Ivana Get Rich: the Donald's Ex Gets Mixed up with Some Questionable Characters

Ivana Get Rich: The Donald's ex gets mixed up with some questionable characters

Ivana Trump has found a deeper pocket than her ex-hubby Donald: the stock market. But her latest enterprise involves her with some highly questionable characters, and it's unclear whether or not she knows about their past history of stock-market shenanigans. Just a couple of weeks ago, Ivana told viewers of The Rosie O'Donnell Show that she was working with a company called Tel-Com Wireless Cable TV, which was going to help her get into Internet retailing. No sooner had she uttered these words than shares of Tel-Com began to move from $6 to $25, briefly giving the firm a market value of $220 million. Since then, the shares have settled back to $10. But still, Ivana's televised plug seems to have inflated Tel-Com's shares by more than $30 million.

Based in North Miami Beach, Tel-Com is but the latest company to excite investors with talk of online retailing. In this holiday season, publications from Newsweek to Business Week are predicting that shoppers will spend heavily with the 'Net's "e-tailers." In this giddy atmosphere, stocks of relatively well-known Internet companies like Amazon.com and America Online are trading at crazy levels. Yet these outfits look like positively blue-chip businesses compared to some other stocks in the e-tailing field. Among the players are some once-floundering companies whose executives insist they will now make good on the Internet. Among them are K-tel International, Egghead.com and Bluefly.

But Tel-Com, the company Ivana Trump is involved with, looks even worse than this lot. In exchange for 10% of a Tel-Com subsidiary, Ivana Trump has agreed to put her name on Tel-Com's Internet site and host its home shopping conduit, called the Fifth Avenue Channel. A peek into Tel-Com's back room, however, reveals that the company's boosters and big shareholders include convicted stock manipulators, shameless promotors and brokers who've been banned from the securities business.

Before Ivana's arrival, Tel-Com ran a broadcasting outfit in Costa Rica and wireless cable TV franchises in Wisconsin. For the nine months ended September, the company's losses were $1.7 million, or 27 cents a share, on revenues of $1.1 million. The company's working capital and tangible net worth were deeply negative.

Tel-Com bought the Costa Rican business from Melvin Rosen in 1996, and he ended up taking over as Tel- Com's chief executive in May 1997 when the company couldn't make its payments to him. Very influential in Rosen's arrival was Charles S. Arnold, a private investor who operates in Florida and North Carolina and has been a consultant to TelCom. "Chuck said, `Don't foreclose on your debt,'" Rosen recalls. "`A lot of people are going to get hurt.'"

In the 1980s, Arnold sold franchises for renting videocassette recorders and running coin-operated pizza ovens. Then he discovered penny-stock promotion. His company, Sound Money Investors, describes itself as "dedicated to helping investors make decisions" through investment magazines, Internet sites and seminars. Arnold's publications, Sound Money Investor and Personal Investing News, offer readers advice on "how to invest safely and avoid risky investment traps," but they also run stories about "low-profile companies with high profit potential."

Unfortunately, these stories are bought and paid for. According to contracts on file with the Securities and Exchange Commission, Arnold and his associates have taken millions of shares of cheap stock in exchange for publishing glowing stories about fledgling companies. When the positive stories spur investors to drive these stocks skyward, Arnold and his coterie are in a position to cash in.

Arnold typically takes his shares through a welter of shell companies with bland names like Universal Holdings and Affiliated Services. Last week Arnold was staging a seminar in Costa Rica, and he refused to talk to Barron's. The program for his seminar included discussions on currencies and instruction on moving assets offshore. Headliners were stock guru Louis Ehrenkrantz and talkshow veteran Morton Downey Jr., who offered to blow the whistle on "Schemes and Scams."

Arnold's lawyer, Jerome Selvers, said, "Mr. Arnold maintains confidentiality and privacy with respect to his business."

Various companies affiliated with Arnold came into 29% of Tel-Com shares after Tel-Com in December 1996 signed a contract with a team of "consultants" that included Arnold plus Carl Caserta, a broker who was sued in 1990 by the SEC, which alleged that he refused to abide by an earlier agreement to stay out of the securities business. Tel-Com filings with the SEC say "the Consultants have disclaimed any affiliation with one another," but the slightest research shows that one of them, Richard Fixaris, has worked as a subordinate at one of Arnold's publications.

In late 1996, Arnold and Fixaris each took 100,000 shares of Tel-Com in exchange for a flattering article in Arnold's Personal Investing News and a telemarketing campaign to interest brokers in the stock.

If Arnold and his crew still hold the 29% of Tel-Com that they did earlier this year, it would be worth $12 million at a recent share price of $10.

Investors in New York say Arnold visited them before Ivana's appearance on Rosie O'Donnell, offering to sell them Tel-Com shares at a steep discount to the market price. With Arnold, say those investors, was Howard Edrich, a stockbroker who was banned from the securities business and pleaded guilty in '92 to possession of stolen property. The plea came as part of the Manhattan District Attorney's prosecution of a stock-manipulation ring.

It was Edrich who answered the phone when Barron's first called Tel-Com about a week ago. A few minutes later, when we asked Tel-Com Chief Executive Rosen about Edrich's past, Rosen said Edrich wasn't available. Sounding disconcerted, Rosen professed ignorance of Edrich's rap sheet and described Edrich as a part-time employee who handled calls from stockbrokers.

Rosen claims that Arnold hasn't worked as a consultant for Tel-Com since Rosen arrived in May of last year. Maybe so. But Tel-Com, complete with information about the deal with Ivana, is one of the three featured investment ideas on an Internet site called StockMaker, which is controlled by Arnold. Rosen says he's mystified by a StockMaker disclaimer that says: "StockMaker has been compensated with 50,000 shares for its profile on TelCom Wireless Cable TV Corporation."

Rosen himself hired the brokerage firm Meyers Pollock Robbins as financial consultants to Tel-Com on July 24 of last year. That was two months after the attorneys general of four states had held a news conference to announce a crackdown on Meyers Pollock for fraudulent sales practices. In at least one state, Utah, Meyers Pollock pled guilty to the fraud charges. In November 1997, federal prosecutors in Manhattan charged that two of the firm's branches were controlled, through a combination of bribes and muscle, by stock consultants and thugs from the Genovese and Bonanno crime families. The defendants are fighting the charges.

In December of last year, Tel-Com filed a stock registration to allow nearly six million shares to be sold by Rosen, three shell companies affiliated with Chuck Arnold and seven Meyers Pollock brokers, including ex- president Michael Ploshnick, who is under continuing federal investigation. The filing says the brokers got their stock from Tel-Com "consultants." Several of the Meyers Pollock brokers have since moved to the Long Island firm Glenn Michael Financial, another ardent proponent of Tel-Com stock.

As for Ivana, she never responded to our requests for an interview, so we don't know if she realizes just whom

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