Golf Entertainment Inc. of Springdale first appeared on my radar screen early this year, and today it’s more than a little blip.
We suddenly began receiving news releases from a publicly traded company about which we had never heard. I contacted Jeffrey Wood, editor of the Northwest Arkansas Business Journal, and said we ought to check it out.
The initial follow-up was pretty straightforward: An outfit with visions of creating a network of television stations targeted at the Hispanic community had acquired a stock shell company called Golf Entertainment. We were intrigued.
As Wood continued to follow the company’s activities, the information became more bizarre. It became clear that the company and its officials had a legal past that was just as curious as its present situation, which was outlined in great detail by Wood in the Aug. 12 issue of the Business Journal following a five-month investigative reporting effort.
Based on the litigious history of the players involved, Wood advised me that we could expect legal action against us if we pursued a story. Our reporting team works to be careful and accurate with every story, but I encouraged him to go overboard in documenting every element of the story and every interview.
Having done his homework by poring through mountains of public documents, he began his effort to interview key figures with Golf Entertainment and the related Genesis Trust. He was met with a subpoena to turn over his reporting notes (privileged information under both federal and state court rulings), comments like “that’s none of your business” and the like. A final effort for comment and response before the story went to press was ignored until hours after press time, and even then the written responses were evasive and accusatory toward Wood.
Golf Entertainment appears to be convinced that stock manipulators have set out to use Internet message boards — and now us — to hurt the company and profit from the effort. If I were facing as many civil and criminal complaints about my actions as they are, I might pursue the same diversion strategy.
Our reporters are not allowed to directly own stock in the companies they cover, and this is standard practice for business writers nationwide. There’s always a chance that a big mutual fund in our 401(k) plan could have holdings in Arkansas companies like Wal-Mart Stores Inc. or Alltel Corp., but we stand a better chance of making snow fall than we do manipulating the value of a mutual fund with a story.
At one point in all this it was alleged that Wood and our company had been hired and/or paid off by short-sellers to do the story. That, of course, is laughable.
After our story was published, I finally decided to visit the www.ragingbull.com Internet message board that Golf officials allege has been used for racketeering and violating U.S. Securities and Exchange Commission code. I was blown away by the number of messages posted regarding a penny stock and by the dialogue in general about the company — good and bad.
I cannot begin to know the motives or stock ownership of the message board participants, and they can fend for themselves in this case. But the business media produce stories daily about the good, bad and the ugly on publicly traded companies — with and without cooperation from the companies — and the credibility of an outfit like Golf Entertainment simply falls farther with petty allegations like the ones made against Wood and our publications.
Like Enron, WorldCom and Arthur Andersen, actions by companies such as Golf Entertainment give corporate America and free enterprise a bad name. Federal regulators, prosecutors and, yes, even the media must be diligent in efforts to raise the awareness of questionable activities so investors can find confidence in the stock market. Furthermore, the conduct of John Dodge, Golf’s general counsel, in this case appears worthy of exploration by the Arkansas Bar Association’s ethics committee.
Golf Entertainment is a tiny company, and as a penny stock we’re not talking about a great deal of market capitalization at stake here. However, publicly traded companies at every level must be held to the same standards of accountability.
We still aren’t clear what assets the company owns or how the stock ownership breaks down. Recent developments show the company may not even legally exist anymore, has been evicted from its office and worked hard to dodge the delivery of subpoenas.
Yep, it’s all about everyone else and not the actions of the company. We’ll see in the coming weeks.