Today is D-Day for the kaleidoscopically colourful entrepreneur Giuseppe Porcelli. Will he fulfil his dreams and make it to the ASX? Michael West reports.
To the best of my knowledge, there is no documented instance of a leopard ever changing its spots. A leopard’s spots are a result of genetics, of course, and the pattern is set from birth. It seems it might just be the same with “creative global entrepreneurs”. Their pattern of behaviour is probably set at birth.
Take Giuseppe Porcelli, the flamboyant Manly-based, self-promoting, multi-award applicant (sadly, yet to win one) who seems to be up to his old tricks. With a track-record of questionable success and an approach to corporate governance that has been subject to significant scrutiny, Porcelli has popped up on the ASX radar again.
Dreams of share market
After a spectacular failure to sell a near worthless and now defunct company, Paid by Coins, to Mobecom (renamed soon after to Gratifii ASX: GTI) for an extraordinary amount of money, Porcelli retreated to his lair in Manly to lick his wounds and assure Lakeba’s long suffering shareholders that it was just a matter of time before Lakeba would hit the big time.
By hook or by crook it seems.
The Paid by Coins “deal” typifies some of the structural problems critics highlight when looking at Lakeba and Porcelli’s performance.
The Paid by Coins crash-out led to some significant litigation against Lakeba for allegedly providing false and misleading accounts to several investors to induce them to part with their money. That lawsuit was eventually settled after Lakeba was ordered to give access to its accounts, although the Lakeba website misleadingly states that the case was dismissed rather than settled.
Porcelli and his trusty business partner, Darren Younger, purchased the shares in question for significantly more than the 3 shareholders paid for them, according to ASIC records.
The more Porcelli fought their claims of misleading and deceptive conduct, the deeper the hole became until the risk of exposure apparently became unbearable. Add significant and unnecessary legal costs to the burden already being borne by Lakeba’s long-suffering shareholders.
This failure is symptomatic of Lakeba’s broader issues: grand claims, limited transparency, and little (or no) realised value for shareholders.
The “successful exits”
Although the Lakeba website still proudly claims two “exits” related to the failed Mobecom transaction (Paid by Coins and AirCrypto), the reality is that in over 10 years of operation Lakeba has had only one genuine exit.
Deals 4 Sport was sold to the wife of a director for a measly $50,000 way back in 2015 when Lakeba merged with TechBeach, the business that actually built that platform. Of course, Lakeba shareholders didn’t see any of the $50,000 and are yet to see a penny from the many other ventures started by Lakeba.
Most Lakeba ventures have failed and disappeared from sight, including a short-lived foray into the world of ICO’s (Initial Coin Offerings) back in 2018 when Porcelli touted QuixxiCoin to investors who saw their cash magically disappear days later in a puff of smoke and mirrors.
Cash not AI!
Two of Lakeba’s ventures that have actually generated enough cash to keep Lakeba’s lights on, Ezidox and Verimoto, were combined into a single entity called DoxAI in an apparent attempt to leverage the two most valuable letters in the English alphabet at the moment – AI – and combine their revenue to give at least the appearance of greater success.
That transaction is now part of a wider lawsuit by another shareholder claiming oppression, amongst other things. With a whole host of named defendants within and around the Lakeba group, including Porcelli and Younger themselves, it seems something may indeed be rotten in the state of Lakeba.
This shareholder oppression action has been commenced in the Supreme Court by a substantial shareholder of Lakeba and some of its ventures accusing Porcelli, Lakeba and a multitude of other Lakeba ventures and directors of some very poor corporate behaviour.
It seems it is very hard, if not impossible, to find a happy shareholder in that group. Despite various efforts, we are yet to hear a happy story from any past or present shareholder, ex-employee, ex-Director or anyone else with whom this publication has spoken.
Sadly, there has been no response from Porcelli despite many approaches.
The amazing Giuseppe Porcelli hits the CEO big-time without the help of a single customer
In an effort to either fight or scare off this shareholder’s action, Porcelli has appointed eye-wateringly expensive legal guns from top tier law firms to represent him and other directors personally. Why not, when it is someone else’s money he is spending? More and more legal fees to be swallowed by Lakeba’s shareholders.
It seems that Porcelli doesn’t just burn bridges, he lays waste to every relationship once their purpose is served or they dare to leave the Lakeba “famiglia”. The popular company review site, Glassdoor, has a number of critical posts from ex-employees that paint a fairly bleak picture of working with Porcelli and his wife, Antonella De Rosa, the highly paid Chief Administration Officer of Lakeba who travels the world with Porcelli on the company’s dime while building an online clothing business in her spare time.
“I had the unfortunate experience of working at Lakeba, and I can confidently say that it was one of the worst professional environments I’ve ever been a part of … The management’s behaviour can only be described as bullying. The only ‘promotion’ that seems to exist is within the family members who run the business.” Glassdoor
“Promises, promises, promises but not much follow through.” Glassdoor
These comments add a layer of internal governance and cultural concerns: employees feeling misled, upward nepotism, low transparency.
London to a Brick(let)
That’s not the end of it, sadly. Another Lakeba venture, Bricklet, has tried for a number of years to generate interest in fractional property without achieving the wild success touted by the Bricklet and Lakeba marketing teams.
This has led to the latest attempt by Porcelli to take something that is apparently of little or no actual value and leverage it into something bigger by adding a bit of fairy dust and smooth talking.
Domacom, an ASX-listed company, had also attempted to promote a fractional property model to investors but hit some speed bumps when it invested in some NDIS properties that failed to deliver.
That and other factors ultimately led to the suspension of Domacom from the ASX while it restructured its finances. Enter Porcelli and his band of merry fractional property promoters like Darren Younger, the business partner of Porcelli. Why have one failed fractional property venture when you can combine two and have it run by an ex-bankrupt CEO?
Lack of cash to purchase Domacom was no problem for the ever-creative Porcelli. He would simply acquire shares of Domacom in exchange for the use of the Bricklet software platform and some investment to reduce Domacom’s debt. Naturally, there would be fees payable to Porcelli personally for his involvement in the transaction, just as there was with the Mobecom burn.
After all, Porcelli would be providing his expertise in scaling businesses such as Deals4Sport, the $50,000 now-liquidated “wonder venture” that is Lakeba’s only actual exit to date. More like a de-horned rhino than a unicorn.
Porcelli’s first job at Domacom was to remove most of the old guard and replace them with some Brickleteers, ably supported by a crony-Board made up of Porcelli as Chairman (of course), Alberto Basile (his buttoned-up Lakeba mathematician sidekick), and Vinu Koliyat (a Lakeba software developer).
Koliyat lasted less than 6 months in the heat of the Domacom Boardroom. This all led to a war of words on the shareholder forum HotCopper.
It seems that HotCopper is the preferred platform that Porcelli uses to tout the ventures he has an interest in under the nom de plume of “myinvest”. An unusual way for a public company Director to make announcements, but it’s worth a read if you have an interest in any of Porcelli’s ventures. Self-promotion is an indubitable skill.
Cryptic crypto
Having secured the Domacom Board, Porcelli’s next job was to change the name of Domacom to Assetora (ASX:AOH) so it could become the fresh new face of fractional property and other structured investment opportunities using the Bricklet platform to manage the initial investment and the much hoped-for secondary market sales.
It might also help get away from all that bad press about Domacom. One of Assetora’s first investments was into WhiteHawk (ASX: WHK) a cyber security marketplace that, like several of Porcelli’s public company plays, was rolling around at the bottom of the barrel of the ASX with a share price in the doldrums.
What a cyber security marketplace has to do with fractional property is anyone’s guess, but more of WhiteHawk later.
Since Porcelli’s initial involvement in Domacom/Assetora it has failed to get relisted. Today is the day!
Whether that is because the ASX is aware of Porcelli’s prior antics involving Mobecom or because the company has failed to restructure the accounts sufficiently to support re-listing is anyone’s guess.
Very little is disclosed to the public about Porcelli’s background and the various lawsuits against him and/or Lakeba.
Two Christmas gifts arrived for Assetora shareholders in the form of receivers being appointed – two receivers not one – apparently the result of management’s failure to honour some debt obligations.
Some hasty refinancing was clearly required from Porcelli and Co, but surely this sort of failure can’t be good for their relisting plans. It all comes to a head right today, so let’s see if it comes up roses or weeds.
By Friday morning they are either listed or delisted.
Fractionalise farms? Who does the work?
Bricklet and its directors (including Porcelli and Younger) also face allegations of inappropriate conduct in the operation of the Bricklet platform to fractionalise farms. Two farms have had to be placed in administration due to the inability to operate them under the Bricklet structure that was designed for residential property.
A judge in Queensland found the structure to be more of a Managed Investment Scheme which required pre-approval by ASIC, so let’s hope ASIC and the ASX keep their eyes on that issue should it come to court. In fact, let’s see if Porcelli & Co even tell them about it as part of their continuous disclosure obligations.
And so that leads us back to WhiteHawk, another apparent attempt by Porcelli to gain influence and possibly control over a publicly listed entity. According to HotCopper, WhiteHawk (ASX:WHK) is “a cloud-based cyber security exchange platform that delivers artificial intelligence (AI)-based Cyber Risk Profiles, interactive online maturity models, tailored Cyber Risk Scorecard reports, matching innovative products, solutions and best practices, all via an intuitive virtual consult”, whatever all that technobabble means.
More partnerships than Married at First Sight
Predictably, it has already announced a partnership with DoxAI, the Lakeba document management venture that combined Ezidox and Verimoto. Another one of Lakeba’s most “exciting” ventures is called Quixxi, which is Porcelli’s very own IT security baby. Having sold the rights to his nascent idea to Lakeba for a fat amount some years ago, paid for with Lakeba shareholder funds, Quixxi has continued to disappoint.
After paying a lot of money for an early iteration with few sales, Lakeba has continued to invest in it for over 10 years with relatively little revenue being generated over that period of time.
It seems someone forgot to do the traditional product-market fit analysis, or the platform simply doesn’t provide the value claimed. What better way to try and make a success of it than to find a floundering listed company in the same space and offer it his expertise in scaling global businesses, like the $50,000 Deals4Sport mega-business that was wound up soon after purchase.
Let’s see if WhiteHawk starts offering DoxAI and Quixxi as a solution to its clients following a significant investment by both Lakeba and Porcelli personally (although he has shown great parental generosity by putting a lot of shares in the name of his children), as well as an investment from the newly formed “Assetora AI & Cyber Fund I”.
Yes, that’s the same Assetora that was touting fractional property and other structured investments as its focus. With the expertise of Porcelli at the helm of Assetora as Chairman it has quickly decided to diversify into cybersecurity and support a business that Porcelli has a personal and corporate stake in.
Watch those moving cups carefully.
These moves appear to reflect the same spotty pattern: Porcelli positioning himself and Lakeba to gain access to listed public vehicles, leveraging his role to secure board seats and shareholdings, then doing deals with Lakeba ventures in an effort to generate some value.
If operational success follows, that may validate the strategy; but the historical track record raises questions about whether shareholders in these listed companies fully appreciate the risks.
The real question will be whether Porcelli/Lakeba actually bring operational substance (customers, revenue, profit) rather than simply corporate manoeuvring and self-interest.
Despite all the horn-tooting, it hasn’t convinced all of the existing WhiteHawk shareholders of the value if some of the comments on HotCopper are anything to go by. RedHammer notes, with tongue firmly in cheek, that “You forgot to mention that Assetora AI & Cyber Fund I is basically another word for [Porcelli]. This means that [Porcelli] essentially hi-fived his left hand with his right hand and in the process issued himself a swag of free options …”
Those spots don’t seem to have changed much.
Porcelli (or, more accurately, “myinvest”) responded to allegations of poor behaviour by declaring he had never actually been found guilty of anything in a court of law. Interesting angle. Maybe he doth protest too much? Maybe it’s just a matter of time before he is found guilty of something and is unable to settle his way out of it as before?
The Porcelli Factor
Porcelli remains a figure worth watching in the Australian tech/venture scene — although you have to be quick to catch him in Australia nowadays.
He is often to be found in Dubai, Nigeria and even Japan trying to raise funds and launch Lakeba’s ventures in new countries that have not yet experienced the “Porcelli Factor”.
Brief forays into the US failed quickly and a new approach to the Canadian market seems destined for the same result. High expectations, low investment, distracted by the next shiny thing.
Porcelli’s track record to date suggests caution, not celebration. His latest moves could redeem his earlier shortfalls or repeat similar patterns.
As with earlier ventures, key questions remain: How is value being shared with investors/stakeholders? Are everyone’s interests aligned? Is there transparent reporting?
The previous pattern with Lakeba has been defined by lofty claims of exits/exponential growth which has not always materialised for external investors. For those involved, the proof will be in the performance, not the promises. In the meantime, it looks like Porcelli’s spots are all still exactly where they have always been.
CaddyShack, CEO of the year antics and turkey sandwiches: Lakeba back in the revenue bunker