Exclusive Interview: IDI Management Shreds Anonymous Blog Post, Buys Stock IDI EZRA MARBACH

 

IDIShort sellers play an important role in any public equity market.

 

That said, as a recent New Yorker article correctly points out: “short sellers are often wrong”.

And, according to IDI (IDI) Chairman Michael Brauser, CEO Derek Dubner, and largest shareholder Dr. Phillip Frost, an article published yesterday by an anonymous blogger about IDI is not only wrong BUT is completely devoid of facts.

Rather than attacking the anonymous blogger management chose to address the article’s main points.

Here’s our conversation from last night (we first talked IDI a few weeks ago HERE):

E: Hi Mike.

IDI Chairman Mike BRAUSER: Derek Dubner (CEO of IDI) is also on the line.

E: Great.

Why don’t we just address the summary points of the article?

BRAUSER: Sure.

E: (Quoting summary points from anonymous blog post) “Frost mixed up with “the wrong crowd” as Barry Honig and Michael Brauser have spun a tiny struggling debt collections business, acquired with $5.7m cash, into temporarily inflated ~$200m shell.”

How do you respond to that?

BRAUSER: I can’t judge myself as the “wrong crowd” and I’m not exactly sure what that means. So that’s difficult for me to address.

E: And Dr. Frost has been a partner of yours for a long time?

BRAUSER: Dr. Frost has been a partner of mine for 6-7 years. We’ve worked together we’ve socialized together, and we’ve had multiple successful deals together.

We’ve also had deals that have either been his legacy deals or others that we’ve worked with and have turned them around into successful companies.

E: Any examples you can provide?

BRAUSER: Yes.

By way of example, Dr. Frost introduced me to BioZone which is mentioned in the body of the article.

BioZone had some technology he was interested in.

We closed on the company and bought it.

And as we dove further into the company we found that the founder had misrepresented tremendous amounts about the company including a lot of liabilities, the ownership of the technology and his position within the company.

He was eventually removed from the company, was quite bitter about that, and started to throw out multiple lawsuits, throwing out allegations against Dr. Frost, and everyone associated with him.

The long and short of it is we ended up in federal court where he lost his claims, he was bought out of his stock at a nominal amount, and had no further claims to pursue against the company.

So, from my position he lost because he sued for 10s of millions of dollars and ended up walking away with something less than a millions dollars.

E: And none of the allegations proved true?

BRAUSER: None of the allegations.

He went to every investigative body he could trying to stir up as much trouble.

He then tried to sue everyone associated with it.

In fact, he attempted to blackmail Dr Frost and myself by having a friend of his who’s a writer for a very well known magazine threaten to publish a negative article.

I was able to get him to put that in writing that he would kibosh that article if we’d pay him a certain amount of money.

I showed that to the federal judge in court in SF and really set him back quite a bit and got him into a bit of trouble.

Further to that, the company BioZone has now become a company called Cocrystal (COCP).

It has a large market cap. The stock rose from $0.15 to $1.15. It trades with good volume, and they have significant science and scientists involved with it.

So, there was a story that this author of this article (anonymous blog) tries to show that we were bad guys and stole the company and did all these horrible things.

In fact, we saved the company and created significant shareholder value.

So that’s just one example.

I’ve been working with Dr Frost for a long time. He’s obviously a man of very significant character.

E: He’s not going to work with just anybody.

BRAUSER: No. He wouldn’t. And I’m proud to be associated with him.

From my own view, I’d never do anything that would hurt or harm that relationship because I do cherish it.

E: Did you speak to him recently?

BRAUSER: I did. I spoke to him today.

He’s very supportive.

I know that he’s a very significant shareholder.

And I look forward to him participating in the activity of the stock in the short term.

E: So nothing has changed from Dr Frost?

BRAUSER: No.

Nothing has changed. He’s fully supportive of the company.

I can tell you that we have very significant plans TOGETHER for the company’s future.

I want to emphasize that.

Dr Frost and I have significant plans that we’ve been working on together that will be transformational to the success of this company.

E: And in his mind the allegations are…he’s known you for a long time, he knows your history, you’ve partnered on deals…

BRAUSER: Sure.

And I can go one step further.

In the body of the article, the author claims that I was a mere board member of InterClick. In fact, I happen to be one of the founders of InterClick – myself AND Barry Honig were founders, and I was chairman of the board – NOT just a board member.

That was one of the first deals I did with Dr Frost. And I brought him into the company where he had a tremendous return on his investment.

The author of the article seems to be misleading on the stock price and where we ended up selling the company.

We sold the company at its all-time high. There were no shareholders that could have lost any money on this sale.

And I will say even further to that I was personally responsible and personally handled the transaction with Yahoo (YHOO) and dealt with them with the smallest of details to the closing of the transaction.

I was intimately involved in every step of the way. I was very proactive as Chairman of the Board in the success of the company as well as the sale.

E: And what can you say about Barry Honig?

BRAUSER: Barry Honig was instrumental as well in the success of the company.

Barry was very supportive, was able to raise substantial capital for the company from significant investors, helped us execute the vision and build the company.

When Barry and I founded…

E: Barry is one of your partners?

BRAUSER: Yes.

In a variety of deals, Barry Honig and I are investors and partners.

We co-invest in some deals.

E: And Dr. Frost knows him well as well?

BRAUSER: Yes, he does.

Barry was co-chairman of the company for some period of time as well.

BRAUSER: For the record, when we founded the company it was doing $50,000 a month. When we sold, it was doing $15 million.

E: The one you sold to Yahoo (YHOO)?

BRAUSER: Yes. InterClick, which the author claims I had nothing to do with.

The next bullet point (quoting from the article): Chairman Brauser’s biography has “interesting” omissions including bankruptcy, wipeout, and fraud lawsuits, with Equifax suing him alleging “fraudulent misrepresentations” with Softbank lawsuit alleging “various frauds”.

I think this deserves significant attention.

I have never had a bankruptcy in my life.

I’ve never been part of any bankruptcy.

I’ve never taken a company bankrupt.

So I don’t know where he creates these false

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