Bitcoin Magazine is now run by fraudsters! Facts exposed.

 Bitcoin Magazine is now run by fraudsters!

A few emails and documents related to theft of Bitcoin Magazine from it's original owners were obtained from a reliable source.

Based on this information it appears that a theft/fraud was perpetrated by Mihai Alisie, a resident of Romania and masterminded by Anthony Gallippi, a resident of USA who is also known as owner of Bitpay, a Bitcoin payment processing service.

According to the documents seen, a number of well known in Bitcoin Community people are also implicated in this fraud as it's financial backers and who are now in possession and beneficiaries of the stolen property.

Below are the facts that could be ascertained from the documents I had access to, followed by my conclusion and opinion based on these facts.

 1. Bittalk Media Ltd., is a company registered in UK on 23/12/2011

From Companies House website http://www.companieshouse.gov.uk/:

Status: Active
Date of Incorporation: 23/12/2011

Country of Origin: United Kingdom
Company Type: Private Limited Company
Nature of Business (SIC):
None Supplied
Accounting Reference Date: 31/12
Last Accounts Made Up To:  (NO ACCOUNTS FILED)
Next Accounts Due: 23/09/2013
Last Return Made Up To:
Next Return Due: 20/01/2013 OVERDUE

Note how accounts are overdue since January 2013.

According to companieshouse.org.uk Mihai Alisie is the only director of the company staring from 12/11/2012

The company is original producer and owner of Bitcoin Magaizne.

 2. COIN PUBLISHING LLC is the company that holds the stolen property (Bitcoin Magazine).

data from http://www.sunbiz.org

Registered Agent Name & Address

GALLIPPI, ANTHONY
411 E AMELIA ST.
ORLANDO FL 32803
Name Changed: 01/30/2013
Address Changed: 01/30/2013

Manager/Member Detail

GALLIPPI, ANTHONY
411 E AMELIA ST.
ORLANDO FL 32803
Title MGRM

ALISIE, MIHAI
STR. X. NR. 29 LOC. CHRISTIAN
JUD. SIBIU 557085 ROMANIA XX
Title MGRM
LEE, CHARLES B
341 LEVIN AVENUE
MOUNTAIN VIEW CA 94040

Note presence of ALISIE, MIHAI and GALLIPPI, ANTHONY

 3. There are unconfirmed reports that J. Matonis (forbes.com), D. Perry (codinginmysleep.com)
S. Pair (bitpay.com) and V. Buterin (bitcoinmagazin.com) are co-founders of Coin Publishing LLC and as such are implicated in handling of and benefiting from stolen property.

 4. According to documents I have seen M. Alisie while being the only director of
Bittalk Media Ltd (the original owner and producer of Bitcoin Magazine):

 - has abandoned shareholders of the company and the company after stealing it's assets;

 - refused to call a shareholder meeting after it was lawfully requested by a shareholder;

 - failed to file annual paperwork with Companies House for Bittalk Media Ltd.

 - run an orchestrated smearing campaign against a shareholder of Bittalk Media Ltd who was going to vote against the sale and was going to bid for the assets of the company in case of it's sale.

 - within a few days after M. Alisie was entrusted with control of the company in conspiracy with A. Gallippi  and evidently in conspiracy with  J. Matonis, D. Perry, S. Pair and V. Buterin sold all the valuable assets of Bittalk Media Ltd. and perpetrated a variant of so called "Tunneling Fraud" http://en.wikipedia.org/wiki/Tunneling_(fraud)

   Furthermore, this was done in secret from some shareholders and after those shareholders stated that if assets of the company are to be sold they would bid for the assets.

   Furthermore, this was done without proper shareholder vote, as required by law and in secret from at least some shareholders (those who would oppose the fraud or perhaps expose the fraudsters to other shareholders).

 5. Additional facts related to the fraud:

- The sale of assets was completed in less than one-two weeks
(refer to http://en.wikipedia.org/wiki/Tunneling_(fraud))

- The sale was done to a company in which M. Alisie has interest.

- Details of the sale are still held in secret from some shareholders of Bittalk Media Ltd.

- M. Alisie has failed to arrange for an audit of company accounts that was lawfully requested by a shareholder.

- M. Alisie has failed to call a shareholder meeting that was lawfully requested by a shareholder.

- Emails that previously could be used to contact Bitcoin Magazine and Bittalk Media Ltd. are not working now.

- on 20st of 2012 M. Alisie bought domain bitcoinmagazine.com for Bittalk Media Ltd. acting on direct instructions from management of Bittalk Media and using companies money that were specifically transferred to M.Alisie for purpose of buying the domain.

- M.Alisie later claimed that the domain botcoinmagazine.com belong to himself.

- Domain bitcoinmagazine.com was not included in the list of assets sold to Coin Publishing (stolen by them).

- Domain bitcoinmagazine.com is now being used by Coin Publishing as Bitcoin Magazine's main website.

- All valuable assets of the company were “sold” at about 10% of valuation (rough estimation). The estimation is based on what a well known investor Brian Cartmel paid for a stake in the company in June of 2012.

- Part of proceeds of the sale were used for production of Bitcoin Magazine while Bittalk Media could not possibly benefit from it because all the intellectual property was already transferred to the fraudsters.

- M. Alisie is hiding from shareholders of Bittalk Media Ltd and does not respond to emails or letters.

- M. Alisie is in hiding with the rest of the money (some of them reportedly in form of Bitcoins) and shareholders of Bittalk Media Ltd. have not received a penny or a satoshi. Some shareholders that are in on the fraud might have been paid.

 6. Comparison with classic Tunneling Fraud.

Based on the mentioned above facts and description of Tunneling Fraud we can observe a high degree of correlation with the mentioned above Tunneling Fraud.
see
http://en.wikipedia.org/wiki/Tunneling_(fraud)
http://www.economics.harvard.edu/faculty/shleifer/files/tunneling.pdf

The typical 7-Step 'Tunneling' Process:

>Step 1: Identify and incentivise a trusted company 'insider', usually in the finance dept,
>that will be willing to trample over company compliance and authorizations – and enter
>secretly into a loan/loans - with a person 'outside' of the company.
>‘Granting’ a partial or a full 'security’ over some of, or over
>the assets, or over the entire business and all of its assets.


In this case M. Alisie and V. Buterin evidently (based on skype logs) had an intention to defraud the company and its shareholders well before the described events. Note how M.Alisie has stolen domain bitcoinmagazine.com by buying it following instructions of the management of the company and then claiming it for himself. It appears that "insiders" have incetivised and "outsider" to help them with this fraud.

>Step 2: Rapidly run down the cash in the company, usually by buying and holding in inventory equipment
>and stock - that is unnecessary at that time.

In this case M. Alisie made it impossible for the company to rise funds as it was planned. He has intentionally run interference with all vital negotiations the company was involved in.

>Step 3: At short (sometimes only 24-48 hours) notice, announce that the company is ‘insolvent’ -
>and have the company immediately forced into a bankruptcy process.

In this case all valuable assets of the company were sold for 10% of fair value and proceeds of the sale partially were used as operating capital for the fraudsters and the rest was simply stolen. Also note the quick sale.

>Step 4: The ‘only'/'main creditor’ is of course the local 'outsider’ - and so it is THEY
> that dominates a rapidly assembled
> ‘creditors committee’ - which similarly rapidly agrees to sell some or all of the company assets....
> to a holding company
> that THEY already control.

In this case, the fraudsters quickly completed the sale and kept it in secret from some shareholders and potential bidders and still keep the details secret from original owners.

>Step 5: Knowing that the original owners are eventually likely to seek justice and also
>the re-establishment of ownership
>of their assets, the ‘tunnellers’ next typically pay a local Police Dept officer,
>to file (knowingly false) 'charges’ -
>against the original owner of the company – usually by claiming that a 'loan' or ‘loans’
>(which the original owners were
>entirely unaware of!) were ‘taken, with no intention of repaying them’.

In this case they run an orchestrated defamation campaign against those who complained and have
disclosed some of the relevant facts publicly. This was a clear ad hominem attack in which they used
multiply lies, effectively (and falsely) accusing opponents of embezzling.

>Step 6: The ‘tunnelers’ typically pay a local Local/Regional Court official, to:
> (a) accept the knowingly false ‘charges’
> (b) hold ‘Court Hearings’, without serving any formal Notice on the victim - the original owners
> (c) gain ‘convictions’ against the original owners.

In this case, there is an example, where the fraudsters have paid to those who helped to vilify and persecute some original owners of Bitcoin Magazine by providing these "helpers" free publicity. Namely this refers to B. Santos operator of UpTweet.

>Step 7: The ‘tunneler’ next offers a ‘Settlement Agreement’ - under which:
>(i) they get to keep all of the misappropriated assets, that they have ‘legitimately purchased from the ‘creditor’s committee’.
>(ii) they have a clause included, whereby the original owner  agrees to waive all rights - to ever sue the 'tunnelers' in the future.
(iii) the 'tunnelers' agree to retract all of the knowing false claims and allegations - that they made against the original owner – thereby quashing all any ‘convictions’ or ongoing legal proceedings.

They have not gotten to this stage just yet, or maybe they thought that they will get away with this.

 7. what's next?

I was told that a first lawsuit has been already filed with a court in England against the perpetrators, that a defamation lawsuit is being prepared and will be started after the first lawsuit has some progress and the discovery is done.

Meanwhile, relevant documents are being prepared to get Serious Fraud Office (SFO, UK) involved to push for criminal prosecution of the fraudsters. If the criminal case is not successful then a civil fraud case will be brought up eventually.