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Author Topic: CEII - interesting scam read

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Came across this in the newspaper yesterday and found it an interesting read, so I thought I'd share.



September 20, 2004 -- WHEN it comes to send-ups of the American Dream, I used to think Ralph Kramden's hope of striking it rich by selling no-cal pizza nailed it exactly right.
But that was before I heard about Skinny Water, which connects up one of those few remaining dots that The Honeymooners never managed to reach: the lure of the pick-your-pocket penny stock market, where dreamers and schemers hope to feast on each other.

We'll get to all that in a minute. But first, and just so that you know, Skinny Water purports to be a real product, and is produced by a Pennsylvania company called Creative Enterprises International, Inc.

The company, which trades on the pink sheets at a current price of roughly 60 cents per share, has been around, in one form or another, for at least the last 20 years, trying to gain traction in momentarily trendy businesses ranging from uranium, to gold, to cosmetics.

These days, health and fitness are where it's at, so Creative Enterprises is there too, pushing the notion that if you drink enough Skinny Water you'll lose weight.

In that sense at least, we may say that the man behind Skinny Water has proven himself to be more of an entrepreneur than Jackie Gleason's lard-bucket bus driver, whose day dreams of success never seemed to materialize into much beyond another withering look from his wife, Alice, the queen of the cold-burn stare.

At least Michael Salaman has actually managed to get his idea to market —or so he seems to be claiming. A visit to Creative Enterprises' Web site reveals an illustration of a bottle filled with water that purports to come from an 800-meter-deep spring in the Balkans.

The Web site also explains why Skinny Water is special from a medical point of view: Creative Enterprises plans to spike each bottle with a teeney-weeney dose of something called hydroxycitric acid. The acid comes from the berries of a plant that reportedly grows only in a region of southern India and is said to possess the ability to suppress hunger.

According to the site, Skinny Water will carry a retail price of $1.99 for a half-liter bottle, and shoppers should begin seeing it turn up on supermarket health-food store shelves in New York, Los Angeles and Miami in October.

UNFORTUNATELY, at least some of what ap pears on the site comes off as overstated and misleading, and maybe even wrong.

The company describes itself as a "marketer and developer" of a "unique portfolio of consumer products that includes Skinny Water." But Skinny Water is the only actual product currently listed on the company's site. The site also describes a series of trade shows where the product will be presented. But no such trade shows appear to be scheduled — at least on the dates listed.

Finally, there is some question about the value of hydroxycitric acid as a diet aid. The site claims that the "most recent clinical study" of the extract, published in January of 2004 by researchers at Georgetown University, found it to be an effective way to lose weight.

But other researchers have come to the opposite conclusion, and an article published three months later in the American Journal of Clinical Nutrition pronounced the evidence in support of its use "not compelling."

It would be nice to have been able to clear all this up directly with someone at the company, but that has proven difficult, given the fact that the company's outside P.R. firm has been let go and a request for an interview with Mike himself brought no response.

"He's difficult to get hold of," explained the ex-spokesman, one Trevor Ruehs.

In fact, selling Skinny Water is not only what Creative Enterprises is all about, it's also about selling stock — and in that pursuit, Michael Salaman has learned at the knee of a penny stock master, his own father, Abe.

You won't easily find Abe and Mike linked in print anywhere as father and son, but they are, and one reason Mikey would clearly like to play down the connection is his father's past as a long-time white-collar criminal with ties to organized crime.

He has been convicted twice for stock market crimes — first in 1976 on a nolo plea for price rigging on the old National Stock Exchange in Philadelphia, and most recently just two years ago when he pleaded guilty to federal charges in Brooklyn for conspiring to commit securities fraud involving members of the Bonanno crime family.

IN between times, Abe made a living as a dealer in corporate shells for the penny stock market, where his merchandise took on the lure of a financial aphrodisiac akin to powdered rhino horns.

Many of Abe's shells, fancied up with changed names and new business strategies, eventually turned up in the portfolios of a now-defunct Park Avenue hedge fund called the Lancer Group, where they were given valuations reaching into the hundreds of millions of dollars each when, in reality, they were worth virtually nothing at all.

Among these was a New York based "new media" company called American Interactive Media, Inc., which began under a different name as a Nevada penny stock in 1986.

In 1995, the Nevada shell was acquired by Michael Salaman, with his father, Abe, assuming a hidden interest in the business through an investment vehicle called Mountain Ranch Partners.

The company claimed to have grand plans to become a force in the age of New Media, but it instead became a plaything of Abe's, who brought in the Lancer hedge fund as an investor, then hired a Florida penny stock promoter named Shannon/Rosenbloom Marketing to hype the shares on the internet.

The stock eventually collapsed from its high of more than $8 per share, to a current price of two one-thousandths of a penny.

And that's not the only deal of Abe's in which Michael has played a role. In the 1980s, Abe's name surfaced in connections with allegations of self-dealing while he served as an outside director of an arts and crafts company called National Paragon Corp.

The company thereafter went bankrupt, then re-emerged, with Abe still as a director, under the name National Media Corp., this time with Mikey as a member of the new management.

In that capacity, his tasks included "developing profits from the company's customer list" which led in 1994 to Federal Trade Commission charges that he had been part of a scheme to misuse consumer credit card information. The case resulted in fines of $292,500 against Mikey, National Media, and others, on an FTC consent decree in which none of the defendants admitted any wrongdoing, but promised to shape up from here on out.

Mikey has turned up as a joint investor with his dad in other reeking penny stock deals as well.

He's been in on the action, along with various other Salamans, in, among other things, a company called America's Shopping Mall, which is currently selling for one one-thousandth of a penny on the pink sheets.

AND there's even a company called Neu rocorp., Inc., which began as a Salaman shell company, then morphed into an outfit that claimed to be developing a chain of walk-in schizophrenia treatment centers.

Like the others, it too has collapsed, and now sells for one one-thousandth of a penny in the pink sheets.

Now comes Creative Enterprises International, Inc., with many of the same ground-floor investors from Abe's other deals surfacing as stockholders in this one as well, even including a Turkish fellow named Turin Itil, who ran Neurocorp's schizophrenia treatment business back in the 1990s, and has now apparently developed a thirst for weight-loss water.

Now I ask you: Is America the land of opportunity, or what! Just because your dad's a no-good-nick, where else but on Wall Street can you stand on his shoulders? Anyone for Eternal Life Air, Inc.? (Breathe enough of it and you'll live forever.)


Posts: 2651 | Registered: Apr 2004  |  IP: Logged | Report this post to a Moderator

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Great article. Thanks for posting!
Posts: 107 | From: Tampa, FL USA | Registered: Jun 2004  |  IP: Logged | Report this post to a Moderator

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