Hookin' for Dollars
Brian Stauffer

Hookin' for Dollars

Candy Gail Wilson knows how to work the street.

The prominent Scottsdale businesswoman long ago mastered the art of manipulating emotions to obtain cash.

She has no problem stiffing business partners.

Her associates embrace similar ethics.

And when the heat is on, she knows how to slip into the night unscathed.

The traits have come in handy for Wilson during the last five years as founder and chief executive officer of Arizona Capital Group, a stock brokerage and investment banking company.

When it came time to raise money to start Arizona Capital, Wilson turned to a mourning widow and obtained $90,000. The stock she gave the woman in exchange is now worthless.

When she wanted to expand her business, Wilson entered into a purchase agreement to buy another widow's stock brokerage company. Once she got control of the firm's clients, she reneged on the deal, refusing to pay a dime for the company. The dispute is now in court.

Her company allegedly allowed brokers to conduct unauthorized stock trades to rack up hefty commissions and then ignored complaints.

And, when the party ended with the stock market slide, Wilson slipped quietly out the door.

She sold Arizona Capital -- the company that she has claimed is worthless -- on August 1 to CGS Blackwater Corporation. According to the new co-owner, Norman E. Clarke, Wilson has left the state but will remain as a part-time employee working as an investment banker.

Meanwhile, Arizona Capital remains mired in litigation and a swirl of nasty allegations of illicit drug use and employees who tote automatic weapons. Former employees say they fear for their lives because of the grungy details they carry in their heads.

During the wild ride, Wilson and her brokers raised several hundred million dollars for start-up companies, several of which evaporated faster than an August shower on a tin roof.

Regulators, including the Arizona Corporation Commission's Security Division, were clueless about the eroding situation at Arizona Capital; even though the firm failed to file required audited financial statements the last three years, the commission took no action.

Wilson didn't follow the typical career path in becoming founder and CEO of a brokerage firm.

The 47-year-old brassy blonde never graduated from college.

She never worked for a major stock brokerage house.

She learned her early business lessons not on Wall Street, but the cold streets of Minneapolis-St. Paul.

For more than two years, Wilson worked the streets and massage parlors of the Twin Cities as a hooker.

Wilson declined to be interviewed for this story. But public records, her sworn deposition in connection to a civil suit and more than a dozen interviews with associates shed light on her past and present business life.

Wilson's seedy background didn't stop her from becoming the owner of a stock brokerage because she was never convicted of a felony. And it certainly didn't get in the way of her biggest, and most spectacular, business venture.

Soon after starting Arizona Capital, Wilson also became the CEO of an Internet service provider that -- ironically -- filters pornographic Web sites. Wilson's brokers at Arizona Capital raised more than $3 million for the Internet company with the perfect name -- Mayberry USA.

Mayberry USA was supposed to be the answer to every parent's fear: how to keep smut, hate and offensive materials from appearing on their kids' computers while cruising the Internet.

The idea attracted attention. Wilson cut a short-lived deal with former Phoenix Suns coach and Mormon family man Danny Ainge to promote the Web site. Other high-profile religious and conservative leaders were also attracted to Mayberry USA, including Moral Majority leader Jerry Falwell and former U.S. attorney general Edwin Meese.

Mayberry USA declared itself as the "first, moral permanent settlement in Cyberspace."

Wilson, the streetwalker turned porno-prevention queen turned moral philosopher, was Mayberry's biggest promoter.

Wilson and her brokers zeroed in on investors who liked the idea of an Internet company that would keep smut out of the home.

But no sooner had millions of dollars been raised than Mayberry USA collapsed, triggering outcries from investors alleging they were deceived by Wilson and Mayberry USA promoters.

Wilson's partner in Mayberry USA was New Orleans businessman Richie Martin, a former broadcast communications broker. Martin is credited with coming up with the Mayberry USA name. The couple obtained a trademark on the name and hit the streets.

"I want Mayberry to be a place where the good guys win and the bad guys get run out of town," Martin told the Chicago Tribune.

It appears the opposite has happened.

October 18, 1979. Minneapolis, Minnesota.

Minneapolis Police Department Officer Billings checks in to the Voyager Motel and registers for the night.

A few minutes later he places a call to B.B.'s Out Call Service and is asked by a young woman if he wants some company. Officer Billings replies in the affirmative.

At 9:27 p.m., a woman named Shandra calls Billings and says she's on her way. But Shandra gets lost.

At 10:45 p.m., someone from B.B.'s Out Call phones Billings and says they are sending out another girl. Her name is Candy.

Ten minutes later, 25-year-old Candy shows up at Billings' motel door.

After a few minutes of chitchat, Candy cuts to the chase.

"Finally she stated that it will cost him $40 for French and $60 for straight sex," Billings' police report states.

Billings "asked her what French meant, and she stated, A blow job,'" the report states.

"At that point, [Candy] was informed she was under arrest and was transported and booked," Billings' report says.

Police records indicate no charges were ever filed in connection with the arrest.

It was just another night on the town for Candy Gail Wilson.

The arrests continued after Wilson turned in her call girl card and started working at a massage parlor. From November 1979 through December 1981, Wilson was the assistant manager and masseuse at Diane's Health Club in Minneapolis, state records show.

In November 1980, two undercover police officers arrested Wilson and another woman for solicitation while working at Diane's Health Club, according to Wilson's employment disclosure form. She says these charges were later dismissed.

But a few months later, in April 1981, police returned to Diane's and arrested Wilson for operating a "disorderly house." Those charges were later reduced to disorderly conduct and a $500 fine was paid, she states in the disclosure report.

In a civil suit deposition obtained by New Times, Wilson says that, after the second prostitution arrest at Diane's, she "decided it was time to move on with my life."

A semester short of a college degree, with a young son under her arm, Wilson moved to Arizona in 1982 and worked a series of clerical jobs before landing a position as a brokerage assistant in 1984 with R.L. Kotrozo Incorporated.

She rose in the ranks and was lured away to work at West America Securities in 1990. A year later, Wilson was hired as the compliance officer at Mason, Hunt & Company for a short-lived stint that ended when the company shut down in the midst of fraud allegations.

Wilson was then hired by W&B McKee Securities in 1991, again as the company compliance officer who was in charge of making sure brokers were adhering to federal and state trading regulations.

She soon became head of retail trading at the firm. Before long, Wilson ran afoul of National Association of Security Dealers' rules. In 1994, the NASD censured Wilson and fined her $2,500 for failing to promptly deposit customer funds in an escrow account. She paid the fine on April 18, 1995. (Wilson would commit the same offense five years later at her own company and was fined $3,750.)

Wilson tried to start her own brokerage firm with David Gold, a friend from upstate New York. But the duo couldn't raise the money needed to open. Gold and Wilson would hook up again a few years later during the Mayberry rollout.

In July 1995, Wilson joined New Jersey-based Montauk Securities, opening a branch office for the company in Scottsdale. She left the firm 18 months later after a dispute over an investment banking commission.

In early 1997, Wilson opened her own brokerage company with the blessings of state and federal regulators. Her previous prostitution arrests, the securities trading censure and fine, her lack of a college degree and history of working at firms that had sketchy histories didn't stand in the way of obtaining a broker/dealer license.

Wilson's broker/dealer application could have been rejected by the state on the grounds that the prostitution arrests did not support that the applicant had a "good business reputation."

However, Corporation Commission spokeswoman Heather Murphy says Wilson disclosed the arrests on her application, there were no felony convictions and that the arrests were 16 years old when she applied for the license.

If getting regulatory approvals to open Arizona Capital Group was relatively easy, raising the necessary capital to get her firm off the ground was more difficult.

But Wilson knew where to go.

She called upon her friend Angela Cesal, a wealthy real estate investor and civic leader who was in mourning over the death of her husband.

Angela Cesal is the type of person who volunteers her time to support the arts, education and international peace.

She's had a hand in promoting events at downtown Phoenix's beautiful Orpheum Theatre. She's active in raising funds for Arizona State University and is a member of the ASU President's Club. She serves on the Phoenix Sister City committee helping to promote international friendship.

Her reputation is very important to her.

"I'm a very honest person. I don't lie. I tell people the way it is," she says. "Life is too short."

Cesal was left a widow in 1994 when her husband suddenly died from a massive heart attack. While she was financially secure from her wise real estate investments, his death was a terrible emotional blow that left her lonely and vulnerable.

"I mourned for more than five years," she says.

That's when the predators moved in.

Cesal was attending a real estate continuing education class in 1996 when the instructor introduced her to Wilson, who at the time was managing the Montauk Securities office in Scottsdale. The instructor steered Cesal into an annuity offered by Wilson -- and picked up a sizable commission.

"He was using Wilson's company as a tool to operate," Cesal says.

Wilson quickly befriended Cesal with laughter and jokes -- just what the widow needed at the time. "Wilson was even willing to drive me to the airport and pick me up," Cesal recalls.

Before long, Wilson began to use the airport drives as opportunities to reel in cash.

"On the drive back from the airport, she would ask me to write a check," says Cesal.

Cesal opened her checkbook to help her newfound friend, who needed to raise money to open Arizona Capital. The money was needed to cover start-up costs and provide a $50,000 reserve required by federal regulations for brokerage firms.

By April 1997, Cesal had given Wilson at least $60,000 that was invested into Arizona Capital Holdings Incorporated -- a holding company that controlled all the stock of Arizona Capital Group. The investment gave Cesal a 7.5 percent stake in the brokerage.

Wilson obtained another $120,000 needed to form the company from Steve Madigan, who at the time was a Microsoft executive. Madigan was given a 15 percent stake.

Wilson also borrowed $25,000 from Gene Tyrrel, who would later become a major investor in Mayberry USA.

Wilson, who invested nothing, according to state records, controlled the rest of the stock. With the money in hand, Wilson was given federal and state clearance to open Arizona Capital Group.

Since then, Cesal says, her relationship with Wilson has been a financial and emotional nightmare.

Cesal says she purchased another $30,000 of stock in the company and then lent Wilson $50,000 to help Arizona Capital maintain its capital reserve requirements. When she tried to get Wilson to repay the loan, Cesal says Wilson refused.

"She was not about to pay me," Cesal claims.

Cesal says she eventually got the $50,000 loan repaid, but only after she hired an attorney.

Cesal alleges she was told little about the financial condition of Arizona Capital, even though she was a director of the holding company.

In January 1999, Cesal hired a consultant to review Arizona Capital operations. According to a report prepared by Larry Malanfant, Arizona Capital had numerous problems including:

• Salaries were more than three times what a comparable firm doing more volume in Chicago spends.

• Bills were not being paid on time.

• Wilson was uncooperative and absent from the business.

"The ship is running without a real captain," Malanfant's report states.

When Cesal tried to press for information, she claims, Arizona Capital flouted legal requirements by refusing to hold regular directors' meetings. "We had to insist on the meetings," she says.

Cesal says the situation deteriorated even more when Wilson got involved with Mayberry USA and moved to New Orleans, where Mayberry USA founder Richie Martin was living.

"She abandoned Arizona Capital and went to New Orleans to be with this guy and run this guy's company," Cesal says.

Her departure angered Cesal, but there was nothing she could do. Arizona Capital continued to struggle, she says.

As Cesal was pumping money into the company, losses mounted. Arizona Capital lost money four of the last five years, with losses totaling $339,751 as of December 31, 2001.

Those losses were only recently publicly disclosed, despite a requirement to file annual audited financial statements with the state Corporation Commission's Security Division. Arizona Capital did not file its annual statements for 1999, 2000 and 2001 until August 7 of this year.

"They were out of compliance," says Corporation Commission spokeswoman Murphy.

The commission could have revoked Arizona Capital's license for failing to file the reports, Murphy says.

State records, however, indicate the commission did nothing.

There are no letters or records of communications between the commission and Arizona Capital demanding that the company submit its audited financial statements for the last three years.

Murphy says the commission did alert the company that it needed to file written statements, but just made no record of the notification.

The financial statements arrived at the commission one week after Arizona Capital announced its intention to be sold to CGS Blackwater. The pending sale must be approved by NASD and the commission.

The audited financial statements showed the company lost money each of the last three years. The financial records are important in determining whether Arizona Capital was maintaining its minimum capital reserve requirements.

The audited financial statements indicate that the company had the minimum capital reserve of $50,000 on December 31 of 1999, 2000 and 2001.

Cesal, however, alleges the company occasionally fell below minimum reserve and would turn to her for additional funds.

"I bailed them out several times," she claims.

Arizona Capital officials, including chief financial officer Bob Trask, did not return New Times calls.

Trask was fined $5,000 in 1998 for failing to maintain minimum capital requirements at a previous stock brokerage firm where he worked with Wilson -- W&B McKee Securities.

Cesal says she's still haunted by the experience with Arizona Capital.

"They were like barracudas," she says of Wilson and her associates. "They are out to eat people alive."

Cesal, who didn't know about Wilson's prostitution background until told about it by New Times, says she feels deceived.

"She made me feel like she's a good friend," Cesal says. "All she was interested in was the money."

When it came time to expand her business in 2000, Candy Wilson turned to another widow.

Evelyn Simmons and her late husband, William, had started a stock brokerage firm called Simmons & Bishop in 1984.

Over the years, the business expanded and thrived under the day-to-day direction of William Simmons, until his death in 1999. At that time, Evelyn Simmons turned the daily management of the company over to other employees while she devoted time to her insurance agency.

Within a year, Evelyn Simmons had determined she wanted to sell the brokerage business.

Wilson learned that Evelyn Simmons wanted to sell her company, and friendly discussions soon began. At one point during the negotiations, Wilson and Simmons joked about being "blonde bimbos" trying to make it in the business world.

Wilson, according to a lawsuit filed by Simmons & Bishop, continued to cozy up to Evelyn Simmons.

And Evelyn Simmons bit.

She trusted Wilson to such a degree that she signed a sales agreement that allowed Wilson to take over her company with $100,000 in promissory notes and promises to pay her a percentage of former Simmons & Bishop brokers' commissions.

A testament to her trust is that Evelyn Simmons did not demand that Wilson or Arizona Capital post any collateral for the promissory notes -- despite concerns raised by her accountants.

The sales agreement was signed November 9, 2000. Wilson took over the Simmons & Bishop accounts and began earning commissions.

The first $25,000 promissory note came due on February 28, 2001.

Wilson refused to pay.

Instead, Wilson filed a lawsuit claiming Simmons & Bishop had withheld important information during the negotiations, forcing Wilson to fix numerous problems at the company. As a result, Wilson claimed in the suit, she should not have to pay for the company. Simmons & Bishop filed a countersuit alleging Wilson committed fraud and breach of contract.

Twenty-one months later, Evelyn Simmons still hasn't been paid by Wilson for the company she and her late husband owned for 16 years. She claims in an affidavit that Arizona Capital owes her $246,700 from the sale of the company.

The heart of the lawsuit is disclosure. Wilson contends Evelyn Simmons failed to disclose material information about her company. But Wilson kept a dirty secret from Simmons, too. She never disclosed her prostitution arrests.

"Evelyn Simmons relied upon Candy Wilson's good moral character in selling the business," court records state. "And [Simmons] would not have, in fact, sold the business had she known that Candy Wilson had previously been a hooker."

Phillip Mauro Nuciola III is one of Wilson's top brokers.

He's a big guy who drives a tricked-out Mercedes to work. His wife and kids are back in upstate New York since moving out to Scottsdale in September 1999.

Wilson turns to Nuciola like the Diamondbacks rely on Byung-Hyun Kim. Nuciola's the closer who comes in to seal a deal. Wilson teamed up with Nuciola to promote Mayberry USA stock to investors across the country.

But Nuciola has also sold plenty of other stocks for Arizona Capital. Nuciola makes his money through commissions. And the only way to earn commissions is to get clients to buy and sell stocks -- even when they are not interested.

William Malavenda learned firsthand just how good Nuciola is at his trade.

Malavenda was in Mexico in February 2001 when he received two urgent phone messages from Nuciola.

Malavenda, a 66-year-old retiree on a fixed income, says he was reluctant to return the calls since they would be expensive at $1.25 a minute, but he did so anyway since he had never met Nuciola and had no idea what he wanted.

At the time, Arizona Capital was handling a small investment account Malavenda and his wife had scraped together -- $4,100 worth of AT&T stock. Arizona Capital had obtained Malavenda's account after it took over the Simmons & Bishop brokerage firm.

Malavenda knew nothing about the fallout between Arizona Capital and Simmons & Bishop. All he wanted was to keep his money in a safe investment.

"We are not the type to go out and invest where we are going to lose a whole lot of money," Malavenda says.

But that's just what happened after Nuciola took over the account.

Malavenda, who recently reached a settlement with Arizona Capital, declined to provide details of what happened. Nuciola declined to comment.

But New Times has obtained from another source a copy of Malavenda's request for arbitration from the National Association of Security Dealers. The NASD is a private organization that regulates the securities industry. NASD rules are approved by the Securities and Exchange Commission.

According to Malavenda's February 2, 2002, statement to the NASD, Nuciola "said he wanted me to sell my AT&T stock and purchase COVAD," a high-flying Internet company that marketed and installed DSL lines.

"Phil's comment was that COVAD would make me more money than AT&T, it was an excellent company and was making a big move into the market," Malavenda alleges in his NASD complaint.

Malavenda, according to his statement, says he wasn't interested in selling AT&T.

"Phil continued to push for me to sell AT&T," Malavenda claims. "Finally, I agreed under duress."

Ten days later, Malavenda returned from Mexico and received some shocking news.

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.

"Whoa! Hang on to your hat," says William F. Kent, a commodities trader on the Chicago Mercantile Exchange who invested $45,000 in Mayberry stock.

"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.

The Chicago-area investors were brought into the deal by commodities trader Michael Lang, who learned about Mayberry USA from former Arizona Capital broker Jeff Oates.

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.

Before moving to Scottsdale, Nuciola was selling Mayberry USA stock directly for Mayberry from its Rochester, New York, sales headquarters. He also had a direct financial interest in Mayberry USA through a Mayberry subsidiary called Child Online Protective Services.

Even after he was hired by Arizona Capital to sell Mayberry USA stock, Nuciola continued to work at Mayberry USA as vice president of investor relations and mergers and acquisitions.

Nuciola's sister was also involved in Mayberry USA. Marla Nuciola Gold helped manage Mayberry's telephone sales department. She also is married to David Gold, who is vice president of sales for Mayberry USA.

Wilson and David Gold, meanwhile, have a long-standing business relationship. The two attempted to start a stock brokerage firm in 1996, but were unable to raise the funds.

With Nuciola now working for Arizona Capital, Mayberry USA and Arizona Capital had become a very tangled web with boundless potential for conflicts of interest.

The average investor was completely in the dark. But other problems soon became apparent.

In the spring of 1999, Lang, the commodities trader, set up a meeting for Wilson and Mayberry chairman Richie Martin with William Smithburg, the retired chief executive officer of the marketing conglomerate Quaker Oats.

If anyone knew how to market Mayberry USA, it would be a business leader like Smithburg, who skillfully maneuvered Gatorade onto National Football League sidelines during his tenure at Quaker Oats.

Lang says Smithburg's ties to Quaker Oats could have led to Mayberry USA's CD being placed inside millions of cereal boxes -- a perfect way to penetrate the Internet service provider market.

Smithburg remembers the meeting in the spring of 1999. He says he immediately loved the idea and offered his services to Wilson and Martin to help with anything the company needed. He wrote a check for $35,000 for Mayberry stock and gave them his phone number, expecting a call.

"I never heard from them again," Smithburg says.

Lang was stunned.

"They never called him," Lang says. "He was really upset and infuriated. These buffoons come up here and come off like they know what they are talking about. They tried to act like they knew more about business than he did."

Other Chicago-area investors set up Wilson and Martin with high-level contacts at McDonald's and the Chicago Cubs marketing department.

Wilson and Martin never capitalized on those contacts, either.

"That killed it," Lang says. "Once they didn't try to chase down and take advantage of investors and contacts like that, you are just kicking yourself in the ass because you are never going to amount to anything."

At the same time it became apparent Wilson and Martin were not taking advantage of business opportunities, the Internet service provider market was beginning to erode.

As doubts mounted about Mayberry USA, investors began to become suspicious about certain stock transactions.

One Chicago-area investor -- who asked not to identified -- kept detailed records on transactions. In May 1999, for example, he says Martin sold him 15,000 shares of Martin's personal stock in Mayberry for $5 a share. Martin sold the stock at the same time Mayberry USA was making a private placement offering at $7 a share.

The investor says he thought it was a good deal getting the stock for $5 a share. He assumed that Martin was simply raising some cash for himself, since Martin had largely been paid for his efforts in Mayberry stock.

In retrospect, the investor says the timing of Martin's sale of stock looks suspicious since the company has since collapsed. "That smells real bad," the investor says.

Martin declined to return several New Times calls seeking comment for this story.

Investors missed another warning in late 1999 and early 2000 when Arnold Rick Gean, Mayberry USA's chief financial officer, reportedly sold all of his 170,000 shares of Mayberry USA stock. Gean was CFO of Arizona Capital prior to joining Mayberry USA in 1998.

"We felt bad for Rick at the time," an investor says. "He did all this work and now had no stock left. I was feeling bad for the guy. Months later, I see that was a big red flag."

Gean did not return New Times phone calls.

By the spring of 2000, Wilson and Martin were finally forced out of Mayberry USA. Phil Scheldt was brought in by the other investors to try to salvage the company.

Scheldt tells New Times that Mayberry USA records indicate that Wilson and Nuciola were also getting rid of their Mayberry stock in the winter of 1999-2000.

"Shareholders got pissed because Phil, Wilson and Richie were privately selling their shares in Mayberry to other people," Scheldt says.

Phil Scheldt discovered another Wilson-managed company that was out of control when he assumed the helm at Mayberry USA.

"It was an unmanaged company," Scheldt tells New Times in an interview from his Dallas office.

Among the problems:

• Mayberry USA failed to pay payroll taxes during Wilson's and Martin's watch.

• Mayberry USA was slapped with judgments totaling $109,000 for failing to pay legal bills to two Phoenix law firms.

• Mayberry USA's service was spotty, with frequent network connection problems, a lack of technical support and poor customer service.

• No one knew how many subscribers the company had.

• Mayberry USA was not collecting money it was owed by Internet networking companies that were delivering Mayberry to subscribers.

Scheldt says Mayberry USA is owed $1.28 million by Internet network companies, including COVAD and WorldCom, both now bankrupt.

Not surprisingly, the company's financial records were also a shambles.

Scheldt hired an accountant who spent months digging through the debris, matching up receipts.

"If it looked like there was stealing by employees, it would have shown up," Scheldt says. "It didn't."

Scheldt says there were questions by Mayberry USA investors, however, over how the money was spent -- particularly on expensive and extensive first-class travel by Wilson and Martin.

"Every receipt, everything was in place," Scheldt says. "Whether I agreed with how it was spent is irrelevant."

Scheldt declined to provide details on the couple's travel expenses. Mayberry USA's business records, he says, are in a storage locker that he can no longer access because Mayberry has not paid the storage bill. Scheldt says he's not even sure if the records still exist.

But associates familiar with Wilson and Martin say the couple traveled frequently on the spur of the moment. They ate at expensive restaurants and stayed in the best hotels, all on the Mayberry USA tab.

Through a confusing maze of bankruptcies and cybersquatting, Mayberry USA became part of 711.net, a North Carolina Internet company, which, like COVAD and WorldCom, went bankrupt.

Mayberry USA may soon end up back where it started -- in Rochester, New York.

An investment team called Eclipse Holdings led by Mayberry stockholder Dennis Ruggeri is attempting to buy the company and try to once again market it as a filtered Internet service provider. Ruggeri says he hopes to make an offer for the company by September 1.

Scheldt says Ruggeri's offer may be the best hope that Mayberry USA shareholders will recoup at least some of their investment.

But not if shareholders find out Ruggeri has a connection to Wilson.

"If Candy's name shows up . . . the shareholders would go ballistic and never approve a purchase," Scheldt says.

Ruggeri, according to Wilson's sworn deposition, was a shareholder as recently as last February in Arizona Capital.

When first asked about it, Ruggeri denied having any financial stake in Arizona Capital.

"I don't know where you're getting your information from," he says. "I would think I would know if I did."

But moments later, Ruggeri acknowledged he did have a small stake in Arizona Capital, but that it was liquidated sometime in 2000.

"It was a loan agreement and it was taken care of," Ruggeri says.

At the same time Mayberry USA hangs on to life by a thread, one of its biggest investors has started a rival firm, called Mayberry America, that provides the same service.

Gene Tyrrel put together an investment group that purchased $700,000 in Mayberry USA stock. Tyrrel says he got fed up and started Mayberry America.

"I was an investor who was pissed off at their (Wilson's and Martin's) lack of management skills and ability," Tyrrel says.

Tyrrel says he's tried for years to get a detailed accounting for Mayberry USA to find out what happened to shareholders' money, to no avail.

"If you can uncover that," he says, "you have uncovered the mystery of the century."

Candy Wilson's days of running Arizona Capital will very likely soon come to an end.

Pending regulatory approval, Wilson intends to sell Arizona Capital to CGS Blackwater LLC and become a part-time employee as an investment banker.

CGS Blackwater co-owner Norman E. Clarke declined to provide details of the purchase of Arizona Capital.

But records obtained by New Times show the company was sold for a song.

According to an August 2 letter Wilson sent to shareholders, CGS Blackwater paid $50,000 to assume Arizona Capital's assets. The money is equal to the amount of capital reserves Arizona Capital must maintain; Wilson essentially gave the company away.

CGS will also assume several contingent liabilities, including the Simmons & Bishop lawsuit, and three pending NASD arbitration cases.

Clarke says he expects to quickly settle the cases.

Wilson's letter states the new owners will be "making distributions" to Arizona Capital's creditors and debtors. The payments will likely be in securities held by Arizona Capital's parent company, Arizona Capital Holdings -- which is controlled by Wilson.

If those securities include Mayberry USA stock, the payments might not be worth much.

What about the original investors in Arizona Capital? What about Angela Cesal?

"I don't know who that is," Clarke says.

When told she was an original investor in Arizona Capital, Clarke quickly dismissed her role.

"In business you can't make friends with everybody," he says. "It's not a democracy. It is a zero sum game. Sometimes people lose and sometimes people win."

Cesal knows the final score in her long and tortured relationship with Wilson, the hooker turned CEO.

"All my investment went down the toilet," she says.


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