By Terrence McCoy
By Scott Fishman
By Deirdra Funcheon
By Allie Conti
By New Times Staff
By Ryan Pfeffer
By Deirdra Funcheon
By Kyle Swenson
Koenig told Molen he didn't care how much the fine was; he wasn't going to violate Federal Aviation Administration rules. So Molen wound up attaching wireless cell phone transmitters to a high-altitude helicopter he had rented.
"Molen if he wasn't selling Sanswires, he'd be selling used cars," Koenig says.
Soon after the jury-rigged demonstration, Huff began negotiations to buy Molen's Sanswire. GlobeTel acquired Sanswire's assets at the end of 2004 by paying Molen 6 million shares of GlobeTel stock.
At the time, Molen was in the middle of a personal bankruptcy action. He hadn't paid taxes since 1988 and had debts totaling $2.5 million. He listed a mere $6,200 in assets including $800 in cash, $200 in clothing, and $5,000 in household goods.
Molen also owed several investors personally for loans they'd made to him. Jay Pontrielli, an Atlanta lawyer who represented one of Molen's investors, says it took ten years to recoup a $30,000 loan his client made to Molen and it was Molen's father who settled the debt. The investor, William J. Wager, died during the litigation.
"We had to chase Molen down for several years and then several more years after we got a judgment," Pontrielli says. "It seemed to the people he was able to raise money from that he had a persuasive business plan for this whole stratellite thing... He's left a trail of frustrated creditors chasing after him."
But Molen counters that only a few investors have "made his life miserable." He still thinks his stratellite idea was good. "I wouldn't say that the business plan was a pipe dream," he says in a telephone interview. "In any business, you find investors who believe in ideas.
"We built something from nothing and sold those assets to another company, and they've taken that and run with it. It's not a scam. And it's offensive to hear that."
If GlobeTel's stratellites began life as the helicopter-hoisted concept of a bankrupt Atlanta businessman and his colorful California for-hire inventor, they soon took on a new, glossy corporate sheen, thanks to heaps of GlobeTel P.R. But the company's overheated press releases brought in not only new investors but also the skeptical gaze of investigative reporters in the financial press.
Motley Fool writer Rich Duprey sent up one of the first trial balloons, warning readers in April of 2005 that although GlobeTel's press releases sounded nifty, the company was an unproven one shopping a lofty concept and had no stratellites on the verge of floating to near-space (not to mention the necessary approval of the FAA, NASA, and the Air Force). GlobeTel's blimp army sounded a bit too much like Motorola's failed 1990s plans for satellite phones, its Iridium project, for Duprey's comfort.
The skepticism increased exponentially once GlobeTel announced in July 2005 that the first beneficiaries of its stratellite wireless coverage would be the inhabitants of the jungles of the South American nation of Colombia.
"We just knew it was out there somewhere, like the Yeti, and after all these years and decades of searching, we have found it at last: the ultimate, all-in-one Penny Stock With Everything," mocked former New York Post writer Chris Byron in an August 2005 column. "We're talking about a company that increased its stock price by nearly 500 percent earlier this year by launching itself into a business, 65,000 feet over the snake-infested jungles of Colombia, that looks to be based, both literally and figuratively, on the ultimate marketing tool of Wall Street itself: actual hot air."
Those spikes in stock valuation were really what the company was about, Byron and others warned. GlobeTel, they cautioned, looked like a classic pump-and-dump operation. In other words, a common maneuver in which executives at a company, holding large amounts of company stock, overhype the company's potential for making money in order to bring in investors and temporarily drive up the value of the stock ("pump"). The executives then cash in, selling off large amounts of their stock ("dump") before reality sets in, investors realize the company won't be able to follow through on its grand pronouncements, and the value of the stock takes a nosedive. Byron ridiculed the small investors who had been lured in by the P.R. about blimps over Colombia and the resulting stock inflation.
But Byron and Motley Fool columnist Seth Jayson really aimed their darts at the inflated dreams of GlobeTel when, on December 30, 2005, the company announced that it was taking over Russia.
In typically grandiose fashion, GlobeTel announced that it had entered a binding agreement with a Russian firm named Internafta to provide cell phone service to Russia's 30 largest cities and that Internafta's payments to GlobeTel to provide the equipment for the phone network would amount to $600 million. It sounded like a huge coup for the small Pembroke Pines firm more than half a billion dollars to be a major player in an emerging European market.
The problem was, both Byron and Jayson pointed out, no one in Russia they talked to had ever heard of "Internafta," and there were already well-established telecommunications companies in the former Soviet nation providing cell phone service. How, they wondered, had little GlobeTel managed to leapfrog over the big multinationals like Cisco or Motorola to land such a deal? As the stock price frothed, jumping 75 percent to almost $4 a share immediately after the news release, the two columnists examined every questionable move in the company's past and greeted each delay in Internafta's payments of the huge cash advance with I-told-you-sos.