You have to pay if you want to play!
Now give me that money!
Davis visit to event raises questions
APPEARANCE FOLLOWED DONATION FROM FIRM WITH TROUBLED PAST
By Dion Nissenbaum
Mercury News - May 28th
SACRAMENTO - Three days after taking a $10,000 donation from its founder, Gov. Gray Davis traveled to Southern California earlier this year to promote a high-tech company that is little known in the industry but has drawn significant attention from federal regulators.
Documents obtained by the Mercury News show that Davis' decision to favor Kanakaris Wireless was curious for a number of reasons: Despite its claims of industry influence, the firm is an obscure, money-losing business run by an aggressive self-promoter who paid $25,000 in 1999 to settle charges of stock fraud by the Securities and Exchange Commission (SEC).
Davis aides rejected suggestions of a link between the political contribution and the Democratic governor's appearance. They said the governor often seeks to support California companies but didn't know of the specific concerns about Kanakaris Wireless.
But the administration's efforts in this case were extensive. Aides touted the governor's appearance at a January Web cast sponsored by Kanakaris Wireless, provided the company with Davis quotes to use in a corporate press release and promoted the event on the state Web site.
``Our challenge as a state is to keep California on the cutting edge of technology innovation,'' Davis said in a statement released by the company at the time. ``We've always been faster, newer, better than the other guy. Now, more than ever, we need to stay ahead of the curve.''
The business is an odd amalgam of entertainment Web sites catering to everyone from singles to bookworms. It is led by Alex Kanakaris, a former stockbroker who bills himself on his personal Web site as a ``visionary,'' ``Cyberguru'' and Internet pioneer.
But Kanakaris was also accused of fraud three years ago by federal investigators as he was trying to get traction for his struggling business.
According to a complaint from the SEC, the problems arose after Kanakaris agreed to buy out concerned stockholders who then had their reimbursement checks bounce. To help get out of the hole, Kanakaris sold $1.3 million in stock and used part of that money to pay off the fleeing investors.
But in an effort to make the stock sales more attractive, Kanakaris and his company falsely claimed that the firm had deals with AOL and Microsoft and the backing of prominent business leaders, the SEC said.
In the end, Kanakaris and his business partner both agreed to pay a $25,000 fine to settle the case without admitting wrongdoing.
Kanakaris blamed the problems on the attorney who he claimed ``ripped his company off'' and said his firm has learned from its mistakes.
``My company has struggled,'' he said. ``It was a mess. We need a couple of breaks, but I think we will be around for a long time to come.''
Despite the company's troubles, Davis agreed to travel to Orange County in January to take part in the ``Orange County Next Generation Internet & Technology World Wide Webcast,'' which was billed as a way for Davis to promote high tech.
Instead, the Web cast turned out to be a poorly produced interview with Kanakaris that was never carried live as promised.
Davis took part in this event just three days after his campaign received a $10,000 check from Kanakaris. Kanakaris also gave Davis a $15,000 donation last year that Kanakaris failed to properly report to state or local elections officials, documents show.
The Davis campaign properly reported both contributions, as well as a third contribution of $3,300 from Kanakaris in February.
In an interview, Kanakaris said he personally badgered the governor for weeks, cornering Davis at a West Hollywood party to show off his pocket PC technology.
``I think it was more the personal appeal to him than a $10,000 contribution,'' Kanakaris said.
Steve Maviglio, the governor's press secretary, said that Kanakaris promoted the event as something more than it turned out to be and that -- despite normal background checks done for state events -- administration officials knew nothing of the owner's past problems until contacted by the Mercury News.
``Our office thought it was an opportune time to pitch California's business climate for high tech to a critical audience,'' he said. ``We had no reason to question his background, just as we don't question the credentials of any of the outlets the Governor interviews with.''
A quick search of public records would have revealed a series of potential concerns. Over the years, Kanakaris has launched a foundering online bookseller, started an Internet TV station that primarily shows B movies, laid the groundwork for a singles Web site and tried to create a market for delivering video to pocket PCs.
None of these efforts has been a particular success.
``They're not on the radar screen of any cable, wireless or satellite video-on-demand system,'' said Richard Doherty, research director at the Envisioneering Group in New York. ``They're the Invisible Man of the industry.''
But Kanakaris has labored hard to get his company noticed.
After the Sept. 11 terrorist attacks, Kanakaris issued a press release.
``Now is the time for everyone to take stock in America,'' Kanakaris said. ``It doesn't matter what the company is, but we should all buy a little stock as a symbol of our support for the American and world financial markets.''
At times the achievements Kanakaris has touted in press releases have proven to be exaggerations.
Kanakaris trumpeted a plan to buy the Los Angeles Film School from two of his top investors, but the deal quietly collapsed. He once claimed to have had 18 million hits on his Web sites in a month, but there is no empirical evidence of that from Nielsen NetRatings, which tracks Internet traffic.
While the company stock is now trading for pennies, one of its supporters said Tuesday that Kanakaris can rebound.
``Alex has the mind of a genius,'' said Lisa Lawrence, a 26-year-old former employee who sits on the company's board of directors. ``We've had horrible luck with technical things, but everything we've done we've always been ahead of the curve.''
Lisa,Lisa ... any photos?
You have to pay if you want to play!
Now give me that money!
Is that your pocket PC or are you just happy to see me, big boy?
Yeah, right!! Thanks for the ping. I hadn't read of this before. He "didn't know....", etc., etc. Taking lessons from Hildebeast, looks like. I only hope people who are registered follow through and vote Gov. Doofus out.
