Hey Guys, Don't Take Their Check!

Yes, I’m back. Apologies for the long hiatus, but I was busy with some knucklehead who had the world convinced that he was going to buy the Pirate Bay. Oy vey. What a story.

I’ll get into all of the details in the coming months. It’s one of the weirdest chapters of my extremely unconventional life.

But in the meantime, check out my column in The Music Void about the latest legal woes of my hero, the Baghdad Bob of digital music, the one, the only Allen Klepshitz of Qtrax. Read about it here.

© 2009 – 2010, Wayne Rosso. All rights reserved.

Among 5-star Hong Kong hotels, Langham Place Hotel Hong Kong is unique…

Langham Place captures the vibrancy and buzz of local culture like no other. And presents it in a way that’s invigorating, engaging, fun! You’ll feel refreshed and inspired as soon as you step inside. You’ll also find every conceivable modern indulgence, including our luxury Chuan Spa.

Langham Place Hotel Hong Kong – the place to be in Hong Kong!

Sounds great, no? And looks pretty nice, as you can see from this link to a little photographic tour of the hotel. Now why in God’s name would anyone care about this beautiful hotel in Hong Kong? No one really. Except our man Honest Al Klepshitz who has been holed up there all week, dropping in on this site at least 40 times thus far. And it’s only Thursday.

Welcome back, Honest Al.

UPDATE: 49

UPDATE: 43

UPDATE: 41

© 2009, Wayne Rosso. All rights reserved.

But what is most interesting is that this particular case as well as the newly files case by Millennium Technologies and yet another case seem to establish a pattern of how Allen Klepshitz “settles” these matters. Two words: rubber checks. In the Alpha/Osher case, he had settled the claims at the last minute after dragging the case on for years. He gave the plaintiffs 2 post dated checks for $250,000 as settlement. But both checks bounced! So this latest judgment is a result of the plaintiffs new case to collect on the rubber that Klepshitz gave them. Are you following?

So as we see in the Millennium case, he bounced yet another check on them. But let me introduce to you a gentleman by the name of Peter Goerke. Mr. Goerke also sued Klepshitz and the case was evidently settled. Klepshitz paid Goerke with 2 checks, one for $88,900 and another for $12,700. And guess what? Both checks bounced. So Goerke had to file yet another suit, to which he was awarded a summary judgment, in order to collect on the bad checks. Not only that, but when Goerke got his summary judgment, Klepfisz had to be threatened with contempt of court in order to get him to pay up!

Is this man a serial check bouncer? You tell me. But one thing is for sure: if Kelpshitz owes you money, get it in cash and still make sure its real!

© 2009, Wayne Rosso. All rights reserved.

Qtrax CEO Allan Klepshitz, according to Qtrax "advisor" Robin Kent, "is one of the most honest people I have ever met".

UPDATE: Our man Al Klepshitz must not be doing that badly after all. In spite of all of the judgments and outstanding claims against Brilliant Technologies, Qtrax and or Klepshitz personally, he was seen not long ago in the First Class section of a Singapore Airlines flight (Klepshitz is know to have a great affinity and passion for the airline’s first class service). Klepshitz was last know to be hanging out in Australia. For the record, a roundtrip first class ticket on Singapore Air from JFL to Sydney is nearly $18,000. So what’s next? Well the good news is that we can rest assured that Klepshitz won’t be looking for some of those government TARP bailout funds as the government is pretty much demanding that CEO’s of bailout companies fly coach.

Yesterday there was a very interesting post in comment to the April 14 story on The Music Void titled “Qtrax Relaunching? What About all the Lawsuits it is Facing? TMV Drills Down on Qtrax”. The poster, named Jessica, is responding to comments made on the site by Robin Kent, an advisor to Qtrax, and a couple of other posters named Frank and Rod. I must admit, Jessica nailed it.

@Rod: I don’t think anyone is blaming Robin. As a matter of fact, there is no mention of anyone blaming Robin anywhere on here, other than your accusation.

@Frank: I agree that this blog is painting a negative picture of Qtrax, however, that is the reality of the situation. The lawsuits speak for themselves; (I’d suggest you read the information provided by Jakomi pertaining to the lawsuits.) Furthermore, Qtrax on countless occasions has made public promises related to their product only to recant them days, weeks, months later. Here’s a company who made a very public launch in 2008, only to have announced hours later, that in fact, they never had any deals with the four major record labels. Then finally, once they managed to get a product together, they announced a version compatible for Macs coming in March 2008. It’s now May 2009 and there is still no Mac compatible version. Anyone with any technical knowledge would know they could never deliver on such a promise because Qtrax is locked into Windows Digital Rights Management for protecting their songs, and Windows DRM is not compatible with Macs at all. Then in 2009, they announced they would provide portability for their songs at last saying April 2009, only to now push that date back to May 2009 (which is quickly coming to a close with no portability in sight). They’ve also promised launches in other countries, and so far, they haven’t lived up to that promise either.

Funny thing is, I haven’t gotten to explaining the obvious flaws with the technical aspects of their product yet. The most likely deal breaker for anyone comes from the fact Qtrax makes use of Windows DRM to protect their songs. Thus, even if they ever enabled portability, you could only transfer the songs to Windows DRM compatible devices, which right there, excludes the iPod and Microsoft’s own Zune. As a result, they’re now catering to a niche market that is ever shrinking as Apple and Microsoft’s share is growing. If they ever wanted to be compatible with the iPod or Zune, either they would need to change or eliminate their DRM (like most of the major digital music services are now doing) or their customers would have to violate the Digital Millennium Copyright Act to remove the DRM from their files. Also, should Qtrax ever go out of business (like in the cases of SpiralFrog, Ruckus, MSN Music, etc.), their loyal customers would no longer be able to play the songs they downloaded since Windows DRM requires a license check every couple of days. As a result, their vast music collection is quickly wiped out with no recourse except to once again violate the DMCA to remove the DRM.

Lastly, from a business perspective, the core premise of Qtrax trying to appeal to illegal filesharers is flawed. As savvy minded individual, why would an illegal filesharer give up downloading songs for free, a method that doesn’t involve watching advertisements, doesn’t restrict how, when, or where they can use the songs, for DRM-laden versions of them which have many Draconian restrictions? It’s just madness if they think they’ll ever make in-roads into that market ever, especially since all of their predecessors haven’t been able to any great extent. Also, they are cheap alternatives, like iTunes and AmazonMP3, which provide the same library of songs but without any of the Draconian restrictions.

Sorry to burst anyone’s bubble here, there’s a reason Qtrax/BLLN is still a penny stock, valued at roughly 2 cents. It’s just not a viable business or product in its current form, and without any significant innovation to try to address these issues, I wouldn’t be surprised in the slightest if it joined the ranks of the defunct SpiralFrog, Ruckus, and MSN Music, in the very near future.

What Jessica, and many others for that matter, is not aware of is that Brilliant Technologies (the owner of Qtrax) and CEO Allan Klepshitz have had a few more minor issues pop up since April 14. First of all, looks like Mr. Klepshitz took a default judgment on April 20, 2009 totaling  more than  $516,000 including interest in the NY Supreme Court case #603243/08, Alpha Capital Anstalt and Osher Capital, Inc v. Brilliant Technologies Corporation and LTD Network, Inc. For those of you who don’t get it, it means that Klepshitz didn’t bother showing up in court or filing any responses to the claim. For your reading pleasure, you can download the judgement here.

But that’s only the beginning. Klepshitz took another default judgment in Maricopa County, Arizona a few weeks ago as well. This time for about $250,000. Plus I understand that yet another $1 million suit was filed against Brilliant in US Federal Court in late April. So now we’re at about $750,000 in default judgments and counting. The new federal suit, plus several other complaints still in the pipeline. I’ve found many in New York State alone and God knows what else is out there in New Jersey, Connecticut and California. But there’s more.

Now here is some interesting new reading. On April 16 a lawsuit was filed in NY Supreme Court titled MILLENNIUM INFORMATION TECHNOLOGIES v. QTRAX a/k/a QTRAX, INC., LTD NETWORK, INC., BRILLIANT TECHNOLOGIES CORPORATION, and ALAN KLEPFISZ. Millennium claims that they were hired by Qtrax in December of 2007 provide services to the defendant for “the initial implementation of Oracle RAC Software to launch the defendant‘s music download site” Qtrax. Then  on January 04, 2008, “Brilliant Technologies retained the services of the Plaintiff to complete a Storage Configuration project at California, as the defendant’s previous contractor was unable to get the infrastructure ready. The Plaintiff sent their engineering team to California to implement the project pertaining to Storage Configuration, and the project was duly completed by the Plaintiff. Further work in relation to the final stages of the Oracle RAC Implementation project was possible only on the completion of the ‘Storage Configuration project’ that the Defendants had been in the process of executing”.

Don’t fall asleep. It gets better. On Jan 15, the Millennium guys then have to send some techies to London to implement the project and supply 24/7 web site support. Now what’s really interesting is the timing of all of this. If you’ll recall, it was last January, 2008, at MIDEM in Cannes when Klepshitz spent over a million dollars to “launch” Qtrax, announcing to the international media (and making monkeys of same media) that Qtrax would launch the next day with licenses from all 4 major labels. Of course it didn’t even take 24 hours for each label to publicly state that they did not have deals with Qtrax. Thus we were given the greatest launch fuck up in history. So it looks as though Klepshitz got a bunch of money in to pay for his big MIDEM launch party and had to scramble to meet his deadline as he had nothing to launch. So he hired Millennium for a bunch of money so that he would have a software client that he could presumably go live with.

OK. So now it’s Feb. 1, 2008 and the MIDEM fiasco has passed. Millennium sent Klepshitz a bill for $26,250. Klepshitz issues a check. The check bounces! More invoices go to Qtrax. More promises to pay. Millennium collects about $85,000 of their invoices over a four month period, but that doesn’t cover even half of the outstanding invoices. After a while Millennium claims that calls to Klepshitz and his attorneys go unanswered so they finally file suit for $147,634.72 plus 9.9% interest and attorney fees. Could it be that Klepshitz blew his wad on his big MIDEM prom and decided to stiff his technology guys? Once again, for your reading pleasure, you can download a copy of the complaint here.

And poor Robin Kent. Robin had commented on the above mentioned The Music Void post that “… I’m an advisor to Qtrax, but I have to defend the founder. He is one of the most honest people I have ever met and smartest.” Robin, I would consider walking that back a bit. But you surely have to give Klepshitz credit for one thing: he has one big set of balls.

© 2009, Wayne Rosso. All rights reserved.

Qtrax CEO Allan Klepshitz

Not! As you could see from my post last week about Qtrax, you’d have to think twice about lending him your car. Yes, it’s Qtrax CEO Allan Klepshitz. And how is the new Qtrax user experience? Does it equal or top that of iTunes? Is Kelpshitz the digital music genius he would have us all believe? Mike Barthel of idolator.com… details his user experience with the new and improved Qtrax. Check it out.

If you’ve tried out the new and improved Qtrax, tell us about your experience in the comments section below.

© 2009, Wayne Rosso. All rights reserved.

UPDATE–3:49 PM EST

Upon further investigation, Brilliant Technologies, a corporation registered in Delaware and owner of Qtrax, is a publicly traded pink sheet stock (BLLN). All well and good. But it turns out that BLLN hasn’t filed any financial statements with the SEC since May, 2007–an out and out violation of the law. Paging Bernie Madoff! Paging Bernie Madoff! See for yourself here.

The FT reported today that Qtrax was yet again relaunching. Good luck with that. There has been a massive credibility gap with anything that Qtrax says based on past claims, many of which are blatantly untrue. In this story you’ll read:

Mr Klepfisz admitted that it had been “a very expensive exercise” to get to the launch, requiring “tens of millions of dollars” of backing from wealthy individuals and boutique investment funds.

What CEO Allan Klepshitz doesn’t mention is that several of these “wealthy individuals and boutique investment firms” have filed lawsuits against Qtrax parent company Brilliant Technologies including: PLATINUM LONG TERM GROWTH IV, LLC and J&N INVESTMENT LLC, ALPHA CAPITAL ASTALT, CORNIX MANAGEMENT LLC, CAMBRIDGE MERCANTILE CORP, OSHER CAPITAL INC, and JBN INVESTMENT LLC. A total of 9 investor lawsuits inall…at least what is posted on the NY Supreme Court online records. It makes for fascinating reading.

My guess is that there is something up between Qtrax and the labels that will once again lead to more public humiliation, which Klepshitz seems to feed from.

The sheer fact that the FT is even mentioning Qtrax, especially after the entire media corps were made fools of by Klepshitz at Midem 15 months ago, is amazing. This, of course begs the question of why in God’s name am I even giving these guys space? And by the way, in my poll of “who will be the next to shut down”, Seeqpod is in first place with 57% of the vote and Qtrax in second place with 29%.

© 2009, Wayne Rosso. All rights reserved.