The last time we mentioned John Thomas Financial, the investment bank was defending controversial energy exploration company Interoil (IOC) against reports of stock price manipulation.
Well, they’re back!
In another shady — if legal — transaction, John Thomas CEO Anastasios Belesis reportedly screwed over a start-up company that was marketing software to help police find missing children.
The full investigation by Roddy Boyd is here.
In brief, Boyd reports that John Thomas Financial wasted or pocketed nearly half of $13 million raised for the company, AMBER Ready. Belesis reportedly hijacked the company’s development program, giving consulting contracts to his friends and political allies. After 12 years, the start-up company is an empty husk with no product in sight.
Highlights from Boyd’s investigation include these scandalous deals:
Doing the maths, Belesis’ various John Thomas Financial units booked nearly $2.24-million in fees for arranging loans–which carried interest rates of 18% and 20%–and private placements (click here for an excel spreadsheet of their fees.) They also took in $15,000 a month in consulting fees for providing Amber Ready business advice. If the anticipated IPO had ever materialised, the various John Thomas Financial subsidiaries would have been well-positioned for a windfall, having amassed at least 2.9-million shares and 3-million warrants (the firm and its units would later come to own almost 39% of the company, or 26.9-million pre-IPO shares.)
In another part of Boyd’s article, Belesis is said to have engineered a wasteful marketing event that benefitted John Thomas as much as it did AMBER:
The real story of Belesis’ influence is only alluded to in the documents, though. After an equity-capital raise in the summer of 2009, Belesis was instrumental in pushing AMBER Ready to stage a promotional concert at ABC Studios in New York’s Times Square. The cost? Only $2-million. [The ads featured on the video above, where the John Thomas Financial logo is displayed as prominently as the AMBER Ready logo, cost $600,000. The legal headaches from this blowout remain, however, with this lawsuit alleging that more than $475,000 was spent on public relations alone for this episode–with $354,000 allegedly still unpaid.)
And Belesis reportedly hired these political allies:
P.C. Koch, a telecom and energy lobbyist whose brother Robert married former President Bush’s sister Dorothy–and who hails from something like the first family of D.C. lobbyists–was slated to be paid $580,000 in 2008-2009 (a copy of his consulting contract is here.) It is hard to argue that the company got its money worth: Comparing the revenues from the private placement memorandum to that of the S-1 shows that in the time Koch was there, AMBER Ready went from zero revenues to $10,600. It’s harder still to figure out what he did or was supposed to do. The listed phone number for Koch’s D.C. lobbying firm is no longer operational and further attempts to contact him were unsuccessful.
Business Insider Emails & Alerts
Site highlights each day to your inbox.