Here is part of my response:
July 3, 2009
“Dear Steve,
Let peace begin with me.
First, you say that I know you “well enough to know”.
No, I do not know you at all, because this threat does not come from the Steve Kubby that I have been defending and/or promoting for the last ten years. What a fool I have been!
May I remind you that I had been trying to resign as CFO for many months, and you kept begging me to stay because you wanted someone there whom you trusted. Ironic, eh?
In fact, nothing would make me happier than to be able to walk away from this deal, but – speaking of ironic – you have made it almost impossible for me to do so, because I have a fiduciary responsibility as a result of the position you wanted me to take and your actions that threaten the shareholders.
Second, you say you want me to send you “ALL the stock certificates.”
I will be happy to send you the CSI certificate for CANNEX. I do not have a cert in your name, and you have absolutely no right to demand any other certs, but I will also send Bob and Raymond theirs. Heretofore, no one has requested them, but I am happy to get rid of them.
Third, regarding the “CFO files”, may I remind you that we have done all of our transactions electronically, and you should have virtually all of these “files”.
They all exist in “Googleland”, and you can find them on your own .There really are no physical “CFO files”.
Fourth, you threaten that you will “file charges: against me for stock fraud, embezzlement, and bank fraud.”
Well, if I had committed those felonies, how would that be cured by my sending you certificates that are not yours and electronic copies of files that you should already have? Actually, you are threatening me with arrest for not making you an accessory-after-the-fact in crimes that – fortunately – I have not committed.
Stock fraud? I have done nothing that has not been vetted by the lawyers and approved by the Board, and nothing that I have done is dishonest.
Embezzlement? I have taken NO money from any source, directly or indirectly related to CSI, or on its behalf, and I have not been paid anything in such a long time that I have forgotten when the last time was.
Bank fraud? What bank did I defraud? I have had no transactions with any bank on behalf of CSI other than helping you open the WF account.
My purpose in going through all the above is NOT to defend myself, but rather in hopes that you will reflect on the absurdity of it all.
Unfortunately, your actions over the last few days have given us such grave concerns about your health.
Do you really think that Bob, Raymond and I are involved in some sort of vast criminal conspiracy, and plotting against you at the same time? Can’t you see how irrational that is?
When you first started this deal you asked me to help you and you said that you would have money in a “week” – or something like that. Now you are saying that Raymond’s plans have failed, but the only deal that you have come close to doing (since Gordon’s $50K) is the now uncertain “C” deal, which would be possible only with the public company that Raymond provided.
The serious flaws with the “C” contract you signed without Board approval were confirmed by “C”, but your only response was to announce that you were consulting an attorney about voiding the… deal with the very people who had pointed out those problems. Everyone on that call was astonished by that statement in that context.
Also, I assume that you are prepared to proceed without Dr. Melamede, since you say you do not trust him. And after all this, why should he trust you?
If you prevail, you will have to have a new Board. Who would want to sit on your Board after what has happened? How are you going to raise money after wrecking the company?
What is your plan for going forward with the company?
R”
As you can see, I raised a number of substantive points asking his plans for how he would go forward, but his response, “No middle ground”, demanded that I again explain a deal approved by him and the lawyers, and ended with this:
Excerpt: Dick,
“There is no middle ground, now that the fraud is so obvious. Either you wake up and recognize the fraud and join the effort to expose it, or I can only conclude that you are a willing co-conspirator with Bob and Raymond.”
In other words, if I did not agree with him that Dr. Melamede is a thief, then I must also be a thief. Except of course, he had already accused me of being a thief the day before, so I did not feel that there was any point in trying again.
That is the sum total of the basis of his accusations against me. As it happens, I have the greatest confidence in Dr. Melamede’s integrity, while I have learned the hard way about Kubby.
Don’t Point Your Finger When Your Hand Is In the Cookie Jar:
We had also learned that he had proceeded with the “C” deal mentioned above, without Board approval, and he had blocked my access to the Company’s bank account without Board approval, so he could take in $20,000 without Board knowledge or approval, and had paid himself $3,000, without Board approval, while leaving vitally important company obligations unpaid.
We have also learned that Kubby used promises of Company shares to borrow money from Company employees and at least one other person without Board approval.
The total amount of money involved was not great, but the way he was doing it endangered the company and put the Directors in an impossible position.
Consequently, because his behavior had became so irresponsible that the Board had to remove him as CEO, he resigned as a Director and then sent his libelous accusations to the media, claiming to be acting from noble motives.
There is one more illustrative point. A month or so ago, Dr. Melamede, who is not a wealthy man, loaned Kubby $2,000 to pay his rent, and Kubby has repaid him only with venom.
That reminds me of Mark Twain’s famous line: “A dog won’t bite the hand that feeds him, and that is the principle difference between a man and a dog.” .
Now I hope that you will understand why I voted as I did.
RC
