There seems to be something about the voice-recognition technology business that attracts scandal. Computergram has reported how former Kurzweil Applied Intelligence chief executive Bernard Bradstreet ended up in prison after he filed fraudulent sales reports to help push through a public share offering, along with other executives from the company (CI No 2,944, 3,065). But Bradstreet’s attempts to manipulate the market pale into insignificance when compared with the initial public offering of Advanced Voice Technologies Inc of New York, which floated in February 1995. The company, a supplier of voice mail systems for educational establishments which recently signed a co-marketing agreement with AT&T Co, was brought to market by Sterling Foster, now accused by the NASD National Association of Securities Dealers of making $51m in illicit profit from three flotations in nine months. The NASD alleges that Sterling Foster’s technique was to foist the stock on investors, help to hype up the price, and then sell its own and affiliated holdings before the stock inevitably fell. The extraordinary story, described in the Wall Street Journal, shows just how easy it can be to go public if the right broker is found. Incredibly, Advanced Voice Technologies’ prospectus disclosed a history of losses, said the company was delinquent on a significant number of accounts payable and said that some suppliers would only deal with the company on a cash on delivery basis. An associated auditor’s report even warned of substantial doubt about the company’s ability to continue as a going concern. Advanced Voice is not actually charged with any wrongdoing – but confidence in the company seems to have fallen.
