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OSI Hosting.net: Deception in Texarkana

By Robin "roblimo" Miller on April 25, 2005 (8:00:00 AM)

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Jason Macer owns OSI Hosting.net, a hosting provider incorporated in Texas. Macer's claims in a NewsForge story last October about having "6,000 people signed up for dedicated servers" proved to be false. So did Macer's claims that he was going to open a huge facility and employ thousands of people in the chronically depressed city of Texarkana. But Macer still claims, despite evidence that his company has virtually no significant assets or income, and no employees other than himself, that by mid-May he is going to acquire three companies in Austin, Texas. He says he can't tell us where he's getting the money for these acquisitions because all his deals are covered by non-disclosure agreements (NDAs). We're just supposed to trust him.
Up to a point, Macer's interaction with the Texarkana business community parallels the plot of The Music Man, a popular Broadway musical in which a charming mountebank bewitches a small Iowa town. But Macer had no beautiful librarian to fall in love with him and reform him, as "Professor" Harold Hill had in the musical. And unlike the 1912-era residents of mythical River City, Iowa, modern-day Texarkanans had the Internet and Google, and used them to check up on Macer instead of taking him at face value.

And before you ask: No, Macer is not affiliated in any way with the Open Source Initiative (OSI) nor does he have permission from them to use their initials as part of his business's name.

How NewsForge got involved

After Macer was quoted in the NewsForge story mentioned above and readers added comments to it that cast doubt on some of his statements, reporter Jay Lyman wrote another story about Macer a week later. Here's a key quote from the second OSI Hosting story:
When asked about number of paying customers and number of servers for OSI Hosting, Macer said the company has 8,428 customers using a total of 12,175 servers on its dedicated hosting side and 380 customers of its collocation hosting. Adding that an additional 485,000 square feet of facility space is scheduled to open in December, Macer also indicated that OSI Hosting had been assembled and rolled out rapidly.

"Because OSI has been pulled together so quickly, and yes haphazardly, we were not able to get everything done on time," said Macer, who claims OSI is not reselling EV1, but is simply running its OSI Hosting sites on three servers with EV1, which again declined to comment.
At this point, we felt the two stories and the accompanying reader comments had cast enough doubt on this small-time operator that we were through with him. (And yes, I consider even negative reader comments to be vital additions to our stories.) But last month, we received this email from Jason Macer:
I request that the article entitle "How SCO Launched an Open Source Company," 
by Jay Lyman, be removed. 

Thank you.

Jason Macer
Chairman/CEO
OSI Hosting.net, INC
We refused to remove the story. A brief round of email correspondence with Macer followed, with this exchange as its culmination:
Robin, I do understand this, however Mr. Lyman, was not 
accurate in his reporting, and this could be considered 
as defamation of character.  You yourself got several 
"bad reviews in regards to the story."  

It would be beneficial to both parties to see it removed.

Jason Macer
Chairman/CEO
OSI Hosting.net, INC


-----Original Message-----
From: Robin 'Roblimo' Miller 
Sent: Tuesday, March 22, 2005 9:20 AM
To: Jason macer

Jason macer wrote:

>> We are still waiting on confirmation if you guys are 
>> going to remove the story entitle "How SCO Launched an 
>> Open Source Company," by Jay Lyman. This is a request, 
>> however we would like to see this handled as 
>> soon as possible

Dear Mr. Macer:

This got bucked up to me for a reply.

We take the "journalism as first rough draft of history" 
aspect of our job rather seriously, so we don't remove 
stories because someone wants to change the record of 
their or their company's past.

Robin 'Roblimo' Miller
Editor in Chief, OSTG

Favoring the "little guy"

I think part of the reason we (and others) were easier on Macer than we should have been is that we all like to see a young entrepreneur with a small company succeed. But in this case the discrepancies between what the young entrepreneur said and observable reality soon became too great to ignore. For example, Macer claimed to a number of people in Texarkana that Novell was backing him financially, while Novell people we contacted told us this was not true.

Macer explained this discrepancy away in a telephone interview by saying all agreements he had with Novell were under NDA.

He said the same when asked about his claimed relationship with IBM. And about virtually every other business relationship he had, including his lack of willingness (or ability) to tell us the names of any of his hosting clients. And as far as the fact that he'd claimed thousands of servers and customers as his own when it seemed he really only had a few colocated servers at EV1, he explained that away during our phone conversation by saying he would have had all those servers and customers if a software developer named Davey Shafik and several of Shafik's friends had completed work Macer paid them to do.

Shafik tells a different story. He and I talked by phone, but rather than look at quotes from that conversation, you might as well read Shafik's written description of his relationship with Macer. It's a four-part tale any young coder thinking about moving to a new town to work for an unknown person or company ought to check out. To sum it up, it appears Macer never paid Shafik or his fellow coders despite repeated promises to do so -- and despite claims that he had so many millions of dollars in hand that the amount owed to the coders could have been paid out of petty cash.

Macer says over and over that it's not his fault that he really didn't have the money he told Shafik he had, but it was the coders' fault, plus Macer claims well-known credit card processor Card Service International did him dirty and didn't pass customers' payments on to him they way they were supposed to.

None of the other 800 (or so) employees Macer claimed he had last year have come forward to say they weren't paid, which either means they were all paid or, more likely, that they never existed. One assumes that these hundreds of people would have had to work somewhere, presumably in the giant Dallas facility Macer claimed he owned -- but that a Dallas-area police officer found to be a locked-up, abandoned building.

Internet research plus old-fashioned detective work in Texarkana

Naturally, when Texarkana residents heard that this glorious-sounding company, OSI Hosting, was going to open a huge operation there and employ thousands of people, they didn't want to do anything that would derail this plan, especially after UPN-21 TV in nearby Shreveport ran this story on March 22, which was nearly identical to one that ran on KTBS the same day.

But Aaron Brand, business reporter for the Texarkana Gazette, was more skeptical than local TV reporters. He called chambers of commerce in Dallas, Austin, and other cities where OSI Hosting claimed to have facilities, and became suspicious when they hadn't heard of a business that claimed to have hundreds of employees and many millions of dollars in annual revenue. When he finally wrote about OSI Hosting, his story ran under the headline, "A grand illusion?" with a sub-head that said, "Computer plant plans creates sizzle, fizzle."

In Brand's story, which he wrote with help from Gazette coworkers Jodi Sheridan, Paige Milton, and Lisa Bose McDermott, Macer is quoted as saying he couldn't meet with local business leaders and city officials on Thursday, March 24, because he was speaking at "a computer-related conference in Utah." In several conversations with private individuals in Texarkana, Macer identified this conference as Novell's annual Brainshare event.

NewsForge staff reporter Joe Barr was reporting from Brainshare that week and didn't see Macer there. Novell conference organizers told Barr that Macer was not on their speakers list and hadn't signed up as an attendee. In other words, once again Macer's words did not reflect reality. And, after some of the pointed questions we asked Novell people about their relationship with Macer's company, they removed an OSI Hosting "partner" page from their Web site.

Several Texarkana business people emailed NewsForge to get our take on OSI Hosting. Better yet, Texarkana lawyer Tommy Johnson had his in-house investigator do some old-fashioned gumshoe work by calling a cop friend in Dallas, who went and physically looked at the building Macer claimed as his headquarters -- and found that it was mostly abandoned and chained up. And Johnson's legal assistant, Mona Rigdon, put us in contact with Steve Oglesby, a local gentleman in the computer business who had been following Macer's activities on his blog.

When Oglesby and I first talked, he worried that I would portray Texarkana as a town full of yokels who got taken in by a scammer. But what really happened is that the citizens of Texarkana -- aside from a few over-eager TV reporters -- did their due diligence and decided that Macer's plans were fantasy, not reality.

Even the local TV stations finally got around to doing some actual reporting on OSI. But Oglesby's blog and the Texarkana Gazette's Aaron Brand did the real reporting work here. This was their story, and it was their local concern, and they handled it exactly right.

NewsForge did a little checking too. We got a Dun and Bradstreet financial report on OSI Hosting that showed less information (and fewer assets) than you'd expect from a two-chair beauty salon. We also asked Dmitri Ereshenko, a Web hosting industry expert, to take a look at OSI Hosting and traceroute its servers. He determined that there was no way Macer's claims of thousands of customers and hundreds of employees could be true; that no matter what he said he was simply reselling space on a few boxes at EV1.

Why waste so much time on a small-time guy?

This story really isn't about Jason Macer. It's about using high-falutin' tech-speak and talk of Linux and open source and other hot-sounding technologies to get unsophisticated people excited to the point where they drop their natural caution and believe, against all odds, that some of the old dot-com magic can rub off on them.

Jason Macer himself was only important for a few moments, and only in Texarkana and nearby communities. But there are other people like him all over the world, and many of them are smoother and more sophisticated than Macer. Whether you're in Texas or Moscow or anywhere else, when someone makes you an offer that sounds too good to be true or promises more than he can deliver, a big yellow "caution" flag should go up in your mind.

The motives of the person making the unfillable promises don't matter; one might do it for personal gain, while another might do it because he wants to feel important. In either case, do a little basic research before getting enthusiastic. That extra step can save you from the financial pain Davey Shafik and his fellow developers suffered at Macer's hands, and can also save you from the roller-coaster ride of false hopes Macer put people in Texarkana through.

Of course, if we believe Macer, everything that's happened was someone else's fault, not his, and if we just wait a couple of weeks he'll have huge deals to announce that will make us all believe in him again. But we'll let him tell you more about that in his own words. The next page of this article is the transcript of a phone conversation I had with Macer on April 12, edited down to about two-thirds of its original length to eliminate repetition and extraneous conversation.

Next: A conversation with Jason Macer
 

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on OSI Hosting.net: Deception in Texarkana

Note: Comments are owned by the poster. We are not responsible for their content.

This is my brother Darl...

Posted by: Anonymous Coward on April 25, 2005 07:44 PM
This is my brother Darl, and my other brother Darl, or is he Jason?

Anyway, it sure sounds like Jason and Darl are related.

Does Jason own UNIX too? We will never know because I am sure there is an NDA... So, what is Darl's excuse for not showing the code today?

#

Train wreck, everyone look

Posted by: Anonymous Coward on April 25, 2005 09:10 PM
That's what this story is. Of course, if Mr. Macer hadn't pulled on the heart strings of Open Source, SCO vs. Linux, EV1 as SCO enabler then the tech community would have ignored all this. But, as it was, those with über Google-FU got interested in his story and it didn't pan out. Then he's false claims became a personal affront. Big mistake.

And then to target tiny Texarkana... where everyone knows everyone and everything going on (I have roots in Texarkana, though I don't live there). Very easy to get "found out" in that small a place.

I think the Open Source community and Texarkana are quite similar -- you can get kudos for being a happy neighbor but screw over someone and be marked for life.

The worst part for Mr. Macer was claiming to have so much built-out datacenter space. At the time his press release came out I was a contractor at one of the top hosting companies in the nation and a VP-level manager asked a group of us if we ever heard of OSIHosting or if we could explain how OSIHosting could have so much DC space overnight. See, people in the business actually read press releases. This manager's question set off a quick investigation that put the lie to OSIHosting's claims. The manager no longer cared about OSIHosting after that.

Then when Mr. Lyons' article came out I personally wrote the first message questioning Mr. Macer's claims showing the traceroute going to EV1, his named enemy for dealing with SCO.

Mr. Macer will probably learn from this to lie less grandiose so as not to appear on so many interested parties radars until the scheme sought has run its course. That's the sad part -- there's no indication that he's admitted to his lying nature or voluminous record of lies and deceptions but having been caught this time he'll adapt to better cover his tracks next time.

#

Company Phone Numbers

Posted by: Anonymous Coward on April 25, 2005 11:01 PM
Funny how the OSI Hosting Customer Service, Sales and Support phone numbers are all the same Sprint PCS Cell phone number.

(http://www.fonefinder.net)

Even in Texarkana I think that's a clue.

#

I can predict the future tor the right price

Posted by: Anonymous Coward on April 26, 2005 12:29 AM
Here's an example of my abilities: any multi-million dollar deals that are under non-disclosure in the story, deals to open hosting facilities that exceed 1,000 servers, will fall through or will run into "difficulties" when mid-May rolls around. And it will be someone else's fault.



Now, wait for mid-May, and when my predictions come true, I'll be available for predicting S&P futures closing prices ten years out. For a small fee of $1,000.00 for each date/closing price predicted. Payment in advance only.

#

Story just in time

Posted by: Anonymous Coward on April 26, 2005 01:10 AM
Together with a few other venture capitalists, we were going to invest $50,000,000.00 into OSI. One of the planned datacenters was going to be on one of the shores of Lake Texoma. Ironically, the deal was for groundbreaking in mid-May. Perhaps that is what he's talking about?



Now me and my investors need to figure out what to do with all this cash. Any other former check forgers out there need $50,000,000.00 with no questions asked? Anybody? Contact me <A HREF="http://64.233.187.104/search?q=cache:5jLu_5p1Dq4J:www.co.bowie.tx.us/dattorney.html+bowie+county+texarkana+district+attorney&hl=en&ie=UTF-8" title="64.233.187.104">here</a 64.233.187.104>, requesting cash, no questions asked. Be sure to include full contact info including daytime and night phone numbers, and home address and drivers license number. That's all we'll need, a bank check will be FedEx'd the same day we receive the info. Really.

#

NewsForge innovates again

Posted by: Anonymous Coward on April 26, 2005 01:17 AM
What a great little drama for a Monday morning. I think NewsForge has given the world the first true geek soap opera.

#

Various forward looking statements...

Posted by: Anonymous Coward on April 26, 2005 01:48 AM
He just forgot to add the standard marketing disclaimer.

#

Robin.

Posted by: Anonymous Coward on April 26, 2005 02:21 AM
I'd love for you to do a report on my company but, I have a few questions first.

Do I have to forge checks?
Do I have to rob a church?
Do I have to lie to the City of Tampa about opening a new facility?
Do I have to lie throughout the interview?

I'm not really willing to do all of this, will you require it?

#

Re:Robin.

Posted by: roblimo on April 26, 2005 05:41 AM
Actually, we run 3+ free/open source software success stories every week, mostly written by Tina Gasperson.

If your organization or company is using FOSS in a significant way, and you feel NewsForge readers can learn from your experience, please contact Tina or me. We far prefer writing about successes to writing about scams and failures.

- Robin

#

If this doesn't work out

Posted by: Anonymous Coward on April 26, 2005 03:03 AM
He could always get a job with Infinium

#

Re:If this doesn't work out

Posted by: Anonymous Coward on April 26, 2005 04:06 AM
Not to mention the fact that Jason Macer lives with his parents and they hadn't heard about this little venture called OSI Hosting until a few days before the news knocked on their door. We tried to go by there that night, but by the time we made it there every light in the house was off and the cops were making the block. Oh well, perhaps in mid-May we'll get another opportunity.

#

Great Beachfront Property...

Posted by: PrezKennedy on April 26, 2005 09:49 AM
...in Florida. Really cheap, willing to settle fast. Just send large unmarked bills to this address...


Oh, yeah... it pays to be skeptical.

#

Kudos to Rob...

Posted by: Anonymous Coward on April 26, 2005 11:34 AM
You had WAY more patience with that jerk than I would have.

#

Re:Kudos to Rob...

Posted by: Anonymous Coward on April 26, 2005 02:31 PM
I did some some research of this company OSI Hosting Jason and his company is a joke and I know people at Novell because I am a Novell Solution Parnter and This Jason is a joke just trying to make him self look bigger then he really is.

#

C'mon, y'all...

Posted by: gonzeaux on April 26, 2005 06:14 PM
... This is not nearly that big of a deal. People run businesses into the ground every day. The guy's probably completely full of it, but that's not unusual either, especially in Texas.

He'll find a way to declare bankruptcy after all of his business deals fall through and you'll never hear from him again.

#

C'mon, is right!

Posted by: Anonymous Coward on April 26, 2005 10:06 PM
The sad fact that 'people do it all the time' is no reason to put up with or excuse his fraud. He's not just running his business into the ground, he is trying to defraud entire communities. There is no reason that he shouldn't be vilified for his pathological lies.

#

Re:C'mon, y'all...

Posted by: Anonymous Coward on May 04, 2005 12:41 PM
Actually, this isn't the first time he's done this, and it won't be the last, unless someone gets enough on him to keep him from doing it again.

#

this is the newspaper club

Posted by: Anonymous Coward on April 26, 2005 06:56 PM
rule number 1 is never lie to a reporter
rule number 2 is never lie to a reporter

#

Re:this is the newspaper club

Posted by: Anonymous Coward on April 30, 2005 01:49 AM
I wonder how you can "run a business" in Dallas, Texas, when you still live with your folks two hours away in New Boston. I'm no genius by any means, but it just baffles me how the logistics of that play out.

#

What a coincidence

Posted by: Anonymous Coward on May 04, 2005 11:12 AM
I know this guy from IRC from about several years ago. This whole story has actually happened twice now believe it or not. I was a programmer who had also been requested to do work for Jason (called StormFury on EFnet). He got a good bit of people worked up over this Phoenix-Corp crap about satellite Internet, TV, and cellphone bundled like service thingy. It was a huge scam that blew up in his face and he moved on. My friend and I are the ones that hosted his phoenix corp page for some time on an EV1 server where he never payed us. That's how he found out about EV1 and I swear if it wasn't a year or so when I first heard the OSIHosting thing. I felt pretty bad about who he was going to scam next but when I saw this article my eyes about popped out of their sockets. This story describes Jason Macer EXACTLY! And I agree that the use of Linux and other buzz words are luring too many people into junk like this.

#

Re:What a coincidence

Posted by: Anonymous Coward on May 05, 2005 02:46 AM
In what city did it happen the first time?

#

Re:What a coincidence

Posted by: Anonymous Coward on May 11, 2005 09:37 AM
Dallas but he worked his magic over the Internet. He began hanging out on IRC in a channel I frequent and began talking to me about doing programming for his new startup company in Dallas. It was a bunch of lies and involved several people. I was younger and more naive then but I most of us caught him in the lies before anything went down. The company's website was www.ph-corp.com though it's down now, you may find a archive of it somewhere on the Internet.

#

Has anyone seen....

Posted by: Anonymous Coward on May 04, 2005 12:50 PM
Just a question: Has anyone actually seen any of the actual paperwork declaring OSI as an actual company? The incorporation paperwork filed with the state or anything?

This isn't Mr. Macer's first attempt to defraud a lot of people. And those of us who remember the first time remember that there really wasn't a company, even though "the paperwork was filed last week".

#

Re:Has anyone seen....

Posted by: Anonymous Coward on May 20, 2005 11:17 PM
This is second-hand, but I know several people who have verified that OSI incorporated early 2004. Not that mere incorporation means anything. My question now: it's past the end of April, and past mid-May. Austin acquisitions should be consummated by now. But the OSI website makes no mention of this, and is in fact becoming a cob-webby ghost town of a website. I'd love to see Roblimo write a final follow-up after contacting Jason. Or is that just kicking a dead horse?

#

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