-Joe
Gregory Alan Bolcer wrote:
>
> http://www.mercurycenter.com/svtech/columns/gillmor/docs/dg073099.htm
>
> This is a fascinating read that leave more questions than answers.
> Why and how could an information Internet play be sued for
> monopolistic practices? Anyways, the author condemns the
> whole Internet bubble. It turns out that the whole VC company
> that funded the play also disappeared with the Etattler CEO.
>
> The letter to the stockholders is hilarious. I might disagree with
> his premise that bogus business models are easily recognizable.
>
> Greg
>
> p.s. Extra points for who can identify the beach in the picture.
> My guess is it's mainland, MX, about 40 miles sourth of Puerto Vallarta.
>
> CONFIDENTIAL MEMORANDUM
>
> Date: July 29, 1999
> To: eTattler.com employees
> From: Tully M. Winterborne III, Esq.
>
> As some of you already know, my firm has been retained to
> assist in the investigation of eTattler's activities over
> the past few months, and to provide for an orderly
> disposal of the company's assets.
>
> Let me be clear on one matter: You will receive no further
> payments from eTattler. Your stock and options are most
> likely worthless.
>
> As is the case with your senior management, moreover, some
> of you also may face criminal prosecution and/or civil
> litigation. I therefore strongly advise all of you to
> retain personal counsel. My firm cannot, of course,
> provide such counsel but we will be happy to make the
> appropriate referrals.
>
> I also want to stress that if any of you knows the
> whereabouts of Daniel D. Gamble, you should come forward
> immediately.
>
> Most of you have told me or my associates that you were
> taken completely by surprise by the manner in which
> eTattler unraveled so quickly during the past several
> weeks. I frankly find that difficult to believe.
> Nonetheless, as best we can determine, here is what
> occurred.
>
> As you know, Mr. Gamble and many other members of the
> senior management, as well as some of the other early
> investors, used the secondary public stock offering to
> sell large amounts of their own holdings to the public.
> This was disclosed, albeit obliquely, in documents filed
> with the Securities and Exchange Commission and was
> therefore not fraudulent. It was, however, a red flag to
> several companies with whom Mr. Gamble had been
> negotiating for a sale of eTattler.
>
> The potential bidders stepped up their due diligence
> process -- and showed more due diligence, frankly, than
> anyone else associated with this company has shown, at
> least in my firm's opinion. They discovered, for example,
> that Mr. Gamble appeared to have been misrepresenting
> eTattler's information inventory and was certainly
> understating the company's technical difficulties. The
> longer they looked, the lower their offers dropped. At
> least one of those companies is believed to have leaked
> derogatory information about eTattler to the press in the
> process, further driving down the price. Within days of
> the secondary offering, the share price hit an all-time
> low.
>
> This attracted the attention of several law firms that
> specialize in suing companies whose stock prices drop for
> almost any reason. Several lawsuits were filed. It turned
> out, of course, that trial lawyers were the least of
> eTattler's troubles.
>
> Mr. Gamble and his associates did find a willing buyer.
> However, just before the sale -- technically, a merger for
> tax reasons -- was to be announced, the U.S. Department of
> Justice began an investigation of possible monopolistic
> practices by eTattler in the salacious-information
> marketplace. (I can neither confirm nor deny speculation
> that Microsoft Corp. was the source of the complaint to
> the Justice Department, although I can assure you that
> Microsoft did not offer $2.5 billion for eTattler at any
> time.)
>
> While the Justice Department was looking initially at
> competitive practices, it soon turned its attention to
> other issues, and the Criminal Division replaced the
> Antitrust Division as lead in the investigation. Soon, a
> number of federal and state agencies joined the case. They
> include the SEC, California Attorney General's office,
> Santa Clara County prosecutor and others.
>
> Late last week, Mr. Gamble told associates he needed to
> ``get away from all the hoo-rah'' for the weekend. He said
> he would be taking his new sailboat on a shakedown cruise.
> He has not been seen since.
>
> People involved with the various prosecutions are highly
> skeptical that Mr. Gamble fell overboard and drowned, as
> the initial evidence suggested. Yes, the ship was found
> adrift and unoccupied, with various indications of such a
> mishap, about 25 nautical miles offshore from Half Moon
> Bay. But it turns out that Mr. Gamble did not, as he
> indicated to many of you, pay cash for the boat; he put
> only 20 percent down despite having more than enough in
> his various bank accounts to buy it outright.
>
> In addition, I have seen a photograph
> obtained by a local newspaper that has
> been covering the story of Mr. Gamble's
> disappearance and the eTattler
> financial implosion. It is a grainy
> picture, taken from the back and
> apparently at some distance, of a man
> sitting on a deck overlooking a
> deserted beach; Mr. Gamble had told
> friends of his wish to buy an island
> someday. The person in the picture is
> also holding a drink and has a cigar in
> his mouth, two of Mr. Gamble's known
> habits. Finally, the person in the
> picture appears to be wearing an
> eTattler hat. The picture has been
> shown to several of Mr. Gamble's former associates. All
> said it could be him.
>
> That mystery may be explained partly by another open
> question -- the actual identities and motives of the
> venture capitalists who originally funded the company. Our
> accountants tell us that ROFL Technology Investors Ltd.
> recovered only a fraction of its original investment by
> selling shares in public markets. We speculate that ROFL
> was under the impression that the planned sale of eTattler
> would prove immensely profitable, and therefore ROFL held
> its now-worthless shares for that reason.
>
> It also turns out that ROFL no longer occupies its offices
> in Menlo Park, Calif. Investigators have traced ROFL's
> ownership to a holding company based in Bogat, Colombia.
>
> Perhaps Mr. Gamble, who made tens of millions by selling
> much of his eTattler holdings, has more to worry about
> than mere arrest by U.S. authorities. In any event, the
> members of the eTattler senior management who have been
> charged with fraud and other crimes are being held in
> protective custody, in locations known only to their
> attorneys.
>
> The final question remains: How could eTattler have gone
> on so long and fooled so many people? Those of us who have
> come into this situation in the past few days are frankly
> baffled. The company's prospectus was clear enough that
> there never was a plausible business model here, just a
> clever-sounding idea. Anyone who looked closely should
> have realized this company was not playing straight.
>
> I believe the answer may be in the Internet culture
> itself. The financial boom has been exciting, but also
> tempting to those with less-than-stellar ethics who have
> found easy targets among greedy investors.
>
> It makes me wonder, too: How many more eTattlers are out
> there?