This is a LONG article but believe me is worth the read. From the Times online: LIFE was good for Carl Freer a year ago. He was on a salary of more than £1m. He was chauffeured to work in a Maybach limousine. The value of his company — British-based, but with its shares listed in America — had topped $1 billion. Things couldn’t have been better. His company, Gizmondo Europe, had just launched a hand-held computer gaming device, which, according to Freer, could carve itself a profitable place in a market dominated by Sony and Nintendo. As he was fond of hinting to his backers, the company was likely to be taken over. The investors would become rich. Freer would become super-rich. Now, little more than 12 months after the Gizmondo console was launched at a party at the Park Lane hotel in London — where stars such as Sting, Dannii Minogue and Busta Rhymes were paraded in front of guests — Freer’s company is in liquidation, having burnt its way through £160m in 18 months. Details of the firm’s extraordinary extravagance — with huge sums spent on exotic sports cars and Rolex and Cartier watches during its short, unprofitable life — are coming to light. One of Freer’s closest allies and a former director of the company is in jail in Los Angeles facing charges of embezzlement, car theft and possessing a firearm. Freer was arrested on suspicion of posing as a policeman to buy a Magnum revolver — and has been exposed as having a criminal record. Investigators are now sifting through a mountain of paperwork to try to discover just how a company nobody had heard of managed to go so spectacularly bust — one of the biggest crashes in Britain since the end of the dotcom boom. In the words of Paul Davis of Begbies Traynor, one of the firms appointed as liquidators of Gizmondo: “No matter how much you spend on cars, watches and directors’ perks, you just can’t get through a sum as big as this quite as quickly as Gizmondo did.†Freer, who had a British father but was raised in Sweden, had run a Swedish electronics business in the 1990s. In 2002 his firm made a bizarre leap: it merged with a carpet retailer based in Florida, Floor Décor. The improbable tie-up gave Freer what he wanted: Floor Décor shares were traded in America under the so-called pink-sheets system, so he could now issue new shares and raise money. The company that had once sold rugs in Tampa became Tiger Telematics. In spring 2004 Tiger breathlessly declared that its main business, Gizmondo Europe, based in offices on the edge of Farnborough airfield, was to launch a “futuristic multi-entertainerâ€, a handheld game device that would play MP3 music files and films, send and receive text messages and incorporate a global-positioning system. Of course, the Gizmondo console wasn’t yet on sale: the group’s turnover in the first half of 2004 amounted to less than £100,000 — and all of that came from a London modelling agency, Isis Models, inexplicably bought by Gizmondo. But that didn’t trouble Freer. In March 2004 Freer’s basic pay was set at £500,000. That was doubled six months later. He recruited a fellow Swede, Stefan Eriksson, to the Gizmondo board. Eriksson started on £400,000 but this was also doubled after six months. Bonuses topped up each man’s 2004 pay to about £1.1m. Freer’s wife, Anneli, received £90,000 for “marketing servicesâ€. And Eriksson received a car allowance of £5,000 — every month. He had a couple of limited-edition Ferrari Enzos — one red, one black and each worth about £500,000 — plus a Mercedes SLR McLaren. Freer, who celebrated his 36th birthday on Friday, preferred luxury to performance — hence the chauffeur-driven Maybach. But behind the electric gates of their Hampshire home he and Anneli kept a Range Rover and a Land Rover Discovery as runabouts. In the garage were a couple of Harley-Davidsons — one with a diamond-etched crank case. In the 2004 financial year Gizmondo racked up losses of £49m. Part of this was covered by borrowings. But most came from issuing new shares in the company’s parent, Tiger Telematics, to investors who thought Gizmondo really might be on to something. Some suppliers to the company were also persuaded to take shares in Tiger rather than hard cash. In March last year Gizmondo’s console — shaped like a big, flat pebble with a black rubber casing — was launched. And as guests sipped champagne at the Park Lane hotel, word went out that 500,000 people had registered an interest in buying a Gizmondo. In reality, the number was nearer 50. Last summer Freer and Eriksson moved to Los Angeles, to oversee Gizmondo’s launch in America. But by this time creditors were closing in. Official American documents show that in the first half of last year, Gizmondo’s losses topped £100m — equivalent to more than £500,000 a day. As before, cash was raised by issuing Tiger shares. In the first seven months of 2005, the number of shares in issue rose by nearly 70%. Then, last September, a Swedish newspaper spotted that Eriksson was the same “Fat Steffe†Eriksson who had been convicted of fraud and receiving stolen goods more than a decade ago. He had been in the “Uppsala Mafiaâ€, named after the Swedish town north of Stockholm. A second Gizmondo director, Peter Uf, had been part of the same mob. A third member, John Enander — known as “the Torpedo†during his Uppsala days — worked for Gizmondo handling “securityâ€. Enander had been jailed in the 1990s for various offences, including assault and blackmail. When Gizmondo was first being set up, he was back in jail for beating up a woman. Eriksson, Uf and Enander all quit Gizmondo. Freer went, too, although he insisted he had committed no crime. Gizmondo struggled on for a while, but without the super-confident, multilingual Freer, funding dried up and the firm was forced into liquidation in February. Intriguing aspects of the saga have since emerged. Last year the company spent £2m on leasing cars. It also bought a share in a racehorse. Papers show about £400,000 was spent on watches, many for potential investors and people with whom Freer wanted to do deals. But both he and Eriksson also had a taste for flash timepieces: Eriksson and his girlfriend, Nicole Persson, had their watches and jewellery valued at nearly £700,000 last September. Freer’s watches were valued at £93,000. Eriksson’s taste for fast cars proved his undoing. When he went to Los Angeles, he took his two Ferraris and the Mercedes McLaren. One morning in February he took a Ferrari for a spin and crashed it just outside Malibu. Police reckon he was doing 160mph. Remarkably, Eriksson suffered only a bloody lip. He was over the drink-drive alcohol limit, say police. More seriously, it emerged that the car — plus the other Ferrari and the Mercedes — were owned by the Bank of Scotland, Lombard and Yorkshire Bank. The cars had been leased to Gizmondo and were not meant to be taken out of Europe. Following the accident, the authorities discovered Eriksson’s convictions in Sweden — something he had omitted from his visa application. And they found a gun in his Beverly Hills house: convicted felons are not meant to own firearms. Chilling details of Eriksson’s past crimes emerged from Sweden. On one occasion, say prosecutor’s documents, Eriksson held a kitchen knife to a man’s throat, threatened to cut off his fingers and finally shoved a gun in his mouth. Eriksson, 44, is now awaiting trial. The one-time playboy has appeared in court wearing an orange LA County Jail jumpsuit. He is pleading not guilty. His lawyer said Eriksson was trying to sell his house at St George’s Hill in Surrey, to pay for the cars. Freer, too, is in trouble. Police raided his Bel-Air house — which is on the market for $5.9m — and his 110ft yacht, moored at Marina del Rey. They found 16 guns — 12 rifles and four hand weapons. Freer was arrested on suspicion of having posed as a policeman to buy a Magnum. He has been released while inquiries continue. It is all “a misunderstandingâ€, said his lawyer. It is now clear that Freer’s past is not all he pretends. He has made false claims before in a bid to bolster his reputation. Teetotal and obsessed with his health, he claimed in official papers that he was a trustee of Kings Medical Research Trust in London. He never was. He also claimed in papers lodged with America’s Securities and Exchange Commission to have been the co-founder of a software company, VXtreme, sold to Microsoft in 1997. There was such a company, and it was bought by Microsoft. But Carl Freer had nothing to do with it. Freer says the VXtreme reference was a mistake and was later removed. While still in his teens, Freer was convicted of fraud after forging his parents’ signature to get a loan. And a German court last year fined him €200,000 (£135,000) for writing bouncing cheques while working as a car dealer in the 1990s — a time when he sometimes used a second name, Erik Jonsson. Freer claims he cancelled a cheque after he thought he was being sold stolen cars. None of this helps Freer’s reputation. And that still matters to him. He is an investor in a new telecoms venture, Xero Mobile, being set up in Los Angeles by former Gizmondo hands. They insist Freer is merely a shareholder; he is not a director. People close to Freer insist, however, that he was the driving force behind Xero. The huge question remains: where did all Gizmondo’s money go? Liquidators are investigating payments of millions of pounds to other companies from which Gizmondo seems to have received little in return. These include £2m paid under a licensing deal with a British company, Game Factory Publishing. Insiders said no games were ever developed and handed over to Gizmondo. Yet when nothing appeared from Game Factory, only part of the money was refunded. Robert Stein, a financial adviser and close confidant of Freer, was a director and shareholder in Game Factory, Companies House documents show. His father, Martin Stein, also a Game Factory director, runs a company formation business that created a number of firms for Freer and Eriksson. Robert Stein refused to comment. Gizmondo also paid money to companies linked to Eriksson, Freer and Uf. In August 2004 Gizmondo bought Indie Studios AB, where Eriksson and Uf were directors, according to American documents. Shortly afterwards, Gizmondo struck a deal with a software firm, Northern Lights, and paid it £1.8m for computer games, which were supplied. Eriksson and Freer declared they each had a 23.5% shareholding in Northern. Companies House records suggest their interest may have been rather greater. Ownership of the rest of Northern Lights was opaque: a controlling stake was held by “Asiatic Securities at Asiatic Commerce Bankâ€, with an address in Panama. There is an Asiatic Securities in Panama, but no record there of an Asiatic Commerce Bank. But in London an Asiatic Commerce Bank is owned by Eriksson and registered at the Mayfair offices of Martin Stein. To confuse matters further, official American documents say Freer and Eriksson had links to another company, also based in Panama, called Asiatic Bank and Finance. No records of such a company can be traced. Asiatic Bank and Finance was at the centre of a complex deal under which debts of £4m — money that Freer and Eriksson had owed to Gizmondo — were cleared. And the previous name of the London-based Asiatic Commerce Bank was Asiatic Commerce and Finance — strikingly similar to Asiatic Bank and Finance. Liquidators admit that so far they have scratched only the surface of the Gizmondo saga. They still struggle to see where all the money went. But, for now, Freer’s days of being driven to work in a Maybach are over. Source
What makes me even more furious about these fuckers is the fact that there's a lot of projects for consoles and handhelds that cant get any founding. I blame these corrupt bastards: who in their right mind would take the risk of investing in some independent console project with shit like this in the market?
The big question for us gamers is...who can get ahold of all the Devkits and software and open that bugger up. I have a Gizmondo and it appears to be pretty powerful. Somebody needs to get the "colors" code and finish that thing. You can tell they thought they would be bought out because there is no software for it. Who the hell would buy them out? Microsoft has their own R&D. Who cares if it was engineered by the designer of the Spectrum series if the market is already flooded. I am trying to figure out how they got away with all this for so long.
Easy, they were lying. Is all a matter of context: just like during the dotcom years every major newspaper was making articles about how you could make a ton of cash with the internet today I see articles everywhere (although not in the same saturated way) saying videogames are the next big thing. Just like in the dotcom days you got a lot of ignorant investors willing to spend their money in stock based on "a hutch" ratter than real market analisys. And that's what the gizmondo fuckers did...
