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| | 03/08/2004
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| | Scoop
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| | Briefly noted, by Ron May
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| | * Where to begin? We are in the midst of political season and TMR has
reported on two of the candidates for the U.S. Senate, one Democrat, one
Republican.
On the Republican side, we have Jack Ryan. That name rang a bell and then
about a month ago, I realized that I had met him at the launch party for
Eppraisals, way back in November, 1999. I don't know if Jack invested in
Eppraisals, (he is a friend of Leslie Hindman's) but he did invest in
another firm, one named Veritel, and the story there is much more pernicious.
I dug up the record of what I wrote about it, and re-checked my information
this weekend. Here is the story of Jack Ryan's involvement in Veritel.
Apparently, the $2,600 credit card expense that was rung up while Chris
Tomes and Jack Ryan were partying in South Beach, Florida (what they
jokingly called a "fun raising" trip) was paid by Doug, the CFO at Veritel
at the time, over Doug's objections which were based on the fact that they
could not make payroll, so how could they pay for Chris Tomes' party bill.
Another issue is how Jack Ryan can came to be on the board of Veritel. And
when many of the initial investors were already convinced that it was not
legit, Jack Ryan was still helping them to raise money.
Actually, here are my five questions for Jack:
1. Jack, what kind of due diligence did you do before investing in Veritel? 2. Jack, was it responsible of you to put $100K into the company as an
investor and then participate in the spending of company funds on your own
personal party activity with Chris Tomes in South Beach while at the same
time the firm was having trouble making payroll?
3. Jack, aside from the fact that Jack Kemp was a friend of yours, on what
basis did Jack Kemp come to serve briefly on the board of Veritel? 4. Why did you help them raise money from more investors after some
investors had already sounded the alarm that this firm was not on the
up-and-up?
5. How do you reconcile your image as an anti-choice candidate with the
pattern of your personal life? (As an aside, I wonder if Jack has a
personally autographed copy of Star-Trek Voyager where his ex-wife, Jeri
Ryan, was the femme fatale.)
The other thing I would note is that Tomes was able to get Ryan, but was
not able to get John Walters from AT&T to sit on the board.
Why was that? That was because Walters checked out the company and found
out what a scam it was.
Here is what I wrote about Jack Ryan:
From TMR: 11/12/99:
"Another person I met was the infamous Jack Ryan. I expected to see a 55
year old guy because he is a Managing Director at Goldman Sachs and I had
heard that these guys make $4MM or $5MM a year. As you may recall, Jack
Ryan's name has appeared before on the pages of this report. He invested at
least $100K in Veritel and he was a key person helping them to raise more
money when other investors had dropped off--- and I might add,
disparagingly given up on the whole thing.
I had also heard that Jack hung around with Chris Tomes, Veritel's CEO, who
is known to be a party animal, and is seen on a typical night having dinner
at Gibson's, Marche', or a similar haunt.
I had in my mind that Jack was hanging around Chris to benefit from his
success in picking up women. Well, after meeting him, I concluded that the
opposite must be the case. Jack is a tall, and very handsome guy who must
be the draw much more than Chris. Anyway, Jack was also married to the
actress who was on Star Trek, Seven of Nine, Jeri Ryan, I hear.
The one story I did hear about his partying days with Chris is that they
went to South Beach for a big party weekend and that Chris ended up with
$2600 on his credit card, no doubt an expense courting investors. That was
at the same time that Chris was not making payroll at Veritel.
Jack, it would be better for you to pick up the tab on future forays with
Chris.
Anyway, Jack says that he still believes in Veritel because he thinks that
"voice verification will be a key to e-commerce on the internet." I said,
"Fine, but why not just throw Chris and his brother Ed out and get some
real managers?" Jack's response was "Chris is a good entrepreneur," and
that has to be the quote of the day."
And this from TMR: 2/20/99:
"Veritel signed an agreement to be represented for a private placement with
Salomon Smith Barney for $10MM last April. I wrote about this in June of
last year. Then the market for IPOs tanked, and along with it went the
valuations on private deals and the propensity to do many of those deals.
The amount of the deal was cut to $5MM in November and Salomon pulled out
completely in the first week of December.
Marc Usem, who twas the chief analyst covering biometrics at Salomon, left
in November to start his own consulting firm and afterwards he approached
Veritel as an independent representative to help them get sales. Veritel's
President Chris Tomes reported to potential investors in October that
Hambrecht and Quist would be the lead on the raise and might pony up to the
tune of $3MM. That too did not materialize.
At its peak, the firm had about 25 people. There has always been some level
of turnover, including the departure of the original speech scientist
George Velius, but starting in December of 1998, the firm lost a slew of
key people. There were really two major rounds of departures, starting late
last summer.
Gone are the controller Ben Horne, the CFO Mitch Liss, Marketing VP Bruno
Rocca, VP of Business Development Darcy Evon (who is starting up her own
internet firm, I-street), Russ Peterson (a very bright developer who went
to Internet1), Yimin Chen (director of applications development), Jill
Kettinger (a marketing assistant), Kate Howard (director of marketing),
Mark Homuth (Bruno's replacement), VP of Telephony Dave Shook (left in
January), and many others.
The word is that payroll checks bounced starting in December and continued
to bounce in January, and not just once. Sometimes people would be issued a
check and asked not to cash it. This is by no means unique among software
start-ups and I am sure that many people in start-up firms have had similar
encounters. I am not trying to sensationalize here.
The firm is run by the Tomes brothers, Ed (COO) and Chris (President and
Chairman). Ed has graciously offered to sit down and talk to me and I
intend to take him up on the offer this coming week. He understands that I
will ask tough questions, but also that I want to be fair.
I would like to understand from him how and why the financing fell through.
One amusing note: Yimin Chen was hired six months ago and came from Rand
McNally. He was featured with his picture about a month ago in a piece in
the Chicago Tribune called "On the job." He says he was hired there through
a recruiter, that he likes his job, and that his "ideal next job" will be
"working with other exciting technologies at the same company." My how a
few days can make a difference! Yimin is going to InstallShield.
I want my story to be "rock oslid," but I will give you the whole story.
The investors include lawyers like Howard Davis who owns restaurants on
Randolph Street like Marche, Vivo, and Red Light and I am sure some of
these guys could be "sue happy." Overall, the firm raised about $5MM from a
large group of angel investors, a typical investment being between $50K and
$100K. A lot of the investors do not hail from high tech, but are
businessmen who are "family and friends." Another financial backer, David
Schwartz, is guaranteeing a million dollar loan from First Chicago. Those
investors will not be happy to see their money lost. I met many of them at
a party I attended during Comdex in April 1998.
In fact, one investor is so incensed that he circulated a letter among the
other investors calling for an "emergency" meeting on March 3rrd. I will
let you know what happens at that meeting.
During the course of the last year, some big names have rubbed shoulders
with Ed and Chris. Chris approached John Walters, the CEO-elect of AT&T who
was fired from AT&T (this story is well-known) and asked John to become the
CEO of Veritel. After doing his own due diligence, Walters backed out.
Another person of note who was asked to get involved in helping the firm to
raise money was Jack Ryan, the managing partner at Goldman Sachs, who put
in $100K himself. By the way, Jack's ex-wife is an actress who appears on
Star Trek."
In the TMR archives, there are 49 entries with Veritel, and 33 with Tomes.
The story has been well documented. I believe that the final amount Veritel
raised and squandered was in the neighborhood of $12MM, but that is a
guesstimate.
Jack Ryan is not the only person trying to leverage greenbacks to expand
his professional portfolio to include a U.S. Senate seat.
Blair Hull has been examined much more heavily in the press, but I must say
that it seems convenient to me that the media decides to focus on the issue
of a messy divorce only three weeks before the election. I wrote about
Blair Hull and his search for a date and/or wife way back in August, 2003
and since then I have had the story corroborated. Blair personally told one
of my sources that he paid the firm for the service. Blair has been seen
accompanied by an attractive blonde woman not long ago at a charity event,
I believe.
Here is what I wrote on August 20, 2003 while I lay in a hospital bed after
my vascular by-pass surgery.
"Here is a little interesting tidbit that may be better for the political
columns than for The May Report. Blair Hull, the multi-millionaire and
Democratic US Senatorial candidate has reportedly paid $50,000 to a local
matchmaking service to find him a wife. The requirements are that she be
between 45 and 55, have grown children, and I can't recall whether or not
she should be a smoker. My source on this is pretty reliable, but Blair, in
the midst of a political campaign, don't you think your opponents will make
political hay out of this? I can see the ads now. "Blair Hull---Smart
Spending to Satisfy Your Every Need". The reason that Hull is paying 50
grand as opposed to the usual 10 grand for the service is that he wants a
more thorough screening job. On that note, I think I'll call it quits for
the evening. I am going to be move to the RIC in the next day or so. When I
get to the RIC, I'll let you know what's going on."
Once again, Hull is running on a platform emphasizing his supposedly
enlightened views toward women, but that may be politically, not personally.
The other question I had was whether the dating service screens only on a
one-way basis or does it screen on both parties. In other words does the
dating service only screen the man or the woman with the money, known as
the client, or does it just screen the object of their desire? In other
words, if Hull is the client, do they check him out and screen him as much
as they screen the women they introduce him to? On the supposition that a
dating service would want to know about restraining orders and the like
which may be sealed records, I called the head of the service in question
here (the name of that service is familiar to readers of this report) and
she said that the firm uses the model of an executive search firm. They do
not screen women unless they are to be introduced and they do screen their
clients, like a Hull, through an outside service they use. They check on
credit and bankruptcy, and other matters, but she did not know how much
they are able to find out if it is not on the public record. She told me
that she will get back to me with details on what she finds out from the
service she uses.
The reason I ask the question about whether the screening is one-way or
two-way is that it represents a fundamental inequality in the treatment of
women. (I should know. I have objectified women over a lifetime and thank
goodness I am not running for the U.S. Senate.) By hiring a dating service,
it is very much slanted one way, I would think. The client is paying for
what he wants, but does the woman get what she wants on an equal basis?
Whether the service does one-way or two-way screening is effectively
irrelevant. It is the appearance that it is a one-way proposition that
reflects an attitude that may be unbecoming for a person seeking such a
lofty office. Just a thought.
One more thing about Blair Hull. Back when I was a headhunter, a number of
my colleagues in the headhunting business did business with Hull Trading,
Blair's firm. They always had a stand-up reputation for quality. They were
well liked by the employees and treated with respect. And to my knowledge,
the firm had a reputation for being ethical. So on the trading front, Blair
did a good job. However, I hear that his firm paid fines in the
neighborhood of a half million dollars. I am talking about my own very low
level knowledge of their operation.
Jack Ryan also has his strong points. He taught school in the inner city
after Goldman Sachs.
* On the political front, I hear that a few of our tech community members
were at a fundraiser for Barak Obama back at the time of the Iowa caucuses.
David Jacobson, formerly of FirstTuesday and Mobile Wednesday and Katherine
Gehl were there. Katherine is appearing on a panel this month somewhere.
Darcy Evon was also there, I heard.
* Does anyone have info. on how Smart Signal is doing?
* I hear there is good news having to do with Liquid Generation, but don'yt
know what it is.
* There was an iBio meeting this morning in Evanston that was not well
publicized. Mike Rosen and Dave Miller, don't you guys send out notices
about events?
* The ARCH/Coalition meeting this morning was a disaster, I have been
hearing all day. One firm no-showed; and one firm, SafeMobile, did not
present a business plan, but did talk about getting distributors. About
sixty people attended. Churchwell got a guy from the audience to come up
and talk about his firm. Here is the question: Who is running this show? We
are paying for that microphone, folks. That is your federal and state tax
money at work --- federal money for the Coalition and state money for the
ITEC sponsoring today's meeting. Did Gerry Zielinski do his job? Why did
not Greg Mackintosh have a biz. plan to present? Is he a client of the
Westec? If they are working with him, why not better preparation? What
companies exactly are they working with? We are paying good money for this?
It should be run better. You guys have had a pass on poor preparation of
the presenters at the meeting too long. |
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