His Biggest Bluff of All?
D. Andrew Beal, a Forbes 400 newcomer and banker/entrepreneur perhaps best known for his high-stakes poker play, is fighting a claim he reported $1.2 billion in bogus losses from investing just $20 million in junk Chinese debt. His Southgate Master Fund llc, co-owned with ex-Beal Bank executive Thomas Montgomery, is in its hometown Dallas federal court defending the tax shelter loss as legitimate or, because various professionals were consulted, at least undeserving of stiff penalties. Among other contentions, the Internal Revenue Service says the losses--from one of the biggest individual shelters ever challenged--violated partnership antiabuse rules, lacked "economic substance" and should be disallowed. The feds say Beal used $216 million of the losses in 2002 to cut his own taxable income to $75 million; how he used the remaining balance in other years wasn't detailed. A noted amateur mathematician, Beal, 55, was a centerpiece of Michael Craig's vivid 2005 book, The Professor, the Banker and the Suicide King: Inside the Richest Poker Game of All Time. --Janet Novack
Rock and Roll
Until it was pulled an hour after we inquired, SK3 Group
)'s Web page grandly proclaimed the company "a leader in global prepaid telecommunications." Indeed, in the last 14 months split-adjusted shares of the Harrison, N.Y. company have risen 3,100% to $4, for a $113 million market cap. Yet its latest financials show only $191 in cash, no revenue, losses, a negative net worth and a going-concern warning from an auditor who just resigned. That's a rather far cry from an early 2007 prediction, also since removed, at the same Web page address of $600 million in sales by this year. One cash flow management strategy mentioned in filings: "Delaying payment of accounts payable and accrued liabilities." Announced but uncompleted acquisitions might substantially dilute existing shareholders. Boss Sajid Kapadia didn't answer our messages. The current business aspirations of SK3 are quite different from those of its 2000 origins in West Vancouver, B.C. as SlabsDirect.com, when it tried for several years--without any success--to sell natural stone over the Internet. --William P. Barrett
The Securities & Exchange Commission continues its battle against companies whose stock trades regularly, despite no quarterly financial statements since, say, the Clinton Administration. In recent weeks the agency has revoked its registration of American Kiosk in Virginia Beach, Va. (last filing 2000), Austin's International in Fort Lauderdale (last filing 1997, bankruptcy 1999) and Premier Laser Systems in Aliso Viejo, Calif. (last filing 1999, bankruptcy 2000). One company the feds just pulled the plug on, syqt in Fremont, Calif., had eight marketmakers trading 46,000 shares daily although the corporate charter was void and the firm last submitted numbers in 1998. That's about the time it entered bankruptcy, sold off its assets and publicly declared its stock worthless. --W.P.B.
The Postal Service crows in a recent Postal Regulatory Commission filing that its unpublicized campaign to discourage retail-window customers from using cheap, bound printed matter rates for items like books has cut such mailings by 58%. How? Pursuant to a new policy, the bargain rate--$2.98 for 2 pounds coast-to-coast versus $6.67 for parcel post--"no longer came up as an option" on terminals postal clerks used "to explore mailing options with customers mailing parcels." But the ploy has worked so well that the extra revenue might put the postals over the inflation cap set by Congress on rate increases. --W.P.B.
The Downside of
An unofficial list of the largest database breaches since 2000 has some big names. -Anne P. Mintz
|ENTITY | DATE ||FILES (MIL)
| TJX Companies | Jan. 2007 ||94.0
| Visa, MasterCard, AmEx | June 2005 ||40.0
| America Online | June 2004 || 30.0
|U.S. Dept. of Vet. Affairs | May 2006 || 26.5
| U.K. Revenue & Customs | Nov. 2007 ||25.0
|Dai Nippon Printing | Mar. 2007 || 8.6
| Chile Ministry of Ed. | May 2008 ||6.0
|Data Processors Int'l | Mar. 2003 ||5.0
| Hannaford | Mar. 2008 ||4.2
|BNY Mellon | Feb. 2008 ||4.0
| KDDI (Japan) | June 2006 ||4.0
|Citigroup | June 2005 ||3.9
| N.C. Div. Motor Vehicles | Feb. 2005 ||3.8
|Ga. Dept. Comm. Health | Apr. 2007 ||2.9
Sources: FlowingData.com; Attrition.org; Forbes research.
Subscribe to Forbes and Save. Click Here.