BizRadio Marketing MasterMind Clinic – A legitimate sales seminar or a sham to lure fresh unsuspecting investors?

February 25, 2010

As a former Sr. VP of Sales and Marketing in a public company I understand marketing.  I understand that BizRadio provided valuable information and likely was a feeder source for investors who felt that Daniel Frishberg could help them watch “their money grow.”  After all, Daniel is “the money man!”

But, let’s look at the facts (and for sure all the facts aren’t out on the table – they all aren’t known):

  1. BizRadio is off the air in Dallas, TX.
  2. BizRadio is off the air in San Antonio, TX cause they couldn’t pay the bill.
  3. BizRadio was off the air in Houston – now back on (but for how long?).
  4. BizRadio moved to 1180 AM in January but was kicked off because they couldn’t pay the $150,000 deposit or provide a letter of credit for $150,000
  5. BizRadio leased (with an option to buy) 1110 AM to Ron Siddiqi and then kicked Siddiqi off the air cause they (BizRadio) couldn’t meet the terms of the 1180 AM agreement – even after they took $180,000 from Siddiqi.
  6. BizRadio in Houston was off the air for a brief time for failure to pay the electric bill.
  7. Salem – who sold Daniel Frishberg 1110 AM – has announced that they are taking the station back for approximately 50% of what Frishberg paid several years ago.  It is reported that Salem had no choice as Frishberg couldn’t pay his bill there either.
  8. Albert Kaleta got in trouble with the SEC and lost his license and was banned from association with any investment adviser (which would include Frishberg).
  9. The SEC also sued two other entities, Business Radio Network, L.P. d/b/a BizRadio (BizRadio) and Daniel Frishberg Financial Services, Inc. (d/b/a DFFS Capital Management, Inc.) (DFFS) as Relief Defendants solely for the purposes of equitable relief.  This relates to Kaleta and the funds owed to investors who were mislead.

Actually the list goes on…  But now, to my amazement the following is featured on the BizRadio web site:

BizRadio Marketing MasterMind Clinic

March 2, 2009
3050 Post Oak Blvd. | Houston, TX 77056
7:00 – 9:00 p.m.
Refreshments will be served,
Dinner will not be provided
Space is Limited

To RSVP Contact Jack Warkenthien 713-490-8796 or register below:

There are a couple of elements necessary for the success of any business, large or small. But do you know where most business owners fall short?

Marketing

Finding the most efficient ways to let people know you’re there. Advertising is a big part of it yes, but marketing goes way beyond that. How do you market your business?

Some time back, BizRadio created something called the MasterMind Group, a meeting of the minds headed by Daniel Frishberg, exposing the secrets of successful, efficient marketing.

This March we are honored to bring you two special guest speakers to address the one of the hottest new marketing opportunities: Network Marketing. Daniel Frishberg introduces Jack Warkenthien, BizRadio Host and network marketing genius.

Jack Warkenthien, author of “Life’s A Sales Call” and national radio personality on the BizRadio Network, will share his knowledge in sales, marketing and leadership, leaving you with tips, techniques and networking strategies that will grow your sales exponentially. He will cover topics including:

  • Networking tips to know and use
  • Increasing your sales by buillding your network
  • Expanding your network using network marketing

Come to BizRadio’s Network Marketing MasterMind Session and let Jack and Dan help your business take advantage of the marketing oportunities that the internet makes possible.

We’ll get together in a casual atmosphere and give you some marketing tips you’ve probably never heard before. There is no charge, but you can’t come unless you reserve a spot.

Join us the evening of Tuesday, March 2, 2010 for a free marketing MasterMind Clinic with Daniel Frishberg and Jack Warkenthien hosted by BizRadio.

March 2, 2009
3050 Post Oak Blvd. | Houston, TX 77056
7:00 – 9:00 p.m.
Refreshments will be served,
Dinner will not be provided
Space is Limited

To RSVP Contact Jack Warkenthien 713-490-8796 or register below:

Jack will also introduce you to Lynn Sperry, the CEO of Sperry Enterprises, and Indendant Marketing Consultant for AmeriSciences.

The wellness industry has seen tremendous growth in recent years and this growth is expected to continue over the coming years.There’s a general awakening that good health is very important and staying hale and hearty requires spending money. AmeriSciences (www.Amerisciences.com), is a company that caters to this need of people by selling nutrient rich products that promote good health.This is an MLM company that offers customers an option to earn back their money and much more.

HUM…I was told yesterday by an undisclosed investor that Frishberg was now getting into MLM.  Now, there’s nothing wrong with Multi-Level Marketing, but for a reputed investment adviser like Dan Frishberg – The Money Man – really Dan – you’re going the route of attracting investors into MLM?

LET ME STATE – There is absolutely nothing wrong with holding a meeting where excellent information is shared.  Years ago when I was tax partner in a CPA firm (now some 25 years ago)… we did the same thing (hold educational meetings not promote MLM).  But, three things jump out at me… (1) twice in this promotion they have the dates wrong.  As insignificant as that seems, if you are running a well run operation it would seem that you would have folks who would catch simple things like that.  Most folks could guess that they mean March 2, 2010, but that’s not what they say – and as insignificant as it might seem, it illustrates an issue with how the business is run.  (2) If you can’t pay your bills and keep the station on the air, then how truly can you offer a program of quality when there is so much confusion related to Daniel Frishberg, BizRadio and investors who are, for the most part and for the moment, in the dark about the status of the money they trustingly put up… And, (3) does it promote confidence to have a man who “managed” millions using his imploding format to promote a MLM product?

Jack Warkenthien the featured speaker is, per his LinkedIn site – a Radio Personality and VP of Sales at The BizRadio Network and the Owner/Founder of NextStep Solutions.  For more info on Jack see here and here.

The AmeriSciences.net link in the BizRadio promotion is the Jack Warkenthien site so that those who enroll become part of his down line.  It appears that this seminar might be a veiled attempt to promote the MLM product and have those enroll under Jack to build his business.  Here’s the true AmeriSciences site.  http://www.amerisciences.com/

Perhaps investors who have questions might want to attend – at least Daniel Frishberg says he’ll be there so you could ask your questions directly.  Just a thought.

UPDATE:  IT APPEARS THAT THE MLM PROGRAM WITH LYNN SPERRY HAS BEEN REMOVED FROM THEIR SITE???


The BizRadio Saga – Albert Kaleta, Daniel Frisberg and David Wallace…this is the stuff bad movies are made of…

February 9, 2010

Is it that the ego is too big for the right thing to be done or it is that this is just a bad movie – only no one is shooting film?  The longer this saga continues the more I’m sensing that there is “tarnish on the microphone” – Mr. Frishberg.

LET’S REVIEW:

Albert Kaleta and Daniel Frishberg are (well “were” in the case of Kaleta) investment advisors, both having investor funds that were apparently under their direction.  Kaleta was the subject of an SEC suit in which Kaleta surrendered (I suppose you’d call it that) his license (in other words he is not supposed to be active in investing funds for others) and agreed not to involve himself with any other investment advisor(s).

The Order bars Kaleta from association with any investment adviser. Kaleta consented to the issuance of the Order without admitting or denying any of the findings in the Order, except as to the entry of the injunction, which he admitted.

So far so good…  Now it seems that Frishberg got to keep his investment license and, therefore, the ability to continue his investment activities (for which I’m told he’s pretty good at).  However, he and BizRadio were sued by the SEC.

The Commission also sued two other entities, Business Radio Network, L.P. d/b/a BizRadio (BizRadio) and Daniel Frishberg Financial Services, Inc. (d/b/a DFFS Capital Management, Inc.) (DFFS) as Relief Defendants solely for the purposes of equitable relief.

Now…a new party to me enters the picture.  Apparently, David Wallace, former mayor of Sugarland, Texas and his investment partner Mr. Bajjali have been active in several successful real estate investment funds.  David Wallace is the Chief Executive Officer and Secretary of General Partner and Chairman of the Investment Committee for Wallace Bajjali Development Partners.  Also, David wrote the book –  “One Nation Under Blog.”  Wallace has an impressive track record.

However, my sources tell me that in one of their last investments (primarily real estate), Wallace placed a portion of the private investment with BizRadio (you know where the microphone is tarnishing these days).  Without verification, I am told that the Wallace Bajjali investment in BizRadio was some $5 million.  I am further told that Albert Kaleta was instrumental in bringing private investors to the table for the Wallace Bajjali investment offering.  In fact, I am told that the subscription agreement that some (I don’t know how many) of the investors signed were signed in Albert Kaleta’s office.

There must be some truth that Wallace Bajjali invested funds with BizRadio otherwise why would they have a UCC Filing with a lien on the company?  See below:

NOW IS THAT A PROBLEM? In an of itself – NO.  Albert Kaleta was reported to be a great investment closer.  Reportedly, Wallace would put the deal together (in many cases public-private partnerships) and Kaleta (with his extensive investor network) would bring investors to the table.  Seemed to work for all concerned…till the SEC got involved.

SO HERE ARE SOME QUESTIONS:

  • If Kaleta was, in fact, (can’t confirm at this time) an active supplier of investors for Wallace Bajjali – does Kaleta’s prohibition from associating with investment advisors have a negative effect on finding future investors that Wallace Bajjali might need for upcoming projects?
  • What impact does the Wallace Bajjali investment in BizRadio have on their reputation with current investors or future investors, if any?
  • Is Daniel Frishberg’s insistence that Ron Crider was some “rogue radio guy” going to stand up to scrutiny when all the truth comes to light?  (I don’t know but it sure seems that Ron Crider had Frishberg’s blessings till his deal with 1180 AM went south).
  • Since Wallace Bajjali clearly has an interest in BizRadio…do they have the clout to take control of the operation and protect their investment?
  • Is it true that BizRadio and Daniel Frishberg are behind in their payments to their San Antonio station owner and behind in their payments to Salem Communications (the company they bought 1110 AM from)?  What impact does this have on BizRadio’s ability to continue as a going concern?
  • If so, what impact does that have on the value of the BizRadio business on a move forward basis?
  • One judge ruled in favor of Siddiqi giving him a Temporary Restraining Order thereby keeping him on the air.  Then (for some reason) another judge got the case and ruled in favor of Frisberg.  Why two judges?  Coincidence there was a change of judges or politics at play (judge shopping)?  Perhaps there is a simple explanation…  Thanks to Sarah Duckers (see the comment below) there is a simple explanation.  Thank you Sarah for your input!
  • Lastly, while it is reported that Daniel Frishberg produces consistent returns for his investors (funds he controls for others), is there evidence that Daniel Frishberg is an effective businessman when it comes to the operation of a radio station for profit.  (I submit, just because I can fly an airplane, does not make me qualifies to design the doggone thing.  Just a thought.)

I suspect that David Wallace is wondering what the hell happened?  Likely, knowing the astute businessman he is, David is figuring out how to protect his investors from what appears to be the Daniel Frishberg ego implosion.  The remaining question is…when will reason and sense prevail?  Perhaps, if logical action is taken quickly, the microphone can be repolished and everyone go back to doing what they do best.

LET’S HOPE FOR INVESTORS SAKE…Frishberg doesn’t take everyone down with BizRadio.

COMMENTS ARE WELCOME…


BizRadio and Daniel Frishberg – Are we watching the slow decline of a legitimate business enterprise or implosion of a business scam?

February 8, 2010

Is this a business enterprises going south or just a Texas flim flam?  Read on cause something doesn’t pass the smell test…

Loren Steffy, with the Houston Chronicle wrote an article on his business blog (dated February 5, 2010) related to BizRadio being allowed to return to the air.  Before, I read that article, I was alerted by another media contact that BizRadio, Daniel Frishberg and Albert Kaleta and his investment firm, Kaleta Capital Management, sold $10 million in promissory notes, telling investors the money would be loaned to small businesses at 12 percent to 14 percent interest. Instead, the SEC said, it went to the money-losing radio network and an affilated investment advisory firm, Daniel Frishberg Financial Services, also known as DFFS Capital Management.

Those articles caught my attention since I was twice contacted by BizRadio representatives, once in 2007 and then again in 2009, to have a show on business ethics on their station.  Both times something just didn’t seem right.  The first time I was invited to the BizRadio office in Dallas and told that my work was just the type of programming that fit the BizRadio format.  Of course, they were not interested in “my work” for their programming content unless I was prepared to pay a tidy sum of money to be on the air.  Pay to play as I call it.  At the time they were on (what I recall and my memory might be inaccurate) 1360 AM in Dallas.  Certainly the station was not one of the higher ranked stations when it came to aribtron ratings.

At the time it appeared that all they were interested in was me paying them money to bring my content to their station.  NOT INTERESTED.

Then, in either late 2008 or early 2009, I was contacted by another representative for BizRadio – again in a pay to play enticement.  When I asked for specific data regarding the stations signal, arbitron ratings, etc. mysteriously the interest in my show disappeared and no calls or emails were returned.  Again, something smelled fishy…but I paid it no attention, after all, in 2009 radio stations all over the country were hurting for revenue.

THEN COMES THE SEC

Loren Steffy with the Houston Chronicle broke the following article:

BizRadio Network’s slogan ringing a little hollow

I began to take notice.  Interestingly enough, it didn’t take long to begin to piece together what appears to be an interesting business enterprise or business scam – right now I can’t for sure tell which…but scam seems to gaining the upper hand thus far.

According to my sources the following seems to hold validity when it comes to the major players:  ALBERT KALETA; DANIEL FRISHBERG; RON CRIDER; and REHAN SIDDIQI

1. According to the Houston Chronicle article:

Albert Kaleta and his investment firm, Kaleta Capital Management, sold $10 million in promissory notes, telling investors the money would be loaned to small businesses at 12 percent to 14 percent interest. Instead, the SEC said, it went to the money-losing radio network and an affilated investment advisory firm, Daniel Frishberg Financial Services, also known as DFFS Capital Management.

Kaleta and Dan Frishberg, who appears on BizRadio as “The Money Man,” were among the network’s founders. Kaleta also was part owner and chief compliance officer for DFFS.

2.  My sources tell me that Kaleta was a master at raising money.  In many cases, I was told, that when an investor would invest with Kaleta, he would suggest to them that they also “loan” money to, what ultimately, was BizRadio and that those funds would pay a return of 11+%.  Therefore, if an investor invested $1 million, he/she might also “loan” $100,000 for the express benefit of getting that high rate of return.  However, I am also told that with BizRadio losing some $300,000 per month (I have not been able to confirm that number), the only way the investor interest could be paid was from more investment funds pouring in.  THAT’S A PONZI SCHEME, just ask Bernie Madoff.

3.  Kaleta signed an SEC consent order neither admitting nor denying wrongdoing and agreeing not to violate securities laws in the future. His firm also agreed to have a court-appointed receiver take over its operations.  From what I am told, Kaleta also lost his Securities license as part of his agreement.  (At the time of this writing I am trying to get confirmation from the SEC on the license revocation).  It appears that Kaleta took one for the team.

4.   The Chronicle article states: “Neither BizRadio, nor Frishberg’s firm was accused of wrongdoing, but they were named as “equitable relief defendants,” meaning they must repay the money.”  At the time of the initial Chronicle article BizRadio was on the air…but that soon changed.

5.  On or around October 2009, Ron Crider was brought on board to be BizRadio’s CEO (or so it seemed).  Crider was not paid as an employee, but according to sources was introduced by Frishberg at BizRadio shareholder meeting(s) as BizRadios CEO or co-CEO.  Likewise, Crider had business cards that indicated he was CEO for BizRadio.  As Crider came on it would appear that the SEC was hot and heavy in their investigation and negotiations to shut down Kaleta – which had a clear effect on the operations of BizRadio.  BizRadio’s web site listed Crider as President of Broadcast Operations (see below).

6.  BizRadio apparently owned 1110 KTEK AM which was the subject of a possible lease/sale.  Seems that BizRadio paid a tidy sum of money for the station, but found that it didn’t serve their needs as well as other potential stations with a better listener reach.  As best I can tell, BizRadio seemed to switch stations often (why – I’m not sure, but it seems that it is either seeking a better signal, financial issues or both).

7.  Crider, ostensibily acting as CEO, negotiated with Rehan Siddiqi to lease 1110 KTEK AM with an option to purchase for some $3.5 million.  Note: my sources tell me that John Saunders was the broker who sold Daniel Frishberg 1110 KTEK for 7.7 million.   Later, Saunders (so I’m told) offered Dan
2.5 Million Dollars for the station (which in today’s economy might be reasonalbe).  Either way, the acceptance of the Siddiqi offer would appear to be reasonable if one were seeking a new station or cash or both.

8.  The Chronicle article states: “Asia Vision had been airing its programming on 1110 AM, which is owned by a BizRadio affiliate. Siddiqi paid $180,000 to various BizRadio-related entities to lease the station for six months after BizRadio moved to 1180 AM.”  Now, perhaps I’m lost but, if BizRadio accepted Siddiqi’s payment of $180,000 from allowed him to broadcast on 1110, then how can Frishberg say that the contract was invalid?  Either Frishberg (as CEO) doesn’t have a handle on the operation of his business or Crider did have authority to execute the contract and Frishberg was willing to accept Siddiqi’s funds…  Right now Crider testifying on behalf of Siddiqi seems to be at odds with Frishberg over the truth.  But there’s more…

9.  Seems that BizRadio lost their right to broadcast on 1180 AM.  Why?  Money!  Sources tell me that Frishberg failed to provide a letter of credit to the folks at 1180 AM and failed the first of February to pay their $75,000 per month lease…hence they were (supposedly) kicked off.  Likewise, I am told that BIZ
Radio had lost it’s Dallas affiliate as a direct result of the Houston Chronicle November 18 article.  Senator Dan Patritck the owner of the Dallas station  wanted to distance himself from Biz Radio, Dan Frishberg and Al Kalieta.

WHAT COMES NEXT?

  • BizRadio is back on the air, but something still doesn’t smell right.  Why did BizRadio broadcast on 1180 AM in January and accept Siddiqi’s money for 1110 AM and then completely reverse course?
  • Why did Frishberg claim that Crider had no authority to execute an agreement with Siddiqi when in fact Crider was listed as President of Broadcast Operations for BizRadio?

  • Frishberg states today in an email I received the following:

An unauthorized but related party, Ron Crider, the same person in the Colorado newspaper story below, held himself out, falsely, to be the Chief Executive of BizRadio, and to be authorized to make deals and contracts for the sale of major assets. Our records show that he was not even an employee of our company, never received a paycheck from our company. Though a merger with his company was discussed and considered, it was never consummated.

  • What?  How could Crider be unauthorized and yet listed as President of Broadcast Operations?  Something doesn’t smell right!
  • Frishberg futher states in his email:

It now appears that there was no real intention to merge, but that this was all part of a carefully crafted plan to wrongfully take a valuable asset, our Houston radio station, for far less than its real value, harming our company and its investors. This is even more onerous now, because BizRadio has more debt than it should, and it is very important that we use our equity in such assets to reduce the company’s debt and make our lenders whole. That is what BizRadio is determined to do and we went to court Friday, to protect our ability to do this.

  • The truth is, at least, partially stated, BizRadio is apparently a money losing operation with too much debt.  But, I suspect the reason the deal with Siddiqi went south is that Frishberg found himself off the air due to his precarious financial situation and debt repayment requirement from the SEC.  I doubt, however, that Frishberg, in the current economy can sell 1110 AM for more than the offer from Siddiqi.  If, however, Frishberg is correct in his statement, he will list the station for sale, liquidate it to the highest bidder and pay off the investors loans thereby complying with the expectation of the SEC.
  • Frishberg goes on to say in his email:

They put in the contract an option to purchase the station for $3.5 million. NOTE THAT WE BOUGHT THE STATION TWO YEARS AGO FOR MORE THAN $7 MILLION.

  • Dan…the fact that you paid more than $7 million for the station two years ago when the cash was flowing from (perhaps) unsuspecting investors or lenders does not mean that you paid a fair price and, two years ago, the economy was booming.  Now, in the midst of the greatest economic recession we’ve seen since the great depression, most investors would easily conclude that the value of the station is worth well less than what you paid two years ago.  Dan…you’re the self proclaimed “Money Man” – surely you know that many business assets have decreased in value…like AIG, GM, Chrysler – even Toyota.
  • Finally, another part of Frishberg’s email states:

It was not disclosed until recently, that the purchaser did not have the means to make such a purchase, and was relying on financing from Crider, who recently failed to live up to financing commitments to BizRadio this month. IT WAS NEVER DISCLOSED THAT CRIDER WHO WAS SUPPOSED TO BE REPRESENTING BIZRADIO WAS INVOLVED ON THE PURCHASER SIDE AS WELL. WHAT A CONFLICT OF INTEREST – UNDISCLOSED!

  • Now…this is most interesting to me.  My sources tell me that Crider was involved with attempts at financing for the sale of the radio station.  Crider, on behalf of BizRadio, (I am told) was negotiating for a $1+ million loan for BizRadio (apparently since the former loan/investment sources would be drying up) and that the sale to Siddiqi for $3.5 Million was the collateral for the loan.  The lender (somehow related to Crider) decided at the last minute to back out which left BizRadio without the resources to continue on 1180 AM (a more powerful station).  Now, Frishberg states above that he was unaware of Crider’s connection to the lender.  Perhaps that is true, but it doesn’t change the fact that BizRadio’s precarious financial condition is the root cause of all that is currently taking place.

THERE’S MORE TO THIS STORY…

I suspect that when Frishberg points strongly a finger at Crider…he forgets that three fingers are pointing back at him.  Are we watching the slow decline of a legitimate business or the implosion of a business scam?

YOUR COMMENTS ARE WELCOME


BizRadio and its CEO, Daniel Frishberg, Continue the Saga into Court

February 5, 2010

Reported in the Houston Chronicle today…A state district judge signed a temporary restraining order against BizRadio and its CEO, Daniel Frishberg.

The TRO came at the request of Rehan Siddiqi, whose Asia Vision broadcasts Pakistani, Indian and South Asian programming. At the beginning of the year, Siddiqi and BizRadio essentially changed places on the AM dial. BizRadio moved to the higher-powered 1180 AM, while Siddiqi moved to 1110 AM, which BizRadio owns.

QUESTION:  Considering much of BizRadio’s funding came from the investors who apparently didn’t know they were investing in the BizRadio operation, how is it that BizRadio owns a station?  And, is that station an asset that would need to be liquidated in order to repay the loans that BizRadio and Daniel Frishberg has an obligation to repay?

Siddiqi paid BizRadio $180,000 to lease 1110 AM for six months, with an option to buy the station for $3.5 million. The deal was negotiated by Ronald Crider, who signed the documents as the co-president of BizRadio’s parent company. Siddiqi also produced a receipt for the money, included in the documents he filed with the court, that was signed by Albert Kaleta, president of the BizRadio Network.

NOTE: Albert Kaleta and KCM, without admitting or denying the complaint’s allegations, have consented to permanent injunctions against future violations of the antifraud provisions, as well as an order appointing a receiver. The Court will determine the amount of disgorgement and civil penalty that will be assessed against Kaleta and KCM.

Named as “equitable relief defendants,” BizRadio and Daniel Frishberg Financial Services, also known as DFFS Capital Management share a responsibility to repay the money.

Monday night at about 10 p.m., Siddiqi got an email from Frishberg saying that Asia Vision was to stop broadcasting on 1110 AM immediately because it had failed to consummate the terms of the deal, according to a copy of the message included in court records. At 7 a.m. Tuesday morning, BizRadio’s programming replaced Siddiqi’s, and Siddiqi went to court to get the restraining order.

Frishberg, who broadcasts as “The Money Man,” claims Crider was never an employee of BizRadio or any of its affiliates and was never authorized to enter into the deal with Siddiqi. He claims Crider and Siddiqi conspired to get control of 1110 AM by paying far less than the station was worth.

I DON’T GET IT:  Albert Kaleta signs the documents and Frishberg is ” The Money Man” – so how is it now he finds that the deal should be undone.  Seems that either he’s being pinched to repay money that he’s co-responsible for or he’s not “The Money Man” he represents himself to be.  Either way, something doesn’t smell right.  Whatever the outcome, these events certainly cast a long shadow on BizRadio, Daniel Frishberg and the credibility of his operation.

The full article from the Houston Chronicle is here.

YOUR COMMENTS ARE WELCOME…


Albert Fase Kaleta sued by the SEC for Madoff like investment – BizRadio and and Daniel Frishberg relief defendants

February 4, 2010

Where did the money go?  And, what attracted investors to invest?

According to the SEC,  between December 2007 and August of 2009, Albert Kaleta and his investment firm, Kaleta Capital Management, sold $10 million in promissory notes, telling investors the money would be loaned to small businesses at 12 percent to 14 percent interest. Instead, the SEC said, it went to the money-losing radio network and an affilated investment advisory firm, Daniel Frishberg Financial Services, also known as DFFS Capital Management.

NOTE: Whenever you are promised an investment return that is better than most folks can normally get…you have a good chance of being scammed!  This is the first rule of avoiding a Ponzi scheme and while this may not technically qualify as a Ponzi scheme…if it were allowed to continue, it would likely have morphed into one.

On Nov. 13, 2009, the Commission sued Albert Fase Kaleta and his company, Kaleta Capital Management, Inc. (KCM), in the United States District Court in Houston, Texas. The Commission alleges that Kaleta and KCM defrauded investors in the offer and sale of KCM-issued promissory notes in an offering that raised $10 million from approximately 50 investors. The Commission also sued two other entities, Business Radio Network, L.P. d/b/a BizRadio (BizRadio) and Daniel Frishberg Financial Services, Inc. (d/b/a DFFS Capital Management, Inc.) (DFFS) as Relief Defendants solely for the purposes of equitable relief.

Kaleta and Dan Frishberg, who appears on BizRadio as “The Money Man,” were among the network’s founders. Kaleta also was part owner and chief compliance officer for DFFS.  There is little doubt that Kaleta and/or Frishberg didn’t know what they were doing.

NOTE:  When money that is “supposed” to go into ‘small businesses’ and instead is diverted…that would be a warning sign that a fraud is beginning.  Now, realistically, the victims wouldn’t know as most fund diversions are kept from the public eye.  In this case, it would seem that luck (if you can call it that) intervened through the worst recession we’ve experienced in years.  More than likely the purported investment scam would have continued if the economy was robust.

The Commission alleges that Kaleta lied to investors about the intended uses of offering proceeds. Among other things, the Commission contends that Kaleta took approximately $1.5 million of the offering proceeds to pay personal expenses.

NOTE:  Like most of the Ponzi schemes I’ve reported on…a common thread is the use of “investment funds” for personal expenses.  Hint…this doesn’t look or smell like it was legitimate.  Again, timing is everything.  Madoff was fortunate in that his fraud spanned many years but, like most, imploded when the economy took a nosedive.

Without admitting or denying the complaint’s allegations, Kaleta and KCM have consented to permanent injunctions against future violations of the antifraud provisions, as well as an order appointing a receiver. The Court will determine the amount of disgorgement and civil penalty that will be assessed against Kaleta and KCM.

Named as “equitable relief defendants,” BizRadio and Daniel Frishberg Financial Services, also known as DFFS Capital Management share a responsibility to repay the money.

According to the Houston Chronicle – “In order to reverse what injustice has taken place here, so that the victims of this fraud can be made whole, what we’re seeking is that the relief defendants relinquish their possession of assets to which they have no rightful claim,” said Timothy McCole,the SEC attorney handling the case.

Frishberg said he and Kaleta are no longer partners. His firm and BizRadio will repay the debt under the terms of the promissory notes, he said.

“We’re eager to have them hurry up and appoint a receiver and get it going,” he said.

QUESTIONS:

In a time when trust in financial professionals is at a low, I wonder what position Daniel Frishberg is taking here in early 2010 when it comes to the repayment of investors?

Are we finding transparency when it comes to the operation of BizRadio?

It seems that BizRadio often is jumping from station to station – especially in the Dallas, TX marketplace.  Is that a result of financial stress on the station since the flow of (what would appear to be) misappropriated investor funds has dried up?

COMMENTS ARE WELCOME!

The following is on the BizRadio web site:

We are off the air for the first time since 2005, but at our headquarters, we are as busy as we have ever been. We are using this time to make some major improvements in our operations that will benefit our audience and our investors.
We will be back on the air very soon, and we will make an important announcement about the future of BizRadio in the next week.
For the latest update, please continue to check back here at BizRadio.com