April 25, 2005

OSI Hosting.net: Deception in Texarkana

Author: Robin "roblimo" Miller

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

(initial chit-chat deleted)

-----

Jason:....We'll give you our full story after we wrap up three acquisitions we're in the middle of.

Roblimo: Three what?

Jason: Three acquisitions we're in the middle of. And we anticipate to do that the end of this month, by the second week of May at the latest.

Roblimo: Okay. Middle of May, latest. So what about Davey Shafik and his friends... (Davey) says you owe them money.

Jason: Well, they never finished the work that they started for me.

Roblimo: Okay.

Jason: Yeah, him and three others -- originally it was him and one other -- started, and they were supposed to do a big, huge... well, it wasn't big, huge, but originally, they were brought in to finish the transaction system. And they said, "We could have it done Thursday," and, "We could have it done and ready by Monday." Sunday night came around and they weren't ready. They said, "We need a little more time." And then the girl said, "It'd really be even better if we could have another week and redo the whole thing from scratch." I said okay. And so Amy and Davey went, started redoing the whole thing from scratch. It came down to Thursday and they said, "You know, we're not just gonna be ready tomorrow. We need a couple of more days."

-----

...and then it went on for about a month and a half like that and every week they needed more time. And the third, fourth week you know, we..."That's it, okay. We'll give you some more time," but I wanted the admin panel. They said, "Oh, that'll be no problem." (So the job) expanded, they agreed, and when it finally went online it didn't have the admin panel, it didn't have the control panel, no way to check anything. About half of what was done, what needed to be done -- and you know, one of the guys had gone over to England during the middle of the stint for about a week, back where he was from. Amy had some problems with her mom; Mom had had surgery and wasn't doing too good. And they brought in a kid named Travis to help and he did some work, and just never got taken care of like it was supposed to.

Roblimo: Okay. And yet you have promised to pay them several times, is that correct or not?

Jason: No. If they finish, and they still have yet to finish and do what they're supposed to do.

-----

Roblimo: Okay. Now, you've said to us and to others that you have 800 employees.

Jason: Oh, that's being misspoken.

Roblimo: It's being misspoken.

Jason: Yeah, hold on just a second.

Roblimo: Sure. Yeah, sure.

Jason: Back in October when that thing should've gone live, and we ended up having problems with Card Service International, our merchant. By the end of October we would've had about 800 employees, yes.

Roblimo: Okay.

Jason: Yeah.

Roblimo: You are announcing now and still putting out this stuff as fact, however, to people. You are also saying that you have this 101,000-square foot Dallas facility.

Jason: Yes, we do have a letter of intent on that as well. We're negotiating purchase on that.

Roblimo: But if I run a D&B on you... I see about as much information as I see from a two-chair beauty parlor.

Jason: Well, we were just incorporated last year. We haven't even announced... last year we had no income. Therefore, we had nothing to announce. Nothing to file taxes, no earnings to report. Our first earnings report will go on the end of this quarter, which ends in June.

Roblimo: Okay. But nobody can find any bank accounts or anything that have any amount of money in them.

Jason: Well, that would be because that's private and confidential information and we're not a public company. We're not required to divulge that information.

Roblimo: That's correct. What I'm saying is that as a credit risk, in fact even Novell... I talked to them. I've been told by some guys in Texarkana and some lawyers there that you were telling them you had backing from Novell.

Jason: Yes.

Roblimo: Novell denies this.

Jason: Well, Novell's gonna deny anything because the people that you're talking to have broken a non-disclosure form.

Roblimo: Okay.

Jason: And Novell does not talk about any dealings with anybody; any of their contracts, period. And they never have and never will. And we're actually filing a lawsuit against Richard Reynolds (a Texarkana Realtor) and Jordan (couldn't make out the name).

Roblimo: Okay.

Jason: Because they've broken non-disclosure quite blatantly and quite bluntly.

Roblimo: Well, I have an on-the-record statement from Novell's director of public relations that they have no investment in your company or intend to.

Jason: Well, that would be Hal Thayer. And you know, like I said, I don't know Hal that much, I don't deal with him. But Novell doesn't usually talk, won't talk about things like that.

Roblimo: Well, I have a lot of contacts within Novell. You know, don't forget, I've been covering this stuff for a long time.

Jason: No, I know. But you know, you have to understand that, say, you call Novell and they start talking about us and them. Well then, they're breaking non-disclosure. The same thing with Richard Reynolds. You call him and start talking to him about you and me. Granted, he'd probably talk to you about it but he's breaking a non-disclosure. Novell's one of the only companies that I know, one of the only companies out of a long... start from IBM, IBM's very stringent with their non-disclosure issues as well, that will not say anything. You call and you ask them about... you ask them before they announced their SUSE deal: "Hey, are you all buying SUSE?" They're gonna say, "No."

Roblimo: Oh, I knew about it long before then.

Jason: Oh, I mean most of us did. But what I'm saying is that they know what a non-disclosure is. These people out here in Texarkana, now they've realized that they've opened themselves up to a lawsuit and that's all I'm gonna say on the matter. And I was saying earlier, if you will wait until our transaction's complete...

Roblimo: But they're not telling me "nothing," they're just flat out denying. They're saying no. That's not the same as...

Jason: I don't deal with Hal Thayer, I deal with Ron Hovsepian, who's the president of the company.

So you might talk to Hal, but as I said, I don't deal with him. And to my understanding, Hal's not engaged in the workings and the dealings of the company. He's with Prescott.

-----

Jason: But anyway, as I was stating, let me finish. If you will wait until that May time period, all that will become public.

Roblimo: Okay.

Jason: I mean, these people in Texarkana who've been calling you are extremely upset with me because I did not go to the city council. The reason I didn't go to the city council is because they would want to engage a state or tax incentives, enterprise incentives, things like that. They can't because we're already engaged with the city of Austin in the state of Texas and another deal in the city of Austin.

Roblimo: Neither Aaron Brand nor I have been able to find any of that.

Jason: Aaron Brand?

Roblimo: Right. He's the business reporter on the Texarkana Gazette.

Jason: Well, I know who he is. An extremely hard-working gentleman as well.

Roblimo: He is, he's really overworked.

Jason: Well, they probably need...I think he's the only business...

Roblimo: He's the business reporter, the business editor and half the byline for that paper. He's the hardest working guy on it.

Jason: Oh yeah. You're talking about a small-time community and you know, like the same thing. You've got a non-disclosure with the state of Texas and the city of Austin. They're not gonna go publicly parading around.

Roblimo: Well, they actually have to because Texas has sunshine laws. They cannot legally sign a non-disclosure.

Jason: Well, the city of Austin can and does.

Roblimo: No, it cannot.

Jason: Yes, it can.

Roblimo: It... okay.

Jason: I'm saying... I mean, I could send you a copy of my non-disclosure if you want me to.

Roblimo: Would you please.

Jason: Yes. But as I've said, I'm asking you to wait until mid-May when all this goes public.

Roblimo: Well, see, right now you've got a whole lot of people who are making these statements, they're going around. And I'm telling you that under Texas state law they cannot sign a non-disclosure.

Jason: The city can, the state of Texas cannot.

Roblimo: No city or county within Texas can either.

Jason: Actually, you know what, you might be right. Let me see, I believe it's the economic development corps. Let me find it.

-----

Jason: Yeah, this is with the economic development group. So you're right, it's not the city. It would be the economic development group.

Roblimo: Which is part of what?

Jason: Well, it's part of the city, but it operates independent from it.

Roblimo: It doesn't work like that under Texas state law. Just like in Florida, very similar laws. If you have any dealings with any government agency or any municipality, county or other government body within the state of Texas, it is by definition public record. I'm just letting you know that. So if Joe Barr (a NewsForge staffer who lives in Austin) goes up to the Austin economic development authority or whatever it is, and he asks for information about their dealings with you, they have to give it to him.

Jason: That's why all I'm saying is that we signed a non-disclosure before we would transfer financial information, which means they can't talk about it.

Roblimo: Well, then they broke the law. We'll jump them for it.

Jason: Okay, but as I said, I think you're the one they emailed here, what, two months ago, about removing that deal. And you didn't seem to want to, but I'm asking you to wait until May, the second week of May, to publish anything.

-----

Roblimo: What about when you put out that big PR thing up in Texarkana about coming up with checks and there was no check?

Jason: Coming up at what?

Roblimo: You know, when you were gonna have your big groundbreaking?

Jason: Yeah, we cancelled that. We actually pulled out of Texarkana altogether.

Roblimo: Why so?

Jason: They didn't want it. The community does, the chamber didn't. As I was saying earlier, the chamber of commerce was extremely unhappy. They made statements. The real estate guy (Richard Reynolds) broke non-disclosures. And when he broke that non-disclosure, we were let off our contract. And I'm not gonna go into an area where someone is basically personally attacking me.

Roblimo: Well, I don't think I'm personally attacking you, Jason. You told them you'd show up with a check and you didn't show up with a check.

Jason: No, but FedEx did. And when I found... I mean, the thing is that Richard Reynolds broke a non-disclosure. I mean he even took a copy of that check and started passing it around. Now you're telling me that that's what a normal person does, who signed a non-disclosure? He takes a check from a client that's confidential and he starts handing it out and showing it to people?

Roblimo: So everybody who deals with you at all has a non-disclosure agreement.

Jason: Yes.

Roblimo: Okay. Now what about the accusations I'm hearing that you had a little ($6000) problem with a church credit card?

Jason: Well, I'm gonna say, you know, proof. I mean and you know it's up to them. I haven't seen anything about it, haven't heard anything about it and where it's gonna be.

Roblimo: Okay. And another thing is, you gave these guys an address in Dallas, where this headquarters was. You know that somebody actually had a buddy who was a Dallas cop go over there and look over at it. You know that, or do you?

Jason: Yeah, I know. That would be, I think, 4025 Midway Road (in Carrollton, Texas) and that's like I said the one that we're in the middle of negotiating a contract purchase. It's owned by Billingsley Company.

-----

Roblimo: By the way, who won the design contest for your showroom?

Jason: Nobody did.

Roblimo: Nobody?

Jason: 'Cause we had nobody turn in designs.

Roblimo: ???

Jason: No, they didn't. I mean, as I stated earlier, and maybe you're gonna have to go back and listen to your tape, the transaction system which was never finished when it went online; we had problems with our merchant provider. It was about six and a half million dollars over 72 hours for co-location services that came in. The merchant provider held those transactions because we were considered a high-risk company; the transactions are all online using checking accounts from four different companies. Mostly four different companies, these are small, for dedicated servers. And that's what we already used to actually get up and get running and to start leasing these buildings in Dallas and Austin. But when they held those funds and then we ended up finding out they were gonna hold those funds for six months, they put a stop on all those plans.

-----

Roblimo: How many servers do you have running right now? I'm going to traceroute you again. The most anybody's been able to find is 17, and they're all at EV1.

Jason: Right now we don't have but three running.

Roblimo: Alright. So, how with three servers -- the income from three servers -- how are you going to make these acquisitions?

Jason: Well, as I said, I cannot talk about it.

Roblimo: You realize that all of this is starting to sound just a hair flaky, right?

Jason: Well, you know, like I said, I abide by my non-disclosures. And when you're involved with contracts or somebody says, "You can't talk about your transaction until it's complete," you can't talk about a transaction until it's complete.

Roblimo: Okay.

Jason: Now to my understanding, there are no SEC laws regarding private companies which state that if I'm involved with anybody in money transactions or purchase transactions, I have to disclose it publicly.

Roblimo: Okay.

Jason: Am I right?

Roblimo: Well, if you make transactions with public bodies, you certainly do.

Jason: Right. But I never said that we're making transactions with public bodies.

Roblimo: You just told me, Austin.

Jason: The city of Austin, we're working on economic development aid: tax incentives and tax abatements.

Roblimo: Uh-huh.

Jason: I told you that.

Roblimo: Right. But I'm... okay, well. Like I said, we'll jump them for breaking Texas law. Right?

Jason: If you want to. They've signed their non-disclosure.

Roblimo: Right.

Jason: Actually, the chamber of commerce signed the non-disclosure. Just found it.

Roblimo: Chamber of commerce. Okay, so we're going from a city agency to the chamber of commerce.

Jason: Well, yeah. In dealing with the city, their economic development corps, you have to deal with the chamber of commerce. The chamber of commerce is who requests all your financial information, they're the ones who sign the non-disclosure.

Roblimo: Okay. Alright, but I assume now... can we assume that you are not going to bring variously reported numbers of jobs to Texarkana?

Jason: No, no. I mean, why would you want to do something like that when... and here's what's bad is when we first reported it, we said three to five years potentially; ten to twelve thousand jobs. And of course, everybody completely disregarded the three to five years and said ten to twelve thousand jobs.

Roblimo: Jason, the thing is, nobody seems to be able to find evidence anywhere that you have the money to do any of this.

Jason: Well, that's the glory of being a private company. You don't have to go public with anything until it's happened.

Roblimo: Okay. So far, can you give me one reason why anybody should believe you?

Jason: No. Why are people so interested in it then?

Roblimo: I don't know. I guess they're just... nobody knows how to take you, Jason. Like I said, there's just nothing, anything to back you that looks like substance.

Jason: Well, as I said, you know, all people have to do is to wait until mid-May.

Roblimo: So now we're waiting until mid-May.

Jason: Yeah.

Roblimo: Okay.

Jason: I mean, I would love to have broken ground, back almost two weeks ago now. But you know, when you've got a chamber president saying something to the news that's basically downcasting you and a real estate agent acting the way he does, breaking non-disclosure and saying what he does to the news media; now, these are supposed to be the leaders of the city. Why would...

Roblimo: These are guys who say that you were supposed to show up with money -- you know, FedEx, whatever -- they say they never saw the money. You were supposed to come up with a deposit and you simply did not.

Jason: Well, like I said, you know, Richard Reynolds signed a non-disclosure.

-----

Jason: Well, things did not go like they were supposed to last year. And there's nothing that I could do about that.

Roblimo: You didn't say "will have." You said OSI's Dallas facility had 101,000 square feet, all doing dedicated services.

Jason: Well, at that time it did and then within a month I think, our (garble) expired and because we couldn't get that money it really just killed the momentum of things.

Roblimo: But apparently, you never actually had the space or the servers.

Jason: Yes. You know, like I said, we were getting ready to put them all in... we had timed it, and see, what's bad is IBM had already built the servers and ended up having to sell the servers.

Roblimo: Right.

Jason: They were able to sell all the extra, excess servers, which is good for them. They've actually had a boost in their, I think that was in the third quarter of last year. But you know, like I said, we couldn't help what happened with our merchant provider. And I wish I could. I wish we would've waited.

Roblimo: But with... with only a few servers, there's just no way that you could've generated the cash flow to buy those.

Jason: What we first started selling was co-location space.

Roblimo: Right.

Jason: And we didn't have to provide servers for that. They provided their own servers for that.

Roblimo: Who was "they?"

Jason: Whoever the customers were.

Roblimo: And you put them where?

Jason: Well, they would've been put in Austin and in Dallas.

Roblimo: Would have been put, but they were never there.

Jason: No, they weren't because the money got held by Card Service International and we ended up refunding their money after it became apparent that CSI would not be delivering that money to us.

Roblimo: Well, those are the kinds of transactions that do show on a Dun and Bradstreet credit report.

Jason: Not when you return that money. And you have to file with places like D&B who do show those credit reportings, you have to file bank statements with them. They don't go out, they're not automatically given. You have to file with them... I think usually you can file with them every quarter.

Roblimo: Well, actually, no. They have reporting; I know, I've owned my own company. As a matter of fact, I am a manager for a public company now, when you think about it.

Jason: Well, you're a public company. Not private.

Roblimo: But remember that this public company deals with private companies all day long. So we run credit checks, using Dun & Bradstreet, and they show us transaction records.

Jason: And you have to show those transactions to them. I mean, they can't...

Roblimo: No, they have records, reports from creditors and banks.

Jason: If the transaction's reversed, we credited their money. You can't let a company hold money for six months just because they think you're high-risk, when it's spelled out in the contract that they understood and they knew that you were gonna have these types of transactions. You just can't do it. You know, it's extremely difficult to get a merchant ID for something that large.

Roblimo: I've never found it hard to get a merchant ID. I had no trouble with it at all.

Jason: For $20 million a month?

Roblimo: I didn't have $20 million a month coming in.

Jason: Well, that's what I' m saying.

Roblimo: Did you have $20 million a month coming in?

Jason: In 72 hours, we had $6 million worth of checks. Excuse me, $6 million dollars, the majority of it was over four companies for dedicated co-location space. That was within 72 hours.

Roblimo: Who were they?

Jason: I cannot say. It's funny, everybody asks that. But you know, what the chamber of commerce of Texarkana can't understand is that in a hosting industry you can't just blurt out your customers because it's disaster recovery space, extremely confidential, you know. In our terms of service agreement, we're not gonna talk about our customers, we don't tell third parties about our customers; it's quiet and confidential.

Roblimo: So you can't...

Jason: I mean, would you go to a company who says that they're secure and then they turn on and start telling you about their... "Oh, by the way, this person is our account," and you didn't want them to? You didn't give them permission to?

Roblimo: Well, what we're hearing, what I'm hearing over and over again here, Jason, is that there's nothing that you can say has any backing, everything's under non-disclosure, you can't even mention your customers...

Jason: And you can't blame these people for wanting non-disclosures. I mean, before I do any business with anybody, I have non-disclosures. I start from the basic initial meetings, then we instigate a non-disclosure before we move forward at all. I mean, it's rather corporate-wise stupid not to.

Roblimo: So you're saying any private company, all private companies should have no information on file, should not be able to give new...

Jason: No, I'm saying contracts and... all I'm saying is that contracts and deals they might have in the works. They shouldn't be publicly available because that could... let's say for instance, Microsoft was working with SCO to put out a Windows-like version of Linux. But I didn't want anybody to know about it...

Roblimo: I would know about it.

Jason: ...until it was ready.

Roblimo: I would know about it in three weeks, if that long.

Jason: Well, yes. I'm giving you a hypothetical situation, okay? What would happen to SCO in those instances is that if they didn't sign a non-disclosure, they'd go, "Oh, hey, we're doing this!" And all the businesses they deal with will pretty much will kill them and people will hate them even more because now they're openly in cahoots with Microsoft. Whereas if you have a non-disclosure, you say, "Okay, we're gonna do everything. But not a word's gonna be said until we say you can say it. We have to agree upon when and what to say." And then, say, you find out about it from somebody who works there. That means that that person who works there has broken that contract because they are an employee of SCO or of Microsoft, and you know there's pretty good legal ramifications that can cover that, depending on what is marked in the non-disclosure contract. And you can have lots of non-disclosure contracts, they could just be for proprietary information, they could be for all information.

Roblimo: That's nice. These acquisitions you're going to make, all this... the thing is, how do you prove to somebody that you have credit? That you have the ability to pay?

Jason: It's called cash money.

Roblimo: Okay. You have cash, how much cash do you have?

Jason: I'm not gonna be talking about that.

Roblimo: You're not going to tell us?

Jason: And like I said, I'm waiting... I don't have to. You know, wait until May. You'll find out, it's gonna come out.

Roblimo: Do you handle all this money personally?

Jason: Not personally.

Roblimo: Four years ago... you got off probation, what, last year for check forgery, right?

Jason: I'm sorry. I don't see where that has any bearing on this conversation.

Roblimo: Well, I mean when you start talking about these million-dollar deals, it tends to have a bearing.

Jason: Well, in my opinion, it does not.

Roblimo: Okay.

Jason: And that's very unprofessional, to even bring it up in a conversation.

Roblimo: Why is it unprofessional? I'm talking about things that can be proved, you're talking about things that you say you don't have to talk about and that can't be proved.

Jason: Well, and as again I told you. I said, wait until May.

Roblimo: And what will happen in May?

Jason: In May, the three transactions will become public.

Roblimo: And they will be with whom?

Jason: I cannot tell you. That's why I said you have to wait until May.

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Roblimo: Jason, what are you going to get out of this? What are you trying to do here?

Jason: What I'm trying to do is put a very good hosting and wireless Internet service company together.

Roblimo: Okay.

Jason: Focusing on managed services, not so much hosting. We're focusing on the managed services and wireless Internet. That's what we're doing.

Roblimo: And you have three servers right now. When you tell people where you are, and they go there and they find empty buildings, Jason, they don't believe you anymore.

Jason: Like I said, when that information was listed on the site, it said, "Coming Soon."

Roblimo: No it didn't. I have screen shots, I printed it all out, too.

Jason: Well, I'm glad you did. And if it wasn't, it has been changed to properly represent that. But then again, all that stuff that was supposed to be able to allow us to do things quickly and easily was never finished.

Roblimo: Okay.

Jason: And that rolls back to our deal with the friendly developers.

Roblimo: With who?

Jason: Friendly web developers who were supposed to take a week and ended up taking a month and a half.

Roblimo: So, if the friendly web developers had come through, you would have millions of dollars.

Jason: No. It really relied heavily on Card Service International, that is the problem.

Roblimo: Okay.

Jason: I mean, there were problems with the system; I think one of three transactions did not go through in testing. I was told it was fixed, I never saw proof that it got fixed. I'm sure it did.

Roblimo: Just out of curiosity, why didn't you just run CPanel like everybody else including the hosting service I deal with personally?

Jason: We do use CPanel for the back end of the server, but you're talking about the web maintenance of users and the account. You can't run that through C-Panel.

Roblimo: No, but there's a whole lot of stock packages out there. A lot of them are free software, too.

Jason: Not to do what we want it to do, though. Eventually, the system was gonna be able to when somebody bought the space, it would send out a message and say, "Hey, we've got--," say, it was gonna be somebody who wanted co-location space in Austin. Or they wanted Miami, so they bought a rack in Miami, a dedicated rack in Miami. It'd go ahead and send a message to the NOC (Network Operations Center) in Miami. It'd say, "Hey, this is reserved," it's gonna put a hold on it, it'd take it out of a database of available sites. It'd collect and charge them so they took a two-year contract. It'd charge them whatever they wanted for it. If they were gonna have managed services for it, it could be for a managed services account. Assign people to it, assign staff to it and then go ahead and give them login information, and then we could go in. Our system was supposed to be integrated with it, a PHP live system was supposed to be integrated with it, they never were. And that was considered a live system. And when it went live, all it could do was process transactions. And it did, rejected one of three (transactions) until it was fixed two or three days later.

And I'm not saying that Davey and Amy aren't great developers. I mean, the ideas are wonderful there. And the work that Amy did was just magnificent work. When Davey went to London, it really just kinda fell off. He said, "Oh, I'm working as hard as I can," but I think even Amy and Travis agreed that he wasn't, and we didn't think he should have been working while he was over there. He should've just waited until he got back. And there were several times I said to myself, and Amy, myself and Travis that Davey kinda wasn't holding up his end. They were both supposed to be co-leads and I think Davey even finally said, "Hey, I don't want to be lead, I just can't do as much as Amy can."

Roblimo: Let me ask you a question, not about them at all. From here, it sounds like a beautiful set of dreams that all kinds of people are questioning, even Steve Oglesby, you know, who...

Jason: I have no idea who that guy is. I mean, and see, like I said, it's almost like it's a personal attack against me. It's "Hey, let's see how much we can dig up on Jason because," for whatever.

Roblimo: Well, I think they believe they've been lied to by you.

Jason: You know, out of the hundreds of phone calls and e-mails that we got, only five percent of them were negative like that. Not even that. I mean, I'm probably saying that maybe two percent of them were negative. I mean, we got letters of support from smaller businesses in the community and I'd say almost every one of them, even the people in the community I talked to said, "Don't worry about the chamber, don't worry about what they're saying. We know that it's a corrupt chamber." You've got people who want to keep wages down in the area and they're gonna do whatever it takes to do it.

Roblimo: So they don't want you there and they're upset...

Jason: You're talking... okay. First, you've got to understand how big Texarkana is. Texarkana's about 60,000 people.

Roblimo: I know.

Jason: Okay, for the past ten years it's been poised, ready to grow, but the chamber hasn't done anything to help it. Okay, Polaroid, 15 years ago or 20 years ago was going to bring a manufacturing plant here and bring 2,000 jobs. They worked with the chamber of commerce for two or three months; chamber wouldn't do anything to help them. They ended up putting it in Longview, and they've been running in Longview since. 2,000 jobs, then the chamber pissed the company off and the company left. And went somewhere else.

Roblimo: Well, why would this guy hate you so much? This guy Oglesby.

Jason: I don't know. I've never met the man, Steve Oglesby. I don't know.

Roblimo: Why do all these people have it in for you?

Jason: I was not the perfect kid in high school. I mean, were any of us ever perfect?

Roblimo: I was absolutely imperfect.

Jason: And I think it's 95 percent because I'm so young. And people don't think a young kid can do anything. But then, let's remember here, 25 or 30 years ago, how old was Bill Gates or Steve Jobs when they started their companies?

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Roblimo: So anyway, you've got me nicely confused. You make big claims, you can't back any of them, everybody in the world is under NDA. You can't talk about your customers, you don't have to talk about anything. But the reality is, Jason, I'm having a heck of a lot of trouble believing you, you know that?

Jason: And that's why I said, wait until May.

Roblimo: And what will happen in May? You were telling people that you were speaking at BrainShare, you know that?

Jason: I never said I was speaking at BrainShare, I said I was attending.

Roblimo: Well, (several people) in Texarkana seem to think that you told them that.

Jason: No, I said that I was going to attend the keynote speech at BrainShare in Utah, which I did not get to go. I got to Dallas and was held up.

Roblimo: I know you weren't at BrainShare.

Jason: No. I was... I got to Dallas, and I was held up.

Roblimo: Obviously. I know a whole lot of people who were there.

Jason: I know, and I looked forward to it. I mean, it would've been my first BrainShare and I was really looking forward to it.

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Roblimo: Could you tell me right now where I could find one piece of positive information about you? Not a wait-until?

Jason: I can't, no. That's what I said. You just didn't... everyone (garble) all aspects of Texarkana. I'm not gonna deal with it. I'm going into Austin, going into Dallas, and we're going to complete our transactions.

Roblimo: What transactions are you going to complete?

Jason: Two hosting companies and one manufacturing company.

Roblimo: You're buying them? You are building them?

Jason: Buying them.

Roblimo: You are buying them.

Jason: Buying two hosting companies and one server manufacturing company.

Roblimo: Okay. And you're buying them with cash money that you already have in hand?

Jason: It's a deal that we already have in hand. And like I said, it will be announced in May.

Roblimo: Money you have in hand or a deal you already have in hand?

Jason: A deal we already have in hand for the transactions.

Roblimo: Is that deal with Novell?

Jason: No.

Roblimo: I know. And of course you can't say with whom, can you?

Jason: No. Even if it was Novell, I wouldn't. I mean, you can say names and I'd say no because I can't say.

Roblimo: It's not IBM, I know that. Trust me.

Jason: I wouldn't want it to be IBM because we'll be competitors with IBM when we buy the manufacturing company.

Roblimo: Ah-hah. Well.

Jason: And it's a small shop, it'll be used only to manufacture our own servers. We had eventually hoped -- like with Texarkana -- we were actually gonna take it, roll it out and make it bigger.

Roblimo: Well, Jason, it's sort of sad that you can't give me a single on-the-record positive, just more wait-untils. But you've been doing a lot of wait-untils. And when it comes to the day and nothing seems to happen, it seems to be a pattern. Whether it's a design prize or groundbreaking...

Jason: Well, with April I'm... as far as April and the groundbreaking, excuse me, it was March 31 I believe we were supposed to groundbreak.

Roblimo: Right.

Jason: When they broke the contract, I no longer could break ground on it.

Roblimo: Well, they said they broke the contract because you didn't have the money.

Jason: No, what happened... I will tell you... It was FedExed out to them Monday evening, which would have been the 28th.

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Jason: Like I was saying, it was FedExed out on Monday evening. I don't think it actually was put in one of those drop boxes at the bottom of the building. I had at four o'clock, Rich Reynolds called and said, actually the chamber president called and said, "Why I'm making this statement against you. What you do is you give me a copy of that check where I can see it." And I said, "I won't give it to you, but I will give it to Richard since he is held in confidentiality." He says, "Well, if Richard says he has it, then that will be fine." And I got Richard a copy of the check. I then watched the six o'clock news where he had, basically, berated me. Like I said, all this stuff from my past came out, which had no bearing on it, and everybody jumped on the bandwagon. He broke non-disclosure and he started passing it out to everybody: the chamber of commerce, reporters, I think, got hold of the check as well. And after I saw that six o'clock conference, we called FedEx and we actually had the package stopped. I then closed that account with Century Bank the following day. The last check could not be drawn on, period.

Roblimo: Seems to me like nobody can deal with you without a non-disclosure agreement.

Jason: No. I mean, I won't have it.

Roblimo: So there can be no positive information about you out there. I want one person who's not related to you to come forward and tell me, "You know, I've been using this guy's service. I've been dealing with him and it was a pleasant and happy experience where I got my money's worth." Just one.

Jason: No, because I'm not gonna ask... and here's a fact: I'm not gonna ask my customers to stand up for me. And like I said, if you will wait until May, when we have these transactions all wrapped up and they go public, you'll be able to ask the people we bought the companies from. Well, that might be too much to ask.

Roblimo: Well, I'm not not gonna make any bets on this with you, because I don't think you have the money to pay even a small bet, but I might make some small side wagers with other people if I can find anybody willing to bet on you.

Jason: Well, that's fine. As far as I'm concerned, you can print what you want to. And you know, they did in Texarkana. They did whatever they wanted to and they overlooked the fact that, hey, if there's the possibility of something happening, why kill it before it gets started?

Roblimo: Well, I didn't see that. You know, the nearest I can tell, there was no possibility because you didn't have any money.

Jason: Well, we did. And we had money lined up, actually, to build that place up there. We still do. We're gonna put that somewhere else, we're gonna put that new data center somewhere else. Not there.

Roblimo: But that money's hidden.

Jason: No, it's not hidden. But we're a private company. We don't have to publicly show that money. The only place we have to divulge that money to is the IRS.

Roblimo: Why in the world would anybody give you business credit? To buy or lease a building, the way that you... that you say you don't have to tell them that you have three cents?

Jason: No. Now, see, when you go to somebody and you get a lease on the building, what's the first thing you do? You sign a non-disclosure between the building owners and yourself. Then you trade...

Roblimo: That's not true. The first thing they do is they do a credit check.

Jason: Well, but they have to get that information from you. And how do they get that? They have to have your financial statements and several other things. And how do they get that? That's right, they sign a non-disclosure.

Roblimo: So basically, nobody can check up on you. Your statements all have to be taken at face value.

Jason: Well, as I said, as far as when May comes around, I won't have to worry about that anymore.

Roblimo: You won't have to worry about it anymore. Why? Is somebody filing criminal charges against you?

Jason: No. I mean, where have I done anything wrong?

Roblimo: I'm not sure.

Jason: Please point it out to me. I haven't done anything wrong.

Roblimo: Well, when you hire people and don't pay them, this is frowned upon. You say they didn't do the work.

Jason: Well, you know, when they sign on to do work and they say, "We're gonna have it completed by xx date," and they fail to do it, then that's a clear bad thing?

Roblimo: What about your promises to pay Davey and what's-her-name a week before Christmas? It didn't happen.

Jason: Well, they never finished it. And when you say, "Hey, we're gonna do something, we're gonna finish it," and they never do, what do you do?

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Roblimo: So why do you really think the whole world seems to be against you, not finishing things and screwing up? I mean, nobody's life is perfect. Mine sure isn't. But how come nobody else has problems like yours?

Jason: Oh no. You know, the thing is, why listen to everything everybody prints and everybody says? I mean, it's not gonna help, it's not gonna hurt my appearance to everybody else. But who's it going to benefit? And the one person that I can guarantee you to spread a bunch of stuff is the gentleman I had business dealings with here last year. You know, signed in to do something with it, he... it was very little money, considering the size of the project. He was a friend and after two weeks his site was up and running. After a month, I still hadn't gotten anything, any feedback from him. After two months, I still hadn't gotten any feedback from him, but he'd already been advertising the Web site on the radio, already been using it, and at the end of the third month, after I'd only gotten a very small partial payment from him, he stopped returning phone calls, period. And I gave him (a few days) to pay-- "Either you get with me or I'm cutting your web site off on Thursday." And I gave him until Friday. No e-mail, no return call, nothing. And we shut the web site off. Then he e-mailed me this -- oh, I'd say two-page, two-and-a-half-page letter that basically said, "Worst service I've ever had, dadadada-this, dadadada-that, substandard this, dadada-this." And this coming from a guy whose step-uncle had raised him when he was a kid and he works for his uncle building houses.

If the job required eight two-by-fours, he'd order 16. Exchange the rest and get the cash. And so, and they said, you know, for church dealings, we just need to let this slide under the table. And I said, "Fine." And then people started asking me, "Hey, what do you think about this guy?" And I said, "Don't do anything with him unless you get a signed contract." Because, see, that's what put me off doing anything without signing contracts with anybody. You know, when he did this and, you know, so anytime anybody says what you said, hey, make sure you get a signed contract with him, and then one night he calls and threatens my life.

Roblimo: Right.

Jason: Because I've been telling people not to do anything with him until they get a signed contract. And this person, finally, you know, he has tons of houses in town and he's having to sell them because he's financially strapped and he's now the second in command of the church.

Roblimo: Okay.

Jason: I mean, you know, so...

Roblimo: Is this the church where you had the $6,000 credit card problem?

Jason: Yeah, I guess. But you know, he's... so now you tell me. He hates me, his wife has threatened my life in the church, he's threatened my life over the phone. I tried to be nice to them on several occasions, tried to apologize for me saying all these things to the other people and they said, "Well, we have nothing for you." As far as church is concerned, that's really, you know, I probably shouldn't have done the business with them, just because it was church. But I didn't know. And I think church is one of the most hypocritical places there is.

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Roblimo: Jason, have you ever thought about changing the people you deal with? Or moving?

Jason: Oh yeah, I have. Dallas is just, you know.

Roblimo: Obviously, Dallas and Texarkana and New Boston, all these people -- you say, unjustifiably -- just seem to dislike you so much and to have all of these warnings going about honesty and dealing with you. I think you need to get out of town there, you know.

Jason: Well, it's not so much Dallas. It's New Boston, Texarkana. And you have to realize what type of community that is.

Roblimo: I've been to Texarkana. And I live in Bradenton, Florida, which is no bigger.

Jason: Yeah, but you know. New Boston, five thousand people in town, everybody knows everybody. And you're either part of the group or you're not.

Roblimo: Well, an awful lot of people there seem to -- I'm sure unjustly -- think that you're a chronic liar. You know what I mean? Why the heck would they bother me about it?

Jason: Well, I don't know. I mean...

Roblimo: Did you ever think when you started telling all these people that you had these servers and you had that many employees and all that, that they would get on Google on the Internet and check you out?

Jason: Nothing on Google showed up until here with this Texarkana deal. There's very little.

Roblimo: Well, there's your press releases, which seem to conflict with reality.

Jason: Well, had the deal with Card Service International gone differently, it would've been different.

Roblimo: It would have been. But you weren't putting out that you would have them but that you already did.

Jason: Oh, we already had... yeah, we had letters of intent on the places and everything. And they were awaiting our first deposits. And that was all held back because after 72 hours of transactions, they cut us off. They simply just stopped, you know. Yeah, at first they said it was three days and then it went to two weeks and then, finally, after you got to somebody who was a supervisor, he said, "Oh, well. We note here that there was some unusual activity and we consider you a high-risk company as far as transaction basis and we're putting a hold on your account."

(At this point Macer started repeating himself again, so I decided to end the interview.)

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Note: soon after this interview took place, a link to Dun & Bradstreet appeared on OSI Hosting's Web site. Several of the press releases mentioned have been removed, too. Google cache and the Internet Archive are your friends in this kind of situation -- and it's also wise to save and print out copies of Web pages that contain information the site's owner might later change out of embarrassment -- or for any other reason.

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