close ties to people at La Jolla Capital and Pacific Cortez.

Corporate Capital Formation once was a subsidiary of Triad Industries Inc., a publicly traded company headed by Bryson's daughter. Coleman was a director of Triad.

According to SEC filings, Corporate Capital Formation was spun off into an independent entity in 2006.

Some of the key people behind Xethanol Corp. have resurfaced with a new public company - Waste2Energy Holdings Inc. - which gained a listing on the Over-the-Counter market through a reverse merger.

Christopher d'Arnaud-Taylor, who was Xethanol's chairman and chief executive, also headed Waste2Energy (OTCBB: WTEZE.OB). He stepped down last week, in keeping with the terms of the merger agreement.

Although d'Arnaud-Taylor resigned as chairman and chief executive, he remains Waste2Energy's biggest shareholder. He will continue to serve on its board of directors, and according to Securities and Exchange Commission Filings, he also got a $300,000-a-year consulting agreement with the company.

PRIOR INVESTIGATION

Xethanol was the subject of a Sharesleuth investigation in 2006. The company replaced d'Arnaud-Taylor as chief executive a few weeks later. Taylor told Sharesleuth that, despite the presence of other Xethanol alumni at Waste2Energy, he created the company without their involvement in early 2007.

According to a recent SEC filing, d'Arnaud-Taylor, his wife and a limited liability company he controls hold 6 million Waste2Energy shares, plus warrants to buy an additional 4 million shares exercisable at 50 cents a share.

Waste2Energy's stock closed Thursday at $1.11 a share. That gave the company a market value of more than $55 million. According to the SEC filing covering the reverse merger, officers and directors control 44 percent of the company's shares.

REVERSE MERGER AND PRIVATE PLACEMENT

Waste2Energy Holdings was formed through the merger of Waste2Energy Inc. and Maven Media Holdings Inc., a public shell company in Chula Vista, Calif. The deal was consummated on May 29, with shareholders of Waste2Energy getting 46 million shares of the combined company.

In the past three months, Waste2Energy has raised $2.5 million through a series of private placements, according to SEC filings. In return for the money, it issued $2.5 million in notes paying 10 percent a year in interest, plus 2.5 million shares of its stock. The company has not identified any of the investors.

Waste2Energy's SEC filing on the reverse merger noted Taylor's ties to Xethanol, including his role as a defendant in a securities class-action suit that the company settled for $2.8 million.

"Appropriate disclosure concerning any XNL issues was included in the 8-K filed with the SEC and will be included in other filings as appropriate,'' Taylor told Sharesleuth in an email response to our questions. "However, there is no other connection with XNL that should be made.''

GAS FROM GARBAGE

Waste2Energy says it has a system for converting garbage and other solid waste into burnable gases. Its main subsidiary is pursuing deals to build cogeneration plants at industrial facilities and other locations to turn those wastes into "renewable green power.''

Xethanol claimed it had a process for turning wood chips, grass clippings and other plant material into ethanol. But the company never produced any commercial quantities of ethanol using the technology and eventually abandoned that business. It is now known as Global Energy Holdings Group Inc. (AMEX: GNH). The company's shares, which topped $16 in early 2006, now trade for less than 20 cents.

SCOTTISH PLANT

Waste2Energy is involved in the construction of a waste-to-energy plant in Dumfries, Scotland, for a British company, Ascot Environmental Ltd. According to an SEC filing at the time of the merger, the waste-to-energy side of the business had revenue of $2.68 million for the nine months that ended Dec. 31, primarily from work on the Scottish plant. It reported a net loss of $4.01 million for that period.

The Scottish plant, known as the Dargavel Energy from Waste Facility (pdf), is in the final commissioning stages, and should be processing waste soon, Taylor said. Waste2Energy's strategy, he said, is to capitalize on that project by selling other units to customers around the world.

"To support this roll-out, W2e has organized a design and fulfillment team in Scotland located in close proximity to the Dargavel site and forged a strategic alliance with a Scottish manufacturing company with a leadership position in thermal engineering processes.''

XETHANOL ALUMNI

Two other key players at Xethanol - Franz A. Skryanz and Jeffrey Langberg -- also have been involved in Waste2Energy.

Skryanz was secretary and treasury of Waste2Energy before it merged with Maven Media Holdings. SEC filings show that he got 500,000 shares in the combined company. Skryanz was an officer and director of Xethanol.

Taylor said Skryanz is no longer an officer or director of Waste2Energy and is retiring.

Waste2Energy said in its SEC filing on the reverse merger that an entity called SilverFox LLC has provided services to the company under two consulting contracts. Other SEC documents have listed Langberg as SilverFox's managing member. Langberg was a Xethanol director and was one of its investment bankers.

SilverFox got 300,000 shares of Waste2Energy stock under the first consulting contract, which was awarded in May 2008 and called for the firm to find potential investors in the company. According to the SEC filing on the reverse merger, the deal also included warrants to buy 300,000 more shares at 75 cents each.

SilverFox got a new contract in November that calls for it to identify and screen potential buyers for Waste2Energy's plants. According to the merger filing, that agreement provides for a finder's fee of 10 percent of the purchase price for each sale it brings in.

Taylor told Sharesleuth that SilverFox LLC is "a tad more'' than just Langberg, and that Langberg is no long managing member.

Waste2Energy's latest SEC filings list the company's headquarters at the same New York City address used by Xethanol. The telephone number also is the same as Xethanol's old number. Xethanol had originally leased that office space from Langberg.

The company is set to move to a new headquarters in Greenville, S.C.

A ROCKY START

Last July, Waste2Energy was sued by the former owner of EnerWaste International Corp., which it had acquired the previous year for $5 million. Thomas L. Dutcher alleged that Waste2Energy had defaulted on the payments for the business, whose "Batch Oxidization System" technology is at the core of its current activities.

Waste2Energy countersued, saying that Dutcher misled the company about the state of EnerWaste's finances and business. EnerWaste's European affiliate, based in Iceland, went bankrupt late last year because of the collapse of that country's economic system.

The two parties settled their differences in April, just before Waste2Energy arranged its reverse merger with Maven Media Holdings.

Irving Kott, a Canadian financier and stock promoter with long history of civil and criminal violations, has died at age 78.

Kott's obituary appeared Aug 24 in a Montreal newspaper, but his passing drew no further media attention. In a sense, he was as invisible in death as he was in life - a life in which he played pivotal behind-the-scenes roles at numerous public companies and brokerage firms.

Kott pleaded guilty in 2004 to two felony charges related to his undisclosed ownership interest in J. B. Oxford Holdings Inc., a brokerage based in Beverly Hills, Calif. J.B. Oxford, whose employees pushed several stocks linked to Kott and his associates, had contended that he was merely a consultant.

The original grand jury indictment alleged, among other things, that Kott used his influence at J.B. Oxford to reap millions in profits on the sale of shares in which he or his associates had an interest. While working at J.B. Oxford, Kott lived in a mansion once occupied by actor Cary Grant.

In his plea, Kott acknowledged that he provided much of the $6.5 million that a Swiss firm loaned to the brokerage in 1994 and 1995 to keep it alive. The Swiss firm and its owner got notes that were convertible to a majority stake in the brokerage (formerly known as Reynolds Kendrick Stratton Inc.). In addition, Kott acknowledged that he provided funds for another investor who bought more than 5 percent of the brokerage's shares in 1994. Neither Kott, the investors or the brokerage disclosed his role in those transactions, which could have been considered material information because of Kott's past.

Kott was sentenced to five years' probation rather than prison time, in part because of claims that both he and his wife were in ill health. He was ordered to pay $1 million in fines and charitable contributions.

J.B. Oxford had earlier agreed to pay $2 million to settle the Justice Department's probe into possible fraud by Kott and others involved with the brokerage.

Kott also figured into the Securities and Exchange Commission's investigation into the sharp rise in the stock of Mamma.com in the spring of 2004. Over a two-day period, the small Montreal-based Internet company' stock shot from $4.10 a share to a high of $15.68. It peaked the following month at $17.49.

Mamma.com later disclosed in regulatory filings that the SEC was not only looking into the unusual activity surrounding the company's shares, but also was probing whether a certain individual - known to be Kott - and "people acting jointly or in concert with him may have had a significant influence on the company in the past as a result of undisclosed shareholdings."

Mamma.com changed its name in June 2007 to Copernic Inc. (Nasdaq: CNIC). Three months later, Copernic announced that the SEC had ended the investigation and that the agency's staff was not recommending enforcement action.

Kott's history of run-ins with securities regulators spanned at least four decades. In 1976, he pleaded guilty in Ontario to conspiring to defraud the public through the distribution of shares in a mining company. He was fined $500,000, which at the time ranked as the biggest personal penalty in Canadian history.

In 1979, he was convicted in Ontario in connection with another manipulation scheme and was sentenced to four years in prison. That conviction, however, was overturned on appeal.

In the 1980s, Dutch authorities identified Kott as the person behind a boiler-room style brokerage in Amsterdam called First Commerce Securities. That operation sold shares in obscure Canadian- and American-listed companies to foreign investors.

Authorities said in 1987 that First Commerce might have taken more than $400 million from investors, an amount equal to nearly $800 million in today's dollars. Kott was never charged in connection with the case; he agreed to pay a fine of roughly $4 million in 1990 to settle the probe into his activities.

Last summer, a group of closely connected companies managed to turn a $291,000 loan to Pure Play Music Ltd. (Pink Sheets: PPML.PK) into stock that soon had a market value of more than $70 million.

But exactly who got the shares was a bit of a mystery -- until now. Sharesleuth has obtained copies of letters that eight entities sent to Pure Play's transfer agent, asking to have restrictions on the stock lifted so that they could be freely sold.

The largest number of shares, 4.5 million, went to Cohiba Partners Inc., a Santa Monica, Calif., company with ties to Regis M. Possino, a two-time felon and disbarred attorney who has provided financing to numerous penny stock companies.

Cohiba was the company that provided the original loan to Pure Play's predecessor - Latin Television Inc. - when it faced a severe cash shortage in 2007.

Sharesleuth previously wrote about Pure Play in June, detailing its ties to Possino and noting that the company retired its $291,000 debt by issuing 29.1 million shares to Cohiba and its assignees at a price of 1 cent a share.

The letters to the transfer agent show that many of the other entities that got blocks of that stock have ties to Possino, too.

Colin Nix, president of Cohiba, also signed as an agent of October Funds, which got 3.7 million Pure Play shares. Both Cohiba and October Funds listed their address as an office suite in Santa Monica that is shared with Possino's companies.

Corporation records list Nix as the president of a third entity, European American Investments Ltd., which got 3.4 million of the Pure Play shares. It also uses the Santa Monica address.

But the letter that European American wrote to the transfer agent on July 18, 2008, was signed by Charles McGuirk - a convicted felon and longtime associate of Possino. McGuirk, who was listed as European American's president, was sentenced to 18 months in prison in the 1990s after pleading guilty to mail fraud and tax fraud in connection with an embezzlement scheme at an insurance company.

Shearson Foundation, a Panamanian company, got 3.95 million Pure Play shares. Henry Ward signed its letter as managing director.

Nevada corporation filings also list Ward as a director of Quantum Companies Inc. McGuirk is that company's secretary and treasurer, and its most recent SEC filing listed its headquarters as the office suite in Santa Monica.

Other SEC filings show that Shearson Foundation has invested alongside Cohiba, European American and October Funds in two other public companies, Ensurapet Inc. (Pink Sheets: EPTI.PK) and Who's Your Daddy Inc. (OTCBB: WYDI.OB).

(See a previous Sharesleuth story on Who's Your Daddy here)

After a law firm signed off on the removal of the stock restrictions, trading in Pure Play's shares surged, as did the company's share price. On Aug. 4, 2008, for instance, the daily volume totaled 402,900 shares, and the stock closed at $2, up from $1.11.

More than 1 million shares traded hands over the next six months, at prices ranging from $1.90 to $2.50. Pure Play's stock price plunged in late February, and has been declining since.
The company's shares were trading at 50 cents when our first story appeared in late June, and now trade for around 10 cents.

The letters to Pure Play's transfer agent showed that 3.7 million shares from the debt conversion deal went to Donna Properties LLC, which listed an address in Panama. In 2001, investigators for the Nasdaq exchange identified Donna Properties as a "client'' of one of Possino's companies, Corporate Financial Enterprise Inc.

Their report said Donna Properties might have participated in his effort to secretly invest in -- and influence -- a publicly traded brokerage firm called Global Capital Securities Corp. Nasdaq delisted that company because of concerns about its ties to numerous people with criminal or regulatory pasts.

Two other companies that received Pure Play stock, Sandias Azucaradas CR SA and Vanilla Sky SA, listed the same Spokane, Wash., address. They got 3.6 million and 2.22 million shares, respectively.

The letter sent by Sandias Azucaradas was signed by Robin Rushing, who was identified as its managing director. She once worked for La Jolla Capital Corp., a Southern California brokerage that frequently ran afoul of regulators, and was a key aide to its chief executive, Harold "B.J." Gallison. He was sentenced to prison for his role in a securities fraud facilitated by La Jolla Capital's successor, Pacific Cortez Securities. He was released in 2006.

The last block of Pure Play stock, 3.95 million shares, went to Stock Certificate Transfer Service Foundation. It listed the same address in Panama as Donna Properties.

When China Fire and Security Group Inc. (Nasdaq: CFSG) went public through a reverse merger in October 2006, Chairman Gangjin Li's teen-aged son was listed as the beneficial owner of roughly 10 percent of its shares.

This week, a Securities and Exchange Commission filing reported that the son had relinquished his interest in that stock, which has a current market value of more than $30 million.

According to the filing, Gangjin Li now has sole voting power over the 2.67 million shares, giving him control of 57 percent of China Fire's common stock.  The filing offered no explanation for the transfer, the latest in a series of disclosures about the ownership of large blocks of shares issued when China Fire merged into a public shell called UniPro Financial Services Inc.

Michael Thieu, a China Fire spokesman, said Gangjin Li originally gave the shares to his son, Ang Li, to provide for his future. But the son is about to turn 18 and will no longer be a minor, and his parents are concerned about what might happen if he gains access to that wealth, Thieu said.

As a precaution, they decided to reverse the gift and use a different vehicle, such as a trust, he said.

"This transaction is internal to the Li family,'' he said. "It has no impact on the company's business operations or financials.''

Sharesleuth reported last year that the person listed as the beneficial owner of another 2.58 million China Fire shares was the sister-in-law of the company's chief executive officer, Brian Lin - a fact not disclosed in any of its SEC filings.

The sister-in-law, who operates natural food stores in Canada and California, was listed as the sole shareholder of a British Virgin Islands entity that sold millions of dollars worth of China Fire stock at the end of 2007.

After our story appeared , China Fire issued a press release and SEC filing clarifying the actual owners of the shares held by various British Virgin Islands entities. It said some of the people - including the sister-in-law -- who had been listed as beneficial owners were in fact nominees standing in for other people.

The new SEC filing says that Gangjin Li gifted the 2.67 million shares to his son in August 2006. It said that last Thursday, Ang Li's mother and legal guardian, Chunfeng Gao, " irrevocably disclaimed and renounced any and all legal and beneficial interest" in the shares on behalf of her son.

Ang Li is a student. He and his mother live in North Vancouver, British Columbia. When Sharesleuth asked him last year how he came to be listed as the owner of a big block of China Fire shares, he said he had seen the documents but was unaware of the details.

Although the reversal of the share gift puts more stock directly into Gangjin Li's hands, that could be seen as a positive for the company and for other investors, said Thieu, a former securities analyst.

"From my view, it actually will provide more stability,'' he said.

China Fire's stock closed Friday at $11.98 a share.