THE REAL “DEAL” ON XYIENCE

Posted on | October 1, 2008 | No Comments

By: Rich Bergeron

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Recently A New York City Magazine that shall remain nameless published an article about the Xyience saga I’ve been reporting on since late 2006. The reporter interviewed me for over an hour as part of her research, but her editor cut out every single quote of mine she put into her story.

Whoever decided to make the cuts was also kind enough to leave a nasty quote in the story from one of the opposing attorneys in my case.

Of course I’m used to not being backed up by most media outlets on this huge scandal. Yet, I’m also confident that eventually the media will have no choice but to start following this case. I know that with the right effort and due diligence I’ll be able to carry my case forward to a shocking resolution. David will beat Goliath in this one, and the truth really will shine through.

Judge Mike Nakagawa held a show cause hearing in bankruptcy court on September 10th related to the recording of my May 14th hearings. He probably didn’t expect the whole thing to turn into an indictment of his own actions in the case, but that’s exactly what happened.

Judge Nakagawa continued the scheduling conference in my case on five different occasions prior to the show cause hearing, and he also promised to deliver decisions on at least three different dates without following through, and I decided enough was enough. Xyience is creeping closer and closer to ultimate approval of their reorganization plan. As it is that plan only benefits the players who orchestrated the fraudulent bankruptcy. I took control of the September 10th hearing to really send the message that I’m not playing games anymore. I wanted the judge to know that he was taking things much too lightly and not paying attention to the absolute need for a full and fair investigation of the whole process.

I asked the judge to recuse himself from the case in a prior motion, and he tried to pigeonhole the request into the category of a recusal based on a previous association.

“Have you ever met me, Mr. Bergeron,” he asked.

I told him no but explained that was not the reason I asked him to recuse himself. I laid into him at that moment, outlining all the various issues with his poor management of the entire case. I called him out for all his broken promises and his allegiance to the bankruptcy attorneys. It was the most amazing feeling of my life to be so captured by the emotion of it all and to be fighting for what I believed in with all my heart. Toward the end of the hearing, I could hear the judge’s voice quiver as if my assault on his character and integrity had really rattled him. He seemed pretty eager to get to the next case on the docket.

I have since requested that the case be transferred to U.S. District Court in Boston, Massachusetts. That will be the best venue for this type of case since there’s a First Amendment issue involved and since continuing the case in Nevada leaves my opponents with all the advantage. Bringing the matter to my home state allows me to at least appear in person, and the change in venue will also ensure that the Fertitta influence factor is eliminated. These billionaires have a lot of power in the Vegas area, and it’s just plain stupid to think they haven’t tried to manipulate the proceedings somehow.

The taxpayers of our great nation are going to have to foot the bill for about $700 billion of bad banking and mortgage and securities schemes in the coming months. Who knows if it’s the bottom of the barrel or if we might actually be in for more rocky roads ahead. The Xyience debacle should teach us that greedy billionaires can buy whatever they want, even judicial influence. This is a living example of how our nation is corrupted from within.

Sometimes the little things in life are the most telling. This may seem like a little, insignificant issue to many MMA fans, but you have to think of the ripple effects. How many people have suffered as a result of the 380 or so shareholders who lost a boatload of money on this bad deal? From another perspective, the Fertittas’ role in this fraud is even more disturbing. How many people do these guys do business deals with each year? How much money do these folks control through either their personal business decisions or choices they make on major boards they’re part of? If they’re committing fraud even at the lowest level and actually bankrupting a company to make a quick buck, there’s something fishy going on behind the scenes, and you don’t have to call Colombo to figure it out. This cancer will spread to their UFC operation in due time, and the league will choke on its own ego.

And another thing… where is the SEC on all this stuff? If they can’t wrap up a simple fraudulent caper like this—even when I gave them all the evidence as it was happening—how do we expect our federal government to really clean up the bigger and badder shit going down?

Markets don’t collapse because the big boys just stop pulling their weight all of a sudden. It’s because all the little screw ups combine to make one grand one. Every level of business can contribute to a crash, and no financial giant or mom and pop store is immune. Yet, there is something intrinsically wrong with the idea that billionaires like the Fertittas are pulling scams like the Xyience bankruptcy and getting off without so much as a slap on the wrist. Where is the accountability? Where are the watchdogs and advocates for a closer look at this thing? Where is the big investigation that should ensue? What is wrong with this picture?

The problem is, the fraud always starts small like the crazy dude in some major European bank who lost billions of the company’s money on bad futures trades. Nobody ever stepped in at the right time to stop him, and he never stepped in to stop himself. The Fertitta family financial boom started off with one casino. Now they own an empire of casinos, real estate, and other luxurious property. The old time roots of organized crime run deep in the family Fertitta, and when you have that much wealth, influence, and organizational power you can pretty much do what you want these days. The mantle of “clean money” fits the Fertittas well in the circles of public knowledge, but most people who follow the UFC aren’t actually up on the family’s brutal history. So you have to ask yourself: do Family ties ever become severed just because one or two of the family members starts making more money and gaining more territory? HELL NO! The fraud gets more sophisticated, and the operation moves underground and gets entrenched. Everything has to be more subtle. Instead of the physical removal of actual cash from the casino count room, now the “corrections” to the books are being done through computer programs and failsafe loopholes in the equipment that leave most people down on their luck at the end of the night.

The partnership between Global Cash Access officials and Fertitta Enterprises is very troubling. The individuals who left Global Cash Access to head up Xyience’s bankruptcy dive were all connected to an alleged failure to report and pay out commissions for the venues where their cash machines were installed. The machines allowed casino patrons to make paperless transactions for gaming cards and other casino offerings. Fertitta Enterprises operates multiple casinos in which Global Cash Access machinery is placed. Why would the Fertitta Brothers do business with a bunch of the very same fraudsters who just potentially screwed their company out of millions? Did Kirk Sanford take over as Xyience CEO to repay his debt to Fertitta Enterprises? Was he so good at his GCA bailout that the Fertittas knew he would be a natural at bankrupting Xyience?

I feel my case is on the verge of a major breakthrough, because the time has come. This kind of thing just can’t go unnoticed anymore if we are to survive as a healthy nation. This and every penny ante scam like it should be sniffed out and stopped before it ever gets this bad. And we can’t handcuff the press for trying to warn people about what dangers lie ahead and what’s really going on behind the scenes. We can’t keep fighting for freedom in foreign lands and ignoring the lack of it in some places here. If we keep acting like freedom is something that’s passed down from the richer to the poorer, we’ll never make real progress.

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