Interesting. I had Mayberry USA for a while and never had any trouble with it. I only left them because I wanted a lower cost ISP. I didn't even know they had gone under until now 9-28-09. Jim
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Nuciola had indeed sold his 180 shares of AT&T and purchased 1,200 shares of COVAD on February 8, 2001. Looking at the fine print, Malavenda discovered that Nuciola had charged him $100 to sell the AT&T stock and another $100 to purchase COVAD.
The excessive commissions on trades that would have cost Malavenda no more than $30 through a discount brokerage service were just the beginning of Malavenda's troubles with Nuciola and Arizona Capital.
Four days after Nuciola purchased COVAD at $3.18 a share, Nuciola turned around and sold COVAD at $2.78 a share, a $480 loss for Malavenda.
And again, Nuciola charged a $100 commission.
Even worse, Malavenda alleges, Nuciola sold the COVAD stock without his permission.
"Why had Phil sold COVAD within four days of telling me what an excellent company COVAD was?" Malavenda asks in his complaint.
The losses continued to mount when Nuciola used what was left of Malavenda's account to purchase 1,500 shares of PSINET at $1.81 a share, again allegedly without Malavenda's permission.
Even though the value of Malavenda's account was plummeting rapidly under Nuciola's care, Nuciola once again charged a $100 commission to buy the PSINET stock, Malavenda claims.
According to Malavenda's complaint, Nuciola had churned Malavenda's account with unauthorized trades to generate $400 in commissions for himself. During the four-day period, the value of Malavenda's stock plummeted from $4,100 in AT&T to less than $2,722.
(A few weeks later, PSINET stock fell to 70 cents a share, dropping the value of his account to $1,050. The company eventually went bankrupt. If Malavenda still had 180 shares of AT&T on August 26, 2002, his stock would be worth $2,262.20.)
Malavenda says he complained to Arizona Capital about Nuciola's unauthorized sale and purchase of stock as well as the high commissions. At first, Malavenda claims, Arizona Capital manager Sam Pittman said he would reverse the latter two unauthorized trades. But later, Pittman refused to do so, forcing Malavenda to file a formal complaint.
Pittman did not return New Times calls seeking comment for this story.
Malavenda dropped the NASD arbitration process because his attorney advised him it would take another year. Last month Malavenda reached a settlement with Arizona Capital. He won't disclose the terms.
"That whole thing is just a total nightmare," he says. "I am so disgusted with the whole system. I'm really bitter."
Malavenda says his investment days are over.
"You have to start hiding your money in a mattress. I think our grandfathers were right. Don't trust the bank. Don't trust nobody," he says.
"It's a shame. It really is."
William Malavenda's experience with Arizona Capital is straightforward compared to what happened to investors sucked into Wilson's Mayberry USA, the Internet porn-blocker.
"I have no idea what's going on," he says. "I've got no return on my investment. Basically, the deal is gone."
Kent, along with several dozen other associates who are connected with the Chicago Mercantile Exchange, bought more than $400,000 worth of Mayberry stock.
Lang, who invested $150,000 in Mayberry USA, is a sophisticated investor and knows well the risks of investing in small companies. But what he saw happen with Mayberry left him and other investors stunned.
"It was probably the finest thing that could ever happen to the Internet for the average person, and it goes down the drain," says Frank Ness, another Chicago investor who put in $30,000.
Lang and other investors say they thought Mayberry USA was a sure bet. The name was great. And in the fall of 1998 there was a strong demand for Internet filtering services to keep pornography out of homes.
Mayberry USA appeared to have a solid business plan, and the timing was perfect. Dot com stocks were soaring. Mayberry USA seemed like a ground-floor opportunity in a company that would soon go public and make a killing.
Everyone was optimistic.
Oates was telling Chicago-area investors in early 1999 to expect Mayberry USA to proffer an initial public offering by late summer. He also told investors to expect a four-or-five share-to-one stock split prior to the public offering.
"That [split] combined with a $15 per share price might make us all a few bucks," Oates states in a February 3, 1999, e-mail to a Chicago investor.
But by late spring 1999, problems began to emerge. Oates, who refused to be interviewed, stopped selling the stock and withdrew from Arizona Capital, but stayed in touch with Mayberry USA investors.
By the fall of 1999, it was becoming apparent that Mayberry was nowhere near ready to go public, and Oates, along with shareholders, began to get upset.
"There are some very promising things in the pipeline, but this has taken far, far too long in my opinion," Oates states in an October 24, 1999, e-mail to investors.
With Oates out of Arizona Capital, Wilson hired Phil Nuciola in September 1999 to keep the Mayberry USA juggernaut rolling.
Nuciola didn't just walk in off the street and land the job.
The former bar bouncer, car salesman and occasional stockbroker was very familiar with Mayberry USA.