Here's an inquiry I sent back in 2014 about questi
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Posted On: 02/07/2019 8:30:42 PM
Here's an inquiry I sent back in 2014 about questionable funding. Cash-starved companies don't/can't do proper research on funding sources.
"I met you at the last GNBT annual meeting in Toronto. You thanked me for attending......
I just became aware that the latest funding for GNBT involved two individuals, Joseph Geraci and Douglas Polinski. It appears both of these individuals have organized crime ties. Here are my sources of this information:
1. Douglas Polinsky.
It has been alleged that he has mob ties ... to New York's Genovese crime family. http://thestreetsweeper.org/uploads/IGM1.pdf
2. Joseph A. Geraci II.
He has been permanently barred from the securities industry for insider trading. http://www.finra.org/web/groups/industry/@ip/...006517.pdf
This article details their time together at National Oil and Gas and some questionable trades allegedly in violation of a lockup agreement.
http://www.thestreetsweeper.org/article.html?c=3&i=1671
If this information is accurate and you were aware of this, you should have informed shareholders. I've been a long time shareholder and cheerleader for GNBT. This revelation puts GNBT in a whole different light.
Please respond."
*************************************************************************************
Mark Fletcher responded quickly and, I think, thoughtfully. Here's his response (sorry for the length of this post but it gives background Joe will appreciate):
Mr. xxxxxx…
The lead investor in the latest GNBT funding (the Series F Convertible Preferred Stock) is Alpha Capital Anstalt. As you will note from GNBT’s public filings with the SEC, Alpha was the lead investor in each of our last six funding transactions. The Series F CPS transaction includes three investors new to GNBT: Great North Capital Consultants, Inc. ($100,000, 4.82% of the transaction); Isles Capital, LLC ($100,000, 4.82% of the transaction); and, Zeiger Tover, LLC ($125,000, 6% of the transaction). The Great North signature on the Securities Purchase Agreement (SPA) is Douglas Polinsky, President. The Isles signature on the SPA is Joseph A. Geraci II, Managing Member. The Zeiger signature on the SPA is Samuel Reinhold, Manager. None of those companies, nor the individual signatories to the SPA, are insiders of GNBT.
Those three investors were brought into the transaction by Alpha, as lead investor. As is standard practice, GNBT was not aware of the final aggregate amount of the investment, the identities of the participating investors, or the aggregate participation amount of each investor until the day of closing. In the SPA, each investor represents and warrants to GNBT as follows: At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, and on each date on which it exercises any Warrants or converts any shares of Preferred Stock it will be either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(
under the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act. Such Purchaser is not required to be registered as a broker-dealer under Section 15 of the Exchange Act.
I do not know Mr. Geraci and had never heard of him prior to the Series F transaction. A Forbes profile states: Since February 2002 through the present time, Mr. Geraci has been managing member of Isles Capital, LLC, an advisory and consulting firm that assists small businesses, both public and private, in business development. He has not been “permanently barred from the securities industry”. In 2003, the NASD ordered that Mr. Geraci “is barred from association with any member firm”. That sanction resulted from the NASD’s conclusion that Mr. Geraci engaged in insider trading of securities of a company in 1999.
I do not know Mr. Polinsky and had never heard of him prior to the Series F transaction. A Forbes profile states: Since 1994, Mr. Polinsky has been the Chief Executive Officer of Great North Capital Consultants, Inc., a financial advisory company that he founded. Great North Capital Consultants advises corporate clients on matters regarding corporate and governance structures, public company acquisitions of private companies and other transaction-related matters, and also make direct investments into public and private companies. The allegations in the 1994 news story appear to remain unproven.
To the best of my knowledge, information, and belief at this juncture, the purchases of GNBT Series F Convertible Preferred Stock by Great North and Isles are legal, valid, and binding transactions.
I will not deny that one might credibly cast a jaundiced eye on the participation of those two companies in the GNBT Series F transaction on account of a perception of taint attached to individual executives in those companies, in the case of Mr. Geraci an NASD sanction in respect of trades in securities 15 years ago, and in the case of Mr. Polinsky unproven allegations in affidavits 20 years ago. However, it seems clear that those two companies are legally entitled to participate in the GNBT Series F transaction. That participation is a matter of public record; it is unambiguously disclosed in the GNBT Form S-1 Registration Statement filed with the SEC on Friday, April 4, including the names of Messrs. Geraci and Polinsky. If the SEC takes issue with that participation, GNBT will certainly hear about it in due course. Presumably, those companies would not be content to have their participation so forthrightly disclosed to the public and the SEC if difficulties were anticipated. Similarly, it seems unlikely that Alpha would compromise its business by inviting inappropriate participation.
The following is certain: The participation of those two companies in the Series F transaction was unknown to GNBT until the day of closing. Prior to the arrival of the SPA signature pages on the closing date, the members of GNBT executive management and GNBT’s Board of Directors had never heard of Messrs. Geraci or Polinsky. I was not aware of the information set forth in your email prior to my receipt of your email on Friday evening. Those companies are not GNBT insiders. Those two individuals are not GNBT insiders. They have no participation in, or influence over, GNBT’s business operations. The aggregate investment of those two companies in the transaction is $200,000, 9.64% of the aggregate transaction.
GNBT, as a development-stage company traded on the Over-the-Counter Bulletin Board and requiring access to the capital markets to fund its clinical and regulatory work, does not always have the luxury of cherry-picking investment pool participants. I will opine that Alpha Capital Anstalt has been a staunch supporter of GNBT’s efforts for several years now and I am most appreciative of the direct involvement of Alpha’s principals.
Thank you, xxxxxx, for your vigilance.
Regards,
Mark Fletcher
"I met you at the last GNBT annual meeting in Toronto. You thanked me for attending......
I just became aware that the latest funding for GNBT involved two individuals, Joseph Geraci and Douglas Polinski. It appears both of these individuals have organized crime ties. Here are my sources of this information:
1. Douglas Polinsky.
It has been alleged that he has mob ties ... to New York's Genovese crime family. http://thestreetsweeper.org/uploads/IGM1.pdf
2. Joseph A. Geraci II.
He has been permanently barred from the securities industry for insider trading. http://www.finra.org/web/groups/industry/@ip/...006517.pdf
This article details their time together at National Oil and Gas and some questionable trades allegedly in violation of a lockup agreement.
http://www.thestreetsweeper.org/article.html?c=3&i=1671
If this information is accurate and you were aware of this, you should have informed shareholders. I've been a long time shareholder and cheerleader for GNBT. This revelation puts GNBT in a whole different light.
Please respond."
*************************************************************************************
Mark Fletcher responded quickly and, I think, thoughtfully. Here's his response (sorry for the length of this post but it gives background Joe will appreciate):
Mr. xxxxxx…
The lead investor in the latest GNBT funding (the Series F Convertible Preferred Stock) is Alpha Capital Anstalt. As you will note from GNBT’s public filings with the SEC, Alpha was the lead investor in each of our last six funding transactions. The Series F CPS transaction includes three investors new to GNBT: Great North Capital Consultants, Inc. ($100,000, 4.82% of the transaction); Isles Capital, LLC ($100,000, 4.82% of the transaction); and, Zeiger Tover, LLC ($125,000, 6% of the transaction). The Great North signature on the Securities Purchase Agreement (SPA) is Douglas Polinsky, President. The Isles signature on the SPA is Joseph A. Geraci II, Managing Member. The Zeiger signature on the SPA is Samuel Reinhold, Manager. None of those companies, nor the individual signatories to the SPA, are insiders of GNBT.
Those three investors were brought into the transaction by Alpha, as lead investor. As is standard practice, GNBT was not aware of the final aggregate amount of the investment, the identities of the participating investors, or the aggregate participation amount of each investor until the day of closing. In the SPA, each investor represents and warrants to GNBT as follows: At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, and on each date on which it exercises any Warrants or converts any shares of Preferred Stock it will be either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(
under the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act. Such Purchaser is not required to be registered as a broker-dealer under Section 15 of the Exchange Act. I do not know Mr. Geraci and had never heard of him prior to the Series F transaction. A Forbes profile states: Since February 2002 through the present time, Mr. Geraci has been managing member of Isles Capital, LLC, an advisory and consulting firm that assists small businesses, both public and private, in business development. He has not been “permanently barred from the securities industry”. In 2003, the NASD ordered that Mr. Geraci “is barred from association with any member firm”. That sanction resulted from the NASD’s conclusion that Mr. Geraci engaged in insider trading of securities of a company in 1999.
I do not know Mr. Polinsky and had never heard of him prior to the Series F transaction. A Forbes profile states: Since 1994, Mr. Polinsky has been the Chief Executive Officer of Great North Capital Consultants, Inc., a financial advisory company that he founded. Great North Capital Consultants advises corporate clients on matters regarding corporate and governance structures, public company acquisitions of private companies and other transaction-related matters, and also make direct investments into public and private companies. The allegations in the 1994 news story appear to remain unproven.
To the best of my knowledge, information, and belief at this juncture, the purchases of GNBT Series F Convertible Preferred Stock by Great North and Isles are legal, valid, and binding transactions.
I will not deny that one might credibly cast a jaundiced eye on the participation of those two companies in the GNBT Series F transaction on account of a perception of taint attached to individual executives in those companies, in the case of Mr. Geraci an NASD sanction in respect of trades in securities 15 years ago, and in the case of Mr. Polinsky unproven allegations in affidavits 20 years ago. However, it seems clear that those two companies are legally entitled to participate in the GNBT Series F transaction. That participation is a matter of public record; it is unambiguously disclosed in the GNBT Form S-1 Registration Statement filed with the SEC on Friday, April 4, including the names of Messrs. Geraci and Polinsky. If the SEC takes issue with that participation, GNBT will certainly hear about it in due course. Presumably, those companies would not be content to have their participation so forthrightly disclosed to the public and the SEC if difficulties were anticipated. Similarly, it seems unlikely that Alpha would compromise its business by inviting inappropriate participation.
The following is certain: The participation of those two companies in the Series F transaction was unknown to GNBT until the day of closing. Prior to the arrival of the SPA signature pages on the closing date, the members of GNBT executive management and GNBT’s Board of Directors had never heard of Messrs. Geraci or Polinsky. I was not aware of the information set forth in your email prior to my receipt of your email on Friday evening. Those companies are not GNBT insiders. Those two individuals are not GNBT insiders. They have no participation in, or influence over, GNBT’s business operations. The aggregate investment of those two companies in the transaction is $200,000, 9.64% of the aggregate transaction.
GNBT, as a development-stage company traded on the Over-the-Counter Bulletin Board and requiring access to the capital markets to fund its clinical and regulatory work, does not always have the luxury of cherry-picking investment pool participants. I will opine that Alpha Capital Anstalt has been a staunch supporter of GNBT’s efforts for several years now and I am most appreciative of the direct involvement of Alpha’s principals.
Thank you, xxxxxx, for your vigilance.
Regards,
Mark Fletcher
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