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FYI: I came across this recent article on Newswire for those who have an
interest.
DEMISE OF ARIEL A REAL WHODUNIT
The San Diego Union-Tribune, SUNDAY May 1, 1994
By: DON BAUDER
Edition: FINAL Section: Business, Page I-1
Word Count: 1435
TEXT:
Ariel Life Systems now lies lifeless. Who done it? Probers are picking over
the corpse for clues.
The company is being liquidated in Chapter 7 bankruptcy. Also in Chapter 7 is
the one-time San Diego multimillionaire who headed it, Donald Brucker.
There were some characters on the payroll, to be sure.
One was John F. D'Acquisto, the former Padres pitcher who has been making
astonishingly preposterous statements of late: That as an investment adviser,
his clients make 5 percent a week--that's week (italics)--and that he has
$182 billion--that's billion (italics)--under management...all after being
fired by Ariel a year ago.
Ariel was a shell and a sham, D'Acquisto claims in a lawsuit.
Meanwhile, the Securities and Exchange Commission (SEC) is investigating
D'Acquisto's investment activities.
Don't blame the product
In the Ariel demise, many people are pointing fingers at one another, but one
thing stands out: The company's products were good.
Before its demise, Ariel Life Systems made and marketed computerized movement
analysis systems, used by athletes to analyze their mechanics, and also
utilized in medical rehabilitation.
Ariel also made a computerized exercise system. The inventor of the machines,
Gideon Ariel, a former officer of Ariel Life Systems, now has his own company
selling the products.
"(Ariel's) products were recognized in the industry as state of the art," and
there was a good market for them, says John Bodkin, a business consultant to
the debenture holders, who lost a collective $3 million in the calamity.
"Having gone over the books, I can say it was very poorly managed," Bodkin
says. "As financial problems increased, the only source of funds to bail (the
company) out was a public offering," and management cooked the books for that
offering, which never took place--pushing the company into bankruptcy.
"They started with a good idea, and it quickly turned into basically a money
siphon for the owners of the company," says attorney Kevin J. Hoyt, head of
the debenture holders committee.
"They were taking a lot of money out of a company that was losing money, and
hiding that fact from investors," Hoyt says. "I believe that my clients were
defrauded."
Chapter 7 challenge
Indeed, such charges have been made in a pending challenge to the
dischargeability of Brucker's debts in his Chapter 7 case. In a detailed
document, the investors claim their money was solicited "by false pretenses,
false representations and/or actual fraud and/or in violation of various
securities laws."
The complaint charges that management overstated sales, made untrue
statements and omitted material facts in trying to put together the public
offering.
"Many systems were listed as sold when in fact they had been shipped on a
trial basis," say the investors. They charge that Ariel or his companies took
out more than $1 million in the year ended June 1993 even though the company
was on the edge of moribundity.
Brucker took out half a million dollars during the same period, according to
the irate investors.
If the investors prevail, they will have future claim on any money that
Brucker makes in his attempt to reconstruct his life. What's particularly
poignant is that in 1980, Brucker was paid $23 million for a contact lens
company he had launched two decades earlier.
Now the money is gone, says Brucker--and his bankruptcy trustee, Richard M.
Kipperman, agrees that there is no money for creditors.
There appears to be little doubt that, in trying to boost sales, the company
engaged in some loose practices--shipping products out on extremely easy
terms, and counting them as sales.
Indeed, Brucker says, "We were counting them as sales when they were shipped.
That is correct. I thought sales at that time were honestly what I said they
were."
Says Ariel, "He (Brucker) created sales that did not exist--sending to a
hospital based on a promise that this is a sale-- but he never sent product
to someone who didn't exist."
Customers didn't make down payments and were given 90 to 120 days to pay.
"When we were supposed to get the money was questionable," allows Ariel.
Two former employees charge that when the auditor was coming to check sales,
management ordered that some inventory be stashed in a van at a remote
location to make it appear it had been sold.
"To the best of my knowledge, that is absolutely untrue," Brucker says.
He also says that he took no money out of Ariel Life Systems--indeed, lost $4
million in the adventure. Funds that accountants think went to him actually
were interest payments simply going through him to a lender to whom he had
pledged personal assets, says his lawyer, Michael E. Steres.
Ariel says he was paid $25,000 a month, but also was reimbursed for parts and
machines that he supplied. He doesn't argue with the $1 million--but says it
wasn't just compensation.
A large investor, Larry D. Greene, said in a court declaration that he told
both Brucker and Ariel that he would be willing to make the investment, as
long as he was guaranteed that the money would only go into production of the
machines and not for payments to Ariel or Brucker.
"They both repeatedly so promised," said Greene, but within days, some of the
money was being steered to Ariel for past royalties that were in arrears, he
says.
"I never met with him (Greene)," Ariel asserts.
A former Ariel employee, Ellen Joaquim, also declared in a statement that she
overheard top managers (former employees of Brucker's at his contact lens
company) saying that "Brucker was exaggerating actual (sales) figures by
several times and reporting these exaggerated figures to prospective
shareholders and investors." Ariel had also been told of the exaggerations,
she said.
Brucker and Ariel deny the accusations.
But there's agreement that the company fell apart when a Wall Street firm
said that if there was to be a public offering, the company would have to
have $12 million in sales for the year ended in mid-1993. "We couldn't
possible make $12 million," Brucker says. "It started us down the slippery
slope (to bankruptcy)."
It didn't help that the company paid $30,000 a month for posh La Jolla
quarters and $11,000 for another office. Brucker admits that was the cost at
the end, but says there were concessions such as free rent early in the game
that brought the actual cost down.
D'Acquisto questions
There are many questions about D'Acquisto. He was hired to help sell the
device to people involved in athletics. At the same time, he was operating a
company called D'Acquisto Financial Group (DFG Inc.), an entity he still uses
in his alleged investment business.
According to Secretary of State records, DFG's corporate status was suspended
in 1987. In an earlier interview, D'Acquisto's lawyer, Thomas F. Goodman,
attempted to explain by saying, "This corporation (DFG) is no longer in
existence, but is a DBA of Palm Springs Starts (Baseball Club Inc.)," another
D'Acquisto company.
In any case, D'Acquisto was cooking up financial schemes while he should have
been selling equipment, say former Ariel employees. Gideon Ariel says that
following D'Acquisto's instructions, he went to Switzerland to set up a bank
account, and then to Nigeria to see a supposed prospective customer.
He met with two people who claimed to be the oil minister and education
minister of that country. "They wanted me to transfer $50 million to Zurich,"
says Ariel, but their equipment order was only for $2 million. "John
D'Acquisto said I should sign. I was scared to death," recalls Ariel, who
then fled Nigeria.
"That was his (Ariel's) deal, not mine. I told him not to go," D'Acquisto
insists.
Another time, D'Acquisto wanted Ariel to get airplanes to fly gold out of
Russia.
"That's pompous and ludicrous," D'Acquisto says. "They (Ariel management)
screwed up; I didn't screw up. They mismanaged the funds."
D'Acquisto then abruptly ended the conversation with this columnist.
D'Acquisto spent lavishly and didn't produce sales, says Ariel, recalling
customers that D'Acquisto said would produce millions and even billions of
dollars in sales that never materialized. "I came to Don Brucker and said he
(D'Acquisto) was talking about billions in sales--why not trillions?" laughs
Ariel.
"The guy who took Don Brucker down was John D'Acquisto," Ariel says.
Brucker denies that. It's true that D'Acquisto was a big spender of company
funds, and a very big talker, but he was not taken seriously. "He would make
all sorts of comments. I more or less ignored them," Brucker says.
However, D'Acquisto was permitted to operate DFG from Ariel offices.
COPYRIGHT Newswire 1994
interest.
DEMISE OF ARIEL A REAL WHODUNIT
The San Diego Union-Tribune, SUNDAY May 1, 1994
By: DON BAUDER
Edition: FINAL Section: Business, Page I-1
Word Count: 1435
TEXT:
Ariel Life Systems now lies lifeless. Who done it? Probers are picking over
the corpse for clues.
The company is being liquidated in Chapter 7 bankruptcy. Also in Chapter 7 is
the one-time San Diego multimillionaire who headed it, Donald Brucker.
There were some characters on the payroll, to be sure.
One was John F. D'Acquisto, the former Padres pitcher who has been making
astonishingly preposterous statements of late: That as an investment adviser,
his clients make 5 percent a week--that's week (italics)--and that he has
$182 billion--that's billion (italics)--under management...all after being
fired by Ariel a year ago.
Ariel was a shell and a sham, D'Acquisto claims in a lawsuit.
Meanwhile, the Securities and Exchange Commission (SEC) is investigating
D'Acquisto's investment activities.
Don't blame the product
In the Ariel demise, many people are pointing fingers at one another, but one
thing stands out: The company's products were good.
Before its demise, Ariel Life Systems made and marketed computerized movement
analysis systems, used by athletes to analyze their mechanics, and also
utilized in medical rehabilitation.
Ariel also made a computerized exercise system. The inventor of the machines,
Gideon Ariel, a former officer of Ariel Life Systems, now has his own company
selling the products.
"(Ariel's) products were recognized in the industry as state of the art," and
there was a good market for them, says John Bodkin, a business consultant to
the debenture holders, who lost a collective $3 million in the calamity.
"Having gone over the books, I can say it was very poorly managed," Bodkin
says. "As financial problems increased, the only source of funds to bail (the
company) out was a public offering," and management cooked the books for that
offering, which never took place--pushing the company into bankruptcy.
"They started with a good idea, and it quickly turned into basically a money
siphon for the owners of the company," says attorney Kevin J. Hoyt, head of
the debenture holders committee.
"They were taking a lot of money out of a company that was losing money, and
hiding that fact from investors," Hoyt says. "I believe that my clients were
defrauded."
Chapter 7 challenge
Indeed, such charges have been made in a pending challenge to the
dischargeability of Brucker's debts in his Chapter 7 case. In a detailed
document, the investors claim their money was solicited "by false pretenses,
false representations and/or actual fraud and/or in violation of various
securities laws."
The complaint charges that management overstated sales, made untrue
statements and omitted material facts in trying to put together the public
offering.
"Many systems were listed as sold when in fact they had been shipped on a
trial basis," say the investors. They charge that Ariel or his companies took
out more than $1 million in the year ended June 1993 even though the company
was on the edge of moribundity.
Brucker took out half a million dollars during the same period, according to
the irate investors.
If the investors prevail, they will have future claim on any money that
Brucker makes in his attempt to reconstruct his life. What's particularly
poignant is that in 1980, Brucker was paid $23 million for a contact lens
company he had launched two decades earlier.
Now the money is gone, says Brucker--and his bankruptcy trustee, Richard M.
Kipperman, agrees that there is no money for creditors.
There appears to be little doubt that, in trying to boost sales, the company
engaged in some loose practices--shipping products out on extremely easy
terms, and counting them as sales.
Indeed, Brucker says, "We were counting them as sales when they were shipped.
That is correct. I thought sales at that time were honestly what I said they
were."
Says Ariel, "He (Brucker) created sales that did not exist--sending to a
hospital based on a promise that this is a sale-- but he never sent product
to someone who didn't exist."
Customers didn't make down payments and were given 90 to 120 days to pay.
"When we were supposed to get the money was questionable," allows Ariel.
Two former employees charge that when the auditor was coming to check sales,
management ordered that some inventory be stashed in a van at a remote
location to make it appear it had been sold.
"To the best of my knowledge, that is absolutely untrue," Brucker says.
He also says that he took no money out of Ariel Life Systems--indeed, lost $4
million in the adventure. Funds that accountants think went to him actually
were interest payments simply going through him to a lender to whom he had
pledged personal assets, says his lawyer, Michael E. Steres.
Ariel says he was paid $25,000 a month, but also was reimbursed for parts and
machines that he supplied. He doesn't argue with the $1 million--but says it
wasn't just compensation.
A large investor, Larry D. Greene, said in a court declaration that he told
both Brucker and Ariel that he would be willing to make the investment, as
long as he was guaranteed that the money would only go into production of the
machines and not for payments to Ariel or Brucker.
"They both repeatedly so promised," said Greene, but within days, some of the
money was being steered to Ariel for past royalties that were in arrears, he
says.
"I never met with him (Greene)," Ariel asserts.
A former Ariel employee, Ellen Joaquim, also declared in a statement that she
overheard top managers (former employees of Brucker's at his contact lens
company) saying that "Brucker was exaggerating actual (sales) figures by
several times and reporting these exaggerated figures to prospective
shareholders and investors." Ariel had also been told of the exaggerations,
she said.
Brucker and Ariel deny the accusations.
But there's agreement that the company fell apart when a Wall Street firm
said that if there was to be a public offering, the company would have to
have $12 million in sales for the year ended in mid-1993. "We couldn't
possible make $12 million," Brucker says. "It started us down the slippery
slope (to bankruptcy)."
It didn't help that the company paid $30,000 a month for posh La Jolla
quarters and $11,000 for another office. Brucker admits that was the cost at
the end, but says there were concessions such as free rent early in the game
that brought the actual cost down.
D'Acquisto questions
There are many questions about D'Acquisto. He was hired to help sell the
device to people involved in athletics. At the same time, he was operating a
company called D'Acquisto Financial Group (DFG Inc.), an entity he still uses
in his alleged investment business.
According to Secretary of State records, DFG's corporate status was suspended
in 1987. In an earlier interview, D'Acquisto's lawyer, Thomas F. Goodman,
attempted to explain by saying, "This corporation (DFG) is no longer in
existence, but is a DBA of Palm Springs Starts (Baseball Club Inc.)," another
D'Acquisto company.
In any case, D'Acquisto was cooking up financial schemes while he should have
been selling equipment, say former Ariel employees. Gideon Ariel says that
following D'Acquisto's instructions, he went to Switzerland to set up a bank
account, and then to Nigeria to see a supposed prospective customer.
He met with two people who claimed to be the oil minister and education
minister of that country. "They wanted me to transfer $50 million to Zurich,"
says Ariel, but their equipment order was only for $2 million. "John
D'Acquisto said I should sign. I was scared to death," recalls Ariel, who
then fled Nigeria.
"That was his (Ariel's) deal, not mine. I told him not to go," D'Acquisto
insists.
Another time, D'Acquisto wanted Ariel to get airplanes to fly gold out of
Russia.
"That's pompous and ludicrous," D'Acquisto says. "They (Ariel management)
screwed up; I didn't screw up. They mismanaged the funds."
D'Acquisto then abruptly ended the conversation with this columnist.
D'Acquisto spent lavishly and didn't produce sales, says Ariel, recalling
customers that D'Acquisto said would produce millions and even billions of
dollars in sales that never materialized. "I came to Don Brucker and said he
(D'Acquisto) was talking about billions in sales--why not trillions?" laughs
Ariel.
"The guy who took Don Brucker down was John D'Acquisto," Ariel says.
Brucker denies that. It's true that D'Acquisto was a big spender of company
funds, and a very big talker, but he was not taken seriously. "He would make
all sorts of comments. I more or less ignored them," Brucker says.
However, D'Acquisto was permitted to operate DFG from Ariel offices.
COPYRIGHT Newswire 1994