What to expect from Bitcoin Magazine

[MPOE-PR]

In case any of the two gents is inclined to comment on the

02/11/12 VM Consulting discussing trade trick of selling cars with Mihai

line in Marchenko's invoice #100001, I'd very much like to hear all about it.

The reason I ask is because a different fuckwit by the name of Lee Wilkins is currently spending time in a Romanian prison over such a "trade trick of selling cars". Seeing how that'd be the exact same sort of Interneteer you are, I'm curious.

What exact tricks were you turning inside, about, and around cars, Vladimir & Mihai?

[cunicula]

I think he is a new owner, right? If the sale was based on defrauding minority shareholders (as Vladimir claims and I think may be true), then Steve has every reason to ask everyone to get past this drama. After all, he is the guy who bought the stolen property.

It's Tony from BitPay who is one of the new owners.

The extent to which minor share-holders were excluded from the process would probably be clearer if Vladimir disclosed the extent of his own and his wife's holdings - given that it's claimed 75% of shareholders accepted the proposal how much of the remaining 25% was controlled by Vladimir and his wife is extremely relevant to whether "minority shareholders" were "defrauded".

Even if Valdimir is the sole minority shareholder, I'm pretty sure that it is a breach of fiduciary duty for the majority shareholders to dissolve the LLC without providing the minority shareholders with advance notice. The minority shareholders must be given an opportunity to voice objections prior to the dissolution if their participation has any chance of affecting the outcome. Even though the minority shareholders lack the voting power to block the dissolution directly, they could still might voice objections that influence the decisions of other shareholders. Thus the rule. This is true even if there are no other forms of self-dealing involved.

e.g. a large shareholder says: we should sell the company for 60k. That is the best we can get. Everyone who is notified (say 75% of shareholders) votes yes. However, if the minority shareholder had been presented and pointed out that there was another offer for 120k available, then this would likely have affected the vote outcome. To prevent this situation, we have the rule that all shareholders must be given advance notice before extremely big decisions like this are made. This is a minority shareholder protection. (one way out is if they are incorporated in some ghetto state which makes laws to favor elites. If so, these protections are often absent. However, my guess is that it is a UK corporation. The UK has very good protection for minority shareholders.)

Maybe there are some other experts out there who can help out? I am not a lawyer and don't have any legal expertise.

[boonies4u]

I think he is a new owner, right? If the sale was based on defrauding minority shareholders (as Vladimir claims and I think may be true), then Steve has every reason to ask everyone to get past this drama. After all, he is the guy who bought the stolen property.

It's Tony from BitPay who is one of the new owners.

The extent to which minor share-holders were excluded from the process would probably be clearer if Vladimir disclosed the extent of his own and his wife's holdings - given that it's claimed 75% of shareholders accepted the proposal how much of the remaining 25% was controlled by Vladimir and his wife is extremely relevant to whether "minority shareholders" were "defrauded".

The above bank statement is incomplete and misrepresents the facts of the matter. Tony Gallippi was informed about that.

Hey Vlad, are you going to try and charge for your time posting to this thead

hey, i have an expense account labelled "Defending My Integrity"!  

You mean an account labelled "Throw Tony Under A Bus"?

it was sold for some unknown to me amount and in secret from some shareholders and justified by defamatory statements (likely for by an order of magnitude lower amount) to Mihai's and Vitalik's new employer and with likely extreme prejudice to minority shareholders. It is as simple as that.

Given alleged misrepresentation on both sides, it is difficult to know the facts. However, my guess is that Valdimir's account is largely accurate (i.e. there was a conspiracy to defraud minority shareholders and Vladimir wisely tried to avoid participation in this conspiracy). My suggestion is that both sides refer these matters to lawyers and avoid making any further actions or statements except on the basis of legal advice.

When shit hits the fan people losers feel the need to defend themselves on bitcointalk which might often drag others into the fray. The only winners are those who don't need to defend themselves, because they aren't losing or accused of anything. In this case it is the new owners... sans maybe Tony.

[cunicula]

I think he is a new owner, right? If the sale was based on defrauding minority shareholders (as Vladimir claims and I think may be true), then Steve has every reason to ask everyone to get past this drama. After all, he is the guy who bought the stolen property.

It's Tony from BitPay who is one of the new owners.

The extent to which minor share-holders were excluded from the process would probably be clearer if Vladimir disclosed the extent of his own and his wife's holdings - given that it's claimed 75% of shareholders accepted the proposal how much of the remaining 25% was controlled by Vladimir and his wife is extremely relevant to whether "minority shareholders" were "defrauded".

The above bank statement is incomplete and misrepresents the facts of the matter. Tony Gallippi was informed about that.

Hey Vlad, are you going to try and charge for your time posting to this thead

hey, i have an expense account labelled "Defending My Integrity"!  

You mean an account labelled "Throw Tony Under A Bus"?

it was sold for some unknown to me amount and in secret from some shareholders and justified by defamatory statements (likely for by an order of magnitude lower amount) to Mihai's and Vitalik's new employer and with likely extreme prejudice to minority shareholders. It is as simple as that.

Given alleged misrepresentation on both sides, it is difficult to know the facts. However, my guess is that Valdimir's account is largely accurate (i.e. there was a conspiracy to defraud minority shareholders and Vladimir wisely tried to avoid participation in this conspiracy). My suggestion is that both sides refer these matters to lawyers and avoid making any further actions or statements except on the basis of legal advice.

When shit hits the fan people losers feel the need to defend themselves on bitcointalk which might often drag others into the fray. The only winners are those who don't need to defend themselves, because they aren't losing or accused of anything. In this case it is the new owners... sans maybe Tony.

The new owners didn't necessarily do anything wrong. But if the sale was fraudulent, then they may not own what they think they own. That is, I am not accusing Tony of any wrongdoing. I'm just saying that Mihai's actions seem suspicious to me.

[boonies4u]

The new owners didn't necessarily do anything wrong. But if the sale was fraudulent, then they may not own what they think they own. That is, I am not accusing Tony of any wrongdoing. I'm just saying that Mihai's actions seem suspicious to me.

Yeah, i'm not saying you were accusing anyone. It just sounds like some of the new owners are going to be accused of knowing more about the situation than previously thought. Though obviously the actions of Mihai and/or Vladimir  have given them the opportunity to purchase the magazine.

[Vitalik Buterin]

So, am I still going to receive the magazine with all this dumbassery going on?

Quantum

Yes. Progress is continuing on all aspects of the magazine's distribution and development.

[BitPay Business Solutions]

This is exactly the kind of "children fighting" that took Bittalk Media down in value.  A grown up needed to enter the house and take charge.  After much effort and due diligence, it was the investors opinion that the house should just be abandoned and start over.

At the time of the asset sale, Bittalk had less than $1000 in liquid assets and substantially more than that in bills that needed to be paid immediately.  The company was technically bankrupt, in other words worth Zero, or possibly worth negative.  Some of our investors backed out because they said we were actually paying too much.  

Once someone quits a company, they quit.  That's what resigning means.  That person is obligated to turn over any company assets that they have, especially when the company asks them to do so multiple times.

I can verify Mihai's claim that the sale was handled by a UK attorney who knows UK law.  I did speak to this attorney with some questions I had, so I can verify the attorney was involved.   He seemed very knowledgeable to me.

I don't know what will happen to Bittalk Media, but they do have a little pile of cash now.  I think Mihai is probably doing the right thing by stopping all spending immediately, conserve as much cash as possible, and return it to the shareholders.  But that is his decision.

EDIT:  to clarify, the new owners did not buy any shares in Bittalk Media, nor did we buy Bittalk media.  Only specific assets were purchased for cash and bitcoins.

[boonies4u]

EDIT:  to clarify, the new owners did not buy any shares in Bittalk Media, nor did we buy Bittalk media.  Only specific assets were purchased for cash and bitcoins.

As in the Bitcoin Magazine, associated domains, associated webpages, etc?
http://bitcoinmagazine.net/bitcoin-magazine-has-new-ownership/

[Vitalik Buterin]

Which is simply not true. All he was is a guy on the skype who gave tasks to illustrators and writers.

"Giving tasks to X and Y" is the job description for pretty much all of the top 0.01% highest paid professionals in the world. And even besides this, Mihai was also responsible for setting up interviews, doing a significant share of the illustrative work himself, handling shipping (with his girlfriend), and much more.

I asked to propose another solution if admittedly high hourly rates are not acceptable and suggested that those could be waived should there be some other reasonable agreement regarding my exit and equity buyout. This matter was discussed and understood. But no action were taken and further work was DEMANDED from me.

Most of the items on that invoice were not "demanded" from you. We both expressed our disagreement with the 80.00/hour rate, and you simply continued on doing what you were going to do anyway as a matter of fiduciary duty as a director but charging for it.

demands to pay cash and/or equity to his girlfriend while denying that if someone else is doing similar work they should be paid too.

Mihai never denied this. His whole point had been that his girlfriend deserves cash and/or equity because Vladimir's wife had already been paid cash/equity.

Informing the company that I cannot spend any more time on all the pointless drama where Mihai Alisie was derailing one negotiation and action plan after another by constant abuse, insults and paranoia

In September, when the situation around MNW was unfolding, Mihai and I both realized that we had been far too lax in terms of keeping tabs on what was going on, and all that Mihai tried to do was take back control. Following the MNW affair, Vladimir and his wife controlled 67% of the Board of Directors and had more shares than anyone else - even the founder of the company. Furthermore, Mihai noticed all of the various "IT" charges that had been billed. It was indeed a mistake on the part of both of us that we did not keep a close enough eye on how things were going and let all of that happen, but when he finally saw what was going on he simply tried to rectify the situation. The fact is, there are plenty of instances in small business where one partner tries to use various underhanded tactics to edge himself into a more favorable position versus the other, and Mihai's "paranoia" over the fact that one person had weaved his way into something close to de facto control over the entire company was hardly unreasonable. Claiming that anything but complete trust constitutes obstructionism, on the other hand, is - in fact, it's often listed as a classic warning sign in "how to detect that you're dealing with a scammer" pages. So that attitude was not exactly a good way of mitigating the problems that we had.

I personally won't comment on the finances; I'm fairly removed from the financial situation myself and I will leave it to other people in the company who are much more capable of stating the facts there than I am.

[Steve]

You guys are spending too much time fretting about this stuff.  To the extent Vladimir feels he's been wronged, he should absolutely seek recompense.  Lawyers, arbitrators and courts exist for that purpose and lawsuits, while costly and best avoided if possible, are a normal part of business.  Disagreements happen all the time.  You guys (Vladimir and Matthew included) have done a great job in bootstrapping Bitcoin magazine into existence.  I wonder if you all really grasp how valuable that experience will be to you in the future.  

I'm looking forward to the next issue and I'm sure those no longer involved with the magazine will go on to do other cool stuff with Bitcoin.

A voice of reason. Please take this mans advice into consideration, and avoid further embarrasment and pointless juvenile drama.

I think he is a new owner, right?

Yes, I'm also a co-owner in the new company.  My interest in participating was to see the publication of the magazine continue.  As far as I can tell, everything was executed properly (but clearly Vladimir disagrees).

[boonies4u]

You guys are spending too much time fretting about this stuff.  To the extent Vladimir feels he's been wronged, he should absolutely seek recompense.  Lawyers, arbitrators and courts exist for that purpose and lawsuits, while costly and best avoided if possible, are a normal part of business.  Disagreements happen all the time.  You guys (Vladimir and Matthew included) have done a great job in bootstrapping Bitcoin magazine into existence.  I wonder if you all really grasp how valuable that experience will be to you in the future.  

I'm looking forward to the next issue and I'm sure those no longer involved with the magazine will go on to do other cool stuff with Bitcoin.

A voice of reason. Please take this mans advice into consideration, and avoid further embarrasment and pointless juvenile drama.

I think he is a new owner, right?

Yes, I'm also a co-owner in the new company.  My interest in participating was to see the publication of the magazine continue.  As far as I can tell, everything was executed properly (but clearly Vladimir disagrees).

Unsurprising. If Vladimir and the shareholders were wronged... and one of the new owners are aware of this, it might bite ya.

[repentance]

Unsurprising. If Vladimir and the shareholders were wronged... and one of the new owners are aware of this, it might bite ya.

Equally, if other shareholders of BitTalk Media were disadvantaged by decisions made by Vladimir and his wife in their capacity as directors after Matthew's departure, it could bite them.

I'm not sure that either side in this particular squabble stands to benefit by airing their conflicts in the court of public opinion.

[repentance]

Even if Valdimir is the sole minority shareholder, I'm pretty sure that it is a breach of fiduciary duty for the majority shareholders to dissolve the LLC without providing the minority shareholders with advance notice. The minority shareholders must be given an opportunity to voice objections prior to the dissolution if their participation has any chance of affecting the outcome. Even though the minority shareholders lack the voting power to block the dissolution directly, they could still might voice objections that influence the decisions of other shareholders. Thus the rule. This is true even if there are no other forms of self-dealing involved.

From what's been posted no-one is talking about the Ltd company having been dissolved, although that would be the logical next step after all creditors have been paid, all claims settled and any surplus paid to shareholders.   It is the express duty of directors to prevent a company from trading while insolvent, even if that requires selling assets (and a director paying himself while leaving the company unable to pay other creditors is certainly a questionable action).  From what we've been told, following the resignation of Vladimir and his wife Mihai was the sole remaining director which would mean that the legal responsibility to avoid insolvent trading rested on him.

You can certainly argue that it would have been nice if all of the shareholders were consulted about the decision to sell assets, but under the circumstances it might not have been legally required given the statutory obligations to which a director is subject.

While the potential for conflicts of interest is enormous when self-dealing is involved, it doesn't always affect other shareholders in a negative manner - which is why each case needs to be looked at on its merits.  If BitTalk Media was unable to pay its creditors following the resignations of Vladimir and his wife, then it had limited options for continuing to trade and there were few options for providing any return to shareholders.

I don't think that anyone has handled this situation impeccably, but pragmatic solutions are rarely ideal ones.   This situation didn't arise suddenly and there were plenty of opportunities along the way for power plays which would negatively affect the value of the company to be avoided.

[Vladimir]

During the period of November 13-15, Bittalk had 293 GBP in the bank account, which I could not access.  The company had $58 in our PayPal account, which also I could not access.  Both accounts were under the sole control of former employee and former Director Mr. Vladimir, after he resigned.

We were already late for the printers which needed cash in advance to print issue 5.  Failure to print and deliver issue 5 to Barnes & Noble would jeopardize and possibly put us in breach of contract.  We did not have enough bitcoins to sell to pay the printer either.  As of this day (nearly 1 month later) no person currently employed at Bittalk (including myself) has access to our bank account or to the PayPal account.  Mr. Vladimir is still in full control of these nearly 1 month after resigning, despite repeated requests to relinquish control. 

On the 16th of November, as the only remaining director of the company, I sought and received approval from shareholders representing 75% of the voting interest of Bittalk Media to sell company assets for the purpose of raising cash.  This was handled properly under UK law by a UK attorney.

While the terms of the deal are undisclosed, I was able to receive a fair price for selling the surplus magazines, iMac computer, and other intangible assets.  In addition, all revenue from Barnes & Noble for issues 3, 4, and 5 would remain property of Bittalk Media.

Looking forward to issue 6, the company was in a weak financial position to fund the writers, illustrators, layout, printing and shipping.  I worked without a salary on issues 1, 4 and 5 to help the company conserve cash.  I would have been willing to work without a salary again on issue 6, but if money was committed to starting on production, there would likely be another shortfall in a few weeks.

To maximize the cash value to shareholders, I decided to stop all production on issue 6, not incur any more expenses at all, and return as much cash as possible to our shareholders.

This process will be handled by a liquidation attorney to make sure all revenue and cash is properly accounted for and distributed.  This will include the Barnes & Noble revenue for issues 3, 4, and 5.  All shareholders of Bittalk Media will receive a cash dividend payment once this process is complete.

Bitcoin Magazine will live on, and is now owned by a very talented group of persons in the bitcoin community with very good business experience.

Quoted for evidence, legal action with allegations of libel is pending.

[cunicula]

Even if Valdimir is the sole minority shareholder, I'm pretty sure that it is a breach of fiduciary duty for the majority shareholders to dissolve the LLC without providing the minority shareholders with advance notice. The minority shareholders must be given an opportunity to voice objections prior to the dissolution if their participation has any chance of affecting the outcome. Even though the minority shareholders lack the voting power to block the dissolution directly, they could still might voice objections that influence the decisions of other shareholders. Thus the rule. This is true even if there are no other forms of self-dealing involved.

From what's been posted no-one is talking about the Ltd company having been dissolved, although that would be the logical next step after all creditors have been paid, all claims settled and any surplus paid to shareholders.   It is the express duty of directors to prevent a company from trading while insolvent, even if that requires selling assets (and a director paying himself while leaving the company unable to pay other creditors is certainly a questionable action).  From what we've been told, following the resignation of Vladimir and his wife Mihai was the sole remaining director which would mean that the legal responsibility to avoid insolvent trading rested on him.

You can certainly argue that it would have been nice if all of the shareholders were consulted about the decision to sell assets, but under the circumstances it might not have been legally required given the statutory obligations to which a director is subject.

While the potential for conflicts of interest is enormous when self-dealing is involved, it doesn't always affect other shareholders in a negative manner - which is why each case needs to be looked at on its merits.  If BitTalk Media was unable to pay its creditors following the resignations of Vladimir and his wife, then it had limited options for continuing to trade and there were few options for providing any return to shareholders.

I don't think that anyone has handled this situation impeccably, but pragmatic solutions are rarely ideal ones.   This situation didn't arise suddenly and there were plenty of opportunities along the way for power plays which would negatively affect the value of the company to be avoided.

I think you are legally obligated to notify minority shareholders if you reduce the firm's business activities by 75% or more, even if their is no formal dissolution.

[Vladimir]

Mr. Vladimir fails to explain what caused this transfer of ownership.

(...)
 
(...) and for over $3000 in software for “digital publications” of Bitcoin Magazine that never produced any digital publications.

(...)

If Mr. Vladimir wants to perpetuate this drama on the forums, I can publicly disclose the invoices sent by him to BitTalk Media as well as the shareholder signed documents.
(...)

The words highlighted above as bold are false statement of facts, defamatory and misleading. And I do not mean minor technicalities like 100BTC or 1000$ I mean either very significant misrepresentation or just outright lies. (...)

In order to refresh Mr. Vladimir’s memory also regarding the over $3,000 payments for the digital edition software expenses I am attaching the following bank statements:


http://www.xe.com/ucc/convert/?Amount=1921.79&From=GBP&To=USD

 http://www.xe.com/ucc/convert/?Amount=529&From=GBP&To=USD

Regarding the denial of the fact that he blocked the $65,000 investment in the company I will let the other shareholders speak.
 
Unfortunately I cannot show the expenses that he has failed to explain because there are no accounting logs (surprise).

quoted for evidence, legal action pending

[repentance]

I think you are legally obligated to notify minority shareholders if you reduce the firm's business activities by 75% or more, even if their is no formal dissolution.

That's probably true but the time-frame within which you're required to notify them might be generous.  You're generally required to notify corporate regulators if you cease trading as well, even if you don't dissolve the company, but many such requirements aren't immediate.

It's absolutely possible for different parties to obtain legal advice from different lawyers and for all the lawyers involved to be wrong.  As a practical matter, the question really comes down to whether the best interests of the company (which exists as a legal entity in its own right), its creditors and its shareholders were served by the actions taken.  Ideals like not wanting to see the magazine die may have motivated owners new and old but they're not especially relevant to whether the actions taken were the best of the available options at the time or whether people lived up to their legal responsibilities.

It's a false dichotomy to present this as one side being right and one side being wrong.  It's possible that both sides have behaved wrongly.

One thing's for certain - if this does get litigated the only winners will be the lawyers.

[Vladimir]

I have copies of the Lloyds bank statements and PayPal history of Bittalk Media, which Vladimir willingly shared with me.   I honestly have not had time to sort through them beyond just the most recent transactions.  

However I can confirm that on the day of 12 November, Vladimir paid himself 4552.80 GBP.  Here is a screenshot of the transaction history given to me by Vladimir.



This was the exact day he resigned ( https://bitcointalk.org/index.php?topic=123857.msg1330827#msg1330827 ) and while he was still in control of the bank account.  To my knowledge, he is still in control of the bank account today, despite having resigned all duties as a Director and employee.

I looked at the invoices that are posted on http://codinginmysleep.com/the-bittalk-media-meltdown/ and I have similar copies in my files, which I received from Vladimir directly, so I can verify their authenticity.

Quoted for evidence. I have no intention to sue you just yet. And it was indeed wise to remove one of your posts which would be classed as "false innuendo". However, choice of transactions present in this image as well as omitting of some relevant material facts known to you could very well give merit to a libel lawsuit here in England against you personally. Please thread carefully.

[Vladimir]

Dear Bittalk Media Ltd, Mihai Alisie and some others I offer you an opportunity to publicly retract all defamatory statements made by you which must be accompanied  by your public and sincere apology. Failing that legal action against you at this point is unavoidable.

Legal action for defamation is being prepared and once it is filed it likely will ultimately result in a number of corporate and personal bankruptcies. It is not what I would want but you are forcing my hand.

[justusranvier]

Of all the ways in which the US legal system sucks, at least there's the fact that libel and slander laws have such a high burden of proof, and are so easy to defend against, that most people never need to worry about them.