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Gene Ray Makes Hall of Fame. Hmmm

Gene Ray has become the ninth local executive to make the Entrepreneur Hall of Fame, which is sponsored by Connect, a technology trade group. Ray "has brought billions of dollars and created tens of thousands of jobs for the San Diego community," gushed Connect, according to the Union-Tribune. But Ray and his colleagues at the former Titan Corp. and SureBeam, a now-defunct offshoot, raised lots of eyebrows among government investigators and on Wall Street. Ray founded aerospace contractor Titan Corp. in 1981, and one of the criticisms of the company was it seemed to worry more about running up its stock than creating profits. In the late 1990s, Titan stock soared as the company touted its telecom ventures in emerging nations. However, word leaked that Titan was bribing officials in Benin. In 2005, Titan paid $28.5 million to settle criminal and civil charges that it bribed the president of Benin. At the time, it was the largest penalty imposed on a company in the history of the Foreign Corrupt Practices Act, said the New York Times. Titan pleaded guilty to three felonies in federal court in San Diego and agreed to pay $13 million. Titan then said it would pay $15.5 million to the Securities and Exchange Commission.

Titan had a subsidiary, SureBeam, that claimed it could irradiate foods. Titan spun off the company and its stock traded separately, although Titan still had a position in it. Like Titan, SureBeam stock enjoyed a big runup based on expectations. SureBeam fired two auditors, one of whom had questioned the company's revenue recognition practices. The stock zoomed when SureBeam said it could kill anthrax, but that didn't work out. Creditors howled and SureBeam went into Chapter 7 liquidation in early 2003.

Titan and SureBeam got hit with civil lawsuits. Allegedly misleading accounting and foreign bribery issues were among the charges. Titan was to be sold to Lockheed, which lowered the price it would pay as troubles mounted. Then the deal blew up in 2004. Titan was sold to L-3 Communications the following year.

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Gene Ray has become the ninth local executive to make the Entrepreneur Hall of Fame, which is sponsored by Connect, a technology trade group. Ray "has brought billions of dollars and created tens of thousands of jobs for the San Diego community," gushed Connect, according to the Union-Tribune. But Ray and his colleagues at the former Titan Corp. and SureBeam, a now-defunct offshoot, raised lots of eyebrows among government investigators and on Wall Street. Ray founded aerospace contractor Titan Corp. in 1981, and one of the criticisms of the company was it seemed to worry more about running up its stock than creating profits. In the late 1990s, Titan stock soared as the company touted its telecom ventures in emerging nations. However, word leaked that Titan was bribing officials in Benin. In 2005, Titan paid $28.5 million to settle criminal and civil charges that it bribed the president of Benin. At the time, it was the largest penalty imposed on a company in the history of the Foreign Corrupt Practices Act, said the New York Times. Titan pleaded guilty to three felonies in federal court in San Diego and agreed to pay $13 million. Titan then said it would pay $15.5 million to the Securities and Exchange Commission.

Titan had a subsidiary, SureBeam, that claimed it could irradiate foods. Titan spun off the company and its stock traded separately, although Titan still had a position in it. Like Titan, SureBeam stock enjoyed a big runup based on expectations. SureBeam fired two auditors, one of whom had questioned the company's revenue recognition practices. The stock zoomed when SureBeam said it could kill anthrax, but that didn't work out. Creditors howled and SureBeam went into Chapter 7 liquidation in early 2003.

Titan and SureBeam got hit with civil lawsuits. Allegedly misleading accounting and foreign bribery issues were among the charges. Titan was to be sold to Lockheed, which lowered the price it would pay as troubles mounted. Then the deal blew up in 2004. Titan was sold to L-3 Communications the following year.

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Oh my, "tens of thousands of jobs" were created by Ray and Titan? Are any of them still left? If all that were true, why is Titan not still (pardon the expression) a Titan on the local scene? No, that operation was always highly questionable in its practices, and it never employed such large numbers of people itself. As to whether it had that large a ripple effect is subject to debate. Sure Beam "sure" didn't deliver its promises.

Many of us locally have questioned the function of Connect. The stated purpose of the group was to take scientific and technology discoveries from UCSD and turn them into commercial successes while creating local jobs. It was never clear that Connect did much of the latter. If it had succeeded in taking discoveries out of the labs, did the UC (a taxpayer funded school) ever see the royalties for discoveries that it owned? There was a huge potential for conflicts of interest at Connect. Giving such recognition to Ray means that yet another San Diego group is blind to the actual record of a local bigwig.

April 3, 2011

Good points. My item just hits on part of the sorry history of Titan and SureBeam. Glad you raised the point about Connect. Does it incubate technologies or does it line up early investors to get in on cheap shares of local techs and biotechs? What does Connect say when the stock soars on phony claims, the insiders dump the shares that they paid pennies for, and the company collapses? I can't remember Connect ever commenting on these all-too-common San Diego tech/biotech adventures, which have so much in common with pump and dump capers. Titan stock got up to around $60, as I recall, before plunging to below $20; SureBeam got to $16 before falling to close to zero just before the Chapter 7. Best, Don Bauder

April 3, 2011

Connect is simply a mutual admiration society. Can somebody tell us what they really do other than toot their own horn and throw gala receptions and awards ceremonies?

April 4, 2011

As I said, at one time, according to my sources, Connect would surreptitiously line up early investors to get in on penny shares of techs and biotechs that were going public, and would certainly be romanced in an overheated market, permitting insiders to get out at enormous profits. But that was secret activity. I don't know if it still happens, and I don't know what Connect now does. Best, Don Bauder

April 4, 2011

Just about twenty years ago, I was an out-of-work financial exec, and was doing the network search thing. The late Bill Otterson, head of Connect at the time, was given to me as a possible source of information or leads. He was never available to meet, but it was suggested I attend a Connect event that featured a guest panel. So, I did that, and while there attempted to introduce myself to Otterson. He listened to me, and then blew me off with, "Go work the crowd that's here." I never got to spend any time with him fact to face. Did "working the crowd" produce anything? No. What did Connect do for me? In a word, nuthin'.

April 4, 2011

So you didn't get in on early penny shares of the next hot biotech or high tech. You could have become a billionaire -- that is, if you had dumped your shares. Best, Don Bauder

April 4, 2011

It wouldn't really have mattered; I'm a buy and hold investor.

April 4, 2011

Buy and hold and pump and dump aren't compatible. Best, Don Bauder

April 5, 2011
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