http://www.stltoday.com/stltoday/business/stories.nsf/0/0BBD3CDDFF737C5F8625705C001C70BB?OpenDocument
By Christopher Carey
Of the St. Louis Post-Dispatch
08/13/2005
A company whose touch-screen voting machines won state
certification in Missouri last month has been raising money through stock
placements that found their way to unlicensed securities "boiler
rooms" in Europe.
AccuPoll Holding Corp.'s filings with the Securities and
Exchange Commission show that the company's financial backers include the
children and business associates of a man who went to prison for fraud in the
1990s.
AccuPoll, a publicly traded company with headquarters in
Tustin, Calif., declined to comment Friday on its finances or the offshore
share sales.
"It is our policy not to publicly speculate on
transactions allegedly made by some of our stockholders or some of our
stockholders' affiliates, especially when we are not a party to such alleged
transactions," said William E. Nixon, its president and chief executive.
His comment was a written reply to questions submitted by
the Post-Dispatch.
People who bought AccuPoll shares from the foreign
brokerages have lost much of their initial investment.
AccuPoll's SEC filings show that its early investors include
two companies managed by adult children of Sherman Mazur, a one-time real
estate magnate in Southern California.
Mazur, 56, pleaded guilty to seven counts of bankruptcy and
tax fraud after his empire collapsed. He was sentenced to 1993 to six years in
prison.
A group of 24 St. Louisans who invested in property he
managed won a $3.2 million civil judgment against him. For more than a decade,
they have been unable to collect the money or identify assets in his name.
AccuPoll is one of at least four publicly traded companies
that have listed Mazur's children as stockholders, Post-Dispatch research
shows.
Shares of all four companies have been peddled to foreign
investors by overseas firms that regulators warned were unlicensed
telemarketing operations, known as "boiler rooms." Each stock
declined sharply in value, leaving buyers with little to show for their money.
AccuPoll's affiliations could prove troubling to election
officials, given public concerns about accurate vote tallies and the security
of computerized voting systems, said Bev Harris, founder of Black Box Voting,
an advocacy group in Renton, Wash.
"All it takes is one person who has criminal or ethical
problems," said Harris, whose organization investigates the reliability of
touch-screen and other computerized voting machines. "That pretty much
throws the whole integrity of the system into question."
AccuPoll says it intends to wrest business from the
industry's established suppliers with a computerized system that prints a paper
receipt confirming each user's choices.
The company also is seeking certification in Illinois and
has been cleared to sell its machines in at least 10 more states.
Although the financing questions don't affect the security
of the machines, they could undermine their acceptance, said G. Terry Madonna,
director of the Center for Politics and Public Affairs at Franklin &
Marshall College in Lancaster, Pa.
"This is a very touchy subject," he said.
"All of it is against a backdrop of uncertainty and distrust."
AccuPoll's SEC filings also show that the company got
financing and consulting services from businesses managed by a lawyer named
Reid Breitman. Those entities used the same address that Sherman Mazur and his
children have used in corporation filings.
Breitman, 38, declined to comment Friday, saying he adopted
a policy of not talking to reporters after another publication unfairly drew an
association between him and a "criminal" who once leased the office
he now occupies.
The building, a former art gallery in Santa Monica, Calif.,
also has been used by Regis Possino, 57, a disbarred lawyer with separate
convictions for drug dealing and fraud.
Four overseas brokerages have marketed AccuPoll's shares to
European investors.
Regulators in Spain and Great Britain issued warnings about
two of the firms, Anderson Fitzpatrick AG and Tana Corum Holdings, saying they
were offering investments without proper licenses.
Focus on technology
The Missouri secretary of state's office, which oversees
election issues, was unaware of AccuPoll's financial backers or the sale of the
company's shares by overseas brokerages, spokeswoman Stacie Temple said.
Missouri's certification process for election equipment
focuses exclusively on the integrity of the machine and its technology, Temple
said.
The same is true for Illinois, said Daniel White, executive
director of the Illinois State Board of Elections.
"If we do learn of those things, the board would
certainly take a look at it," he said, referring to questions about
companies' financing and executives' backgrounds.
AccuPoll says 10 other states already have approved its
systems - Alabama, Arkansas, Ohio, South Dakota, Utah, Kansas, Kentucky,
Louisiana, Pennsylvania and West Virginia.
The company has signed up just two customers, a pair of
small Texas counties, that are awaiting that state's certification.
High-pressure tactics
The Post-Dispatch has been tracking AccuPoll as part of its
continued monitoring of overseas boiler rooms, which push foreigners to buy
stock in small American companies with limited business histories, revenue and
capital.
A series of Post-Dispatch stories last year showed how the
operations took in hundreds of millions of dollars by selling inflated shares
in roughly 200 public and private U.S. companies. Those shares invariably
plunged in value.
The telemarketing operations are called boiler rooms because
they use high-pressure sales tactics to promote risky or fraudulent
investments. They typically operate from hidden locations, and their brokers
often use false names.
In many cases, they sell shares that are restricted from
resale on the U.S. market for one year. Most foreign investors who bought
shares of the other three public companies with Mazur children as stockholders
lost nearly all of their money. Only one of the companies still exists in its
original incarnation, and its shares trade for a fraction of a penny.
A compelling story
AccuPoll was incorporated in 2001, in the aftermath of the
bitterly disputed 2000 presidential election. The company says its system,
which includes a printed verification slip, provides better assurances that
each ballot is recorded accurately.
AccuPoll is hoping to capitalize on the nationwide
modernization of voting equipment inspired by the Help America Vote Act, which
allocated $3.9 billion in federal money for replacing manual punch-card
systems.
AccuPoll became publicly traded in 2002, when it merged with
Western International Pizza Corp., a dormant Salt Lake City business whose
shares were still registered with the SEC.
As part of that transaction, a group of AccuPoll investors
split 18.6 million shares of the combined company's stock, or roughly a fourth
of the total changing hands, SEC filings show.
One of those investors, a limited-liability corporation that
got 4.2 million shares of stock, was managed by Jamie A. Mazur, 27, Sherman
Mazur's son. Another limited-liability corporation, which got 4 million shares,
was managed by Jennifer Mazur, 26, Sherman Mazur's daughter.
In addition, AccuPoll issued 3.8 million shares as a
retainer to three consultants - Jamie Mazur, Breitman and GCH Capital Ltd. The
company gave them warrants to buy 2 million more shares at a discounted price.
Breitman once was managing director of GCH Capital. He also
manages Palisades Holdings LLC, which provided AccuPoll with $1.9 million in
loans that were convertible to stock.
California corporation filings lists GCH's address as 2224
Main Street in Santa Monica, Calif. AccuPoll's agreement with Palisades
Holdings lists the same address for that company.
The address also appears in the Nevada corporation filing
for a business that Sherman Mazur incorporated in December.
A Canadian newspaper, the Vancouver Sun, published a set of
articles July 25 that identified Sherman Mazur as a behind-the-scenes player at
General Commerce Bank AG, an Austrian firm that pushed shares of obscure U.S.
companies.
Before Austrian authorities shut down General Commerce in
2001, regulators in other nations had added it to their list of operations
selling securities without proper authorization.
California corporation records show that in August 2001, the
mailing address for GCH Capital was in Vienna and matched the address used by
General Commerce Bank.
Rakesh Saxena, an international fugitive under house arrest
in Canada, told the Vancouver paper that he had enlisted General Commerce to
sell shares of several unlisted companies. He said the firm used boiler rooms
in Spain, Germany and Belgium to market the stock.
The story identified the operators of General Commerce as
Sherman Mazur, Possino and Raoul Berthaumieu, who went to prison in the early
1990s for writing $1.6 million in bad checks on a Los Angeles bank account,
depositing them at the old Centerre Bank of St. Louis (later Boatmen's, now
Bank of America) and withdrawing $655,000.
None of the three men has been charged with any wrongdoing
in connection with stock sales.
Saxena is wanted in Thailand in connection with the collapse
of the Bangkok Bank of Commerce in 1996. Saxena, who is accused of defrauding
the bank, was arrested in Canada and has been fighting extradition for nine
years.
Familiar faces
Two AccuPoll executives came from other public companies
that received financing and consulting services from the Mazur children,
Breitman, Possino or some combination of those sources.
Chester L. Noblett Jr., AccuPoll's executive vice president
for sales and marketing, previously was chairman and chief executive of eSat
Inc., a broadband communications company. Two of Mazur's children, Emily and
Trent, were shareholders. They filed to sell $960,000 of eSat shares in the
spring of 2000 - while they were still minors.
Shares of eSat were marketed to foreign investors by
securities boiler rooms operating out of Asia. The company later went out of
business.
Craig A. Hewitt, who until May was AccuPoll's chief
financial officer, previously was chief financial officer of Junum Inc., a
credit repair and monitoring firm.
Junum had a financing agreement with Breitman's Palisades
Holdings and consulting agreements with GCH Capital and Jamie Mazur.
Junum gave up on its credit business in 2002 and merged into
a company that develops lottery games for international markets.
Tough market
AccuPoll is facing long odds for success.
The company reported $1.22 million in revenue for the nine
months that ended March 31, with all of the money coming from a subsidiary that
specializes in installing and servicing computer printers and other hardware.
AccuPoll posted a loss of $7.81 million for the same period.
That figure included nearly $4.6 million in general and administrative spending
and $2.6 million in professional fees.
AccuPoll had a little less than $73,000 in cash on March 31,
the date of its most recent quarterly report. The company warned that it would
require "substantial additional funding for obtaining regulatory approval,
commercialization of its product, and for continued product improvement."
AccuPoll's stock closed at 14.5 cents a share Friday in
trading on the over-the-counter market, down 96 percent from its high of $3.82
in February 2004.
AccuPoll's lack of resources makes it unlikely that the
company will dislodge the industry's leaders, Diebold Corp., Election Systems
& Software Inc. and Sequoia Voting Systems, said Harris, of Black Box
Voting.
"There's a lot of money greasing the skids for these
purchases," she said. "The lobbying dollars are just stunning. That
works against the little guys."
The number of systems the bigger companies have in service
also works against the upstarts when election boards are considering equipment
purchases, Madonna said.
"If you have a base of operations with sales and
satisfied customers, it's a lot easier than taking a flier on someone
new," he said.
The potential market for AccuPoll's products in Missouri is
limited. Most local election boards that are buying electronic voting machines
in the state have been buying optical-scan machines instead of touch-screen
machines, because optical-scan units are less expensive.
But people elsewhere who have used AccuPoll's equipment were
impressed.
"I was amazed at how fast they were and how easy they
were for our people to understand," said Jean Milka, chairwoman of the
Democratic Committee of Allegheny County in Pennsylvania.
The group used the machines this spring at AccuPoll's
invitation to decide on party endorsements for the Democratic primary, she
said.
The machines - which resemble a computer monitor married
with a printer - were easy to move and easy to set up, Milka said. And the
paper receipts inspired confidence, she said.
"I just thought it was a great system," she said.
Reporter Christopher Carey
E-mail: ccarey@post-dispatch.com
Phone: 314-340-8291
Copyright 2005 St. Louis Post-Dispatch
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