Bopaboo: Biggest Online Music Scam Ever?

The online music space has seen its fair share of shady startups. The shadiest in recent memory is BurnLounge, which went out of business after being sued by the Federal Trade Commission for allegedly operating an illegal pyramid scheme.

But a new startup called Bopaboo is perhaps even more audacious. Whereas BurnLounge was a legitimate music service offering legal music as part of a pyramid scheme, Bopaboo appears to simply be a scheme.

The idea is simple: if you have an MP3 and no longer want to listen to it, resell it in our online marketplace. If you have an IQ lower than 75 and don’t see the problem with this, here’s the deal: there’s no way for Bopaboo to ensure that you’ve deleted the MP3s you “resell” or that you won’t “resell” them multiple times.

In that sense, Bopaboo isn’t a marketplace for “reselling” digital music: it’s a scam masquerading as a legitimate music service based on a misunderstanding of first-sale doctrine.

But the scam gets worse. Bopaboo doesn’t actually give you the money paid for the songs you “resell.” According to the company’s FAQ:

Immediately after someone has purchased your music, bopaboo transfers 80% of the selling price into your bopaBank. You can use your new found money to buy more of your favorite music on bopaboo.

In other words, when somebody buys your “unwanted tunes,” Bopaboo takes 100% of the cash and allows you to put 80% of the amount it collects towards the purchase of other unauthorized songs on Bopaboo that Bopaboo doesn’t pay a cent for. You get no cash.

In effect, Bopaboo is attempting to create a music download service in which it charges users for music it has no rights to sell and acquires the music from its users under the guise of “reselling.”

Quite audacious.

Which is not surprising given the track record of the 28 year-old “serial entrepreneur” behind Bopaboo: Alex Meshkin.

As News.com notes in its story on Bopaboo, Meskin has an interesting past. He claims to have raced through high school, turned the money set aside for his college education into millions in the stock market as a daytrader and sold a startup called Surfbuzz.com for $24 million in cash and stock during the .com boom.

The story was so believable to some that Meshkin became the youngest owner of a NASCAR team at the age of 23. Yet as BusinessWeek detailed in 2005, Meshkin’s experience in NASCAR raised questions about Meshkin’s past.

But Meshkin, now 24, didn’t graduate from a Maryland high school in three years, his day trading profits can’t be confirmed, and he won’t reveal the name of the outfit that he says “merged” with a Web site he co-founded in a deal worth $24 million.

Now, Meshkin’s racing business has a big hole in it, too. Besieged by angry investors and stung by sponsor defections, Meshkin’s once-promising Bang! Racing is reeling. On Jan. 21 the team shuttered its 35,000-square-foot shop in Mooresville, N.C. In the garages in and around Charlotte, a hub of NASCAR racing, speculation is thick that the upstart team may not race in 2005 — if ever.

That begs a number of questions: For starters, how did a whippersnapper with zero experience running a motor racing team elbow his way into NASCAR? How did he persuade Toyota (TM ) in just its first year of NASCAR racing to pick his bid for one of four sponsorships out of the 84 submitted? Did NASCAR conduct any due diligence on Bang Racing?

Just a year ago, NASCAR insiders were hailing Bang as a team to watch and Meshkin, its irrepressible owner, as a farsighted entrepreneur. His dream of melding the speed of NASCAR with cutting-edge technology impressed racing insiders and sponsors. It was only a matter of time, it seemed, before fans would be engaged in live chats with their favorite drivers at Nutzz.com, a Bang Web site. Or they would be reaching for their cell phones at the track for audio feeds from inside race cars. Both were among Meshkin’s innovative ideas.

Those favorable first impressions have faded. Now, Meshkin finds himself at odds with many in the tight-knit racing community. His backers and fellow executives at Bang, who just months ago had soaring expectations for Meshkin, are his sharpest critics. In fact, as of Jan. 26, a former Bang executive, attorney James L. Coffin, already had hauled Meshkin into federal court, suing him for alleged misuse of Coffin’s credit reputation and for failing to live up to promises of a six-figure salary and equity in Bang. Other refugees from the race team are also threatening legal action. One is investor George Blacker, who says he put together $400,000 in financing for Bang. Blacker claims that once Meshkin had the money in hand, he reneged on a job offer and the size of a stake in parent company Bang Holdings. Meshkin says Coffin waited nine months after being let go before starting to allege that Meshkin is “the anti-Christ.” He says Blacker misconstrued the terms of their arrangement.

Meshkin’s NASCAR dreams collapsed but I decided to see what happened after BusinessWeek’s story ended. What I discovered leaves little doubt about the nature and fate of Bopaboo.

Researching Meshkin isn’t difficult – a search for his name yields his personal blog – AlexMeshkin.com. It’s billed as “An insider’s look at the business and marketing of NASCAR.”

The blog is curious given the fact that Meshkin’s days in NASCAR are long gone. So why did he start posting articles that are years old about his failed NASCAR team on his new blog in February 2008? The Bopaboo.com domain name registration gives us a hint. It was registered in December 2007, meaning Bopaboo was in the works when Meshkin started blogging.

My suspicion is that Meshkin believed posting old articles and photos about his NASCAR team would help create an “online presence” that gave him credibility for Bopaboo. After all, press, prospective investors and potential employees would logically look him up online and AlexMeshkin.com was the perfect vehicle to ensure that he’d look like a million bucks.

And Meshkin does look like a million bucks in his self-written bio:

Alex Meshkin is a serial entrepreneurial that is well documented in leading publications including CNBC, Fortune, Fox News, and many others. Alex Meshkin currently serves as President of bopaboo – your place to buy and sell digital music.

Previously, Alex Meshkin served as Executive Vice President of Corporate Development of Cloverleaf Partners a global software developer and sports marketing agency.
Alex Meshkin is widely known for his success as the Founder and CEO of Bang! Racing, a company formed through a strategic partnership with Toyota Motor Sales (TMS) and Toyota Racing Development (TRD). In 2004, Bang! Racing broke numerous motorsports records; and Alex Meshkin became the youngest team owner to win in NASCAR history, bringing Toyota its first two victories.

Additionally, Alex Meshkin oversaw a Joint Venture between Bang Racing’s parent company (Bang!) and Vertrue Inc. (NASDAQ: VTRU), and strategic technology partner eBay (NASDAQ: EBAY) to launch the first consumer membership program in the field of motorsports, targeting NASCAR fans. Together, Bang!, Vertrue and eBay launched an innovative consumer membership which delivered consumers deep discounts at leading NASCAR sponsors including; Home Depot, Sunoco and Target, and provided incentive credits redeemable through an online auction powered by eBay.

Prior to Bang Racing, Alex Meshkin led the product development and strategy for a venture funded financial consulting firm. And as a teenager during the dot.com era of the late 1990’s, Meshkin founded and led the first online alternative currency dynamic commerce company from concept through merger.

Meshkin’s discussion of Bang Racing is interesting. BusinessWeek described Bang Racing’s collapse as Meshkin’s NASCAR partners and investors, including Toyota, started to question Meshkin’s credentials.

But BusinessWeek’s article preceeded some of the legal action that shed more light on Bang Racing. What of the “Joint Venture between Bang Racing’s parent company (Bang!) and Vertrue Inc. (NASDAQ: VTRU)?”

Vertrue sued Meshkin:

Plaintiff generally alleges that Defendant, acting as the “alter ego” of the Companies, “engaged in a scheme to defraud [Plaintiff] by misrepresenting and concealing Nutzz.com’s and Bang Racing’s marketing capabilities (or lack thereof) and Meshkin’s, Nutzz.com’s and Bang Racing’s dire financial status in order to induce [Plaintiff] to enter into an agreement with Nutzz.com and provide it with an advance of $1.25 million to fund its advertising and promotional obligations under that agreement.” Compl. ¶ 1. Plaintiff contends that Defendant “intentionally misrepresented his personal background and his two companies’ ability to perform such obligations when, in fact, neither company would be able [to] do so.” Id. Plaintiff asserts that Defendant made false representations designed to conceal his companies’ “dire” financial condition in an effort to induce Plaintiff to enter into an agreement with Nutzz. Id. Plaintiff maintains that had it known the truth about Defendant’s and the Companies’ financial conditions and their inability to carry on operations, it would never have entered into the agreement with Nutzz, advanced Nutzz $1.25 million, accepted Bang Racing as Nutzz’s guarantor or expended significant additional sums of money in the good faith, albeit erroneous, belief that the Agreement would be performed.

One of the more interesting court documents related to the case is a motion for a protective order filed by Mary Ann and Shahram Meshkin, Alex Meshkin’s parents. As part of Vertrue’s lawsuit, the company served a subpoena on Wachovia Bank related to the Meshkins personal financial records and accounts. And why would they do that? Because Mary Ann Meshkin appears to have been neck deep in her enterprising son’s businesses.

According to the court document, Vertrue alleged that Alex Meshkin instructed his mother to set up a company called One Angel Enterprises LLC. The purpose of this company? To siphon off money from Bang Racing. Emails entered into evidence referenced in the court document apparently showed that Mary Ann Meshkin instructed Bang Racing’s office manager to open up a bank account for One Angel Enterprises LLC and “Over the six months following the establishment of the One Angel Account, Defendant [Alex Meshkin] had Ms. Colley [the office manager] move large sums of money, ranging from $3,000 to $5,000, from Bang Racing’s accounts into the One Angel Account.”

But that wasn’t all. Alex Meshkin also owned 90% of a company called KeyAge Ventures, of which his mother owned the remaining 10%. Money was also moved from Bang Racing to this company’s bank account:

During the period covered by the emails included in Plaintiff’s Exhibit D, Defendant had Ms. Colley move several large sums—$12,000 each time—to KeyAge Ventures.

According to a deposition of a Bang Racing vice president, Alex Meshkin “caused sums of money to be transferred to Mary Ann Meshkin for several months” after payments to Bang Racing’s employees had stopped.

In denying Mary Ann and Shahram Meskin’s motion for protective order, the court stated:

The evidence submitted by Plaintiff indicates that Defendant directed his mother, Mary Ann Meshkin, to form an LLC, One Angel, and subsequently transferred some amount of funds to that account. The evidence also shows that Defendant retained at least some degree of control over the funds, as he was named as an additional signer on the account. Moreover, according to Plaintiff, the testimony of Mr. Adalio will establish that Defendant continued to direct the transfer of funds to the One Angel Account after Bang Racing stopped paying employee salaries. Plaintiff is attempting to subpoena the bank records to show that Defendant used his family’s bank accounts to make extraordinary transfers from accounts owned by his business entities and thus used his family to “process assets.” (Pl.’s Opp. 4.) Such a showing would help Plaintiff establish Defendant’s fraudulent intent.

In the end, after what looks like a clusterfuck of a case that spanned multiple jurisdictions and courts, Vertrue’s lawsuit against Meshkin was dismissed on the grounds of res judicata and collateral estoppel. In other words, the issues Vertrue sought remedy for in its lawsuit against Meshkin had already been resolved via arbitration between the parties, meaning the court had no ability to address them again.

I was unable to find information about the outcome of Meshkin’s arbitration with Vertrue but would point out that Vertrue is an established, legitimate company that was acquired by management and an investor group for $800 million in 2007. It’s still in business, Bang Racing isn’t.

It’s also worth noting that Vertrue’s lawsuit was just one of the lawsuits filed over Meshkin’s activities with Bang Ranging. Another, filed in Maryland District Court by a former vice president at Bang Racing, went so far as to claim that Meshkin violated the RICO (Racketeer Influenced and Corrupt Organizations) Act. I do not know the outcome of that although it is noted in the Vertrue lawsuit that “the action was settled in March 2006″ and was being “memorialized…in writing.”

So what of Meshkin’s other serial entrepreneur successes?

Surfbuzz.com was real. The Washington Post published an article about it. But its $24 million acquisition? That appears to be a fabrication. According to Wired.com, Surfbuzz.com went out of business. From Wired on June 6, 2000:

If ever a startup embraced the whole make-a-fast-buck, dot-com ethos, it was Surfbuzz.com, an auction site that awarded expensive prizes to its customers. The only buzzing to be heard now is from the flies swarming over the corpse of Surfbuzz, which said Tuesday that it is going out of business.

In a brief email, Surfbuzz informed its customers that come Wednesday, it “will no longer be operational nor continue to exist.” No specific reason was given for closing down (”Due to unforeseen circumstances…”), but it’s better than even money that profligacy played a role.

Surfbuzz, started by two ultra-young founders (one a teenager) with money made from day trading, tended toward extravagance from the start. Even they described their business model as “borderline crazy.”

And in the end, they were right.

The Los Angeles Times also reported on Surfbuzz.com’s shuttering and quoted Meshkin as stating that the company “has chosen to reduce costs and shift resources.” It was noted that Meshkin and his brother, Brian, “were no longer members of the management team and were not involved in the decision.”

The resume of Brian Meshkin is online and states that “The company later merged with a public holding company.”

Since publicly-traded companies have to file statements with the SEC, I decided to see what I could find. And indeed one publicly-traded company did have a financial relationship with Surfbuzz.com. Wade Cook Financial Corp. reported that it acquired “450,000 shares of Surfbuzz.com, Inc. common stock at $450,000…through a private placement” in the fourth quarter of 1999 and “an additional 100,000 shares of Surfbuzz.com common stock” for $100,000 in January 2000.

What type of business was Wade Cook Financial Corp.? A scam. Started by a taxi cab driver named Wade Cook, the company was involved in peddling bullshit investment seminars and other such nonsense. In 2000, Wade Cook Financial Corp. entered into a settlement with the Federal Trade Commission and 14 state Attorneys General over allegations of misrepresentation. As it turned out, you could not double and triple your money using Wade Cook’s techniques. Go figure.

In 2002, the company was in trouble with the FTC again for failing to comply with the settlement. In 2002, the company filed for Chapter 11 bankruptcy. In 2007, Wade Cook was found guilty of tax evasion and in September of this year, Cook was taken into custody by the authorities. He’ll apparently be spending a better part of the next decade in prison.

So what happened to Wade Cook Financial Corp.’s investment in Surfbuzz.com?

An SEC filing has all the juicy details:

In May 2000, the Company was informed by the management of Surfbuzz, that Surfbuzz was a defendant of a patent infringement suit with respect to technology used in the operation of that business. As a result of the patent infringement suit, operations at Surfbuzz were halted. In an effort to avoid losses on its investment in Surfbuzz, the Company held discussions with the initial promoters (the “Promoters”) of Surfbuzz to develop a plan for protecting the Company’s investment. As a result of these discussions, the Company entered into a related Stock Purchase Agreement for the purchase of common stock in a company named Sundog Technologies, Inc. (”Sundog”). The Company entered into this stock purchase agreement on January 31, 2001. Sundog is a Delaware corporation organized in 1992 for the purpose of seeking and acquiring business opportunities. Under the Stock Purchase Agreement, the Company surrendered 250,000 shares of Surfbuzz common stock for 100,000 shares of Sundog, and paid $4,000 in additional transfer costs. As a result of this transaction, the Company became the owner of 100,000 shares of Sundog common stock with a basis equal to the cost value of the surrendered stock. Sundog has approximately 23,900,000 shares issued and outstanding, with its common stock registered under the Securities and Exchange Act of 1934, as amended. Surfbuzz has since changed its corporate name to Arkona, Inc. The Company continues to work with Promoters concerning its remaining $200,000 investment in Surfbuzz stock.

Both Wade Cook Financial Corp. and Sundog Technologies, Inc. (which changed its name to Arkona, Inc.) were penny stocks traded on the notorious over the couter bulletin board.

By April of 1999, Wade Cook Financial Corp.’s financial situation was already looking precarious. The company had a market capitalization of only $31 million and SEC filings show nothing more, as it relates to Surfbuzz.com, than the firm’s 6-figure investment in the failed startup. I can find no reference to Surfbuzz.com in any of Arkona, Inc.’s filings. In fact, after the .com bubble burst, an Arkona, Inc. press release indicates that it abandoned its investments in most of its technology products and instead focused on selling software for auto dealerships. This led to Arkona’s acquisition by DealerTrack last year.

The big question – how did Meshkin make $24 million from a shuttered business that was pawned off by companies then trading on the over the counter bulletin board that didn’t have $24 million to spend and never disclosed a merger to the SEC? The obvious answer – he didn’t.

The articles published about Surfbuzz.com make the company’s fate clear and the SEC filings show little more than a small investments made by Wade Cook Financial Corp. that it partially traded to another company to “avoid losses.” Soon after, that company sold off and abandoned most of its technology portfolio to focus on selling software to auto dealerships. Ostensibly, Surfbuzz.com was part of that divestiture. In addition to the absence of filings showing a merger between Surfbuzz.com and a publicly-traded entity, I can find no Form 4 or Form 5 filings indicating that Meshkin ever cashed out a large stock position.

As for Meshkin’s role at a “venture funded financial consulting firm,” that would appear to be Pivotry, which billed itself as a “the answer to the ‘Technology Bubble Bust’ with an Internet platform to provide executives and investors with a ‘20/20′ view of their companies.”

Brian Meshkin, his brother’s business partner yet again, stated:

Pivotry is developing a breakthrough platform to provide companies and investors with tools to assure successful performance. Today, a company cannot be successful if it projects years of losses. In 1989, 78% of companies going public had 12 months of profitability before their IPO. In 1999, just ten years later, only 25% of companies going public were profitable over the same period.

Assure successful performance? Nifty. Alex just had to chime in:

‘Powered by Pivotry’, companies move at ‘internet speed’ without forsaking common sense business practices.

You just can’t make this stuff up. And what happened to Pivotry? Brian Meshkin’s resume reveals what you probably already suspected:

Brian joined Pivotry as a portfolio company of incubank, an incubator venture fund on the East Coast affiliated with idealab! in Pasadena, California. Brian was a Managing Director of incubank and coordinated investments for the fund. With the dot.com meltdown in mid-2000, Brian was instructed by the Board of Directors to shut down the Company, so Brian was responsible for terminating all 15 employees, selling off assets, and closing the Company without dealing with a bankruptcy.

Finally, Cloverleaf Partners, “the global software developer and sports marketing agency” that Meshkin claims to have been Executive Vice President of Corporate Development for, appears to be yet another “holding” company owned by Meshkin himself.

Interestingly, Cloverleaf Partners was mentioned in the Vertrue lawsuit. In a deposition, Meshkin claimed that he was the president of Cloverleaf Partners and had signing authority on the company’s bank accounts. But he stated that he didn’t actually own the company. Instead, he claimed, the owner of the company was “Morningside Capital Partners,” which in turn was owned by “Morningside Foundation.” Cute.

The court ruled that Meshkin did not have to submit any documentation about Cloverleaf Partners because “plaintiff has not presented any evidence that
would equate Defendant’s signatory rights to an actual ownership interest in the company.”

The cloverleafpartners.com domain name lists Meshkin as the owner of cloverleafpartners.com and lists his address as 19722 One Norman Blvd. Suite 220, Cornelius, North Carolina 28031. That’s the same address listed on the AlexMeshkin.com domain registration.

A search shows that the 19722 One Norman Blvd. Suite 220 address is used by other companies and may in fact be a UPS Store mailbox. A satellite photo shows that the location is home to a nondescript shopping center – not exactly the type of place one would expect a young business mogul like Alex Meshkin to locate his corporate headquarters (I suspect Meshkin would have us believe that he owns the shopping center).

In fact, nothing about Meshkin gives credence to the notions that some NASCAR insiders held about Meskin’s $80+ million fortune. One of the Vertrue court documents states:

At the hearing, defense counsel confirmed that 2 Defendant’s address is 8545 Townley Road, Apartment 2K, Huntersville, North Carolina 28078, the address listed on the Complaint.

That’s right. Our young multi-millionaire apparently counted an apartment in Huntersville, North Carolina amongst his lavish residences. I suspect that he’d tell us he owns the complex.

Which brings us back to Alex Meshkin’s latest sure-fire success story, Bopaboo. Meshkin claims that his “talks so far” with record labels “have been positive” but News.com’s Greg Sandoval reports that one label executive told him, “There haven’t been any talks. They have asked to meet and we responded. That’s it.”

Of course, what Meskin says and what the truth is usually appear to be two different things. But that’s not stopping him from gearing up for success with Bopaboo.

He’s busy hiring. There’s even a position open for Director of Finance/Controller. Primary job duty? Perhaps wiring money to bank accounts belonging to Alex Meskin’s mom?

What’s amazing about this story is that with little more than a search engine as a sidekick, Meshkin’s fabrications are quickly exposed as fabrications. While News.com’s Sandoval noted the BusinessWeek story about Meshkin’s questionable past, other news outlets, including The Guardian and the BBC, have published articles about Bopaboo.

To be fair, most of the press has been skeptical. The Guardian’s Sean Michaels called Bopaboo a “crackpot Web 2.0 scheme” and concluded with the comment, “Knowing Silicon Valley, the FBI is just around the corner.”

If only he knew how likely that was to be the case.

Obviously, Meshkin is both audacious and ambitious at the same time – a potentially dangerous combination. And, if I had to judge him based on the contradiction between his uninspiring track record and his glowing account of it, I’d say there’s a good chance he’s either a morally bankrupt human being or has delusions of grandeur.

It’s one thing to fuck up a good thing, it’s quite another to leave an ugly trail of angry employees and partners who are suing you from everything from alleged fraud to violations of the RICO Act. It’s one thing to list the companies you’ve started, it’s quite another to lie about what happened to them. It’s one thing to tell people who you are, it’s quite another to engage in self-aggrandizement.

If Alex Meshkin is lucky, Bopaboo will die quickly and quietly and he won’t find himself in any real trouble. But perhaps that’s hoping for too much. Meshkin is clearly planning a trip to Club Fed at some point in his life and given the fact that his penchant for ego-boosting schemes that collapse still seems to be strong, we’ll probably be able to easily follow the foul-smelling trail he leaves all the way to the prison gate.

Maybe he can cell with Bernard Madoff.