Ramy El-Batrawi has based 27 firms that are actually inactive or dissolved, hawking every little thing from relationship counseling to futures buying and selling to van leases to Alaskan fishing holidays, a HuffPost overview of state data finds. He even ran a journey company in Palm Seaside, Florida, with a Saudi arms dealer concerned within the Iran-Contra affair, and was named as a go-between for an offshore entity listed within the Panama Papers.
In 2010, the Securities and Trade Fee barred El-Batrawi from being an government in a publicly traded firm for 5 years as a part of the settlement over a $130 million inventory fraud case towards an organization he led till it collapsed in 2001.
Now that his prohibition interval is over, El-Batrawi has one thing new to promote: shares in YayYo, a price-comparing ride-sharing app that doesn’t presently work.
The corporate, with El-Batrawi as CEO, is attempting to promote $50 million in inventory ― which it will probably do due to newly relaxed securities legal guidelines that permit speculative startups elevate cash from mom-and-pop buyers. Proponents of the legal guidelines mentioned they’d boost the economy and create jobs, whereas critics mentioned the loosened guidelines put folks’s cash in danger.
YayYo paid Grasp P to report a promotional track for the corporate and has been working TV adverts on daytime cable information for weeks that includes the actor John O’Hurley, who famously performed a catalog salesman peddling unusual merchandise and eccentric tales on “Seinfeld.”
“What in the event you had been an early investor in Uber or Lyft — what would you be value in the present day?” O’Hurley asks. The reply, he says, is that you’d have made “made tens of millions, if not tens of tens of millions.” (Uber and Lyft are valued at $62.5 billion and $7.four billion, respectively.)
However wait, there’s extra: YayYo, O’Hurley says, may simply develop even sooner that Uber and Lyft. When and if YayYo’s app works, it can allow you to examine costs from completely different ride-hailing firms by plugging straight into the info that firms like Uber and Lyft have made accessible to third-party developers.
Because the outdated saying goes, if it sounds too good to be true, it’s in all probability working inventory adverts on Fox Information at 11:45 on a random weekday morning.
Lyft has already filed a stop and desist order towards YayYo and barred the corporate from utilizing its knowledge, a spokesman informed HuffPost. Uber didn’t return HuffPost’s request for remark, however BuzzFeed’s Will Alden noted that the corporate’s phrases don’t permit its knowledge to be aggregated with that of its opponents.
A ride-hailing price-comparison app that may’t examine the costs of the 2 dominant ride-hailing providers is extraordinarily unlikely to succeed, not to mention be bigger and extra in style than the 2 multi-billion-dollar firms whose knowledge it’s supposed to make use of.
A spokesperson for YayYo declined HuffPost’s request to remark for this story. Bob Vanech, a YayYo board member, informed BuzzFeed final week that the corporate was prone to meet its $50 million objective.
A ride-hailing price-comparison app that may’t examine the costs of the 2 dominant ride-hailing providers is extraordinarily unlikely to succeed.
Buried on web page 54 of YayYo’s 69-page providing doc filed with the Securities and Trade Fee is a biography that particulars a few of El-Batrawi’s previous enterprise ventures, in addition to his historical past of working afoul of economic regulators. What received him briefly banned from working a public firm was his management of GenesisIntermedia, a telemarketing firm.
The SEC alleged that El-Batrawi and Adnan Khashoggi ― a Saudi arms vendor who was rumored to be the world’s richest man within the 1980s ― created an offshore firm to carry 15 million share of Genesis’ inventory. The offshore entity then lent these shares to stockbrokers in return for money. The mortgage agreements, the SEC mentioned, meant that if the value of Genesis inventory rose, El-Batrawi and Khashoggi would obtain more money.
In order that they allegedly pumped up the value of the inventory by making false statements concerning the firm’s funds and limiting the variety of shares that would commerce. Additionally they paid an actress to advertise the inventory in TV commercials.
When the worth of Genisis inventory fell because the inventory market dropped after the 9/11 terrorist assaults, El-Batrawi and Khashoggi had been presupposed to pay again their loans, however they defaulted, bankrupting the brokers who had given them money. The Securities Investor Safety Company, a government-mandated trade group that successfully insures prospects’ accounts when a brokerage goes beneath, needed to step in with what was on the time the company’s largest-ever bailout.
Not less than 9 different firms El-Batrawi registered had been dissolved between 2002 and 2004 for failing to pay annual charges or to file stories to the state officers. Douglas Jacobsen, who was Genesis’ former chief monetary officer, informed HuffPost he had created 20 or 30 completely different entities for El-Batrawi, various which had been successfully shuttered in 2001.
Jacobsen blamed the Sept. 11 assaults for the companies’ failures: “9/11 ruined every little thing for everyone,” he mentioned. Whereas that rationalization appears insensitive, it’s in all probability not completely improper: Sudden inventory market drops like these after 9/11 will help unmask fraudulent enterprise schemes that depend on inventory costs persevering with to go up. When the general inventory market dropped, it dragged Genesis’ inventory down and prompted the brokers to ask for his or her a refund ― solely to find they weren’t getting paid again.
However even in disclosing these not-very-promising previous enterprise ventures in his YayYo’s SEC submitting, El-Batrawi could also be overstating his skilled background.
The providing doc says that El-Batrawi additionally based Aloha Aviation Group, which then partnered with an funding automobile run by billionaire Ron Burkle to amass the then-bankrupt Aloha Airways in 2005.
A spokesman for Burkle’s agency, The Yucaipa Firms, declined to remark, however an in depth affiliate of El-Batrawi informed HuffPost the SEC submitting doesn’t precisely state what occurred. El-Batrawi tried to deliver Yucaipa offers and introduce the corporate to folks, however it didn’t actually pan out. El-Batrawi, the affiliate mentioned, is “being slightly bit quick and unfastened” ― exaggerating his involvement within the deal to bolster his résumé.
YayYo is sort of precisely what critics of the Jumpstart Our Enterprise Startups Act ― the JOBS Act ― feared when President Barack Obama signed the invoice in 2012. (The SEC completed the ultimate rulemaking to implement the legislation in 2015.) The laws capitalized on the concept crowd-funding might assist enhance the economic system by kickstarting investments in small, progressive and dangerous firms which are usually open solely to stylish buyers like enterprise capitalists.
“It’s actually arduous to see how eradicating fundamental investor protections and exposing tens of millions of Individuals to ripoffs will spur ‘jobs,’ however it isn’t arduous to recollect the way it helped destroy the economic system,” Tyler Gellasch, a former Senate staffer and counsel for SEC Commissioner Kara Stein informed HuffPost. “Sadly, that’s precisely the place Congress and the SEC appear to now be headed.”
From Gellasch’s perspective, the JOBS Act was a siren name to for shady businessman to take cash from gullible buyers. In YayYo’s case, it looks as if that’s precisely what’s taking place.