New evidence has come out showing Iroquois Capital, Richard Abbe and his investment partner Bruce Bernstein of Rockmore Capital lied to investors and the Securities Exchange Commission in a take over deal with airport nail salons XpresSpa ($XSPA). I previously reported the duo, are battling a serious fraud case in the Southern District of New York filed by Moreton and Marisol Binn, the XpresSpa founders. The lawsuit, which was filed in November 2017, has claims of undo influence, deception, and kickbacks used to effect a merger takeover by Form Holdings of XpresSpa. Two claims of Securities violations that involved fraud survived the defendants motion to dismiss but federal Judge Louis Stanton allowed the defendants to have some of the evidence presented by the plaintiffs sealed. Information in the public record regarding the sealed evidence shows Bernstein’s ex-wife, a downtown socialite and jewelry designer Sheryl Aufrichtig, proactively reached out to the Binns attorney when she learned about the lawsuit and showed them financial documents from her divorce that makes Bernstein look like he has flat out lied to the securities regulator.
At the heart of the case is the accusation the Abbe and Bernstein have been colluding to take over XpresSpa with hidden financial interest in a predatory loan. Throughout the court case and in SEC filings each man has sworn that they are independent of each other. According to an un-redacted motion in the case filed by the Binns attorney Rosanne Felicello and Michael Maloney of CRK Law LLP, Richard Abbe DOES have a financial interest in a loan that controls the company via debt covenants called the Rockmore Note. I have previously reported on how this transaction was set up here and why it is being challenged as legitimate. Aufichtig sent a letter from her ex-husband’s attorney Pamela Salon of Aronson Mayefsky & Sloan that talks about what Bruce Bernstein real financial assets are and apparently it doesn’t show he put up all of the $6 million Rockmore loan to XpresSpa.
Bernstein’s lawyers, at Mintz Levin LLP, have tried to claim this information is confidential or attorney client privilege applies but since it came from his Ex-Wife that argument doesn’t work. There was even some talk by the defendant’s attorney that maybe Bernstein divorce lawyer Salon had lied about his financial interest during their divorce negotiations which seems pretty far-fetched. What is also equally absurd is that parts of this case are sealed at all. It involves executives of a publicly traded company and litigation in public federal court is design for be open to the investing public the same way SEC filings are supposed to be truthful.
Attorney Felicello wrote in her motion, “It seems clear that the statements made in the letter concerning the identity of the persons with an actual interest in the Rockmore Note are irreconcilable with the statements made by Defendants in reports filed with the S.E.C. with respect to, inter alia, the independence of the members of the Board of Directors of Form Holdings Corp. However, the conflict between the contents of the Sloan Letter and Defendants’ statements to the S.E.C. does not conclusively establish the falsity of the Sloan Letter. Rather, this conflict demonstrates the falsity of Defendants’ statements to the S.E.C.”
Net-Net all that legal language is saying it looks like Bernstein isn’t stupid enough to commit criminal fraud and lie about assets in his divorce but instead choose to lie to the S.E.C. because you know they can only sue you civilly.
Aufichtig, age 55, made out well financially in the divorce a few years ago. The couple was married in New York City in the early 90s. New York City real estate records show the Bernstein’s West Village home at 345 W. 13th street 6th floor apt was sold for a whopping $11.7 million in 2016 but apparently this divorce didn’t got so well if Aufichtig is upset enough to out her ex and the father of her kids for possible securities violations. Aufichtig made news early this year when the New York Post reported she sued a high-end real estate landlord in Tribecca saying she shouldn’t pay $16,000 a month in rent because the building wasn’t zoned for residential living and called it a dangerous flophouse. The landlord countered telling the NY Post Ms. Aufichtig is just trying to get out of paying rent.
Bernstein’s Ex Wife
Sheryl L. Aufichtig and Bruce T. Bernstein did not respond to emails for comment.
Yesterday XpresSpa held a shareholder meeting and voted to split the stock up to 1/25 times and to issue new shares of common stock. They company needs to get its share price up if it plans to stay on the NASDAQ.
THIS STORY HAS BEEN UPDATED
The husband comes off as a fraud, and the ex-wife as money grubbing and angry.
Gee. What a lovely couple (of what, I’m really not quite sure). They seem to be made for each other.