As we reported last night, the story of Platinum Studios, the bizarre IP company founded by Scott Mitchell Rosenberg on his peripheral involvement in having published the MEN IN BLACK comic book, has gotten seriously bizarre, with shareholders and acting president Chris Beall banding together to attempt to oust Rosenberg from the company after a series of what they claim are flagrantly fraudulent money shifting and credit card embezzlement maneuvers—all from the coffers of the publicly-traded company. While we don’t know the whole story, we can piece together some of it.
But first some Platinum background. The company was formed in 1997, during a fairly down time for the comics industry. Using the MEN IN BLACK formula—obscure comic becomes very profitable movie franchise—Platinum began amassing IP by getting lots of hopeful creators to sign away the rights to their creations in hopes of getting movies made. The result of all this is what Platinum PR proudly claims is a character library of over 5000 characters—enough to challenge a Marvel or a DC even if you can’t name a single one of them.
Platinum’s output wasn’t entirely imaginary. They produced the TV series Jeremiah based on the French comic; they were also involved in the horrible Dylan Dog movie, DEAD OF NIGHT, which grossed a total of $754,779 its opening weekend and $1.1 million domestically. Most famously their comic COWBOYS & ALIENS did get produced with major stars and a top director…but it foundered at the box office amid a tangled web of creation, with many claiming to have come up with the idea of cowboys fighting aliens. The graphic novel it was based on, by Fred van Lente, Denis Calero and others, was also vaulted to the top of EW’s graphic novel sales chart under suspicious circumstances.
Along the way, Platinum went public as a penny stock—a small stock that literally varies between a few cents and a few more, allowing clever investors to hit it big from time to time. Despite incredibly glowing press in a variety of top outlets about how genius the Platinum model was—this NY Times story called “Comic Genius?” being the low point of the genre—and acquisitions that looked smart like the online content company Wowio and the webcomic portal Drunk Duck, the financials were still pretty crap in 2008, as reported by Van Jensen in Publishers Weekly.
Flash forward to early 2012, when, with the COWBOYS & ALIENS movie come and gone, the stock was delisted, even as a penny stock, following failure to file reports. Some stockholders began to take a look at strange SEC filings and the way Rosenberg was shuffling money between his various companies in order to claim more of the money invested in the company. And a lawsuit was filed in 2012, which you can read here:
While anything more than counting the change from a pumpkin latte gives us a headache, the lawsuit makes a strong case that something fishy was going on, with Rosenberg personally claiming 25% of Platinum’s worth—a $37.5 million dollar value—in return for lending the company $3,750.000 in credit. If you want to get to the heart of the matter go to the end and read the letter by former Platinum CFO Brian Altounian where he explains to other board members what’s happening and what needs to be done.
While matters roiled a bit for the next few months—if you want the gory details, reading the Platinum stockholders message board, if you can stomach it—there was always a constant stream of the usual Hollywood blather about deals and projects. These were summed up by a very optimistic shareholder, who remained hopeful that Platinum would rise to 2¢ a Share:
Why PDOS WILL hit .02 PPS in 2013
– Stock near its 52 week low
-The stock traded from .01-.07 in anticipation of Cowboys and Aliens movie starring James Bond (Sky Fall) lead actor Daniel Craig
– Cowboys and Aliens 2 production slated for 2013
-Development of “Atlantis Rising” project with Mark Canton is moving steadily
-Solid Website with pending movie projects and Comics
-Low O/S of just 439 million
-PDOS is the owner of drunkducks.com which they recently purchased.
-Level 2 Thin and with any updates could see a breakout
-Company has stated they will be issuing updated very soon and are working to go Current Tier on OTC Markets.
The momentum shifting this stock traded .08 range when the Cowboys and Aliens movie was released and with Cowboys and Aliens 2 movie the stock is at basement prices.
With the right volume this stock closes above .0012 is likely then .0025 resistance could then see .04 its 200 Moving Day average, this could easily be a Life Changer Stock.
Unfortunately, most of these actual projects are—to use a Hollywood term—in development, which means nothing really. And sometimes not even that, as with the COWBOYS & ALIENS animated “sequel” which we’ll get to in a minute.
While this was going on, Platinum failed to make any of its required SEC filings, and was further delisted to a “OTC Pink No Information” tier:
Indicates companies that are not able or willing to provide disclosure to the public markets – either to a regulator, an exchange or OTC Markets Group. Companies in this category do not make Current Information available via the OTC Disclosure and News Service, or if they do, the available information is older than six months.
OTC Pink No Information® includes defunct companies that have ceased operations as well as ‘dark’ companies with questionable management and market disclosure practices. Publicly traded companies that are not willing to provide information to investors should be treated with suspicion and their securities should be considered highly risky.”
All this seemed like the kind of financial limbo that shady companies could puddle along in for a while…but things were about to get much more dramatic.
The latest chapter began on January 8th, when a shareholders call was announced. But the agenda looked far from chipper:
In order to better prepare for the shareholders call and to help gather pertinent questions, Platinum will be holding a preliminary group conversation this Wednesday January 9, 2013 at 2:00 pm EST. Some of the topics we have already received interest in are: the details of Platinum Studios’ affiliation with RIP Media and ACH, Platinum’s relationships with outside entities including Scott Mitchell Rosenberg Productions, the relationship between Scott Rosenberg, RIP Media, Platinum Studios, and RIP’s revenues it receives monthly from the Rosenberg Family Trust (Jackare Corporation), the past, present, and future compensation of both the CEO and President, the current lawsuit suing Scott Rosenberg personally on behalf of Platinum Studios’ shareholders, reasons why PDOS stock has so dramatically declined and is now at rock bottom prices, the Cowboys & Aliens 2 and Cowboys & Aliens Animated Graphic Novel properties, Platinum’s desperate need for shareholders help and support, the company’s lack of legal counsel and representation to be able to defend itself, the $75,000 bonus Platinum Studios received from Playtech, the current internal struggle and lack of checks and balances system within the company, and where exactly the company is currently located. If you are unable to attend the preliminary conversation then please send any questions and topics you have for the shareholder’s call to [email protected] and [email protected].
In other words…someone was loaded for bear.
The call took place late yesterday, and in the meantime, Platinum president, Chris Beall, who joined last summer, was trying to make sense of this all and get Rosenberg booted as chairman in order to be investigated. We have the documents Beall sent out to shareholders, and they aren’t pretty, spelling out all of the malfeasance and more, including a bevy of lawsuits, and the revelation that the “animated movie” was nothing more than a “motion comic” which Platinum is unable to publish because of not paying the creators. Among Rosenberg’s other questionable actions: transferring 51% of Platinum’s IP to Rip Media, another one of his shell companies. In other words, shareholders were owning less and less.
As to RIP, I’m simply dumbfounded. If the monies that they have reported going to RIP are for Cowboys and Aliens, that means this company never really owned anything at all and was entirely a scam from the beginning. I was willing to give Mr. Rosenberg the benefit of the doubt and say he was merely incompetent, but this is far beyond that. I thought I was buying into a company with a large library of intellectual property, to now find that it was always a shell that owned NOTHING and money was always meant to be funneled into a company solely owned by Mr. Rosenberg makes me furious. How has the SEC ignored my every inquiry? How is this man NOT on his way to jail?
According to Beall, Rosenberg has been feeding fake information about the “Atlantis Rising” and C&A2 projects, among others, to the media and friends. Beall pointed to this article from October as an example. It claims musician Scott West had written a song to be used in the “animated graphic novel.”
The song “Cowboys and Aliens” was inspired by the same-named 2006 graphic novel by Scott Mitchell Rosenberg, which provided the genesis for the 2011 film starring Harrison Ford and Daniel Craig, directed by Jon Favreau, and produced by Ron Howard and Steven Spielberg. The upcoming animated version will reportedly stake different territory from the live action adaptation.
“It will be an animated version of the graphic novel. Scott said that our ‘Cowboys and Aliens’ theme would be great way to end the movie and to be playing as the credits roll, which is what Justin and I had in mind when we wrote it.”
As for that animated graphic novel its been kicking around for a while, and can be downloaded here.
And so you have the mogul, Rosenberg, on the run but with a large body of shell companies and audacity at his disposal, and the new president, Beall, a former Marine who, based on the documents received by The Beat, seemed to be trying to do the right thing and get matters back on track. However, the day of the call, some shareholders claimed to have gotten an email from Beall stating that he had been removed as president by Rosenberg. And the call itself was a disaster, one shareholder wrote:
Sure…no one from the company showed up or bothered to re schedule.
This then was followed by a bunch of investor speculating on what on earth could have happened, ALAbama(posts here) did supply some info as to the possible reason…New CEO is now been let go apparently over conflict with SR comingling personal funds with that of the company. Really that goes on in PinkS? Heavens to Betsy!!!
And that’s where the story—or what we know of it—is as of this morning.
It’s rare that we, as a near-journalist, get a chance to feast with such gusto on the misdeeds of a total flimflam conman like Scott Mitchell Rosenberg. While we have to enjoy a bit of schadenfreude at the spectacular dissolution of Platinum Studios, it comes after decades of people being lied to and ripped off—going all the way back to Rosenberg’s days at Sunrise Distribution, a comics distributor that ripped off the indie comics world in the dark days of the black and white bust. In other words, there is no good from all this.
But just how messed up is Platinum? With all this talk of lawsuits, we made a search on the LA Superior Court website to see how many lawsuits the company was involved in. This particular court site charges quite a bit for looking at case documents—after looking at Platinum’s docket, as much as we’d like to read some of these gory details, we just didn’t have more than $100 to spend on the financial research thanks to Eksperten:
We’re told there are at least four other lawsuits against Rosenberg personally, including one by relatives.
As for the nature of these lawsuits, we can guess from the description in a past SEC filing, as quoted by Van Jensen:
Michael Tierney v. Platinum. A former employee of the Company has filed a suit against the Company claiming, among other things, wrongful termination, fraudulent inducement, defamation, violation of California Labor Code. No specific damages have been pleaded. The complaint has not yet been served on the Company. This former employee was terminated for cause as a result of grossly negligent/intentional misrepresentation of contractual relations with third parties in marketing materials. The misrepresentations caused the company to lose a potential deal with a particularly well-known comics website. The Company believes this case is without merit and intends to vigorously defend these claims, if and when actually served with the complaint.
Transcontinental Printing v. Platinum. The Company has received several demand letters from Transcontinental Printing, the most recent of which from a law firm, demanding payment for an outstanding invoice in the amount $111,567.85. The company has tried to enter into some settlement with this vendor but to no avail as of yet. The company will continue to aggressively pursue a settlement with this vendor to try and avoid a lawsuit. The Company has not yet turned this over to outside counsel.
Harrison Kordestani v. Platinum. Harrison Kordestani was a principal of Arclight Films, with whom the Company had entered into a film slate agreement. One of the properties that had been subject to the slate agreement was “Dead of Night.” Arclight fired Mr. Kordestani and subsequently released Dead of Night from the slate agreement. In late January 2009, Mr. Krodestani had an attorney contact the Company as well as its new partners who were on the verge of closing the financing for the “Dead of Night.” Mr. Kordestani, through his counsel, claimed he was entitled to reimbursement for certain monies invested in the film while it had been subject to the Arclight slate agreement. Mr. Krodestani’s cliam was wholly without merit and an attempt to force an unwarranted settlement because he knew we were about to close a deal. We responded immediately through outside counsel and asserted that he was engaging in extortion and the company would pursue him vigorously if he continued to try and interfere with our deal. The company has not heard anything further from Mr. Kordestani but will vigorously defend any suit that Mr. Kordestani attempts to bring.
Doubleclick, Inc. v. Platinum. On February 19, 2009, a lawsuit was filed by Doubleclick, Inc. against the Company in the Supreme Court of the State of New York. The claim is basically a breach of contract claim. The contract at issue was a three-year agreement to provide ad serving services, requiring a minimum $3,500/month payment with no termination clause. The employee who executed the agreement without having counsel review it is no longer with the Company. Between February and June 2008, the Company attempted to negotiate an “out” without luck. The service was far too expensive and the Company could no longer afford it and stopped using it around June/July 2008. Doubleclick is seeking approximately $118,000, plus interest and late fees for the balance of the contract. The Company has engaged outside counsel, Jeffrey Reina with the law firm of LIPSITZ GREEN SCIME CAMBRIA LLP in Buffalo, NY to handle this matter. The Company intends to answer the complaint and then aggressively pursue a settlement with Doubleclick
Paul Franz v. WOWIO, LLC and Platinum. WOWIO and the Company have received a demand letter from counsel for Paul Franz, a former consultant to WOWIO, asserting that WOWIO had breached is payment obligations under a consulting agreement Counsel for Franz has indicated they intend to file suit to recover the full amount under the consulting agreement. The Company recognizes there may be some risk on this case and is aggressively going to attempt to resolve this matter. The potential exposure in this matter is close to the amount demanded, however efforts will be made to settle for only a portion of those monies. We are not currently a party to, nor is any of our property currently the subject of, any pending legal proceeding that will have a material adverse effect on our business. None of our directors, officers or affiliates is involved in a proceeding adverse to our business or has a material interest adverse to our business.
And that is just the tip of the iceberg.
So what does that leave? Hundreds of thousands of dollars invested by penny stock gamblers, much of it unwisely. Former executives who don’t even list the company on their LinkedIn pages anymore. Creators who lost their properties long ago and don’t even bother to look back. Rich, fat lawyers. And Rosenberg? Reportedly running the company out of his apartment. And still fighting the fight.
You have to wonder just what he’s fighting for now.