There were a lot of people who lost extortionate amounts of money on Stan Lee Media, Inc when it was listed on the stock exchange, and then there were those who sought to use the company to make as much money as possible, and not by entirely legal methods. Sadly, those who lost the most were the people who bought into the company and purchased shares as long-term investments. There’s be some who bought shares for a quick flip, and they more than likely did make a small profit, but, as will be shown, there were a lot of people who, at the end of the life of Stan Lee media, Inc, were left very out of pocket.
The failure of Stan Lee Media, Inc, can be put down to a number of factors. The dot.com bubble was about to burst when the company was floated, and when it did burst, it brough down a number of such underfunded, over speculated companies. Another factor was poor management and, of course, criminal behavior when it came to trading the shares. People went to jail because of what happened at Stan Lee Media, Inc.
There is some good news though. If you’re one of those unlucky ones who didn’t manage to cash out on time, the physical stock certificates are now worth some money. The actual shares are largely worthless, but the certificates themselves can fetch up to $100 each on various auction and memorabilia sale sites. It’s not the millions you were promised, but it is better than the less than nothing you got.
The question here is, who bought shares in Stan Lee Media, Inc, and who was left holding the bag (so to speak) when the company went under? Hopefully these questions can now be answered.
When Stan Lee Media, Inc was announced, the main selling point was Stan Lee himself. This was the first time in nearly sixty years that Stan Lee had been away from Marvel Comics. Rightly or wrongly, the general public tended to believe that the success of Marvel Comics was down to Stan Lee alone. The idea, from the start, was to float the company on the stock exchange, hence Stan Lee media, Inc wasn’t an entirely new company, it was a pre-existing Colorado based company, Boulder Capital Opportunities, Inc, which was already listed on the SEC.
Boulder Capital Opportunities, Inc outlined their business plan to the SEC on 29 July 1996 as such.
The Company’s business plan is to seek, investigate, and, if warranted, acquire one or more properties or businesses, and to pursue other related activities intended to enhance shareholder value. The acquisition of a business opportunity may be made by purchase, merger, exchange of stock, or otherwise, and may encompass assets or a business entity, such as a corporation, joint venture, or partnership.
Boulder Capital Opportunities, Inc, had very little capital behind them. They owned no real estate and had no full-time employees. What it did possess was 100,000,000 shares which could be traded immediately, so they were going to accept the first offer that came along. Those shares were worth $0.001 each.
On 25 June 1999, Boulder Capital Opportunities, Inc, informed the SEC that it had been acquired by Stan Lee Media, Inc.
This meant Stan Lee Media, Inc, took over the 100,000,000 shares and Boulder Capital Opportunities, Inc, ceased to exist.
Initial Stan Lee Shares
The first shares allocated for Stan Lee Media, Inc, happened when the company took over Boulder Capital Opportunities. When this happened, Stan Lee Media, Inc, had a total of twenty-five full-time employees on the books. Shares would be allocated between them all, at different times.
These were the following employees at Stan Lee Media, Inc, at the time of its start-up.
Stan Lee, Founder, Chairman of the Board of Directors and Chief Creative
Officer
Devendra Mishra, President, Chief Executive Officer and Director
Gill Champion, Chief Operating Officer and Director
Stephen M. Gordon, Executive Vice President, Operations
Robert M. Schultz, Vice President, Finance
Andrea L. Freitag, Secretary and Director
Jennifer Kahn, Manager of Strategic Affairs
Patty Smith, Project Coordinator/Production Manager
Mark Lasoff, Executive Vice President
Jamie Wilkinson, Executive Vice President
Dana Moreshead, Vice President, Creative Services and Brand Management
Taylor Grant, Executive Editor
Steve Gerber, Senior Editor
Shawn McManus, Art Director
Aaron Sowd, Conceptual Designer
Duncan Rouleau, Key Designer
Zachary Foley, Lead Digital Artist
Russ Heath, Conceptual Designer
Andrey Pavlovskiy, Senior Digital Artist
Anthony Winn, Storyboard Artist
Jason Thomas, Digital Artist
Gary Manfredi, Director of Technology
David Medinnis, Chief Technical Officer
Richard Yaker, Director of Web Services
All these staff members would be afforded the opportunity to purchase shares in Stan Lee Media, Inc, at reduced prices, before and after the company was publicly floated. Some took the offer up, a lot didn’t.
Note that Peter Paul was not an official employee of Stan Lee Media, Inc, when it was floated on NASDQ. His wife, Andrea Freitag, was, and one of Paul’s companies, Paraversal would benefit from a consultancy deal.
A total of 6,680,000 shares were handed to the six directors and executives of Stan Lee Media, Inc. The first round of shares unfolded as such.
Stan Lee. Founder, Chairman of the Board of Directors and Chief Creative
Officer: 3,600,000 (held in the name of the Lee Family 1985 Trust)
P.F.P. Family Holdings, L.P.: 2,700,000 (Peter Paul’s main company, and issued to Andrea Freitag)
Devendra Mishra. President, Chief Executive Officer and Director: 50,000
Gill Champion. Chief Operating Officer and Director: 50,000
Stephen M. Gordon. Executive Vice President, Operations: 270,000
Robert M. Schultz. Vice President, Finance: 10,000
The employees that are known to have been afforded the opportunity to purchase shares in Stan Lee Media, Inc, and the dates were as follows:
Combined, the thirty-six names on this list paid $6,823,750 to Stan Lee Media, Inc for their shares. It is not known if all listed actually bought their shares or, if they did, managed to cash them out for a profit or a small loss.
One company of note on the list is Paraversal. Paraversal would enter into a consulting agreement with Stan Lee Media. This agreement was initially a three-year term with a monthly compensation of $16,000, increasing to monthly compensation of $20,000 as of March 2000, stock options to be mutually agreed upon, and reimbursement of certain business expenses.
Parversal was owned by Peter Paul. He was amongst those who decided how much Paraversal would be paid, along with stock allocations and bonuses. Peter Paul would make more money out of Stan Lee Media, Inc, than anyone associated with the company, including Stan Lee himself.
Allocating Stan Lee
Here’s how the stock allocations were rolled out, according to documents filed in various Stan Lee Media court cases and with the SEC.
Stan Lee Media, Inc and Macromedia:
November 3, 1999. SLMI issued Stock Certificate No. 0001 evidencing 714,286 Series A Preferred shares to Macromedia, Inc. ("Macromedia").
On or Before October 23, 2000. Macromedia assigned 714,286 Series A Preferred shares to Shockwave.com, Inc. ("Shockwave") (Amendment No. 1 to Agreement between SLMI, Shockwave, and Macromedia dated October 23, 2000, SM012989).
After October 24, 2000. On March 15, 2001, Shockwave changed its name to Atomshockwave Corp. On December 5, 2005, Atomshockwave Corp. changed its name to Atom Entertainment, Inc.
Stan Lee Media, Inc and Elliott Associates.
August 2, 2000. SLMI issued 4,000 cumulative convertible Series B Preferred shares; 2,000 shares to Elliott Associates, L.P. and 2,000 shares to Westgate International, L.P.
August 25, 2000. Both Elliott Associates, L.P. and Westgate International, L.P. converted 2,096 cumulative convertible Series B Preferred shares (1,048 shares per entity) into 266,530 total shares of Common Stock at $7.885 per share. These shares were equally distributed between Elliott Associates, L.P. and Westgate International, L.P., each organization receiving i33,265 shares. A total of 1,904 shares of Series B Preferred remained outstanding after this conversion.
November 9, 2000. Stock dividend issuance of 13,327 shares each.
December 12, 2000. Both Elliott Associates, L.P. and Westgate International, L.P. converted a total of 630 shares of cumulative convertible Series B Preferred (315 shares each) into 410,340 shares of Common Stock.
Westgate International, L.P. changed its name to Elliott International, L.P.
Others.
2,800 shares of Common Stock issued on December 13, 1999 to Mr. Ben-Zvi in consideration of a settlement agreement.
25,000 shares of Common Stock issued on May 17, 2000, granted on November 8, 1999, issued to Cyberworld as a licensing fee.
409,037 shares of Common Stock issued to Conan Properties, Inc. on September 7 (or 11), 2000 in consideration for all the rights in the intellectual property known as Conan the Barbarian.
833 shares of Common Stock issued to an investor on February 15, 2001 for an unknown price and for an unknown reason.
5,000 shares of Common Stock issued at an unknown price per share on August 18, 2000 to Mr. Burkom.
1,500,000 shares of Common Stock to be issued subsequent to November 3, 1999 to key employees, consultants, and advisors of SLMI pursuant to SLMI's 1999 Incentive Stock Option Plan.
150,000 shares of Common Stock to be issued to non-employee directors pursuant to SLMI's 1999 Stock Compensation Plan, including any shares repurchased by SLMI and reissued to any such employee, consultant, or advisor.
Stan Lee Media, Inc and Peter Paul.
Peter Paul owned a number of companies and names and dealt in Stan Lee Media, Inc stock, resulting in the price going up. It was one of the reasons why the SEC ordered trading in the stock to be suspended and Paul, and others, charged and convicted of manipulating the stock of Stan Lee Media, Inc
As of December 2007, Peter Paul, through the companies he controlled, owned the following:
P.F.P. Family Holdings, LP. 2,668,300
Continental Entities, Inc. 705,500
Celebrity Enterprises, Inc. 629,633
Hollywood Holdings Corp. 416,306
Global Brand Holdings, Inc. 82,500
The Medici Group, LLC 82,500
Global Language Solutions, Inc. 55,000
World Network, Inc. 42,350
Excelsior Productions, Inc. 26 500
TOTAL 4,708,589
As has been pointed out previously, employees were given the option to purchase stock at a lower price than the public. These included Stan Lee himself.
Stan Lee owned 3,600,000 shares in the new company, via the Stan and Joan Lee Inervivos Trust. Andrea Freitag, also known as Andrea Paul, owned 2,700,00, via P.F.P. Family Holdings – which was run by Peter Paul. Champion and Mishra both owned 50,000 shares each. Via stock options, Stephen Gordon would end up with 270,000 shares.
Floating Stan Lee
Here’s how the shares played out.
On July 23, 1999 SLM entered into written compensatory stock option and warrant agreements with certain executives and key employees to purchase 1,250,000 shares at $2.50 per share, the estimated fair market value at the date of grant.
In July 1999, SLM entered into agreements with two parties for consulting services in exchange for options to purchase 725,000 shares of SLM's common stock, at an exercise price of $2.50 per share, the estimated fair market value at the date of grant. 575,000 of these options were granted to Ziffren, Brittenham, Branca & Fischer LLP as consideration for future services as SLM's general entertainment counsel in connection with structuring and negotiating entertainment-related transactions and all other entertainment related matters.
On July 23, 1999, 10,000 shares of restricted common stock were issued to certain employees in consideration for past services issued at $2.50 per share. Another 50,000 shares of restricted common stock were also issued and to be delivered in June 2000 subject to employment conditions.
On July 30, 1999, 37,500 shares of restricted common stock were issued as part of a Private Placement resulting in proceeds of $150,000.
The stock was rolled out onto the NASDQ in August 1999 and the first day of the float, 16 August 1999, it closed at $9.00 per share, up 41% from their opening. On the first two days, 271,200 shares were traded.
The shares took a slight dip the following day, closing at $8.13. This wasn’t a warning sign; in fact, it was perfectly normal. When a new company starts up, especially one with a profile that Stan Lee brought to the table, it closes higher on the first day and then settles on the second.
During May through July of 1999, a total of $738,100 in cash was received for subscription stock. The subscription stock consists of 246,029 shares of restrictive stock that were issued on July 23, 1999, in consideration for purchase for a value of $3.00 per share. In addition, warrants were issued to purchase another 246,029 shares at $5.00 per share. All subscribed stock was issued prior to September 30, 1999.
On 5 October 1999, Stan Lee Media, Inc, entered into an agreement with Paraversal, Inc. to provide Stan Lee Media with strategic business development services, including structuring of corporate partnering relationships and strategic alliances. The agreement called for Stan Lee Media to pay Paraversal $16,500 in monthly compensation which would increase, plus bonuses. Paraversal was offered 5000,000 shares at $5.00 per share and handed $300,000 for work already done. Before the end of 2000, Paraversal was being paid $1,000,000 per year.
On 8 November 1999, it was being traded at $7.19 per share. The same day, Stan Lee Media, Inc, stock was listed on the Frankfurt Stock Exchange.
It hit a peak of $30 a share in early February 2000 but closed at $19.00 on 8 February.
On 28 February 2000 it closed at $25 per share but dropped at $16.25 on 9 March.
For the bulk of 2000, the stock remained steady at $10 per share. There was no great incentive to sell as a large profit wasn’t able to be made, unless a person hadn’t paid for their shares or had managed to get them at a very reduced price.
The table below shows how the stock behaved for the last five months of 2000. The table isn’t anywhere near complete, but it does give a good idea as to how it behaved.
Why Did The Stock Fall?
In November 2000 Peter Paul, through his companies, began to offload his shares. He dumped 150,000 shares and then left America for Brazil, leaving his wife to answer questions from the SEC.
What wasn’t known to the public, and only suspected by the SEC and NASDQ, was Stan Lee Media, Inc insiders were manipulating the stock. Peter Paul (and he wasn’t alone in this), was releasing shares from one company he owned and buying them for inflated prices by another. Knowing that selling large amounts of stock would devalue the price, both Paul and Gordon began to borrow large amounts of money from Merrill Lynch & Co using their stock as collateral. In doing so, they were able to sell their stock to Merrill Lynch and not impact the trading price. The contact person at Merrill Lynch was Jonathon Gordon, Stephen Gordon’s brother.
Friday, 15 December 2000, the stock closed at $1.00.
The same day Stan Lee media, Inc, laid off 140 staff and closed its doors. It had received an informal inquiry from the Securities and Exchange Commission, and that the SEC had discovered evidence of possible misuse of company funds by former members of its management team. The deadline for raising over two million dollars in financing had passed without success.
Two press releases were issued.
Stan Lee Media, Inc. announced today that, based upon the continued volatility of its stock and the drop of its stock price to below $1, it is unable to complete the balance of its recently announced bridge financing. In light of this fact, Stan Lee Media has suspended its production operations and laid off substantially all of its staff. Key executives will remain at the company to explore new financing options.
‘We still believe in the fundamentals of our business plan and are proud of the work we have accomplished to date,’ stated Ken Williams, President and CEO. ‘In the coming weeks, we will be focusing on exploring the full range of strategic alternatives available to us in order to maximize shareholder value.’
If that wasn’t dire enough, the second press release made it clear to anyone familiar with the company, and finance, that it was all over. Even more damning, it showed where the blame lay.
Stan Lee Media, Inc. announced today that it has received notice of an informal inquiry by the Securities and Exchange Commission. The inquiry seeks to gather information regarding securities trading in the company's stock by certain individuals and entities. In addition, during its internal investigation, the company has discovered evidence of possible misuse of company funds by some former members of the company's management team.
‘The company plans to cooperate fully with the investigation and to turn over to the SEC any information in its possession which may be helpful to the investigators,’ stated Kenneth Williams, President and Chief Executive Officer and Stan Lee, Chief Creative Officer of the company. ‘Management is continuing its discussions regarding strategic alternatives for the company, and presently we do not believe that these developments will adversely affect the company's near-term strategic plans.’
Stan Lee Media also announced that it had terminated its consulting agreement with Paraversal, Inc., the consulting company through which Stan Lee Media retained the services of Peter F. Paul, and the employment agreement with Stephen Gordon, the former Executive Vice President/Operations of Stan Lee Media.
Tuesday, 19 December 2000, NASDQ halted all trading in the stock. The people who’d bought and held onto the shares as investments were now well out of pocket. The dream was over.
When the SEC had finished its investigation, it found the following.
Paul and Gordon, who already controlled a large number of Stan Lee Media shares, used nominee accounts at Pittsburg Institutional to buy 1.6 million Stan Lee Media shares valued at $14 million in nominee accounts at Pittsburg Institutional and attempted to pay for the stock with checks that bounced.
While aggressively purchasing Stan Lee Media shares, Paul and Gordon sold Stan Lee Media stock at below market prices. Pittsburg executed and reported all of these sales transactions after the close of trading, thus avoiding public reporting of the lower sales prices.
Paul failed to make required filings with the Commission regarding his beneficial ownership of, and changes to his ownership of, Stan Lee Media shares.
Pittsburg maintained the high bid for Stan Lee Media stock through the use of RediBook ECN, an electronic communications network, thereby disguising the fact that virtually all of the demand for Stan Lee Media stock was coming from Pittsburg Institutional. When Pittsburg stopped bidding for the stock, the price of the stock collapsed in two days by 72%. Pittsburg engaged in ‘marking-the-close.’ Through this practice, he attempted to influence the closing price of the stock by placing purchase orders at or near the close of market.
The SEC estimated that shareholders had lost over $25,000,000 in the Stan Lee Media, Inc, collapse. They began to seek Paul’s extradition from Brazil. He was arrested in Brazil in August 2001, placed in jail and finally brought back to America in September 2003.
Jonathon Gordon was sentenced to two years jail. Stephen Gordon was handed six years. Peter Paul got ten years and was released in 2014.
What happened at Stan Lee Media, Inc, regarding share and trading was the kind of behaviour that Michael Milken wouldn’t have gone near. It was always going to fail.
Who was left holding stock? What is shown below is a list of shareholders in Stan Lee Media, Inc. as of 2001 when the company filed for Chapter 11 bankruptcy. For privacy reasons, I’ve removed the listed addresses. All of those listed held shares in the company, and all lost money on it, other than Stan Lee himself, who was gifted his shares when the company was formed.
Among those listed as owning stock included Stan Lee, Joan Lee, their daughter, J.C. Lee and Stan’s brother, Larry Lieber. Others included lawyer Arthur Lieberman, who acted for Marvel Comics, Stan Lee Media, Inc, Conan Sales Co and POW! Entertainment (more on that soon), along with a number of Stan Lee Media, Inc. insiders including Gill Champion, who would team with Stan and Liberman to form POW! Entertainment.
As of 29 August 2024, Stan Lee Media, Inc. stock is worth $0.0006 per share.
The burning question will always remain – how much of this did Stan Lee, the person, know? The SEC investigated Stan Lee Media, Inc, thoroughly. It found that Stan Lee had no idea what was going on with the company. His involvement was one of a figurehead, and a creative. The SEC found that he was not involved in the business side of the company, and that he was manipulated by Peter Paul.
Stan Lee rarely mentioned Stan Lee Media. In May 2006, he spoke about the company.
‘What happened was a nightmare I’m trying to forget. I want to put it behind me, I don’t want to be associated with it.[i]
Next: What, exactly, was the business model for Stan Lee Media, Inc?
[i] Telegraph Forum 15-16 May 2004