 | | December 17, 2009
The May Report: 12/17/2009: Arrington blinded by San Francisco address of a dirt under the fingernails Grabowski-esque Chicago firm: Canopy Financial is here!; ITA's Margaret Plett to be CMO for Third Wave Business Systems
Editor and publisher: ron@themayreport.com, ronaldmay@aol.com, www.themayreport.com, 773-525-3944.
If you missed an article, go here: http://www.tmronline.com/A55951/tmrarticles.nsf/vwFullNewsletter
______________________________________
********************************************
Is Not GTD getting you down?
Resolve to join us in January!
Co-working at Milwaukee & Montrose
Great location: Just off 90/94 Junction
Near Blue Line, Metra, Lawrence Ave bus terminal etc.
Plentiful Restaurants and Bars for lunch and after hours
Membership options start at $150/mo.
Floaters, Dedicated Desk and optional Private Offices
Casual Environment - Serious value!
Great Light with 10 Foot ceilings (Light=Joy!)
FREE Onsite Parking
New Furniture
Conference
Room Internet
VOIP
Color Laser Printer
Swimming Pool (just kidding!) and more...
Call Garnet: 312-925-6911 or garnet.steen@gmail.com
****************************************
____________________________
TABLE OF CONTENTS
The Scoop section:
-- Canopy Financial, under scrutiny for fraud, is right here in Chicago, despite Mr. Arrington's focus on San Francisco
-- ITA's Margaret Plett to be CMO for Third Wave Business Systems
[Editor's note: Ron May here. I owe Harvey Daniels a big apology. More on that in the next report.]
________________________________
*******WIRTH BUSINESS CREDIT - ACQUIRE EQUIPMENT - SAVE ON TAXES*******
Section 179 of the IRS tax law allows for accelerated depreciation on up to $250,000 of equipment for small businesses. In most instances, this applies to financed equipment, as long as the equipment is put into use before the end of the year. That means that you can lease up to $250,000 worth of equipment and immediately take up to a $250,000 tax deduction for 2009. Check with your tax advisor and if you qualify, call us to finance the equipment you need today!
WIRTH Business Credit ( www.wirthchicago.com ) is a local equipment financing company available to help you finance IT, computers, phone systems, networking equipment, office equipment, furniture, retail fixtures, point of sale systems and other business critical equipment. WIRTH is backed by a public company and provides leases for transactions as small as $5,000. Although the credit market is tight, we are still working with startups and less than perfect credit. We are direct lenders (not brokers) and we never sell our leases, so you will always deal with us and not pay any fees to middlemen.
Take a look at our one page application: ( http://wirthchicago.com/Wirth_Lease_App_41.pdf) and call us today!
Frank Rogers
WIRTH Business Credit
frank@wirthchicago.com
http://wirthchicago.com
630-325-1458
*******************************************************
________________________________
The Scoop section:
____________________________
Canopy Financial, under scrutiny for fraud, is right here in Chicago, despite Mr. Arrington's focus on San Francisco
http://www.techcrunch.com/2009/11/24/canopy-financial-accused-of-serious-financial-fraud-investors-burned/
Canopy Financial Accused Of Serious Financial Fraud, Investors Burned
103 Comments
326 retweet TOP1K Share33by Michael Arrington on November 24, 2009
Something really, really bad went down at high flying startup Canopy Financial.
This is one of the high flying startups that had a lot of buzz the last couple of years. They've raised at least $85 million in venture capital with the help of an investment bank, Financial Technology Partners. Their most recent round, a reported $62.5 million, was funded by Spectrum Equity Investors.
Canopy debuted on the 2009 Inc. 500 List at #12 in terms of the fastest growing private companies in America.
In 2008 CEO Vikram Kashyap said his company had 2007 revenues of $9 million. More recently, we've heard, the company was saying they'd hit $60 million in revenue and $9 million or so in EBITDA.
All of this may have been lies.
Until recently all the venture capitalists involved proudly placed Canopy Financial on their portfolio pages. Now all trace of the company have been erased from the portfolio pages of investors GGV Capital, Spectrum Equity and Foundation Capital. And their investment bank has erased them from their trophy page as well. But here's what these pages looked like very recently:
So what happened? Multiple sources have told us that Canopy was absolutely making up their financial statements, even forging audited statements with fake KMPG letterhead. And somehow the investment bank and all the investors never figured it out.
A call to KPMG before investing tens of millions of dollars would have been a good start, although I have the benefit of hindsight here.
Spectrum took the biggest hit, with their recent $62.5 million investment in the company. And we're hearing that they're now suing to try to recover some of that money. One of the early investors, GGVP, may have taken as much as $25 million of the recent round "off the table" from the Spectrum investment, and they're now a defendant in the lawsuit, says one source.
Canopy's website right now is a simple information page. All deep links are broken, and the old site has been taken down (we have a screenshot here from a few months ago).
We've reached out to just about everyone involved with the company for comment.
get widgetminimize
CrunchBase Information
Canopy Financial
Website: canopyfi.com
Location: San Francisco, California, United States
Founded: 2004
Funding: $89.5M
Canopy Financial, Inc. provides technology-enabled electronic payment, account management, and investment technology platforms for health savings accounts, flexible spending accounts, and health reimbursement arrangements. It offers HealthDirect for... Learn More
Information provided by CrunchBase
_______________________
Ron May here. What you may not know from having read the Tech Crunch article from November 24th is that Canopy Financial had about 110 in Chicago and 10 in San Francisco total and they are now down to 20. Almost the entire developer staff here has been cut.
Two of the top 3 people who will be indicted. But the indictments coming will not include the CEO, Vikram Kashyap, I am hearing. They will include the two guys right below him, in particular Jeremy Blackburn who is here. The Chicago offices are at 230 West Monroe Street.
What Tech Crunch did not have is the Park Forest connection which comes through Jeremy Blackburn.
++++++++++++++++++++++++
From Google when you put in canopy financial fraud park forest
Chicago FBI: Canopy Financial Co-Founder Jeremy Blackburn Facing ...Dec 3, 2009 ... eNews Park Forest is the only online news source exclusively serving Park Forest, ... false information about Canopy's financial condition. ...
www.enewspf.com/index.php?...canopy-financial...fraud... - Cached -
Police Report2, Park Forest Police Reports for December 14, 2009, Staff ... 9, Chicago FBI: Canopy Financial Co-Founder Jeremy Blackburn Facing Federal Fraud Charges ...
www.enewspf.com/index.php?option=com_content...id... - Cached -
Canopy - Blogs, Pictures, and more on BloggedCanopy Financial Accused Of Serious Financial Fraud, Investors Burned .... Canopy Garden Dining & Bar Bishan Park II 1382 Ang Mo Kio Ave 1 Singapore 569931 Email: . ... we visited the canopy walk at El Yunque National Forest. ...
www.blogged.com/topics/canopy/ - Cached -
Latest News and Information on Financial StatementsChicago FBI: Canopy Financial Co-Founder Jeremy Blackburn Facing Federal Fraud ...eNews Park Forest Canopy Financial faces SEC fraud chargesSan Francisco ...
mocobiz.com/cybermonday/news/Financial-statements.html - Cached -
+++++++++++++++++++++
http://tinyurl.com/ybbbyrk
Chicago FBI: Canopy Financial Co-Founder Jeremy Blackburn Facing Federal Fraud Charges Alleging Deceit in $60 Million Stock Sale
Thursday, 03 December 2009 21:24 Press Release Police Report 11972
1 2 3 4 5 (2 votes, average 5.00 out of 5)
Chicago, IL-(ENEWSPF)- A co-founder of Canopy Financial, Inc., a health care transaction software company, is facing federal fraud charges alleging that he defrauded investors by creating and distributing false information about Canopy's financial condition. The defendant, Jeremy Blackburn, allegedly deceived a private equity firm that invested more than $60 million in Canopy stock this past summer by submitting a bogus auditor's report and falsified bank statements to the investment firm. Blackburn allegedly fraudulently obtained more than $2 million of the investment funds for personal expenses and luxury items, and used a false bank statement in an attempt to obtain a mortgage on a new home. Blackburn, who resigned recently as Canopy's president and chief operating officer, was charged with wire fraud in a criminal complaint filed Monday and unsealed late today, announced Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois, and Robert D. Grant, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.
Blackburn, 36, of Malibu, Calif., was released on a $1 million unsecured bond after appearing late this afternoon before Magistrate Judge Nan Nolan in U.S. District Court in Chicago.
Blackburn was one of three co-founders of Canopy, which was established in 2004, and entered bankruptcy proceedings last week. A special committee of outside directors reported information to federal law enforcement officials and is cooperating with the continuing investigation, officials said.
Separately, the U.S. Securities and Exchange Commission filed a civil enforcement action against Canopy and Blackburn that was unsealed today in Federal Court in Chicago. Mr. Fitzgerald noted the cooperative efforts of the SEC's Chicago Regional Office. Blackburn led the company's daily business operations, sales, account management, marketing, engineering and product development. The privately held company, which has offices in Chicago, Plainsboro, N.J., and San Francisco, developed and provided software programs for banks and health care payers for payment processing and administration of health-related savings and spending accounts. Canopy's products related to expense tracking, online bill payment, claims processing and account management for healthcare transactions.
According to the charges, Canopy agreed earlier this year to sell shares of preferred stock to certain investors on two separate closing dates, and agreed to provide the purchasers with audited financial statements for 2008. The agreement also provided that Blackburn and the other two cofounders, identified in the charges as Individuals A and B, could redeem up to 10 percent of their preferred and common stock in Canopy.
On July 15, 2009, Canopy sold approximately $63 million of a class of preferred stock to several parties, including shares totaling slightly more than $60 million to two entities affiliated with Spectrum Equity Investors, which wire transferred the funds to Canopy. On Aug. 19, 2009, Canopy sold almost $12 million more of the same class of preferred stock to various investors, including a small portion of that amount to the same two Spectrum entities. At the same time, Blackburn redeemed a portion of his stock for approximately $1.6 million, and Individual B, who served as Canopy's chief technology officer, redeemed shares totaling approximately $975,000.
After Canopy received Spectrum's fraudulently obtained investment, Blackburn allegedly obtained unauthorized transfers from Canopy's financial accounts of more than $1 million to a credit card company account, a corporate jet leasing company, and a luxury automobile dealership, the charges allege. In addition, approximately $1.17 million was transferred from Canopy into two of Blackburn's personal bank accounts, allegedly without corporate authorization.
The complaint alleges that Blackburn fraudulently obtained money from Spectrum by creating and distributing false information about Canopy's financial condition, including a purported independent auditor's report for 2007 and 2008. After creating the false financial information, Blackburn allegedly caused the phony auditor's report, purportedly prepared by the accounting firm KPMG, to be sent to Spectrum on June 30, 2009, to complete the stock purchase agreement.
The charges allege that, according to KPMG, the firm never performed an audit of Canopy's financial condition and never drafted an independent auditor's report for the company. When KPMG learned of the purported audit report, it sent a letter to Canopy on Nov. 3, 2009, demanding that it stop using the false document and stating that it had never performed an audit of Canopy's financial statements. On Nov. 12, 2009, Canopy's general counsel sent a letter to Spectrum stating that the purported KPMG audit documents were not authorized by KPMG, which had never audited Canopy, so they could not be relied upon in any investment dealings with Canopy.
In addition to the phony audit report, Blackburn and Individual B allegedly provided Spectrum with falsified bank statements for the months of January through June 2009 in response to a request by Spectrum. The statements, which purported to represent a Canopy account at Northern Trust Bank, showed balances from January through June ranging between $5.7 million and nearly $9 million. In fact, the charges allege, no such Canopy account existed and the only Canopy account at Northern Trust, which was held for the benefit of one of Canopy's Health Savings Account clients, had a balance at the end of June 2009 of just under $87,000.
In late July 2009, Blackburn applied for a mortgage on a new home in Malibu and allegedly submitted the same phony Northen Trust statement, but this time purporting to be of his own personal bank account, showing a balance of just under $9 million at the end of June 2009. When Northern Trust contacted Canopy about the purported statement, Blackburn allegedly represented that he was not going through with the loan and asked that the documents be destroyed.
The government is being represented by Assistant U.S. Attorneys Manish Shah and Stephanie Zimdahl.
Wire fraud carries a maximum penalty of 20 years in prison and a $250,000 fine and restitution is mandatory. The Court may also impose a fine totaling twice the loss to any victim or twice the gain to the defendant, whichever is greater. If convicted, however, the Court would determine a reasonable sentence to impose under the advisory United States Sentencing Guidelines.
A complaint contains only charges and is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
++++++++++++++++++++++
http://www.google.com/hostednews/ap/article/ALeqM5hvMQaJW50Sf8HMJlXKUBZDFiFe9gD9CBU6BO3
Health care software founder charged with fraud
(AP) - Dec 3, 2009
CHICAGO - A California businessman has been accused of using bogus financial data to defraud investors who put $60 million into a health care transaction software company he founded.
Federal Magistrate Judge Nan Nolan ordered Jeremy Blackburn of Malibu, Calif., released on a $1 million unsecured bond Wednesday after the complaint was filed.
The complaint accused Blackburn of siphoning off $2 million of the money invested in his Canopy Financial Inc. for personal expenses and luxury items.
Blackburn resigned recently as Canopy president and CEO.
Defense attorney Steven Kowal said Blackburn is cooperating with federal investigators.
Copyright © 2009 The Associated Press. All rights reserved.
____________________________________
ITA's Margaret Plett to be CMO for Third Wave Business Systems
Subject: RE: Margaret, I heard you're leaving the ITA. Why, and do you have another job?
Date: 12/17/2009 2:20:52 P.M. Central Standard Time
From: mplett@illinoistech.org
To: RONALDMAY@aol.com
Hi Ron,
I do have a new job starting in January. Here's a link to the news on the ITA website: https://www.illinoistech.org/associationnews.aspx/458
~Margaret
From: RONALDMAY@aol.com [mailto:RONALDMAY@aol.com]
Sent: Wednesday, December 16, 2009 3:06 PM
To: Margaret Plett
Subject: Margaret, I heard you're leaving the ITA. Why, and do you have another job?
+++++++++++++++++++++
ITA Bids Farewell to VP Marketing, Margaret Plett
Margaret Plett, ITA's VP of Marketing and Communications, has announced that she will be leaving the ITA at the end of the year to start a new job in January. She will be working as the CMO for Third Wave Business Systems, a software developer and reseller of SAP BusinessOne and Microsoft Dynamics business software, headquartered in the New York metro area.
Margaret will stay in the Chicago area, working out of her Naperville office, and will continue her work in the Illinois technology community by joining the board of the Illinois Technology Foundation and continuing as a member of the ITA
__________________________
END OF REPORT |