Last month, the details started coming out on the latest in an incredibly overcrowded MVNO market, Xero, and they didn't look pretty. The company appeared to be very closely related to Gizmondo, the failed gaming device provider, which increasingly is looking like it might have just been some sort of scam. The execs at Xero mostly came from Gizmondo. The basic "story" ("free" mobile service supported by ads) is essentially the same, and now we can add questionable financial dealings to the list as well. There had been rumors early on that Xero had raised an astounding $300 million -- an amazing sum for a company with basically a me too product entering an extremely crowded market with plenty of questions concerning the exec team. Now, MocoNews is pointing out that the company has pulled off a reverse merger, to basically backdoor its way into the public markets without doing an actual IPO. While not every reverse merger of this nature is problematic -- it's usually a pretty big warning sign of what's potentially a pump-and-dump style scam. Considering all the questions surrounding this company, you'd think they wouldn't go for such a questionable strategy -- unless they really have nothing else (which, again, would be a red flag). Hopefully the next thing won't involve paying these execs exorbitant salaries while giving them insanely expensive luxury cars for them to race around in -- leading to all sorts of other trouble. It's also worth noting that the original story on Xero mentioned that former Gizmondo CEO Carl Freer was helping Xero raise money in Los Angeles. Of course, perhaps part of the reason he was in LA, rather than the UK, was because his former lawyers back in Great Britain are suing him for nearly a million dollars in unpaid fees. Really adds credibility to the company, doesn't it?
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