November 29, 2007 4:53 PM

Internet Attacks!

First, for background, please see the previous post on the indictment and SEC civil suit against two former officers of Maximum Dynamics.

Prosecutors now say the Colorado Springs company was a fraud, but in 2005, it was very much promoting itself as a legitimate software company that was a victim of short sellers.

First, let's look at the press release the company issued after the SEC, suspicious of the company's filings, halted trading:

COLORADO SPRINGS, Colo.--(BUSINESS WIRE)--Feb. 25, 2005 Maximum Dynamics, Inc. (OTCBB: MXDY), an international projects management and back office services company with subsidiaries focused on mobile logistics, mobile/virtual commerce and other technology solutions, in response to the Securities and Exchange Commission's (SEC) ordering a suspension of trading of its shares from February 24, 2005 through March 9, 2005, has prepared the following response to its shareholders and interested parties.

In its reasoning, the SEC stated it had concerns over the accuracy of information provided by Maximum Dynamics in its latest Form 10-QSB filed on December 3, 2004 and in a recent press release issued on January 10, 2005. The SEC questioned the accuracy of the assertions made by Maximum with regard to the delays it has experienced in fulfilling orders of its Tagnet products as well as an agreement that will allow Maximum Dynamics to begin offering pre-paid product offerings on point of sale terminals in the United States and Mexico.

Maximum Dynamics is cooperating with the SEC to provide the documentation it has regarding these two issues and the SEC's investigation and hopes to resolve them as soon as possible.

"The SEC did not provide us with any notice of a trading halt that I am aware of," said Eric Majors, CEO of Maximum Dynamics. "We are trying to contact the people from the SEC who are involved with the investigation in order to resolve this serious issue before the end of the period specified by the order. We feel that this trading halt was totally premature and not in the best interest of our company or shareholders and we intend to do everything that we can to rectify thesituation."

Many of Maximum's shareholders are confused about the reasons provided by the SEC for the halt because the shareholders have since confirmed on their own accord the validity of the statements contained in the press release cited by the SEC.

"With respect to Tagnet we have fully disclosed all that we were aware of at the time of our filings", said Eric Majors, CEO of Maximum Dynamics. "Similarly, I think that it is entirely unclear as to what could possibly be gained by misstating the reasons for delays in the
delivery of our products as disclosed in our filings. Johannes Clausen, the CEO of Tagnet International is presently in Denmark and is looking into this matter now. People from the SEC have called me before regarding this investigation and I am entirely without explanation as to why they did not pick up a phone to discuss this matter with me considering the severity of the impact on the shareholders, investors, our contractors and the company. I am personally trying to work with the SEC to resolve this matter quickly provided the proper people at the commission make themselves available today as I continue trying to contact them."

"It is my personal belief that the entire investigation launched by the SEC may be tainted by faulty information sent to them by anonymous undisclosed sources, for some specific gain that may also include the shorting of the stock of the company", said Eric Majors, CEO of Maximum Dynamics. He added, "This is a serious matter that has been going on for a considerable amount of time and the magnitude and scope of which has only recently come to light. I believe that this matter can be settled but it has already caused damage to the company, and the shareholders. Considering the fact that our company has recently appeared on the Regulation SHO list, I strongly suspect that these events may also somehow be related. I will encourage the SEC to look into the relationship between the offending parties, the emails and our appearance on the Regulation SHO list."

When the company filed its final 8-K on July 27, 2005, it had fully developed its attack on the short-sellers:

Item No. 8.01 - Other Events INTERNET ATTACKS

There appear to be an excessive number of negative rumors floating on the internet regarding the condition of the company and the officers. Some of these rumors have been accompanied by defamation of the company and its officers and the business advisory board members. It is the opinion of management that some of these negative remarks and false allegations go far beyond the normal negative criticism that may be expected and some remarks, in particular, are false and libel. Organizations, such as Raging Bull, have chosen to ignore repeated requests by the company to investigate these matters and expose the offending parties. Management believes that the purpose of these remarks are intended to reduce share holder confidence and that these and other tactics have been in use by certain suspects who are currently the subject of investigation by law enforcement authorities. The primary source of these attacks appears to emanate from South Africa. Management is currently working with law enforcement authorities from its operations center in South Africa in order to locate the sources of these internet postings and emails and has had some success.

Management of the company only recently became aware of the lengthy period of time that the anonymous internet and email attacker may have been disseminating false information. This false information was intended to discredit the company in the eyes of prospective clients of the company and, as yet, other unknown recipients. There is no doubt that the anonymous internet attacker has played a major role in attempting to discredit the company and the officers of the company during the SEC investigation and the offenders appear to have started their efforts in early 2004. Until this unfortunate situation draws to a conclusion, management is advising the public and the share holders to expect more salacious and false allegations to appear on the internet and in the form of emails.

Recipients of inflammatory emails regarding the company are asked forward these messages to the company as soon as they are received, with the email headers if possible.

Until the anonymous internet attackers are brought to justice, management is providing a warning to investors to rely on the company itself as the sole source of information regarding the company.

The company itself as the sole source of information? Not sure that was such a good idea.

Posted by David Milstead at 4:53 PM | Comments (0)