DH Blair was the investment group who underwrote the IFT (Interactive Flight Technology) IPO. Here are some articles regarding the brokerage firm DH Blair. As most of you know, IFT was the company that created and manufactured the IFEN (entertainment system) that last I heard was still suspected as a possible cause of the sr111 crash.

D.H. Blair brokerage, ex-employees indicted on 173 counts of stock fraud

By Colleen
Debaise

DOW JONES NEWSWIRES NEW YORK, July 27 — D.H.
Blair & Co.’s retail-brokerage unit and 15 of its
officers and employees have been indicted on stock-fraud
charges, two years after the unit ceased
operations. Among the IPOs that Blair fraudulently sold were
Amerigon Inc. (ARGN), Telepad Corp., Premier Laser Systems
Inc., Interactive Flight Technologies Inc., Sepragen
Corp. (SPGNA), Food Court Entertainment Network Inc.,
Titan Pharmaceuticals Inc. (TTP), Digital Video Systems
Inc. (DVIDE), Conversion Technologies International
Inc. and Advanced Aerodynamics & Structures Inc.
(AASI), according to the indictment. See Full
Article at http://www.msnbc.com/news/438541.asp#BODY (link no longer works)

There were about 51 security holders that held
stock with IFT around the time the IPO was issued. Most
were not listed as being involved with other
Blair-underwritten companies. A source has provided me with a
short list of those initial investors in IFT who have
been involved in other Blair under-written companies
and a biography on each one that have appeared in the
press. This list does not imply in any way wrongdoing in
regards to these individuals. -brothers Morris
Wolfson, Aaron Wolfson, and Abraham Wolfson.-E. Donald
Shapiro -Richard A. Nelson and Elaine M. Nelson -Marc
Roberts -Andrew Bressman -Leonard Keller and Eileen
Keller -Ron Cantor -Jules H. Dreyfuss -Robert A.
Foisie -Lenny Corp The biographies will follow in the
next few posts.

Morris and Abraham Wolfson:

http://www.forbes.com/forbes/97/0224/5904114a.htm (Article must be purchased)

"Why
would Harriton deal with a clearly disreputable
bucket shop? Was it as a favor to Morris and Abraham
Wolfson, sons of New York real estate magnate Zev
Wolfson—developer of One State Street Plaza? Morris Wolfson has
sizable accounts at Bear, Stearns. He was also a big
player in Baron's house stocks. And Wolfson Investment had
bought $400,000 worth of A.R. Baron's privately
issued convertible preferred stock. As a special
client of Baron he would be Entitled to allotments of
hot issues before the suckers were invited in.
Bressman told people that the Wolfsons asked Harriton
to take on Baron as a clearing firm again.
Bressman told people that Harriton asked the Wolfsons if
the family would guarantee the firm. The family declined,
but Harriton took Baron back anyway. Morris
Wolfson, 38, is infamous as co-owner of a Harlem
apartment building that collapsed in 1994, killing three
people. Wolfson was not found liable for the deaths."

Joseph Morton Davis:

http://securities.stanford.edu/complaints/dreyfus/98cv04318/010.html (link no longer works)

D.H. Blair & Co ("D.H. Blair"), a now defunct company
run by "penny stock king" J. Morton Davis. D.H.
Blair was notorious for boiler-room tactics such as
cold calling, overcharging customers and high
pressure sales tactics. In 1997, for example, D.H. Blair
agreed to pay $4.9 million in fines and restitution
as part of a settlement with the NASD arising out
of allegations that it overcharged customers who invested in
public offerings it underwrote. Also in 1997, D.H. Blair paid a
$25,000 fine to settle improper-trading charges
brought by the NASD. Currently, D.H. Blair is
reportedly being investigated for sales practice violations
by the SEC, federal prosecutors and a task force of
state
securities regulators.

D. H. Blair

Aug 18,
1997
http://207.197.132.133/alerts/v3/ALRTV3N29.html (link no longer works)
The
September issue of Money magazine highlights the
personal financial gains of Marianne Gingrich, House
Speaker Newt Gingrich's (R-Ga) wife. Mrs. Gingrich
reportedly made a quick $5,000 from three initial
public offerings (IPO) underwritten by D.H. Blair Investment
Banking. The Money report recalled Rep. Gingrich's
outraged reaction when word spread of former House
Speaker Tom Foley's (D-Wash) use of IPOs to make a
fast profit. Gingrich asked Foley "how he made more than
$100,000…dealing in new stock issues not available to most
investors." The owner of D.H. Blair Investment, J. Morton
Davis, and his wife, Rosalind, made more than $83,000
in individual contributions in the 1996
election cycle -- including $10,000 to Gingrich's leadership
PAC, the Monday Morning PAC. Rosalind Davis gave
the Monday Morning PAC $5,000 on Oct. 25, 1996,
around the same time that Marianne Gingrich was buying
and selling stock underwritten by Davis' husband. According
to a list by Mother Jones, J. Morton Davis was
also a charter member of GOPAC when it was in
Gingrich's control and gave the group $20,000. Recently,
Davis successfully lobbied Congress to include a provision in the
tax bill benefiting investors who help support the
type of companies D.H. Blair Investment often
underwrites. The Davis family is no stranger to
the campaign finance world. In 1996, D.H. Blair & Co., a
brokerage firm partly owned by Davis' children, paid a
$100,000 penalty to the Federal Election Commission
(FEC), which alleged the company illegally
used contributor lists to solicit clients. One of the lists
requested from the FEC by D.H. Blair & Co.? Newt
Gingrich's.

Andrew Bressman

http://www.sec.gov/enforce/adminact/34-42103.htm (link no longer works)

Andrew
Bressman, age 34, resides in Norwood, New Jersey.
On December 15, 1997, Bressman pleaded guilty to
and was convicted of New York State felony charges
of enterprise corruption and grand larceny in the
first degree arising from his activities as a broker and chief
executive of Baron. In his plea, Bressman admitted to
defrauding his customers by more than $1,000,000. He is
presently awaiting sentencing on those charges. From
January 2, 1990 through August 17, 1992, Bressman was
a registered representative at Blair. In August 1992, Bressman
left Blair to become a registered representative
and president of Baron. In February 1993, Bressman
became a registered principal at Baron and
in September 1993 he began serving as Baron's chief executive
officer. Bressman ceased employment with Baron in July 1996. While
employed at Baron between August 1992 and July 1996,
and while engaged in the manipulative schemes and
abusive sales practices described above, Bressman
received $6,038,412 in compensation from Baron.
Bressman's compensation arose in whole or in substantial part from the
illegal activities described
above.

A R. Baron & D. H. Blair

Sept 22,
1997

http://www.nasdr.com/1420/goldsmith_02.htm

In May, the Manhattan District Attorney
announced the indictment of A.R. Baron & Co., Inc. and
the arrest of 13 individuals for cheating
thousands of investors out of more than $75 million.
The individuals and the firm, which is now defunct, were charged
with participating in a pattern of criminal activity. Included in
that pattern were lying to investors to induce them to buy
certain low-priced securities; manipulating the markets in certain
micro-cap stocks to benefit themselves and their favored
customers; making unauthorized trades in the millions of
dollars; refusing to honor its customers’ directives to
sell securities in their accounts; outright thefts
from investors; and forging documents to prevent
detection of their crimes. Four NASD Regulation
examiners from our Chicago office worked closely with
the Manhattan DA throughout this important investigation.

Robert Fosie Feb 17,
1998

http://www.sec.gov/enforce/litigrel/lr15642.txt February
17, 1998, the Commission filed a
complaint in the United States District Court for the
District of Columbia against Robert Foisie ("Foisie").
The complaint alleges that Foisie, a resident of
Old Saybrook, Connecticut, failed to file thirty required forms
reporting his securities ownership with the
Commission.

J. Morton Davis

http://www.forbes.com/forbes/98/0824/6204055a.htm

"Morty
Davis, 69, is a Brooklyn-born Harvard hundred
million dollars. He got rich by raising money in the
private and public markets for companies that tonier
firms wouldn't touch. Since that kind of paper
is hard to sell, Davis demanded and got top dollar from
the outfits he served, collecting big fees and
getting hunks of equity in those companies.

E. Donald Shapiro was a Director on three
Blair-related companies named in the indictments alone.
Priemier Laser Systems, Telepad, and Food Court
Entertainment Network
Inc.

In an S-3 on 10/11/1996 made by Interactive
Flight Technologies: "The Company has agreed not to solicit Warrant
exercises other than through D. H. Blair Investment
Banking Corp., the underwriter of the IPO."

D.H. Blair & Co. (August 1997)

Fraudulent and
excessive markups in sixteen securities as to which the
firm dominated and controlled immediate aftermarket
trading Fines and restitution of almost $5 million
Significant fines and suspensions for the firm’s CEO and Head
Trader." http://www.nasdaqnews.com/news/pr/invinit.html

Clearing House Practices (Scroll
down until you reach
D.H.
Blair) http://www.oag.state.ny.us/investors/microcap97/report97d.html


GODFATHER IV MEETS BOILERROOM II

The United States
Attorney for the Eastern District of New York has charged
that representatives of four Mafia families teamed up
with Russian mobsters in a multi-million dollar stock
scam involving several "boiler room" brokerage
firms. A four-year investigation by federal authorities
has culminated in the indictments of nineteen
individuals, including six alleged mobsters or associates of
organized crime families. The allegations focus on
activities at four brokerage firms: White Rock Partners
(later renamed State Street Capital Markets Corp.); J.W.
Barclay & Co.; A.R. Baron & Co., Inc.; and D.H. Blair &
Co. All four firms specialized in the sale of
microcap stocks.
http://www.stockpatrol.com/radar/radar2000.html

A Favor to One
. . .Which brings us to one
great irony in the new law. Buried deep in its bowels
(Title III, Sec. 313) is a remarkable tax break that
could provide the key to reforming the entire
system--even though it certainly wasn't meant that way. The
break was the result of the efforts of one man, J.
Morton Davis, who built the investment firm D. H. Blair
& Co., Inc., and who is well-connected in
Washington. Among other things, he owns part of the parent
company of The Hill, a newspaper that covers
Congress. http://www.aei.org/oti/oti8079.htm

D.H. Blair to refund up to $2.25M regulators say.

Wednesday, October 7, 1998 By DAVID EVANS, Bloomberg
News NASHVILLE -- D.H. Blair & Co., a New
York-based penny stock underwriter that ended retail
operations in April, reached an agreement with state
regulators to set up a $2.25 million restitution fund for
customers who think the brokerage made inappropriate
trades http://www.naplesnews.com/today/business/d408263a.htm "While at UBS, Schonberg worked closely with D.H. Blair
& Co ("D.H. Blair"), a now defunct company run by
"penny stock king" J. Morton Davis. D.H. Blair was
notorious for boiler-room tactics such as cold calling,
overcharging customers and high pressure sales tactics. In
1997, for example, D.H. Blair agreed to pay $4.9
million in fines and restitution as part of a settlement
with the NASD arising out of allegations that it
overcharged customers who invested in public offerings it
underwrote. Also in 1997, D.H. Blair paid a $25,000 fine to
settle improper-trading charges brought by the NASD.
Currently, D.H. Blair is reportedly being investigated for
sales practice violations by the SEC, federal
prosecutors and a task force of state securities
regulators." http://www.lawssb.com/Dreyfus/complaint.htm (link no longer works)

__________________________________

Fifteen officers from the now-defunct D.H. Blair
& Co. - including its three top men - were indicted
in Manhattan yesterday for running the
problem-plagued securities firm as a corrupt enterprise.
Among those facing up to 25 years prison if convicted
are Kenton Wood, the former Wall Street firm's
chairman, and Alan Stahler and Kalman Renov, its vice
chairmen.
http://www.nypost.com/07282000/business/34020.htm (link no longer works)

EX-D.H. BLAIR BROKER GUILTY IN IPO PRICE SCAM
By LARRY CELONA and DAREH GREGORIAN A stockbroker from the now-defunct
Manhattan securities firm D.H. Blair pleaded guilty
yesterday to conspiring with several brokers in a scheme to
artificially inflate IPO prices. Vincent Poliseno, 32,
pleaded guilty to securities fraud and attempted
enterprise corruption in front of State Supreme Court Judge
Bernard Fried -- the first arrest and conviction stemming
from a lengthy, sweeping investigation into corruption
charges against Blair and some of the companies it did
business with.
http://www.nypost.com/02052000/business/24186.htm (link no longer works)

_________________________________
D.H. Blair,
the booming Wall Street brokerage house,
is being investigated for allegedly defrauding
thousands of investors through manipulative sales and
trading practices, The Post has learned. As part of
the investigation, the Manhattan district attorney's
office is focusing on a team of Blair brokers whose
clients include organized-crime figures - among them,
John Gotti's son-in-law, Carmine Agnello, sources
said. The main thrust of the probe, sources
said, is Blair's financing, promotion and trading of
new stock issues that resulted in artificially
inflated prices for customers."
http://208.248.87.252/113097/1291.htm (link no longer works)

D.H. Blair And Top Officials To Pay $4.9 Million In
Fines And Restitution August 13, 1997

"The 16
securities involved were: Amerigon Corp. common stock;
Telepad Corporation units; AquaCare System units; Symbollon
Corporation units; Skyline Multimedia units; Linda’s Flame
Roasted Chicken units; Skysat Communication units;
Video Update units; U.S. China Industrial
Exchange units; Montbatten common stock; U.S. Diagnostics Labs
units; Premier Laser System units; Infosafe System
units; In-Time System units; Interactive Flight
units; and Sepragen Corporation units. There is no
suggestion that the affected companies knew of, or were
involved in these
violations."

http://www.nasdaqnews.com/news/pr/ne_section97_58.html


Greed is NOT good
Pump and Dump:
The Inside Story of D.H. Blair
By Timothy Harper Inside story of DH
Blair Section 1: Greed is Not Good Throughout most of the 1990s,
pretty much
everybody who worked on Wall Street knew that D.H. Blair & Co. was a brokerage
house that played
fast and loose with the rules. It was the kind of place where young brokers
could make a
lot of money fast -- especially if they weren’t bothered by ethics, or by
losing money for
their clients. Consequently, it was no surprise last month when 15
former executives
and brokers at the now-defunct D.H. Blair were indicted by the Manhattan
district attorney on charges of enterprise corruption -- a polite legal term for using a supposedly legitimate company for fraud and racketeering. What was shocking was that it
took so long for authorities to bring criminal charges against Blair’s shady practices.
The indictments against D.H. Blair and some former employees -- including the chairman, two vice chairmen, the
head trader and 11 brokers -- alleged that Blair was “a criminal enterprise” from 1989 until 1998, when it was closed. The 173-count indictment accuses Blair and its
brokers of
cheating clients out of tens of millions of dollars in a number of ways. Among
the alleged
illegal acts were stock price manipulation, insider trading, high-pressure
sales tactics,
selling shares for more than their market prices and stealing client lists from
other
brokerages.
http://netbank.onmoney.com/Editorial/Investing/harper/pump_dump_step1.html
http://netbank.onmoney.com/Editorial/Investing/harper/pump_dump_step1\
http://www.nasdaqnews.com/news/pr/ne_section97_58.html
http://www.nasdaqnews.com/news/pr/ne_section97_58.html
http://sites.state.pa.us/PA_Exec/Securities/releases/dhblair.html
http://sites.state.pa.us/PA_Exec/Securities/releases/dhblair.html http://www.nypost.com/07282000/business/34020.htm
http://www.nypost.com/07282000/business/34020.htm

I was wondering what happened with the indictments and this is the most recent information I was able to find:

DISTRICT ATTORNEY - NEW YORK COUNTY News Release June 5, 2001 Contact: Barbara
Thompson 212.335.9400 Manhattan District Attorney Robert
M. Morgenthau announced that a 34-year-old former
stock broker at D.H. Blair & Co., Inc. pleaded guilty
to enterprise corruption and securities
fraud. The defendant, ALFRED PALAGONIA, was a broker at D.H.
Blair & Co., Inc. from January 1990 through February
1998. The defendant was indicted in July 2000 along
with 14 other brokers and the D.H. Blair firm itself
in an indictment charging the defendants with
operating D.H. Blair as a criminal enterprise. Mr.
Palagonia is the first defendant to plead guilty arising
out of that indictment. The defendant pleaded
guilty yesterday before New York State Supreme Court
Judge Bernard Fried to one count of Enterprise
Corruption and one count of Securities Fraud in violation of
the Martin Act. The maximum penalty for Enterprise
Corruption is 25 years in prison. The defendant was
charged by the New York County District Attorney's Office
with participating in a scheme in which certain
brokers and others at D.H. Blair & Co., Inc. and other
broker/dealers conspired to manipulate and maintain the price of
securities being offered in IPOs at artificially high
levels. The illegal techniques included a variety of
fraudulent sales practices such as misrepresentations of
material facts, omissions of material facts that the
brokers were legally required to disclose, misleading
statements including unreasonable price predictions and
statements about the expected compensation to be received by
the brokers, imparting or intimating the possession
of material nonpublic information, and unauthorized
purchases of securities. The scheme benefited favored
customers of D.H. Blair & Co., Inc., including customers of
principals of the firm, who were able to sell their
securities in the aftermarket. Those securities were bought
by other, non-favored customers who were not aware
that they would not be readily able to sell their
holdings, and who later lost money when the price of the
securities dropped. Mr. Palagonia was charged with
fraudulently selling to the unsuspecting public securities
including Interactive Flight Technologies, Inc., Digital
Video Systems, Inc., and Advanced Aerodynamics and
Structures, Inc. One investor from Colorado lost
approximately $450,000 due to Mr. Palagonia's fraudulent
conduct. Today's plea is part of a continuing
investigation by the New York County District Attorney's Office
into corrupt activities in the securities industry. In
addition to Mr. Palagonia, three other former stock
brokers have pleaded guilty to attempted enterprise
corruption and securities fraud during the course of the
investigation of D.H. Blair. Assistant District
Attorneys Steve Krantz, Tom Curran and Melissa Paolella of
the District Attorney's Frauds Bureau handled the
investigation of this case under the supervision of Daniel J.
Castleman, Chief of the Investigation Division, and Owen
Heimer, Chief of the Frauds Bureau. Investigator
Christopher Donohue assisted in the investigation under the
supervision of Assistant Supervising Investigator Angel
Flores, Deputy Chief Investigator Thomas Jackson, and
Chief Investigator Joseph Pennisi. Mr.
Morgenthau thanked the United States Securities and Exchange
Commission, and the National Association of Securities
Dealers for their
assistance.

http://www.manhattanda.org/whatsnew/press/2001-06-05.htm

By Gary Stoller, USA TODAY

An inactive Wall Street brokerage firm, its chairman and three top
executives pleaded guilty Friday to multiple counts of securities
fraud and collusion to fix stock prices on the Nasdaq market.

The plea agreement, which averted a trial that was scheduled to begin
Monday, calls for D.H. Blair and Co. and the executives to pay $21
million to reimburse defrauded customers.

According to Manhattan District Attorney Robert Morgenthau, the
executives and 10 of their brokers who previously pleaded guilty
engaged in "a massive scheme of securities fraud" and "price
manipulation" from 1989 through 1998. During those years, D.H. Blair
and its "investment bank affiliate" brought public nearly 100 small
companies.

"Unknown to its tens of thousands of retail customers, Blair
consistently arranged to buy initial public offering (IPO) shares
from its preferred clients — often celebrities and wealthy
individuals — at a predetermined premium and resell them to its rank-
and-file clients at artificially inflated prices," Morgenthau said in
a statement. "Many of the less-favored customers were unsophisticated
investors of limited means, in some cases elderly or infirm, and
completely unsuitable for Blair's highly speculative securities."

When these customers wanted to sell their shares, they
were "aggressively discouraged from doing so," the district attorney
says.

D.H. Blair, which operated for 94 years before selling its assets in
1998, colluded with another brokerage, A.R. Baron, Morgenthau
charges. In 1997, company founder Andrew Bressman, a former D.H.
Blair employee, pleaded guilty to defrauding A.R. Baron customers of
more than $1 million from August 1992 to July 1996.

The D.H. Blair executives who pleaded guilty Friday were Chairman
Kenton Wood, Vice Chairmen Alan Stahler and Kalman Renov, and head
trader Vito Capotorto. Wood, Stahler and Capotorto face prison terms
of up to four years, and Renov faces probation, a Morgenthau
spokeswoman says.

Lawyers for Wood and D.H. Blair had no comment. Stahler and Renov
were represented by different law firms but issued the same written
statements. The two executives "took this difficult step to close a
painful chapter" in their and their families' lives and "have always
tried to be faithful" to their responsibility to their "loyal clients
and friends," the statements said.

Gary Naftalis, Capotorto's lawyer, says "Mr. Capotorto wants to get
this matter behind him so he can get on with the rest of his life."

Stahler and Renov are sons-in-law of J. Morton Davis, former D.H.
Blair chairman and current chairman of D.H. Blair Investment Banking,
which underwrote D.H. Blair's initial public stock offerings. Davis
divided D.H. Blair into two entities in 1992, retaining control of
the firm's investment banking business and transferring ownership of
D.H. Blair's retail brokerage business to Wood, his two daughters and
Capotorto.

No criminal charges have been brought against Davis, but more than 90
civil lawsuits have been filed against him, D.H. Blair and its
brokers by former stockholders who charge they were defrauded.

Davis' lawyer did not return calls for comment.

D.H. Blair officials said in a statement that the guilty pleas to
criminal charges relate only to their company "and in no way involve
D.H. Blair Investment Banking Corp."

The following names appear in INTERACTIVE FLIGHT TECHNOLOGIES INC's SEC filings:

http://www.edgar-online.com/brand/yahoo/people/companypeople.asp?cik=932021

From the September 26, 1997 print edition

Underwriter takes heat at Interactive Flight
Mary Vandeveire The Business Journal

Early investors in Phoenix-based Interactive Flight Technologies may be getting a check in the mail following a securities industry probe.



In the meantime, current shareholders are watching closely as the company tries to reverse setbacks and sustain operations.

In a settlement with National Association of Securities Dealers Regulation, D.H. Blair & Co. Inc. agreed to pay restitution to investors who paid excessive markups on 16 securities, including Interactive Flight units.

The settlement stems from allegations that, from June 1993 through May 1995, the New York-based firm charged excessive markups on certain securities whose initial public offerings were underwritten by D.H. Blair Investment Banking Corp. The firm was the underwriter on Interactive Flight's March 1995 IPO of 2.8 million units comprising warrants and shares of common stock. The IPO price was $5 per unit.

The recently announced settlement, which levels a $525,000 fine on D.H. Blair's head trader, does not suggest that the affected companies knew of the violations.





Current Interactive Flight investors are ready for some uplifting news.

The company's shares have been trading in the $2.50 range, following news of major sales setbacks. The stock's high for the past 52 weeks was $16 per share, the low $2.13. As earnings out this month show continuing losses for the company, the focus is on averting a business dead end projected for early next year.

IFT has completed the installation of its entertainment systems in seven Swissair aircraft and is scheduled to complete installations in eight more by February. After that, there are no more major sales agreements to fulfill.

The company's recent filing of third-quarter earnings noted: "If additional customers are not forthcoming soon, the company would have to review whether its current [sales] backlog can prudently support its ongoing development projects and overhead."

IFT develops, makes, installs and operates a computer-based in-flight entertainment network, which lets aircraft passengers see movies, purchase goods and services, play computer games and gamble through an in-seat video touch screen. The company has installed its "shipsets" on aircraft operated by three European airlines: Swissair, Debonair and Alitalia Airlines.

The delivery and installation of IFT's entertainment network on one Swissair aircraft during its third quarter helped boost third-quarter revenues 23 percent, to $1.5 million, compared with $1.2 million for the same period last year.

Company executives were encouraged from interest generated at a recent airline entertainment conference, chief financial officer John Alderfer said.

"We'll be following up now on airline visits after the conference," Alderfer said. "IFT has paid a price to enter the in-flight entertainment market, and it's been a significant price. We have to get some base hits here."

Alderfer would not discount the possibility of IFT being acquired by one of the handful of giant players in this industry, but declined to comment specifically about options being evaluated since bringing in Merrill Lynch last month.

"We hired Merrill Lynch to look for strategic partners," Alderfer said. A lot of times a partner would "buy an interest to benefit from the relationship."

Other companies in in-flight entertainment include Matsushita, Sony Trans Com, Hughes Avacom and B.E. Aerospace.

B.E. Aerospace, which makes a range of products for commercial aircraft, also had a setback in recent months, stock analyst Debra Fiakas of H.D. Brous noted. British Airways passed over B.E. Aerospace's more substantial entertainment product in favor of one that would involve much lower revenue. Fiakas said B.E. Aerospace and Interactive Flight are the two publicly traded companies that have had good products that reached the marketplace.

"I believe Interactive Flight Technologies could have given the B.E. Aerospace product a run for its money," said Fiakas, describing IFT's product. "It's very much like a laptop computer. You just touch the screen to get what you want.

"I want to use it, I'm just not sure I want to pay for it. I think those questions are still unanswered. Perhaps that's what Merrill Lynch's charge is -- to find out just how deep the market is."

In July, IFT lost out on an estimated $200 million contract from Qantas Airways.

"There are two sizable things that have happened in the last six months," Alderfer said, noting that the decision by Qantas to keep its old entertainment system was one. The other was the realization that in-flight entertainment systems do not generate enough revenue to pay for themselves on a stand-alone basis.

"There was a perception that the system could pay for itself out of its own revenue," Alderfer said. "In March, after having installed systems on Swissair, we found that was not the case."

The Swissair agreement originally required IFT to manufacture, assemble, install and operate the system on Swissair's long-haul fleet. Under the agreement, the company agreed to finance the purchase price -- about $72 million -- out of revenue from passenger use of the systems. The agreement has been renegotiated under a memorandum of understanding that was set to expire Tuesday. IFT agreed that Swissair would receive title to three systems, with IFT's recovery of costs to come from a percentage of the systems' gaming revenues.

During the quarter ended July 31, IFT expensed all of its costs associated with the three systems -- totaling about $13 million. IFT reported a net loss for the third quarter of $18 million, compared with a $4.9 million loss a year ago.

For the nine months ended July 31, revenue was $4.1 million, compared with $2.9 million for the same period 1996. The net loss for the nine months was $33.9 million, compared with $10.9 million last year.

D.H. Blair's alleged actions would not have had an effect on the current market performance of shares in IFT, a local stockbroker said.

In the IPO, what likely happened is that on the days that IFT shares, and the other affected stocks, came to market, the D.H. Blair trading desk exceeded the 5 percent profit limit on risk-free transactions. Sales of shares that are not held in inventory fall into the risk-free category. If there had been high turnover during the first trading days of these issues, traders may have been marking stocks up -- by $1, for example, on a stock they took in at $6.50 -- and selling them without taking them in inventory and carrying some of the risk that there would be a buyer later on. A $1 markup on a $6.50 stock represents a 15 percent gain.

"It's pandemonium when a stock opens," the broker said, adding that, in regulators' eyes, the frenzy wouldn't excuse a pattern of excessive markups on at least a dozen securities.

http://phoenix.bizjournals.com/phoenix/stories/1997/09/29/story4.html

From yesterday's USA Today, needs to be added to this thread. I don't even have to comment. Gary Stoller says it all in his excellent article.

http://www.usatoday.com/money/biztravel/2003-02-16-swissair-investigation_x.htm

Mlynarczyk says he received a phone call from a representative of stockbroker D.H. Blair & Co., who asked him whether certification was near and whether he'd like to get in on the ground floor of IFT's initial public stock offering. IFT went public in March 1995.

Such an offer could violate a federal bribery law, which applies to anyone, like Mlynarczyk, acting on behalf of the government. The law, which imposes a fine and up to 15 years imprisonment, is violated by offers of ''anything of value to any public official'' with intent ''to influence any official act.''

Mlynarczyk says he turned down the offer. Several years later, D.H. Blair and 13 former employees were found guilty of defrauding investors in 15 IPOs -- including IFT's -- through stock-price manipulation. Four of those employees -- including the vice chairman -- received prison sentences. The company is now defunct.

A month after the stock offering, Mlynarczyk says he canceled his contract with IFT because the company kept changing its entertainment system specifications and pressuring him to speed up the certification process. Two days later, while he was away, two men arrived at his Florida office in a limousine with New York state license plates and demanded that his wife hand over the prototype and related data, Mlynarczyk says.

His wife refused their demands because IFT still owed $30,000. The two men handed over $30,000 in cash and then cut the prototype system into parts when it didn't fit into the limo, Mlynarczyk says.

Itkis says he can't recall Mlynarczyk, but he laughed when he was told about Mlynarczyk's account. ''He has a very vivid imagination,'' Itkis says. ''It sounds like a movie scenario. Can I get rights to it?''

>>>Itkis says he can't recall Mlynarczyk, but he laughed when he was told about Mlynarczyk's account. ''He has a very vivid imagination,'' Itkis says. ''It sounds like a movie scenario. Can I get rights to it?'' <<<

He's a real laugh, isn't he???