Jill Kelly Fire Was No Mystery But A Message

2/3/05

Bob Friedland messed with the wrong people when he fired Keith Gordon and Bizarre. That the Jill Kelly home suffered a mysterious blaze the next day is no mystery. That was a message. You don't mess (and I am using the polite word here) with the wrong people. And if there are people in this business that you don't want to mess with, it is Keith Gordon and the Bizarre crew.

I hear that Bob Friedland really stuck it to Bizarre when he threw them out of their deal with JKP. Bob tried to sell their warehouse of product for a buck fifty a piece when it normally sells for ten bucks a piece.

The day before JKP was supposed to say yeah or nay to a continuing relationship, Bob Friedland sold Bizarre's warehouse of product for a $1:50 each.

Keith got on the phone and stopped that sale. Then Friedland turned around and tried to sell that stuff to somebody else for a buck a piece. I understand that got stopped to.

Gene Ross reports January 25, 2005:

[Jill] Kelly said [Tyler] Faith did wake up, eventually, but it took Kelly screaming at the top of her lungs to do it. Again, dispelling rumors of a candle left burning, it was noted that the fire started as a result of an electrical problem.

Kelly, according to her story, woke up with flames lapping her ceiling. Kelly said her dogs were all in bed with her and her room was glowing. Referencing the movie The Exterminator, Kelly said it was like the effect of a flame thrower. "That was the sound and that's what it looked like coming out of my freakin' bathroom. But it was a vent."

Kelly went on to describe the back draft effect that was created. Kelly was particularly worried about the flames reaching a closet where she keeps two propane tanks. "It was like a movie, a cartoon. It was a nightmare."

The oddest thing said Kelly is that her dogs didn't wake up whereas someone driving up the road a mile away will prompt them to bark. "Or maybe they did wake up and I just didn't remember. I was in shock."

Kelly said the whole scenario was a very scary dream. "It was my seventh time almost dying and I've got two [lives] left."

This was not a mystery fire. This was a warning. Those guys at Bizarre are the wrong guys to set your little Jewish accountants on to mess with.

Somebody went to Friedland and said to him, do you even know who you are messing with here? Do you have a clue?

If anyone is the last vestiges of the New York Mob, it is those guys. I'm not saying they are Don Corleone but I wouldn't want to be on the bad side of Teddy Rothstein. And Teddy was in the office the day Friedland fired Keith and Bizarre.

I hear Keith and Bizarre have a new warehouse (Canoga Park?) with all their product intact.

I've heard rumblings that a lot of people were up in arms about what Friedland did and they want to take Bob and JKP down. Bob gave Bizarre a first-class screwing without a clue of who he was screwing.

If I were Bob, I'd be concerned about kneejerk responses from the Bizarre crew because they are kneejerk kind of guys. They may not call in Jewish lawyers. They might just take matters into their own hands. They're old school. They may not worry about legal niceties.

JRV writes on XPT: "All you have to do is look at JKP's SEC filing posted here a while back to know that JKP is running with the wrong crowd."

Scott Hoover, publicity man for Jill Kelly Productions, writes:

That rumor about the fire is utter bulls---. I was caused by faulty wiring....I do not think anyone from Bizarre would be stupid enough (or agile enough) to climb up into Jill’s attic and set a fire or rewire it to short out.

What was done with Bizarre’s product was a legal business transaction. I could go into detail about the shady and underhanded events that happened to cause us to sever ties with Bizarre, but that will all come out in the end. The truth always does. We shall prevail.

Everyone LOVES to trash JKP- is it because it’s a woman owned company or because of people’s feelings towards Bob? I have no idea but it is completely moronic to think that we are over here shaking in our boots in fear of any wannabe or so called “mafia connected” criminals coming to take us out. f--- them and f--- those who continue to have nothing better to do with their time than make up silly s---. Hey- why not talk about something good. It seems so many people in this business really hate the industry that is their bread and butter. Self loathing is rampant here. Go do something else! Why not go bake a cake for your neighbor or visit and elderly relative you locked into a nursing home. Can you people really look at yourselves in the mirror each day for more than a quick second?

Parasite writes: "JKP's a woman owned company? Not unless Bob Friedland got some bolt-ons and had his cock and balls cut off."

I thought JKP was a publicly-owned company?

I get calls and emails that "everyone loves to trash JKP" because:

* JKP is widely thought to be a fraud.
* Because a lot of porners can't stand Bob Friedland.
* JKP has a history of not paying its bills on time.
* JKP will always be a penny stock. Friedland knows his nonsense could never pass scrutiny on a big board.
* What kind of PR person for a publicly held company writes press releases using the f-word? Obviously Friedland doesn't treat it like a publicly held company.

Smiling Arab writes on XPT:

Back to JKP: the funny thing is that you can see the writing on the wall of it right now, or at least one possible scenario. Forget about where the money is coming from and going to ($9 million dollars loss in one year? Why would they even have a nine million dollar gross budget, total, much less a loss of that amount?) Everyone that owes that company will be mutilated if Bob simply calls in the deferred compensation and loans he's made.

Their "board"? Seriously, slap yourself around, people. Jill is an employee of her own company, she's not going to stand in the way of anything. How could a company with probably less than 10 full employees lose $9 million dollars? Most of it, of course, was Bob's capital, and most of it was before they went public. The former makes me arch an eyebrow, but does the latter have any signficance? What kind of due diligence has to be done on that $9 million once they went public? Can he simply point to a balance sheet that says, in paper, he transferred X amount of money to the company?

This is what we know: 1. Jill Kelly is no more than a paid employee with some worthless stock in "Jill Kelly Productions."

2. They pulled off a reverse merger acquisition with little legitimate reason to do so, since there is no demand for their common stock shares (valued by JKP at $0.001. This isn't uncommon for small market companies but it sort of defeats the point of going public for legitimate reasons when no one wants to invest in your company.)

3. Many of the shareholders are friends and family of CEO Mr. Burns. Others are adult industry players who either came up with capital or, more likely, discharged debt in exchange for stock options. Bob's own stock is held by a trust.

4. Rather notice this stunning peak and valley. I'm just guessing, but it appears that stockholders were selling at 5x the value, possibly through pre-arranged stock options, or possibly through prior agreement. Since there's no demand for this stock, we can at least say that most or all of these sales came from the original investors listed in their initial SEC filing following the company buying "IDC Technologies" (née "Pacific Trading Post," which did graphics for snowboards) and going public.

5. The 60+ year old CEO is inordinately fond of sleeping with his 20 year old employees. Not our business? Hell, try that in the real world.

6. Who is an investor in this British fund? Looks like a politician signed their annual report.

7. If this were a simple dodge, why would they hire PortfolioPR--which seems to specialize in penny stock companies--to do their IR/PR? Yet practically everything in the public domain with JKP's name on it is produced in house, in contradiction of the norm with PortfolioPR's other clients.

James writes:

Bam! we've got scrap-metals and hauling, manufacturing consultants and they're doing precious metals in WEST AFRICA. that's arguably the best area of the world if you need to make large amounts of money dissapear or appear. those places don't keep real records if they're keeping them at all. all you've gotta do is have the balls to set something up and say you lost or gained money doing business there. did you find a more detailed profile of jkp's actual financials or looked into what the "restricted" status means in practice?

Smiling Arab writes:

Here's Frank Maude's website. He's a Tory, apparently in good standing, and though I don't understand British politics, appears to be a centrist (ie, no railing against obscenity).

He also seems to enjoy sitting on a number of hedge fund and corporate boards. In the middle of last month, someone sold 50,000 shares of common stock in JKP.

That's really a drop in the bucket since they've issued (or plan to issue) 500 million shares for a hilarious valuation of $5 million dollars. But the seller didn't get more than pennies for them, compared to a year ago, after they went public, and shares were being sold for several times that. I dunno, what I think we're looking at is a guy (Mr. Burns) making sure he has a golden parachute.

He funded Ms. Kelly to the hilt and fondled the young starlets then, realizing how much money (his family's money) he'd blown, is attempting to con someone into buying it from him, and definitely to protect himself from the earlier debt-ridden financial profile.

Smiling Arab writes on XPT 2/5/05:

The shares in JKP owned by Jubilee were not purchased outright. Rather, they were swapped from a company called "Maximum Ventures, Inc," which I recall from JKP's initial SEC filing. (There are two - one a British Columbian mining interest; another, this one, in New York).

On November 18, 2003, per this link, Jubilee swapped shares of Jubilee itself with Maximum Ventures in exchange for Maximum's holding of JKP shares.

Who was "Maximum Ventures"? According to this link, it was sold. The purchase price is quite interesting. Maximum had transferred more than a million shares of JKP restricted stock valued at $3.75 per share. Yet, not long after, Maximum itself was sold to VerticleBuyer for only $450,000 (representing 77% of the company's outstanding shares). Compare/contrast: JKP restricted stock valued at around $4 million, vs. a tenth of that.

Quite interesting: just two weeks prior to swapping his JKP stock to Jubilee, on November 6, 2003 the CEO of Maximum Ventures, Abraham "Avi" Mirman released this press release announcing the Jill Kelly Productions Adult cable channel that James mentioned. Note it was issued by Maximum--not JKP.

Note also that the above press release announces no contract, no money at all, just a "letter of intent"--just two weeks prior to selling. I haven't been able to find any other JKP press releases signed by Avi. Why haven't we heard anything else about the cable channel? Was it something to attract genuine investors by JKP's angel in NY so he could cash out?

Here's Maximum's piece of s--- website. It says that they helped with "reverse mergers," among other things. Aha. Maximum consults with Bob, is given worthless stock in lieu of cash, then sells it while it can.

Avi's other company is called Mirman Capital Ventures. Mostly involved in biotech.

Jubilee swapped some of their shares for JKP. Why? Like Maximum, swapping their stock for other companies was the shell game by which they hoped to catch lightning in a bottle and attract investors:

From their 2003 report, shortly after picking up their JKP shares from Avi Mirman:

The Company's original intention was to build a portfolio as quickly as possible, with sufficient critical mass to create genuine liquidity in the Company's shares, for the benefit of those companies which had agreed to exchange a block of their own shares for shares in Jubilee.

The percentage of Jubilee's holdings in JKP in relation to the rest of their portfolio has fallen dramatically in the past year. At the time of their swap from Maximum, it represented some 8% of their portfolio. Now, per their
3rd quarter 2004 report, it's only 3.5% (and that's considering, again, the hilarious restricted stock valuation of 1.242 million quid). This number is so small that they don't even list it in their top (equally dodgy) primary holdings.

Here's Keith Gordon's employment contract. They set up a wholly-owned subsidiary called "JKP Bizarre" to distribute his stuff.

Here's Jill's employment contract. Now, if you're an executive, you need to have one, but I think it's funny that JKP's own "PR professional" Scott Hoover persists in misrepresenting this as a "woman-owned company." It's a corporation, and far and away most of the shares are not in her hands. It isn't nice to mis-represent the ownership of a publically-traded corporation, Scott, even if the only place you can sell it is on Pink Sheets.

The Koretskys own Pleasure Productions. In 1999, their partnership with New Frontier Media--another clusterf--k of a porn company going public--was a "perfect fit," according to Koretsky. Within two years, they were suing the holy hell out of each other over, among other things, stock transfers. (Parenthetically, I have to say that I know judges who would throw this complaint in the lawyer's face. I've never seen so many misspellings in one document since I was a clerk typing affadavits from crackheads.)

Klehr is a fairly decent, if cheap, law firm. There haven't been any disciplinary proceedings taken against any partners or Barry Siegel, the guy that did JKP's SEC paperwork.

What is/was Bob's connection to the three owners of IDC Technologies? At least there were three of them when they purchased PacificTradingPost. One of the three was implicated and subject to investigation following a raid on a boiler room pumping-and-dumping stocks that they had business with. I haven't been able to find any SEC charges.

And, while we're on the subject, why did Bob issue a $778,414.05 promissory note to himself through a shell corporation? Perhaps he won't be satisfied with still more stock in lieu of cash, like Michael Koretsky got for his $250,000 note. Or this porn producer, James L. Long, who was, after 3 years, paid only $10,000 of $140,000 owed to him, and settled for still more stock.

Now it's starting to make sense. This company was absolutely riddled with debts, but probably not any more. Let them eat stock options! And more stock options! It's an all-girl orgy of stock options! I never get tired of exchanging cash and services for stock options! Damn you promissory note! Psst, hey, buddy, wanna buy a stock option?

Re: Avi Mirman and his Maximum Ventures, Inc's holdings of JKP (later swapped to Jubilee after the mysterious "letter of intent" for a JKP adult cable channel), I was correct. Maximum was advising Bob and JKP and as a result was paid in company stock--so much company stock he was actually part-owner of the company. The merger agreement refers to Maximum having all but veto power over a number of issues in the agreement.

From the JKP-IDC Technologies merger agreement:

5.4 Publicity. Any public announcement or press release relating to this Agreement or the Contemplated Transactions must be approved by MVI, JKP and the Company in writing before being made or released.

That was on August 8, 2003. On November 6, 2003--three months later--Avi Mirman issued this press release on a "letter of intent" signed by JKP to own their own adult cable channel, a subject which has never been heard about from any JKP corporate officer again. Less than two weeks later, Mirman swapped his JKP shares with Jubilee. Quite a deal, isn't it?

That "letter-of-intent" press release had an extensive quotation from Bob. Kind of serious, that, if it turns out this "letter of intent" was intended solely to overstate the company's future earnings potential. It's a different world when you're under Sarbanes-Oxley jurisdiction, compared to being a horny old man that likes to fondle twenty year old girls in your sole proprietorship.

A porn insider writes:

Maybe Scott Hoover will take the time to look in his mirror after reading what “Smiling Arab” had to say (and backs up with published facts) about the fraud JKP and its business partners are trying to accomplish.

When companies are taken public, it is generally done to raise funds (from outside investors) for future growth, and this is clearly not the case with JKP. It is painfully obvious to everyone why Friedland chose to go this route. What you have here is a man who squandered more then a million dollars on an obsession with anything porn, and then realized he was likely to never see a dime of it returned. The reality is that the company was/is in debt for an amount that exceeds its worth. Had Freidland continued as a sole proprietor (with a minority partner), the company would eventually fold through poor sales and a lack of funds, or legal claims by its many creditors. By going public, he was able to buy time from his creditors by getting them to agree to convert receivables to stock. And better yet, he stands the slim chance of replacing the money he invested by selling stock he owns.

Of course all of this will only work if the stock has value, and unfortunately for him it doesn’t, and probably never will. Besides the fact that Friedland doesn’t have the first idea on how to run a public company – he still treats it like it is a sole proprietorship – it is his bulls--- that will sink him in the end.

All small companies utilize some hyperbole, and that is acceptable and expected. Bob’s problem is not hyperbole – it is outright lies. Not to long ago he stated that JKP had purchased (read “purchased”, not “trying to purchase”) a nightclub in NYC and was in the process of converting it to a JKP club. It was in that same announcement that he revealed plans to open JKP clubs nationwide. Well, we now know there never was a completed purchase of a NYC club and there are no JKP clubs anywhere! Recently he announced the formation of a JKP clothing line – what happened to it, Scott? Ditto the cable channel already addressed by Smiling Arab. To the uneducated this might sound like nothing, but to the investment community (who would eventually underwrite JKXJ if it ever went to the big board) and to the SEC, this sort of bulls--- is a very big deal!

Salaries paid to the top three executives are way out of line. While JKP describes itself as a “leading provider of adult material”, they aren’t, unless you consider any company in the top 25 to be so. I would say that their library size and annual sales bring them in around the top 25, yet they pay themselves as if they’re in the top three. A $1500.00 car allowance? Come on! That is fairly common in multi-billion dollar public companies; not in those who’s annual sales are less then ten million.

These are examples of why the company is in debt, and how Friedland loves to spend other’s money. How about their choice of business partners? IDC, Maximum Ventures, Mirman Capital, and others – now these are some great companies who bring nothing but credebility to JKP!

Another issue is the board of directors. What publicly held company are you familiar with whose entire board is made up of the three principles? I am willing to bet that Freidland doesn’t even have an idea of the purpose of a Corporate Governance policy, or what it is, for that matter. If he did, he would recognize that the pillar of that is a board of directors that consist mostly of outsiders.

Oh, well I’m at it, shouldn’t JKP have an Investor Relations department, and shouldn’t there be a link to that (along with Corporate Governance) on their corporate website?

Luke, JKP does not act like a public company, they just want the benefits of being one. Now you know why so many of us refer to it as “fraud.” Fortunately, the investing public will never suffer from Friedland’s misdeeds because – in my opinion – the company will never pass SEC scrutiny and be allowed on a big board. Sadly, the same cannot be said for the creditors who have agreed to convert their receivables for this worthless stock.