Paid blog posts may put Accoona's IPO at risk

Tim Faulkner — Fri, 21 Sep 2007 17:31:14 EDT

Saul Hansell of the New York Times was surprised when numerous blogs chastised him for his coverage of search engine/electronic retailer Accoona and the questionable history of its founder, a felon sometimes known as Armand Rousso, as a stamp dealer and stock promoter. Why would anyone bother to defend such a questionable man and such a negligible company? Because they're apparently getting paid to do so. Most of the blog entries openly label themselves as paid posts — a practice that is itself highly controversial. What's even more controversial is who is footing the bill for these sponsored testimonials. Regardless, Accoona is likely to pay for them in the end.

Hansell reports:

Valentine Zammit, Accoona's chief executive, said that company had nothing to do with the posts. He added that Accoona's employees, directors and consultants aren't supposed to be touting its stock while the company is trying to sell shares to the public.

Nevertheless, someone is, in fact, touting the company via paid blog posts. With his lack of response to Hansell's call for comment, Rousso is making himself a prime suspect. Technically, he is not an employee. Accoona's prospectus goes a long well to spell this out:

Armand Rousso, one of our co-founders together with CDIC, and one of our significant stockholders and an option holder, is not and never has been employed by us or any of our subsidiaries, and has not been a director or officer of us or any of our subsidiaries since October 5, 2004.

However, it also makes it clear that he is a consultant:

Mr. Rousso has been connected with us only by virtue of ... being an officer, director, employee and the sole stockholder of S.P.B.D. Consulting Corp. ("SPBD"). SPBD provides consulting services to various companies in which Mr. Rousso is an investor, including us...

It's hard to imagine someone paying bloggers to promote Rousso and Accoona out of the goodness of their hearts. The most logical suspect is someone with an interest in burnishing Rousso's reputation and Accoona's IPO prospects — someone, in other words, with a financial interest in the company and its IPO attempts. Far from greasing the way for Accoona to go public, these paid postings are likely to throw up a major roadblock.

Convicted felon Armand Rousso leaves a stench Accoona can't expunge

Owen Thomas — Wed, 08 Aug 2007 11:53:56 EDT

Armand Rousso is an international man of mystery — Internet-style. Long before today's Web 2.0 kids were even suckling at their mamas' teats, in the 1980s — or so he claims — he invented e-commerce. Others claim that, at the same time, he invented e-commerce fraud. On an ancient MCI telecom network, he ran something called the International Stamp Exchange — and, claims engineer David Glassman, who says he wrote the code for the exchange, faked all the bids on it to simulate activity. No matter. The purported ruse won Rousso coverage in Time magazine. Now, an e-commerce company he's backing, Accoona, is trying to go public. "Investors should run away screaming," writes Henry Blodget — and he knows a thing or two about investors running away screaming. But he's just looking at the numbers. There's way more to this story — and it all has to do with Rousso's suspicious business dealings.

Accoona's S-1 filing "reads like a pulp magazine," says VC Ratings. They aren't kidding.

Rousso owns 14 percent of the company directly, and Gestrust SA, a Swiss trust operator, owns 46 percent on behalf of various investment vehicles. I could not find any direct ties between Rousso and Gestrust or the vehicles, but I would not be shocked if there were such. And here's what the company has to say about Rousso:

In 2004 in connection with the founding of our company we issued 60,000,000 shares of common stock to Armand Rousso, one of our co-founders, for $6,000. Also in 2004, in connection with our Cooperation Agreement with China Daily Information Company d/b/a chinadaily.com.cn ("CDIC"), one of our co-founders, we issued 14,000,000 shares of common stock to CDIC.
Armand Rousso, one of our co-founders together with CDIC, and one of our significant stockholders and an option holder, is not and never has been employed by us or any of our subsidiaries, and has not been a director or officer of us or any of our subsidiaries since October 5, 2004. Apart from his stockholdings in us and his option to purchase common stock, since October 5, 2004 Mr. Rousso has been connected with us only by virtue of:
(a) being an officer, director, employee and the sole stockholder of S.P.B.D. Consulting Corp. ("SPBD"). SPBD provides consulting services to various companies in which Mr. Rousso is an investor, including us and B2X Corp. Please see "Consulting Agreement," for a description of the Consulting Agreement between us and SPBD;
(b) being one of the inventors listed on many of our patents;
(c) Ron Henley, one of our directors, being an employee and an officer of SPBD and a director of B2X Corp.; and
(d) marrying in 2006, Alessandra Coderoni, who was our Chief Operating Officer from May 2005 to August 2006.

And why Accoona's eagerness to distance itself from Rousso? Why, read on:

In 1999, in the case titled The Government v. Rousso and Laroze, Mr. Rousso was convicted in France of, inter alia, securities fraud, and as part of the proceeding he was credited with time served and fined 120,000 euros.

Ah, but that was all in France, right? Mais non!

Concurrently, in The United States of America v. Marc Armand Rousso, etc., in the U.S. District Court, in New Jersey, Mr. Rousso entered into an agreement whereby, inter alia, he pleaded guilty to (A) one felony count of violating 15 U.S.C. §§78j(b) and 78ff(a) and 17 C.F.R. §240.10b in connection with securities, and (B) one felony count involving the transportation, transmission and transfer of monetary instruments and funds to conceal proceeds of the aforesaid activities contrary to 18 U.S.C. §1956(a)(2)(B)(i), in violation of 18 U.S.C. §1956(h). In July 2006, Mr. Rousso received from the District Court 3 years probation and a fine of $200,000 and as a condition of probation was prohibited from holding a "job/position within the Securities business." The principal underlying activities occurred during a period ending over nine years ago and are themselves completely unconnected to us.

It's all in the past, in other words. Don't worry about it. And ignore the fact that we're paying "management fees" to Rousso's consulting firm. He doesn't actually work for us.

The fundamental fact shareholders need to remember is that by buying shares of Accoona, they're going into business with a convicted felon. It's a fact, disclosed in black and white in the SEC filing. No one writing about Acoona's IPO seems to want to come out and say that, though. It stinks to high heaven. But I suspect investors and bankers, hoping to make a quick buck through a resurgent IPO market, are just holding their noses.

Gawker: valleywag, accoona

Paid blog posts may put Accoona's IPO at risk

Convicted felon Armand Rousso leaves a stench Accoona can't expunge