IDI: Strong Sell On Fraud Lawsuits, Bankruptcy And Technology Failure, -92.4% Downside by The Pump Stopper
- 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.
- 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”.
- IDI stock temporarily inflated from extensive Yahoo message board stock-pumping scheme, touting IDI across dozens of boards with interconnected aliases, similar to halted and bankrupt FNRG.
- IDI’s Transunion lawsuit could mean instant $0 for stock as IDI future apparently based on IP they don’t own, which Transunion acquired when IDI CSO Poulsen’s last company went bankrupt.
- Confluence of temporary factors above have inflated IDI stock to the obviously unsustainable valuation of ~$200m or >40x revenue, creating imminent -92.4% downside in “best case” scenario.
I believe Idi Inc. (NYSEMKT:IDI) is another worthless Brauser and Honig wipeout. This famous wipeout team has joined forces to temporarily resuscitate a fraud ridden shell with a tiny debt collections firm, acquired with $5.7m cash payment, to the unsustainable valuation of $200m or >40x revenue. In what appears a desperate attempt to salvage his failed fraud shell, Frost has clearly gotten involved with the “wrong crowd” and regrettably stained his reputation through association with one of the worst penny stock wipeout teams in America.
Brauser’s biography conveniently “forgets” to include a long track record of fraud lawsuits, bankruptcy and shareholder wipeouts. While touting involvement in Naviant, Brauser neglects to mention he was apparently sued by data fusion giant Equifax (NYSE:EFX) for “fictitious receivables” and by Softbank for “various frauds” with apparent multimillion dollar payments to Equifax. Shockingly, the Naviant debacle barely scratches the surface and Barry Honig’s background looks even worse.
(picture credit IDI)
IDI faces an insurmountable lawsuit while desperate for cash and with a $160m equity shelf filed IDI stock is now “coincidentally” being pumped with an apparent sketchy online Yahoo message board stock promotion campaign, similar to halted and bankrupt Forcefield Energy (NASDAQ:FNRG) where the chairman was arrested for fraud.
IDI is eerily similar to the BVSN, VNRG, USEL, IZEA and DRNE wipeouts thiese people oversaw, With a huge amount of IDI shares becoming unlocked soon, a $160m shelf filed for IDI stock sales and an abusive $31m+ free payment to Brauser and Honig, IDI is at imminent risk of total wipeout.
It’s not often you get to short a cash burning penny stock wipeout team with a declining, $5.7m cash acquisition trading at >40x revenue for <7% cost to borrow. I recommend you pour yourself a tall glass of Gilby’s vodka and sit down as what you read will be shocking….
“Interactive Data” A Tiny, Struggling Debt Collections Business With $0 R&D Spending, Bought With $5.7m Cash
Now that IDI has officially announced they are winding down the China billboard business with huge write offs, 100% of IDI’s ongoing business will be “Interactive Data, LLC”. I think IDI investors are confused and don’t understand what this business actually is.
“Interactive Data, LLC” is the business IDI is pinning their “data fusion!” hype-story on, which IDI just acquired last year with a $5.7m cash payment.
Strip away the hype, we see “Interactive Data, LLC” is a tiny firm with just 9 full time employees founded in 2001. Based in Georgia, Interactive Data seems focused on providing contact information verification to the debt collection business. When a debt collector calls a defaulted creditor, they are not allowed to harass people with similar names and face severe lawsuits if they make that mistake. Therefore, debt collections agencies pay tiny amounts for some very basic offerings which allow them to be sure they are tracking down the correct person.
The contact verification business is a brutally competitive business where, over the years, Interactive Data finds itself facing larger, superior competitors with cheaper, better products and dominant sales teams. Due to this, Interactive Data has struggled and been apparently forced to hire outside sales consultants and, based on their transactional pricing model, chase after the smallest and least profitable customers in the industry. Interactive Data isn’t even a real technology company anyway because this tiny business seems to have been built largely by acquisition with no R&D in 2012, 2013 and apparently 2014 as well.
We can see Interactive Data’s financial struggling below in the only clear Interactive Data financials I could find, available here.
(picture credit IDI inc filings)
We can see Interactive Data’s 2014 revenue declined -7% versus last year while gross profit fell -18.5%. Also interesting: Interactive Data claims to have spent zero on R&D in most of 2014, 2013 and 2012 and even with this expense at $0 and without public company expenses or any of the other SG&A Brauser/Honig/etc are layering on this tiny failure, it only generated a ~$474k in profit, which also declined -34.8% from the previous year.
Considering IDI has already opened multiple branches in FL and WA with 8+ engineers and the typical >$400k of annual cash cost just to be a public company, I estimate IDI’s cash burn in the future will be at least -$2m per quarter. Perhaps this is why none of IDI inc’s press releases include the financials of this tiny struggling “business” they just acquired? Clearly the above “business” is worth nothing vaguely close to IDI’s current ~$200m market cap. Recall that there is nothing else here. The only aspect to IDI’s business is this tiny, marginally profitable and extremely competitive company. That’s it.
So what are Brauser and Honig doing with a fraud ridden shell and this tiny struggling debt collection firm? Let us dig deeper to understand what is truly going on here….
Brauser’s “Selective” Disclosures = Fraud Lawsuits, Bankruptcy and Wipeout
As a reminder, Michael Brauser, Barry Honig and their investment vehicle Marlin are clearly the financial architects of IDI to me and I don’t see how IDI would even exist without them.
Michael Brauser: History of Fraud Lawsuits, Bankruptcy and Wipeout
Picture credit IDI inc
Brauser seems to “selectively” tout his background, picking and choosing certain companies while failing to transparently disclose lawsuits around his involvement with other companies. A large number of these undisclosed companies wiped out big piles of retail shareholders.
Naviant = Fraud Allegations
(picture credit Naviant)
For instance, Brauser touts his “Naviant” track record sale with Equifax in his biography. What seems to have been forgotten though is he was apparently sued by Equifax for fraud allegations over that transaction and apparently saw millions of dollars go to Equifax as a result. This amazing lawsuit alleges Brauser “participated in the