The Time of the Cyber Stalker

    In July I joined the elite but not small in any sense group of people on the internet who were subjected to the attentions of a ‘cyber-stalker’.  Mine was named David Phillipson, a hack for a website called that was supposedly a networking group for investors and entrepreneurs.  Funnily enough, about six months before I checked out one of their ‘meet and greet’ events at The Flamingo Hotel in Santa Rosa, and discovered that all the people who were to attend were small businessmen – no investors, no one looking for investment money in the same class we were.  Dave first sent me a blatant promotional letter in what I would learn was his style – intimidation.  He knew next to nothing about what we were trying to do, nothing about Steve Glanz or the programs he represented, but this was his style – after he did this to me, he did it to dozens of other people on Linked In as well.  His job was as a salesman for, and he was hard-sell all the way.
July 15, 2010
    Of the $3 Billion that we generated for projects last year (several million for film & televison) not one dollar went to a solicitation on the internet.
    Do you honestly think that this approach will work for you?
I'd be happy to guide you in a direction that will not only put you in front of hundreds of millions, but also teach you 1) the language of capital so you are attracting money like a magnet  2) educate you on the various securities and compliance laws which will keep you from prison.
    In fact, all of it went to deals which were in compliance, and yours was not.  Are you aware of the infractions that were within your email?  Are you aware of the penalties?
    Feel welcome to contact me if you believe you can benefit from upgrading some core business skills and if you can answer YES to the next two questions.
    Would you invest to shrink time to get your funding met?
    If you could get yourself in front of more qualified investors in a week than you could meet in a year, would you invest to get the short cut?
    Yours was not an unusual proposition.  Just an illegal one.
David Phillipson
    I'm not certain why you think my proposal was illegal.  I am not a broker -- I am a published author looking for a seed investor or joint venture partner.  Our financial adviser is not soliciting investors for any of the programs; we are under contract to him.  In what way is it illegal for us to look for investors?  No one should have to pay upfront fees, some of them considerable, to get access to investors.  It is not illegal to offer a partnership, or look for a loan.
Debora Hill
    Those two letters started off a firestorm of controversy that eventually got Dave Phillipson banned from the Venture Capital group on Linked In.  Some pointed out the many inconsistencies and glaring errors at the website...some were simply humorous.
    Well, Dave seems to be a great orator and he is trying to lead the sheep down a path we have seen in 1933 in Germany.
But most of us can see through him and that will not happen.
Big words, big ego and in the end we see him as he is ............................. just a little dick.
Posted by Gernot Trolf 
    Apart from his attack on me, what also got people started vilifying Dave Phillipson was his claim that had “Hundreds of Millions in Funding Available” when it was in fact a for-pay networking site.  It continued for was even entertaining for awhile.  Not so much for another woman on Linked In who became an internet friend of mine, Anne Michaels.  She chose to leave the group after a couple of weeks of The Dave Show.
Dear VC Group:
    I am sad to say and not that I will be missed by any means, but I must take my exodus from this group. I was here to network and find, leads and share funding war stories and not this crap over the last 7-10 days of bloody Dave Phillipson and the CEO Space B.S.
    Seems that no one wants to drop this subject matter and get on to bigger and brighter things. I guess I could leave for several months and tune in like a soap opera. I will not miss much as the "he said, she said" will still be going on and on... it will never end. I have bigger fish to fry than to waste my reading time on trivial and insignificant matters.
    Adios amigos...I'm outa here! Anne L. Michaels
    In July a traditional funding company entered our lives for awhile, a long while actually considering the business.  We had trouble determining whether they were actually called Master Capital Solutions or Universal Capital Solutions – they seemed to go by both names.  I saw their posting on Linked In and wrote to a woman named Felicia Lyda about our project.  She asked me to fill out a short online form, which I did, and she sent me a number of attachments with a bewildering array of possibilities.  I told her, as I tell everyone up front in my first proposal, that we cannot pay any upfront fees – all fees must come out of the investment amount or later out of the program profits.  When I read their brochure I realized there were actually FIVE fees to be paid before financing was received – and so a veritable chaos of information and negotiation ensued while we attempted to figure out their dog and pony show.  We had a telephone conference with the CEO of the company, Fernali Ferrice, and told him we wouldn’t be able to pay any upfront fees.  He offered an equity partner in the Joint Venture who would pay the fees and in return take a percentage of the company for a period of three to five years.  It was a pretty heavy payment for what wouldn’t amount to more than a few million to start the investment program, but at the time it was the only offer we had left – everyone else had dematerialized.  
    But when Steve and Frank started to investigate the company (some called Due Diligence in the financial industry, for some reason...what does due have to do with it?) They found out that the CEO’S real name was Fernando Rios, and he was the former owner of a company that supposedly did mortgage bailouts and was then fined by the government for fraudulent practices.  We submitted an application anyway, but I didn’t have a good feel about these people, particularly since they seemed very vague about the procedure.  The third week in July they completely changed their story and said we would have to pay the application fee which would then be reimbursed by the company that decided to become our JV partner.
July 26, 2010
Dear Felicia,
    Thanks for your email and phone call.  In speaking to you and Mr. Ferrice, it was explained that upon filling out the application, a third-party would contact Debora Hill and offer to pay all fees in exchange for equity.  Now you are reversing your position and stating that Debora must pay the fee first, and then she will be contacted by the third-party for fee reimbursement in exchange for equity.  This makes no logical sense.  Please double-check with Mr. Ferrice.   
    Clearly, if Debora was able/willing to pay the fee in advance, she would not need the third-party, and would also not need to give up equity.  Lost Myths Ink has received dozens of funding offers with upfront fees in the past couple of months alone, but all advice on the internet and in Linked-In advises not to pay these -- Debora came across one posting on Linked-In, in which a company paid $25,000 in upfront fees and six months later still has no financing. 
    When any company asks for advance fees, I advise an abundance of caution.  It is too easy to lose that money, and it seems to be more the rule than the exception.  Mr. Ferrice explained the process, with a logical scenario in which the fee money could not be lost.  However, we have no solid documentation to prove this claim. 
    Engaging with any firm that asks for advance fees requires a modicum of due diligence.  We have discovered the following: 
1.  Your website page  states that your company has been in business from 7-10 years.  Although UCS has a B+ rating, BBB records indicate that UCS was incorporated in April, 2009.  Clearly, the company has not been in business 7-10 years.  How do you explain the discrepancy?…
2.  Mr. Ferrice's previous company, Presidential Cash VIP, went out of business in March, 2009 after numerous complaints about advance fees with no services being performed.… and this court case:  It is curious that just after this, he started a new company.  How do you explain these complaints, and what reassurance do we have that UCS will not replicate the same problems? 
3.  Mr. Ferrice has been sued for advance fee fraud and breach of contract.…
4.  Mr. Ferrice's real name is Fernando Rios.  He has several more aliases which are variations on his two names.  Was the name changed after he opened UCS -- because the fallout from the previous company was so severe he didn't want it to cloud his new business venture?  Or is there a better explanation for the name change? 
5.  Mr. Ferrice filed bankruptcy in 2007.  Has he learned from this experience? 

6.  I checked a few of the names given in the UCS testimonials and funding list.  They cannot be located.  Perhaps you could assist us in this, and put us in touch with satisfied customers?  For starters, you mentioned that UCS had recently funded a movie with Antonio Banderas.  Would any of these contacts be your UCS client in this case?  Bill McKay, Filmcrest, J. David Williams, Green Moon Productions, Melanie Griffith, Antonio Perez, Maestranza Films?  If so, can you provide evidence of the funding through one of these sources, possibly even a direct referral from this client?  In addition, can you provide evidence of funding for any client in the $1.5M range, and possibly the one at the $40M level? 
7.  In the funding list, there is no record of any loan over $40M.  We are requesting $100M+.   Can UCS do that? 
8.  The existence of "proprietary" elements to the structured financing scenario makes it difficult to judge credibility.  Can you at least explain the elements in a way that makes sense?  For example, you indicated that someone is paying the coupon on the CD.  That person would be taking a risk, as would the depositor who is guaranteeing the loan with the CD.   Is their risk minimized by good underwriting, or is their risk entirely eliminated?  How?
    We are more than happy to hear the UCS side of the story.  If we are satisfied, the next step in our due diligence may be to have our Chicago partner pay a visit to UCS.  Although he will be evaluating your office and staff, his main task will be to see and verify documentation of performance that can only be provided in person.  It will take us a few days to set this up.   
    On the positive side, both you and Mr. Ferrice have been accessible and answered our questions so far.  Although the financing structure is still somewhat mysterious because of "proprietary" elements, we were impressed.   
    Deborah has indicated a willingness to have her partner pay the fee for the smaller loan of $1.5M.  However, at this point in time, that partner does not have the required $1,000 capital, and we cannot accurately predict when he will have that money, nor his willingness to take that risk without some reassurances.  
    Given the history of advance fee fraud and breach of contract, I am not advising the payment of advance fees until we have a better comfort level with UCS.   
    If Debora dips her toes into the water with the $1.5M loan, I would request one of the following on her behalf. 
1.  The third-party fee provider pays the advance fee, not just reimburses the fee.  For such a low level loan, and only $1,000 given by the fee provider, an equity share of 2% would be appropriate.  Please recall that we intend to quickly leverage that loan to create an investment level of  $100M+ , then quickly double that amount and accelerate the investment profits – and with movies that will earn significant profits.  Therefore, 2% equity is still a huge ROI, not to mention that the fee would be paid back very quickly. 
2.  Forget the third-party fee provider.  UCS pays the advance fee.  This will demonstrate UCS’s confidence in its programs – that it is not merely earning its profits on fee money, but on commissions, JV agreements, etc.   
3.  Our Chicago partner pays the advance fee, but only after he has visited your company, and only if he is 100% satisfied that UCS is reliable.  The fee should not be merely an expense, but must be totally refundable upon non-performance by UCS.  This visit would take a few days to set up.   
    If Debora decides to ask for a $120M loan, we request the following:
1.  The third-party fee provider pays the advance fee, not just reimburses the fee.  If the fees are under $10K, the equity share would be 20%.  If $10K-$15K, the share would be 25%.  If $15K- $20K, equity share would be 30% .  Please recall that we intend to quickly double the loan, pay back the loan almost immediately, and accelerate our investment profits dramatically, along with movies that will earn significant profits.   
2.  Forget the third-party fee provider.  UCS pays the advance fee. 
3.  Our Chicago partner pays the advance fee if he has the money, but only after he has visited your company, and only if he is 100% satisfied that UCS is reliable.  The fee should not be merely an expense, but must be totally refundable upon non-performance by UCS.  This visit will take a few days to set up.   
    As a show of good faith, Debora could send you a completed application.   However, the following condition should apply:
She must not be pressured into paying any advance fees, nor into agreeing to anything.  She needs ample time to have all of these questions, and other questions answered.   An unsigned contract should not be interpreted as a signed contract, as many agencies do.  Therefore, if she does not sign immediately, UCS must keep all her options open until she is satisfied, and UCS must give her ample time to negotiate terms.  
    Finally, as an alternative, we reiterate our original offer to make this an investment, not a loan, with the terms that Debora originally stated, filling out our application first.  We charge no advance fees.     
Sincerely, Steve Glanz
    After Steve sent that letter we had a second telephone conference with Fernando Ferrice (or whatever he was calling himself that week; he had used five different variations on his name at one point or another) and Felicia Lyda.  But he was slippery and managed to evade answering most of Steve’s concerns.  We did agree to submit an application and have another conference call the following week.
July 28, 2010
    Thank you for sending these wiring instructions.  I have some comments and questions.  Sorry to be so wordy.  I like to be thorough. 
    We talked to Mr. Ferrice a couple days ago.  We appreciated him following up with our due diligence questions.  Many of our concerns were addressed.  Some were not, but we feel good enough to proceed cautiously.  We agreed that the first step would be to have Debora fill out your application.  She has now done so and has mailed those files to you. 
    Our next step is to conference with our Chicago partner.  (Actually, he lives in Highland Park, about 30-60 minutes drive from Oak Brook Terrace).  The goal will be to have him meet with you and Mr. Ferrice at your office.  Hopefully, at that time, you can show him some documentation of past performance that is not available by phone or email.  He may also discuss with you the pros and cons of the "use of funds" part of you application, as he is my direct agent to the Private Platform Programs. 
    In that regard, I have a question.  Debora has put in two applications, one for $1.5M, and one for $125M.  The smaller loan would be used in a program that can leverages small investments into a large profits, which will then be used to fund the project and pay back the loan.  The larger loan would be used to invest in a more direct Private Placement Program, with the same result.  There are some benefits to the larger program, as large-sum programs are more consistently available, prevalent, and somewhat less complex than the smaller deals.  However, one advantage of doing the small loan is that it could be seen as a "trial" loan.  If the loan comes through, could Debora then request the larger loan, or would she have to pay off the smaller loan first? 
    My question is this.  If Debora discloses in her application that she intends to invest the funds for these purposes, will the lender ask for details of these investment programs?  If, so we may run into a problem, as the lender is not the "investor."  Only Debora will have access to program details, and then only after she has filled out the program application.  She is well aware of the program outlines, however, and we have a high level of confidence in them. 
    Our Chicago partner can meet with Mr. Ferrice, the Lender, CD depositor, and coupon payment provider if necessary, to give them the some confidence as to these programs, and thereby Debora's ability to repay the loan. 
    Will the lender restrict Debora from using the loaned funds in this way?  Must she only use them for the project itself?  And if so, will the lender be monitoring this usage?
    Mr. Ferrice said that after receiving LMI's application, he would be happy to introduce us to one of his satisfied clients.  If you are he could set up a conference call in that regard, we would be most appreciative.  If you happen to know one whose project size and viability is similar to LMI's, that would be great.  This could be an anonymous conference call, as we don't wish to intrude on any confidential arrangements you have with your clients. 
    We asked Mr. Ferrice if he could evaluate both applications for viability.  Ultimately, it will be up to the lender and other principals.  However, as your company has been doing this for a while, we assume that you have a good estimate of which projects are a good fit.  Debora's personal financials are weak, but in my opinion, her project is strong, even though the company lacks pre-existing assets. 
    The reason we would like your pre-approval opinion is because we don't want the fee money wasted.  It is very, very common for project owners to spend thousands of dollars on multiple financing companies for preparation and submission to lenders, only to be rejected.  This is one reason we are so cautious about advance fees.  If UCS does not think this project is a good fit, please let us know rather than wasting our money, your time and ours. 
    With regard to the advance fees, our first choice would be to have our Chicago partner pay them.  It is way too early to tell if he will, and if so, whether it would be for the small loan or the big one.  As he makes his money on the PPP's, he would be unlikely to ask for an equity position.  Our second choice would be Debora's business partner, but he may not have any funds until mid-August.  Our third choice would be UCS's client who likes to JV on film projects, and would pay the advance fee on behalf of LMI in exchange for equity.  Mr. Ferrice indicated his willingness to introduce Debora to this client after receiving her application, and verified that it would be a pre-payment, not a reimbursement.  If options 1 and 2 don't work, a introduction to the JV partner (option 3) would be useful. 
    We appreciate UCS's patience with our due diligence efforts.  We will do the same on lenders and other principals you may introduce us to, as necessary.  I agree with Mr. Ferrice that UCS has a reciprocal responsibility to do background checks on his prospective clients, and Debora will be most cooperative in this regard. 
    My fiancee, with whom I live, is a first generation Latino.  She has been very active in providing services for the under-served Latino community.  I have come to appreciate what she does.  That Mr. Ferrice has done the same is a positive incentive for us to work with him. 
    I will most likely be unavailable for discussion on Wednesday.  Thursday is a better day. 
Sincerely, Steve Glanz
August 2, 2010
Dear Team,

    Steve and I talked to Felicia Lyda this morning.  It was a difficult conversation, as she brought a high-pressure 'closer' into the conversation and he pretty much dominated it.  Bottom line, we would be going for the smaller loan amount if we go with them at all, as there are closing costs involved -- with the larger loan amount they would come to almost half a million, which could be why they don't have any closed deals in that amount listed on their website.  Even with the 1.5 million it would amount to around $14,000 when all is said and done, but all of that except the application fee of $995. would be after the loan is approved.  Steve hasn't made a commitment, and it looks like we will have to submit another application for the smaller amount, as the first one mentions both amounts.  But that is on hold at the moment until we talk to Steve's guy in Chicago and see if he would like to go out and meet with them.
Later, Debora
Dear Mr. Ferrice,
    We had another telephone conference with Ms. Lyda this morning.  Unfortunately she brought a 'closer' into the conversation, a man named James (sorry, I didn't get his last time) who was extremely impatient and really didn't want to answer any questions.  Also, I am attempting to get the facts straight, as I cannot ask our associates (either our man in Australia or Steve's colleague in Chicago) to pay any fees without a strict accounting of just how much will be involved.

    After our discussion this morning we have decided, upon the disclosing of 'closing' fees to apply for the smaller loan amount.  The closing fees for the larger amount you suggested would be close to half a million dollars u.s. and we don't have anyone who could contemplate paying that kind of money before the release of the funding.  To my understanding the closing fee for the 1.5 million u.s. would be around $15,000.  It is very important that we know the exact amount of money that we would need to expended before funding is received.
    I understand that ours is a very unusual funding scenario, and it has been borne in upon me that it is not to the taste of most traditional funding sources.  Since Felicia posted your offering at Linked In, you probably know that there have been several ferocious discussions going about 'upfront fees' and whether or not they should be paid...ever.  I don't really weigh in on either side of the argument, but I do tend towards not paying them, since it is so easy to lose money again and again by this method.  There have been some horrific examples posted about spending $25,000 or so and never seeing a penny in financing.
    I have posted that we may be working with you, and that we and you are in the evaluation process.  I have several groups waiting for word on whether we do decide to work with you, and not, then why not.  So it isn't just for our purposes that I must know your entire process and how much money is involved before funding is received.

    I will be speaking to Steve's associate today or tomorrow, and I will then know if he is interested in coming to your offices to meet with you.  I think the first logical step would be for you and Ms. Lyda to speak to him by telephone.  If Steve believes it would still be possible for us to work together, I told Felicia we will submit another application for the lower amount of $1.5 million.
    So, I will contact you again once I have spoken to Steve's associate.  Thank you to Felicia for her time this morning.
Sincerely, Debora Hill
August 3, 2010
    Thanks for speaking with Debora Hill and myself yesterday, along with Mr. Jackson.  I agree with Debora that Mr. Jackson was impatient in some ways, but in other ways I like the fact that he is a straight talker - and we did learn a few things.
    As we have been talking to you, Mr. Ferrice, and now Mr. Jackson, some of the facts have been inconsistent.  We conferenced with Mr. Ferrice again this morning to get them straight. 
    According to Mr. Ferrice, the potential JV partner will pay the application fee, and the collateral commitment fee in exchange for equity.  It is not a reimbursement of fees, and the JV partner will not be the lender. 
     The commitment fee for $1.5M is approximately $4K-$5K, not $15K as
Mr. Jackson indicated.  $15K would apply to collateral in the $10M+ range.  For collateral in the $100M+ range, the commitment fee is around $20K - $40K approximately, according to Mr. Ferrice.  It may be that for precise numbers, we would have to apply, and only then would we have direct access to the banker or lender's exact fee structure.  It may also depend on the particular deal, according to Mr. Ferrice. 
    We also learned that after applying for one loan, and have gained access to principals for more precise information, that if we then decided to apply for a different size loan based - that could be arranged. 
    Mr. Ferrice could not put any of this in writing as we requested, as he felt we had not yet made the commitment to engage your company.  We understand. 
    So we can now move forward with our plan to see if we can come up with a fee-provider on our own.  If not, we may opt for the JV partner option.  We may also have our partner visit your offices. 
    Our sense of your company is that Mr. Ferrice is a busy fellow, and that he may not always communicate facts accurately to yourself or other sales staff.  We understand, especially since he told us that he is the one who handles loans of $1M and above.  As Mr. Ferrice does not give out his email address to clients unless they have made the commitment (ie. paid the application fee), we will continue to correspond through channels - that is you. 
    We appreciate your patience.  Please also extend our thanks to Mr. Jackson for assisting you yesterday.  If we do business together, we will want to know that you have been fairly compensated for your efforts. 
Steve Glanz
    We found it amazing that a company which supposedly funded multi-million dollar corporate deals could be so vague as to details and requirements that would fundamentally put a burden on anyone applying for a loan.  They were as slippery as an eel and twisted every which way and back again in avoidance of details.  We decided to go ahead and apply for the smaller loan amount suggested; the larger, which they kept trying to push on us because the fees would be enormous, was ridiculous.  Also, Steve was trying to set up an appointment for his programs manager, Steve Schwartz, who happened to live in Chicago, to go out to the UCS offices and meet with Fernali Ferrice (or whatever his name was that week) and Felicia Lyda.
    On August 6th I had a telephone conference with Steve Glanz and Steve Schwartz, our first meeting.  In a year we had finally progressed far enough for me to meet the programs manager, which was both encouraging and somehow pathetic.  He went out to the UCS offices and met the people there, but after investigating the company and the owner he suggested we have nothing to do with them.  Since we had pretty much come to the conclusion, it wasn’t a surprise.
August 19, 2010: to Richard J. Dubin and Tomas Krejci
    Clearly the economy has been kicking my ass or I would have been in contact with you before.  Yes, still looking for a seed investor.  Yes, we've come close more times than I care to remember.  Yes, we have people considering coming in at this very we have before.  I'm sure you understand, having to live in this economy just like the rest of us.
    Several weeks ago an East Indian contact of mine provided a personal reference to Robert Rodriguez.  Our agent Scott Ferguson wrote to him and sent him our funding proposal, and after they exchanged emails for about a week our financial consultant Steve Glanz spoke to him on the telephone.  Their approaches were somewhat at odds, as Rodriguez is all Hollywood and pretty much into the one-minute pitch and Steve is involved in financial programs that take time to prepare and explain.  The end result was that Rodriguez asked him for a written proposal.  Being Steve (and not being all that happy with Rodriguez) it took him over a week to get that material to Rodriguez.  Today he mentioned that he hadn't heard back from him, and my thought was that he won't hear from him for at least another week...
    If we do a Joint Venture with Rodriguez he already knows the two of you will be in charge of the first two productions.  We do have scripts that would suit his style, but there hasn't been any discussion about him producing/directing any of our productions, and there may never be.  We may simply become financial partners in the program; he is interested in new ways of financing film, particularly a method that doesn't involve a heavy debt.
    Do either of you know him?  I know he's 42 and I know most of the films his company has produced; apart from some of the slightly off-track (for him stuff) like Spy Kids, the only film I've seen of his is Once Upon a Time in Mexico, which I walked out of halfway through the movie.  I just wanted to get a little more perspective on him.
    Hope things are going well on your end of the universe...I'm still in there pitching but feel as if I'm running out of balls!
Blessed Be, Debora Hill
    In August we reconnected with Stephen Edwards, a businessman in the UK.  I first spoke to him in May and he somehow became lost to us only to resurface in August, ready to invest.  We agreed on a 65-40 split since he would be taking out a large credit line with a bank in Dubai to make the investment.  The extra 15% was for the repayment of the credit line.  Our first contact was during the last week of the month, and for the next two weeks our partnership appeared to be on the speed track.  Could this finally be the breakthrough we’d been searching for?  He owned a company in Europe called ProLand, and he was in the process of building 1,000 luxury green condos in a city that was being built on the coast of Africa, and would be called Eko Atlantic.  While we might question the wisdom of building an entire resort city on the coast of a country like Nigeria that had so many political and cultural issues, we admired Stephen’s goals – he was one of the few people we’d met with a vision as insane as ours.
    Originally he planned to invest 1.5 million; after Steve Glanz sent him information on a remarkable CMBS program that ran only 7 days and had a very high ROI, he decided he would try to get a larger line of credit.  He had been approved for 3 million; now he asked for 6.  This would be the beginning of the delays in our collaboration.  On the 31st we opened a new corporate account at The Bank of the West, my old bank.  Our experiences with the largest local bank, The Exchange Bank, had been so abysmal I vowed I would never bank with them again, so we went back to the BOW and my old friend Charmaine Boyd, who had also been my mother’s banker.  
    The good news was that Stephen knew a lot about private placement programs and high-yield investing.  This in itself was almost a miracle; one of our major problems had been the lack of knowledge and/or willingness to listen and learn about these remarkable programs.  By the end of August we had drafted a joint venture agreement for him and gotten the details of his bank account in London.
August 24, 2010
Dear Stephen Edwards:
It was a pleasure talking with you.  As you requested, here is our initial proposal, subject to change as market conditions or terms change, and as terms among the parties are negotiated, if necessary. 
    Debora Hill and partners in LMI, Ink will earn 35% and you will earn 65% of program profits. 
    My  intermediary fee is 5%, and there is another 20% of fees in the mix, as you will see in the attached program description and table.  I gave a few sample investment levels.  Note that at $5.5M, the percentage ROI increases dramatically. 
    Either Debora or myself will be the principal.  In either case, there will be Paymaster agreements in place to protect all parties. 
    Based on the attached overview, sample ROIs are as follows (these are all NET after all fees and commissions are taken out):
Invest $1.1M, LMI gets $5.25M and Proland $9.75M
Invest $3.3M, LMI gets $15.75M and Proland $29.25M
Invest $5.5M, LMI gets $65.624M and Prloand $121.875M
    Re-entries are possible, so this can be done in two stages if desired.  At any point, profits may also be used to invest in other programs. 
    Let me know if this makes sense, and if you have any questions.  The attached overview is for courtesy purposes only.  It is not for further distribution.  Please read the disclaimers. 
    My partner has been doing this program successfully.  His clients have been paid and he has been paid his commissions. 
Sincerely, Steve Glanz
August 25, 2010
Dear Deb,
    Good news!  He is giving you the money.  Then you are the principal.  He is not.   Edwards doesn't need to speak with the program manager.
    He could send the money to your bank, and then you just wire it to the transaction bank.  Two steps, won't take that long.  But if you prefer to save a step, I'll find out. 
    Timing depends on a few factors.  First, Edwards needs time to get his credit line.  The CMBS program has been running a bit slower because of delays at UBS, which they are now using.  It will probably speed up by Sept. 1.
    Steve S. suggests to keep it simple, let you be the signatory.  My main concern is making sure you understand everything, so he says I could listen in on your call to the compliance officer as a "silent" listener.  When you talk to the platform manager (and you may not need to), they prefer to only talk to the principal, so I probably should not even be a "silent" on that one.  You can just report to me what he said, and show me the contract.  It's really all very simple. 
    We'll set up all the Paymaster arrangements in advance.  As for my vacation, I can still work.  I'll do only the necessary things, will have access to hotel computer, can make some phone calls, etc. 
August 27, 2010
    I just talked to Steve S.  He said not to worry.  Compliance officer will not ask about your JV with Edwards.  You should not say anything about it either.  Do NOT mention my side-agreement of 5%.  Don't ask, don't tell.  Compliance officer is a female, not the sharpest kid on the block, but she does her job.  Steve will coach you.  Just say yes to a few simple questions she asks, don't volunteer anything else. 
    When the time comes, I'll send you the package, and Steve S. will tell you what to say and do. You will submit CIS, Passport, POF, and FPA for Steve S.   My FPA will be lodged separately with the Paymaster, not part of the paperwork that goes to the platform. 
    After you sign platform contract, you will be contacted by platform.  You then send funds to the Platform/Trust in an account in your name.  They buy the bond and it settles in your account.  This takes a few days.  After it settles, you get your money in 7-14 days thereafter, or by mutual agreement to extend if there are any delays.  This is all in my overview. 
    You get 90%, platform takes 10% off the top.  You will designate as follows:  Steve S.'s 10% goes to a Paymaster in Chicago.  By separate agreement, my 5% goes to the same Paymaster in Chicago.  Your 75% ($15M per $1M invested) goes to the same Paymaster in Chicago.  We will have all registered wit this Paymaster.  Paymaster pays all three of us.  You can tell Paymaster to send funds to one account, or multiple accounts/sub-accounts.  He just follows your instructions.  
    We should not engage in the CMBS program until we get the green light from Steve S.  He's been paid in the past when the group was using Merrill Lynch.  They had to change to UBS.  UBS has been slow.  So once he is paid on he UBS client, he will give the green light.  It should be shortly after Sept.1st.
    After all is said and done, you can request to re-enter the program with $5.5M or whatever.  There is not an automatic rollover, you have to re-enter.  However, second round, you won't need to submit all that paperwork, as you will then be an established client. 
p.s. I forgot to mention.  You will also instruct the Chicago Paymaster to send 65% of your profit to Edwards.  Edwards will have also registered with the Chicago Paymaster.  So really, only 35% of the 75% ROI goes to you.  In an earlier email, I spelled out the numbers.  If Edwards invests $1.4M, then it would be  35% x $15M = $5.25M for you.  You will have to decide whether to immediately reinvest the $5.25M (really $5.5M is neede) or agree to have Edwards reinvest out of his share.  
    If Edwards invests more than $1.1M, then just do the multiplication.  In any case, you and Edwards should come up with a plan as to where the re-entry money will come from.  Will it come out of your share, his share, or a combination?
August 30, 2010
Hello, Stephen, 
    I got figures from Steve Glanz on the possible reinvestment of the seed money through the first few weeks, if you agree.  Here it is, below.  Sandra and I will be opening the holding account at The Bank of the West -- our banker is named Charmaine Boyd.  Her telephone number is: 707-778-3300.
    Have a great day; talk to you soon!
Sincerely, Debora Hill
I will contact Steve Schwartz and set up my phone conference with the compliance officer. 
I will talk to the compliance officer and submit the forms required to start the program.
The Platform manager will contact me; I will transfer the funds to the program account which will be in the name of LMI.
The Platform manager buys the bond and it is placed in my account; the above requires a few days, possibly a week to complete.
The first payout comes after 7-14 days, unless there are mutually agreed-upon delays (this hasn’t happened in the past). Our first payout amount will be 15 million, 9.75 million to you and 5.25 to us.  If we roll over 5.5 out of that first week’s payout we will be left with 6.175 for you and 3.4 million for us.
If we do put 5.5 in the second week, the payout would be $187.50.   LMI gets $65.624M and you get $121.875M.  After the second week payout we should then roll over 20 million off the top, which will put us in the highest investment category direct to the program, no intermediary.
Hello Debs:
    Sorry about the late response. I have formally requested for the funds from my bankers and the initial response was ok but I was further told that since the global melt down, all funding based on credit lines would now go via the legal & credit dept and this would take more than the normal 5 days maximum.
    I have been given tentatively 10 working days effective from tomorrow and I will let you know how much would be approved.  In the meantime, I have reviewed all docs and info and I think it’s ok with me.
    However I would not sign the JV until I receive the green light from my bankers.
    Please bear with me on this.
Rgds, Steve...
September 1, 2010
Dear Team,
    Despite the slight delay in Stephen Edward's credit line, he assured me yesterday we are still a go and in progress.  He asked if he could open an account at our bank, the Bank of the West, and have some of his share of the profit placed there for other u.s. investments.  Our banker, Charmaine Boyd, approved this and now they will be communicating regarding the papers he will need to submit for this. 
    Steve G is leaving on Friday and will be back on the 16th -- but Steve S is ready, so hopefully when the line of credit is activated and transferred we will be ready to go.  I have a list of the steps that will need to be accomplished to enter the program, hopefully with no snafus!
    Stay tuned...
    OK, maybe you've missed a few steps in this process, which isn't surprising because it happened in such a short time.  Stephen has a standing line of credit for between 3 and 4 million lbs in the UK.  He did apply for the line to be activated immediately, but then at the beginning of this week was told that due to the state of the global economy it could take up to 10 business days for it to be activated rather than the 5 it has taken in the past.  That was two days ago, but then today he was told it would be one day next week, probably not for the entire amount he's been approved for in the past, but he doesn't need that much anyway.  So I guess he already had the collateral covered previously.
    No, I don't know what his business does, but I know there is a website -- you did send me information about the company registration at one point.  He obviously isn't in dramatic need of his share of the program profits, since he is arranging for an account at The Bank of the West, with our banker Charmaine Boyd, to transfer them to the account here so he can use them for other U.S. investments.  So things look good here...better than they did two days ago.
    How are you doing on your end?  Steve said he's trying to assist you in getting the money for your fish are things going?
    Steve Edwards sent us his bank details in London, we sent him ours for the Bank of the West.  That was on September 3rd.  By the middle of the month, we were still waiting for Steve’s approval on his line of credit, and I was talking to two other possible investors.  We received the signed Joint Venture agreement from Steve E. On the 16th.
September 17, 2010
    I am still working on one or two things to put my credit line facility in order and we will have to wait till next week to get the green light. There are some issues with my company’s tax that has to be paid which came up during the credit check, and this I will do by Monday/Tuesday.  The bank wanted to be sure everything is ok as it should be, and I can’t blame them.  Let’s see how it goes.
Rgds, Steve
    Frank’s deal in Europe fell through; we never really got an explanation anymore than we ever did with him, but it turned out to be some kind of a scam.
September 18, 2010
Hello Team,
    I spoke to Stephen Edwards by Skype this morning.  I had noticed his little 'contact online' was on all night his time, and he told me he was up most of the night getting stuff in order for his construction project in Africa.  Anyway, the bank has approved the credit line and told him it will be activated one day this week -- they wanted the past two years tax returns from the company but said it was a formality, and they will be registered with the bank by this evening our time.  He said not a lot of taxes had to be paid to get the line activated -- 210,000 lbs sterling.  Oh, ok...if that's ALL.  Geeze...but he has arranged for that as well, and now we are waiting for the activation of the line of credit and of the wire transfer.
    Just hang in a little longer without spontaneous combustion, please...Debora
September 28, 2010
    My impression from Edwards is that he thinks big.  He sees in that CMBS program an option to make a lot of money very quickly, even though it may not seem to offer the best security.  In my view, if funds cannot move from the account, and if the program has a history of success, I have no problem with the fact that the platform must have access to the account to monetize it, whether it takes 1 week, 3 weeks or 6 weeks - as long as the funds cannot move.  If you, me, Edwards, Frank or whoever doesn't like the terms of the deal, don't sign the contract.  We won't see the contract until we apply, and we are waiting for the money before we can do that.  Steve S. will support us as best he can and so will I. 
    On the other hand, we could offer other options to Edwards if you and/or Frank think that's the way to go.  Could start with a "safer" investment and then go to the other in the second round.  Or maybe he likes the other, non-CMO, leveraged program I mentioned, which has a large ROI potential as well.  I basically don't want to fret too much about this until there is real money in the bank.  We can spend a lot of time spinning our wheels needlessly.  "Show me the money" and then we'll worry about it.  But regarding Frank's due diligence suggestions, yes I have done it on the programs mentioned and will do more if and when we cross that bridge.
September 29, 2010
    my bankers want me to tidy my taxes, and I am asking some partners to help me out...they refused my suggestion of making direct debit saying they can’t use depositors funds to settle tax payer’s requirement.
    I am on the verge of getting assistance and until my friend comes forward with the funds, there’s nothing I can do. I am hoping for the best.
    If nothing happens b/w now and Friday this week, then let’s be hopeful for next. I am not concerned with the first payout date for now until I take care of what will allow us now discuss that.
    I hope you would be appreciative and cooperative.
Rgds, Steve....
    Once again we were plunged into the uncertainty of knowing whether or not this investor was going to come through, bail on us or just fizzle out as so many others have.
Dear Team,
    OK, Sandra and I agreed on the following if Scott and Frank agree.  We can take on another seed investment on the same terms; the only way I can post on Linked In is if I'm not a broker -- a few people on there tried to make me admit I was one so they could report me to the SEC.  There are nasty people everywhere.  The first investor in will definitely fund DC, Go West and Don't Breathe.  Sandra and I have already begun discussing further films with a couple of other investors.  We are nearing 30 scripts, so won't want any outside projects for at least five years...maybe never.  We have to make this very clear to people, because once we have the film fund going we're going to have a lot of people asking us to fund their films.  Not for five years; we need to become established in that industry.
    The downside of having two investors is that the four partners may have to reduce their back end percentage to 5% each.  Steve will receive his extra 5% commission on whichever investor comes in first.  And if the second investor comes in first with only the minimum investment, it will mean waiting once again to start production on the first two features.
    Everyone has to agree to this please let me know.
September 29, 2010
    I've discussed this with the partners and our financial adviser.  We're not ending our contract with you, and we certainly understand your problems regarding the tax situation.  However, there is a level of anxiety due to the continued delay of the release of your line of credit, so I will be going back to Linked In to look for another investor.  We are still hoping you can accomplish the line of credit, we would certainly still like to work with you on an extended basis, and we are pulling for you. 
Sincerely, Debora Hill
October 6, 2010: to Richard J. Dubin and Tomas Krejci.
    We have a second investor who will has been discussing entering a program for our film fund; he and Steve Glanz are going to start working on that next week.  It looks, however, as if we will have to postpone the start of pre-production and the signing of our contracts until after the 1st of January.  If this is not the case, and we can at least sign the contracts and get you your signing fees in November or December, I will alert you immediately.
    I know this has been a difficult year -- our first investor's tax problems in the UK turned out to be a lot more complicated than he imagined, and we will have to enter the program at the lowest level rather than the 5.5 million he had planned, so it will take until the end of November at least (possibly into December) before we can get the first payout for the film fund.  If our #2 investor comes in next week as planned that could change, but let's plan on beginning work the first week in January.
    Don't despair...although it's so easy to do.
Sincerely, Debora Hill
    That second investor was David King, Scott’s connection who returned at the beginning of October.  Rather than writing to me, he contacted Steve directly, which turned out to be the first sign of trouble.  That escalated quickly when I wrote to him about the Joint Venture agreement, and he refused to do one with us – in fact, his opinion was that we shouldn’t benefit at all from him being introduced into Steve’s programs.  He said he only way he would do it would be to pay a small referral fee to Scott Ferguson – one million or 5%, whichever happened to be less.
    We wanted to jettison him at that point, but Scott and Steve convinced us to go ahead and let him in.  Steve Glanz lost us the opportunity to work with the film director Robert Rodriguez because he felt Rodriguez didn’t show him the proper respect.  Apparently that didn’t apply to us, we weren’t supposed to expect anyone to show us even a modicum of acknowledgment, much less respect.  
    We learned more about Stephen Edward’s goals and needs.  He had won the bid to build his condos at Eko Atlantic, and in order to build them he had obtained a 1 billion u.s. loan from a bank in Dubai.  In order to activate the loan he had to pay a 10 million u.s. insurance bond, and this was why he needed our program.  Once he was turned down for the line of credit due to his back corporate taxes, he tried to raise enough among his colleagues to at least enter the minimum of Steve’s programs, which started at $600,000.
October 20, 2010
Hey, guys -- 
    Stephen Edwards expect to have our funds to our bank by sometime early next week, at least that's the news this morning.  Depending on how much it is will depend on when we can get started, but he is pulling in funds from three colleagues at this point.
    His cousin OJ, who now lives in Texas, is going to be coming to California -- he is an aspiring musician/rapper and we are going to be giving him some of Stephen's funds to start something out here -- not clear on that yet.  Anyway, he's going to be staying at Extended Stay America, I think -- have to check on that.  I will probably refer him to Chip Miller at Red Hot Productions down in Hollywood; he's a music producer and director.
    Now, Steve is going to be buying up to 200 VW cars and 200 vans to ship to Lagos for that new city, Eko Atlantic.  They will be purchased here -- do you two know anyone who would be willing to work on that project (for pay of course!) -- we can get him a fleet price and probably Gilroy would be best.  There will be massive arrangements to be made to get them overseas, and he will need two people to go with them -- a qualified VW repair person and an overseer.  VW isn't building in Africa right now, and the country requires cars built to U.S. specs rather than Euro.  Wondering if you guys know someone who would be willing to be the overseer for this -- it would mean arranging for the purchase of the cars and all the surrounding bullshit getting them to Africa.  And he (the overseer) would have to go with the cars and a qualified mechanic to Lagos and remain for about three months.  I know this is a massive undertaking and it would require someone with an adventurous spirit, but there would be good pay in it for him (I don't think a her would be a good idea here, but tell me if I'm wrong) and good accomodations in Lagos.
    I know this comes as a bolt from the blue...for us as well.  I'm going to refer OJ to someone I know in Hollywood -- a music producer/director named Chip Miller -- to see about whatever he is doing. 
Talk later, Deb
    The middle of October David King refused to sign a Joint Venture
agreement with LMI.  He refused to do any business with us at all; he stated that if he was going to work with Steve at all, he would only pay Scott a referral fee; he wouldn’t have anything to do with us despite the fact that we were the ones under contract to Steve, the only ones who could introduce any investors into the programs.  I wrote to him on the 17th.
Dear Mr. King,
    Well, I guess we have a misunderstanding.  From the very beginning I was quite clear about the kind of offer we were making -- we are only interested in investors who will go into the program under a Joint Venture agreement.  Steve was under the impression when he spoke to you the first time that you agreed to a Joint Venture.  Steve is our financial adviser -- we signed a contract with him, we have the invitation into his programs.  Scott referred you to us, and anyone who wants to utilize Steve's programs needs our entry.  A referral fee to Scott would not be sufficient.  If you have your own platform, you don't need us anyway.
Debora Hill
    He then sent me a one sentence message: “For this purpose I am not an investor.  Good luck with that...I closed down my film investment company permanently more than 12 months ago.  I no longer have any interest in film investment. Period.”  So why was he even communicating?  Because he wanted around us to Steve.
    I've been skype chatting with David King.  We could have an audio chat, but it's late and I'm trying to keep the noise to a minimum. 
    When I talked to David a couple weeks ago, I asked if he was aware of your agreement.  He indicated that he was and would honor it.  I reported that to you.  I therefore assumed that you and David had exchanged and executed a JV agreement in the past.  After chatting with David, he says that this was a misunderstanding.  He believed the "agreement" was merely a typical agreement to pay a referral fee on future transactions  He has also sent me a copy of an email to Scott in July, indicating that he had terminated his film funding business. 
    I apologize for the misunderstanding.  It would be unfortunate to terminate our relationship with David over this misunderstanding.  We are now looking at a potential MTN deal.  It is only in the potential stage - nothing yet has happened.  David is bringing forth the buyer, and I would be a broker bringing forth a seller.  On that transaction, David says he can pay a maximum of 1-5% of €27m or $1m, whichever is the lesser - to Debora.  You can decide how to split it with Scott, etc.  As an active broker in the deal, I would receive commission, and would determine how much additional I can share with you as well.  However, I do have brokers and referring parties to pay from the program side too.  I haven't worked out the numbers at all, as the deal is only in the hypothetical stage at this moment. 
    Even if it were only $500K - $1M to you, that is not enough to fund your project - but it's something, and can be leveraged for other lucrative investments. 
    We are also looking at a potential $10M PPP in the near future.  Again, it is only potential at this point.  In that deal, I would split my part of commissions with your group.  No specifics at this time as it is only hypothetical at this point. 
    That's my take on it.  If you disagree, David will walk and we'll be left with no possible business transactions with him. 
    This is a little confusing -- I have a feeling he's lying to one of us.  But, since everyone else is already asleep (except probably Frank!) I'll go out on a limb here and agree to 1 million minimum if you do a deal with him.  I don't feel that this is actually all that ethical on his part, but ok -- we will then invest it into a program for all four partners.  We have all agreed to do this with all money that comes in.
        From now on, since we won't be joint venture partners with Mr. King, you deal with him exclusively.  I don't like him, I believe he's a liar and a manipulator, but there are a lot of those in this business. do what you think will be best for all of us, you included.
Sincerely, Debora
    OK.  His number was $1M maximum, not minimum.  But I'll make up the difference (and more) from my end.  Thanks for your understanding.
    I got a message from David King late last night that he would not to have any further dealings with you or Steve.  I sent him a return message this AM asking him to re-approach a continuing dialog with Steve. Now, I don't know if Steve got that or he is trying to sort out a continuing dialog with David to save the situation.  
    Anyway, If King would still be workable with a fee for us (if nothing else) that would be worth exploring.  
October 17, 2010
    I got a message from David King earlier today.  He is still in an ongoing dialog with Steve on the programs. Now, he wants to provide me the fee if things develop with Steve. I will share the fee with the partners should that evolve.  I wanted everyone to know that.
    And, I noted that to Steve today in a message.
October 18, 2010
    Firstly, however justified or not, I have an unsettling feeling that the team members harbor resentment of me for pursuing a possible fee situation presented to me recently involving David King.
    Please understand everyone that David King proposed the fee go to me purely on his own actions, I did not suggest a fee nor do I have a deal in the back wings on a fee.  However, as a result, I am put in a position where I must take the fee and indeed want to do that.  Not doing that would overshoot an opportunity for us to gain seriously needed funds for working capitol or to reinvest and turn it around for a greater amount. So, my motives are for the team not so much for personal gain.
    After first learning of the fee I notified Steve that any fee to me I would share with the team. The team will share with me in whatever I gain if David King is successful.  It's my understanding that Steve would bridge the fee, if needed, out of his own proceeds in order to make $1M. A vary gracious thing to do in light of the relatively huge amount involved.  
    On what to do. If we all agree I believe we should jointly invest in one of Steve's programs as a team with a combined amount, provided its safe and assures us a timely turn around. 
    Anyway, at this stage we don't know yet if things will proceed forward. We will have to wait and see.
Regards, Scott
    And after all that, what a surprise that Steve’s program manager couldn’t get along with David King and refused to work with him.