BD wrote:
Chicago Sports Webio, created with such fanfare, generated only $2,300 in revenue, the SEC said.
I wonder what the revenue for the score or espn1000 is...
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| David Hernandez case: Investors tally their losses, pain, an https://mail.chicagofanatics.com/viewtopic.php?f=156&t=34421 |
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| Author: | BD [ Sat Jul 04, 2009 1:11 pm ] |
| Post subject: | David Hernandez case: Investors tally their losses, pain, an |
David Hernandez case: Investors tally their losses, pain, anger For dozens of investors, dream deals offered by Webio backer have turned into nightmares By Becky Yerak and Ameet Sachdev | Tribune reporters Two weeks ago, Fred Samp of northwest suburban Deer Park went to a job fair at Schaumburg High School. The 61-year-old is looking for work after he lost $156,000 entrusted to David Hernandez, the would-be media mogul accused of running an $11 million Ponzi scheme. Now that the steady interest payments Samp was receiving month after month from Hernandez have stopped, Samp and his wife, Linda, have missed mortgage payments. "We are going to lose our house," said Samp, a former sales manager. In the three weeks since the Securities and Exchange Commission brought financial fraud allegations against Hernandez, dozens of investors in the Chicago area and around the Midwest have confronted the reality that what looked and sounded like a spectacular deal when it was offered to them by Hernandez is being called a scam by the government. Some like Samp are shattered and trying to find ways to pay their bills. Others who invested less are angry at themselves for believing Hernandez, a Downers Grove resident who, they were stunned to discover, has a criminal record and a history of personal bankruptcies. The U.S. attorney's office in Chicago filed a criminal complaint against Hernandez, charging him with mail fraud. Hernandez, 48, fled Chicago on June 15 after the SEC filed its civil lawsuit. He was captured a week later, having apparently tried to commit suicide in a motel in Normal. Hernandez could not be reached for comment because he is in custody in a Peoria jail, waiting to be taken to Chicago to face charges. The investors' stories have been overshadowed by Hernandez's ties to Chicago radio personality Mike North, who partnered with Hernandez earlier this year to launch Chicago Sports Webio, an Internet radio station featuring sports talk shows. The association with North brought Hernandez, a sports fanatic, a lot of attention. One of Hernandez's companies sponsored North's cable TV show, allowing him to appear as a guest on the show. He threw promotional events for Webio at Hooters restaurants and U.S. Cellular Field, and spent $23,000 on a holiday party at the Ritz-Carlton in Chicago, government records show. Sports Webio went out of business last month after Hernandez's alleged scheme was exposed. The SEC claims that Hernandez broke securities laws by using investor funds for payroll and other expenses at Webio, and paying off existing investors with new investors' funds. "Hernandez bragged about knowing Mike North," said Len Locascio, a 56-year-old investor in Hoffman Estates. "His face would light up whenever he was around him and [co-host Dan] Jiggetts." Samp and Locascio are among a group of investors from the Chicago area. Others from Michigan and Wisconsin also have contacted the Tribune after learning about the SEC allegations against Hernandez and his key financial vehicle, NextStep Financial Services Inc. Mary Headley, who lives in Middleton, Wis., said she learned about NextStep Financial in late 2008 from a friend "who was going to get an additional source of income by letting people know" about the investment opportunity. Hernandez solicited funds from more than 100 investors in at least 12 states through NextStep Financial, the SEC said. Court records show that at least one of Hernandez's employees initially invested $10,000 with him. Interviews conducted with several investors reveal that Hernandez didn't have to personally recruit many investors. He relied on investors telling their friends and families. Headley said her three brothers invested with NextStep Financial. Sandy Rankel said she was among 15 friends and relatives in Michigan who gave Hernandez money. Samp said he invested some of his mother-in-law's savings with Hernandez and told some of his friends, including Locascio. "These people were close, old friends of mine," Samp said. "The only reason I told them was they showed me courtesy and grace and had helped me in the past. They asked me how I was doing this and I ended up telling them." Locascio said he holds no hard feelings toward Samp. "Fred's an honest guy," he said. "He was a true believer." Samp was in desperate financial straits in late 2007 when he first met Hernandez. He and his wife had filed for bankruptcy earlier that year and were planning to sell their home to pay off debts from a failed business venture. Their real estate agent introduced them to a mortgage broker who talked up Hernandez. The Samps met Hernandez in January 2008 at his offices at 225 W. Washington St. in downtown Chicago. Hernandez's office had pictures of him with Oprah Winfrey and former President George H.W. Bush. The walls were lined with awards. "He was calm and quite smooth," Samp said. "He said he liked to help people with problems." The Samps bought a $25,000 "guaranteed investment contract" from NextStep Financial. The contract agreed to pay a monthly interest rate of 15 percent. The contract made some unusual assurances. It said the funds were "insured by one of several National Insurance Groups, which include Fidelity, Nationwide and Equitable Insurance." The contract also said "taxes on this investment will be the responsibility of NextStep Financial Inc." Samp said he did some research. Hernandez said his primary investment was in payday loans, specifically Check 'n Go stores, so Samp looked into that. He also hired an online firm to conduct a background check on Hernandez. He said it came up with nothing, apparently missing Hernandez's previous convictions, including one for fraud. "We had to do something to get some cash flow," Samp said. "My back was against the wall." The checks started arriving in Samp's mailbox like clockwork after the 15th of every month. When he came into some more money, Samp invested it in NextStep, ultimately opening three accounts. In a September 2008 letter to investors, Hernandez said his firm was "one of the strongest middle market funds managers & investment firms in the nation," according to documents the SEC has filed with the federal court in Chicago. "I get calls every day from funds managers begging our group to take on their funds to improve the performance of their portfolios," Hernandez wrote. "I turn down millions of dollars from major financial institutions and investment firms across the country." Hernandez developed a Web site that showed how a $10,000 investment would be worth $31,958 after one year. In a December 2008 newsletter, he said all eight of parent NextStep Holdings Inc. subsidiaries, including NextStep Financial, were exceeding financial forecasts. His NextStep Tax Consultants, Hernandez claimed, had recently hired two former IRS lawyers. His Spectrum Entertainment, which would later include Chicago Sports Webio, also owned "high end yet affordable movie theaters, entertainment centers and skateboard parks," he wrote. Locascio opened his account in October with $45,000. "It sounded too good to be true, but Fred had been receiving checks for 10 months," he said. Locascio, though, began having some doubts after stumbling on an inconsistency while attending the Ritz-Carlton party in December, where filet mignon was served and every guest received a bottle of wine with "NextStep" etched in the glass. At the party, Hernandez told Locascio that one of his daughters attended Princeton University. Hernandez's wife, Gina, told Locascio that the daughter was going to a local college. In January, Locascio said, he asked Hernandez for $20,000 of his principal to help pay for his mother's medical bills. Hernandez obliged without asking any questions. The following month, Hernandez was late in sending checks out, Samp and other investors said. In March, some investors received no interest payments or statements. "So I called my contact person who worked for him," Headley said. She was told that high school students were helping Hernandez set up a new computer system. "High school kids?" an alarmed Headley thought. Headley was later told that account information was erased due to computer malfunctions. In a March 2 letter to investors, Hernandez apologized for delays in the processing of month-end statements and interest payments. By April, Headley still wasn't getting a statement. Hernandez became increasingly elusive, she and others found. On June 1, after getting wind that investors were complaining to the SEC, Hernandez contacted the agency via e-mail to try to convince it that he wasn't selling securities. Eleven days later, the FBI raided Hernandez's offices. The SEC alleges that Hernandez never invested in payday advance stores as he claimed, nor did he purchase the insurance policies that purportedly covered investor funds. It appears nearly everything Hernandez used in his sales pitches, including claims that he held two University of Wisconsin degrees, was untrue. Hernandez-controlled bank accounts had a total of $11.8 million in funds, of which $11.5 million came from investors, SEC records show. As of the court filing on June 15, the SEC had reviewed $8.1 million, of which $4.7 million went to income and principal payments to investors. The SEC said it believes that the "overwhelming majority" of the remaining $3.7 million also went to investors. Hernandez seems to have spent much of the rest. Some went to payroll and rent, while more than $275,000 went to advertising and promotion for Webio. The filing says that $632,000 of investor funds went to Hernandez, including $91,000 in checks made to his wife. Tim Martin, a lawyer for Gina Hernandez, said while the checks were made out to her, they were endorsed by David Hernandez. He said Gina had no knowledge of the checks, nor of the alleged Ponzi scheme. The books showed no income from payday lending businesses such as Check 'n Go. NextStep Medical's bank records also don't show any revenue flowing into any of the accounts, the SEC said. Chicago Sports Webio, created with such fanfare, generated only $2,300 in revenue, the SEC said. |
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| Author: | spmack [ Sat Jul 04, 2009 1:16 pm ] |
| Post subject: | Re: David Hernandez case: Investors tally their losses, pain, an |
BD wrote: Chicago Sports Webio, created with such fanfare, generated only $2,300 in revenue, the SEC said. Wow. |
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| Author: | SteveSarley [ Sat Jul 04, 2009 1:17 pm ] |
| Post subject: | Re: David Hernandez case: Investors tally their losses, pain, an |
That cannot be right. The SEC seems to be missing a couple of zeroes, don't they? |
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| Author: | crosscheck [ Sat Jul 04, 2009 1:21 pm ] |
| Post subject: | Re: David Hernandez case: Investors tally their losses, pain, an |
BD wrote: Chicago Sports Webio, created with such fanfare, generated only $2,300 in revenue, the SEC said. I wonder what the revenue for the score or espn1000 is... |
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| Author: | doug - evergreen park [ Sat Jul 04, 2009 1:26 pm ] |
| Post subject: | Re: David Hernandez case: Investors tally their losses, pain, an |
well, it's almost 5 figures for a 30 second commercial on national radio.... |
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| Author: | Pappy's Crappy [ Sat Jul 04, 2009 1:29 pm ] |
| Post subject: | Re: David Hernandez case: Investors tally their losses, pain, an |
crosscheck wrote: BD wrote: Chicago Sports Webio, created with such fanfare, generated only $2,300 in revenue, the SEC said. I wonder what the revenue for the score or espn1000 is... $2300??!! I'm laughing my ass off. From the Trib: Here are the top Chicago-area radio stations, as ranked by BIAfn's 2008 revenue estimates. 1. WBBM-AM 780......... $44.9 million 2. WGN-AM 720............ $44.5 million 3. WTMX-FM 101.9........ $34.8 million 4. WGCI-FM 107.5......... $29.7 million 5. WOJO-FM 105.1........ $22.9 million 6. WLIT-FM 93.9............ $22.1 million 7. WVAZ-FM 102.7........ $20.4 million 8. WLEY-FM 107.9........ $20.3 million 9. WUSN-FM 99.5......... $19.6 million 10. WXRT-FM 93.1......... $18.7 million 11. WBBM-FM 96.3........ $18.5 million 12. WLS-AM 890............ $18.0 million 13. WDRV-FM 97.1........ $16.8 million* 14. WKSC-FM 103.5...... $16.7 million 15. WSCR-AM 670........ $15.7 million 16. WLUP-FM 97.9........ $14.4 million 17. WKQX-FM 101.1...... $13.5 million 18. WMVP-AM 1000...... $13.1 million 19. WNUA-FM 95.5....... $12.3 million 20. WPPN-FM 106.7...... $9.7 million |
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| Author: | Pappy's Crappy [ Sat Jul 04, 2009 1:32 pm ] |
| Post subject: | Re: David Hernandez case: Investors tally their losses, pain, an |
BD wrote: Chicago Sports Webio, created with such fanfare, generated only $2,300 in revenue, the SEC said. "Dat woulda been way higher if we woulda sent out all dem invoices." |
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| Author: | Mr. Reason [ Sat Jul 04, 2009 1:36 pm ] |
| Post subject: | Re: David Hernandez case: Investors tally their losses, pain, an |
Pappy's Crappy wrote: BD wrote: Chicago Sports Webio, created with such fanfare, generated only $2,300 in revenue, the SEC said. "Dat woulda been way higher if we woulda sent out all dem invoices." "and If we woulda jus had sum mora dose billboards" |
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| Author: | Pappy's Crappy [ Sat Jul 04, 2009 1:40 pm ] |
| Post subject: | Re: David Hernandez case: Investors tally their losses, pain, an |
Just George's trip to Calgary ate up all the revenue because he said the plane ticket alone was $1,800. $2,300! That is just too funny. That brightened up my dark, rainy 4th of July. |
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| Author: | Pappy's Crappy [ Sat Jul 04, 2009 1:50 pm ] |
| Post subject: | Re: David Hernandez case: Investors tally their losses, pain, an |
BD wrote: Chicago Sports Webio, created with such fanfare, generated only $2,300 in revenue, the SEC said. Tribune wrote: 15. WSCR-AM 670........ $15.7 million "Da Innernets is like a jet. Regular radio is like a propeller plane." --Mike North, 2009 |
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| Author: | Baby McNown [ Sat Jul 04, 2009 2:04 pm ] |
| Post subject: | Re: David Hernandez case: Investors tally their losses, pain, an |
SteveSarley wrote: That cannot be right. The SEC seems to be missing a couple of zeroes, don't they? 
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| Author: | C_Howitt_Fealz [ Sat Jul 04, 2009 2:15 pm ] |
| Post subject: | Re: David Hernandez case: Investors tally their losses, pain, an |
| Does Ed Sherman still think this is a good business concept? |
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| Author: | Pappy's Crappy [ Sat Jul 04, 2009 2:18 pm ] |
| Post subject: | Re: David Hernandez case: Investors tally their losses, pain, an |
BD wrote: "Hernandez bragged about knowing Mike North," said Len Locascio, a 56-year-old investor in Hoffman Estates. "His face would light up whenever he was around him and [co-host Dan] Jiggetts." The above quote is kind of buried in all this, but does this mean the investors SAW Hernandez in the presence of North & Jiggs? North & Jigs were present at some function involving Hernandez's investors? That would be interesting. Or does the guy just mean he saw Hernandez with North & Jiggs on TV? |
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| Author: | C_Howitt_Fealz [ Sat Jul 04, 2009 3:16 pm ] |
| Post subject: | Re: David Hernandez case: Investors tally their losses, pain, an |
Forget Hernandez for a moment. If the station only generated $2,300 in revenue, that says a lot about Spacedump and North as salesmen, and the lack of confidence in the reach of webio. |
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| Author: | Score is doomed [ Sat Jul 04, 2009 3:18 pm ] |
| Post subject: | Re: David Hernandez case: Investors tally their losses, pain, an |
Pappy's Crappy wrote: Just George's trip to Calgary ate up all the revenue because he said the plane ticket alone was $1,800. $2,300! That is just too funny. That brightened up my dark, rainy 4th of July. What a joke!!! North has to be embarrassed that this came out! I can hardly stop laughing at this
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| Author: | Pappy's Crappy [ Sat Jul 04, 2009 3:39 pm ] |
| Post subject: | Re: David Hernandez case: Investors tally their losses, pain, an |
Good thing this company was run by that top-notch, veteran COO or things would have REALLY gone down the shitter! |
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| Author: | Sarah Marshall [ Sat Jul 04, 2009 3:46 pm ] |
| Post subject: | Re: David Hernandez case: Investors tally their losses, pain, an |
I have NO SYMPATHY for a bunch of saps who got conned by a con man. Every Get-Rich-Quick scheme in history has been a fraud, but they thought THIS ONE WAS DIFFERENT - hah! Suckers. |
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| Author: | Drop In [ Sat Jul 04, 2009 3:49 pm ] |
| Post subject: | Re: David Hernandez case: Investors tally their losses, pain, an |
It is nice to see Webio ended up on the Fortune 100,000,000. I feel bad for North since he lost out to my neighbor's 4 year old kid's lemonade stand. Maybe there is more money in opening up a stand??????? |
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| Author: | Pappy's Crappy [ Sat Jul 04, 2009 3:50 pm ] |
| Post subject: | Re: David Hernandez case: Investors tally their losses, pain, an |
How funny does this sound now in light of the $2,300 revenue figure? This was uttered about a week before the shit hit the fan: Mr. Hernandez said, "I know what my overhead expenses vs. revenues are. We're absolutely in a profit." |
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| Author: | Supercup [ Sat Jul 04, 2009 3:54 pm ] |
| Post subject: | Re: David Hernandez case: Investors tally their losses, pain, an |
Its obvious this idiot didnt do his homework about marketing on the internet. $2300.00? Thats fucking embarrassing, and prolly the reason why this clown is taking a week off from his dormant television gig, out of humliation. I wonder if this info was leaked to Comcast and they are looking for a way to get Nort off their channel, they have to be pulling their hair out. Hernandez pulled a financial ponzi scheme, but Nort pulled a ponzi scheme also if you think about it, he promised all these advertisers and 2300 bucks sure as fuck means he came up short. Hotels in Normal better get the discount rooms ready, they might have another broken person waiting to fort themselves. What died a worse death, Steve McNair, or Norts career? |
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| Author: | Supercup [ Sat Jul 04, 2009 3:55 pm ] |
| Post subject: | Re: David Hernandez case: Investors tally their losses, pain, an |
Drop In wrote: It is nice to see Webio ended up on the Fortune 100,000,000. I feel bad for North since he lost out to my neighbor's 4 year old kid's lemonade stand. Maybe there is more money in opening up a stand??????? 2300.00 in three months is less than what a drive thru clerk at McDonalds makes. |
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| Author: | Pappy's Crappy [ Sat Jul 04, 2009 4:02 pm ] |
| Post subject: | Re: David Hernandez case: Investors tally their losses, pain, an |
Supercup wrote: 2300.00 in three months is less than what a drive thru clerk at McDonalds makes. 12 weeks x 40 hrs/wk x $6.55/hr minimum wage = $3,144. It wouldn't even cover ONE minimum wage employee for 3 months. |
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| Author: | Pappy's Crappy [ Sat Jul 04, 2009 4:05 pm ] |
| Post subject: | Re: David Hernandez case: Investors tally their losses, pain, an |
Time of your life, huh, Jesse? No regrets, huh, Jesse?
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| Author: | Score is doomed [ Sat Jul 04, 2009 4:21 pm ] |
| Post subject: | Re: David Hernandez case: Investors tally their losses, pain, an |
Can't wait for Webio II
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| Author: | Pappy's Crappy [ Sat Jul 04, 2009 4:44 pm ] |
| Post subject: | Re: David Hernandez case: Investors tally their losses, pain, an |
Don't forget that whoever sold the advertising at webio got a 15% commission, so while $2,300 of revenue may have come in on the books, $345 was paid right back out, leaving only $1,955 for other expenses.
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| Author: | Pappy's Crappy [ Sat Jul 04, 2009 4:46 pm ] |
| Post subject: | Re: David Hernandez case: Investors tally their losses, pain, an |
C_Howitt_Fealz wrote: :lol: Does Ed Sherman still think this is a good business concept? Ed: "It just needs a little tweaking here and there. When it's re-launched can I come to the party and will there be a dessert cart?" |
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| Author: | HawaiiYou [ Sat Jul 04, 2009 5:39 pm ] |
| Post subject: | Re: David Hernandez case: Investors tally their losses, pain, an |
$2300 LMFAO!! Mahogany Tables! |
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| Author: | Cuda [ Sat Jul 04, 2009 5:40 pm ] |
| Post subject: | Re: David Hernandez case: Investors tally their losses, pain, an |
Quote: Jesse Rogers, who left CBS Radio's WSCR-AM 670 to be program director for Webio, told listeners. "We were making good money. We were spending money, which is what you have to do to make a good station." Or not |
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| Author: | Pappy's Crappy [ Sat Jul 04, 2009 5:51 pm ] |
| Post subject: | Re: David Hernandez case: Investors tally their losses, pain, an |
HawaiiYou wrote: $2300 LMFAO!! Mahogany Tables! And apparently the tables were leased and now he's being sued for unpaid rent on them! |
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| Author: | C_Howitt_Fealz [ Sat Jul 04, 2009 6:09 pm ] |
| Post subject: | Re: David Hernandez case: Investors tally their losses, pain, an |
$2300 - bunch of high schoolers could have thrown a bunch of podcasts together, sold some spots and banners, and done better than that. |
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