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Monkey Business

The chart of the company's stock had always been a black line slithering along the ground like a snake. Almost no one noticed it, and those who did weren't tempted to pick it up. The line continued its dull progress, and it seemed that nothing extraordinary would ever happen to the company, when suddenly something did.

The transformation occurred on the last day of November. The black line shot out of its pattern like an oil gusher out of the earth. Speculators began getting rich, then some of them got poor, and the CEO got more telephone calls than the company line could handle.

"Hey," said Pat Greene, to those who got through, "we don't know what's going on."

"Absolute nuttiness," he called it, and though he comes across as a pretty sharp fellow, Greene was one of the few people not to connect the soaring stock price to a company news release issued that morning. The first sentence contained all the pertinent information: the name of the company (three times), its stock symbol and the news that it was open for business.

"PinkMonkey.com, Inc. (OTC BB:PMKY) ... announced today the launch of PinkMonkey.com, located at www.pinkmonkey.com. The new service will challenge well-established Cliffs Notes by providing literature notes, study guides and test preparation software to high school and college students via the Web."

Monkey Notes were of "impeccable quality." They were half the price of Cliffs Notes. Greene expressed faith his company would "quickly reach" a significant share of the $400-million study aids market. But it was the headline that grabbed people: "PinkMonkey.com Poised to Become the Amazon.com of the Educational Study Aid Market."

Investors went wild. And how important was it really that PinkMonkey.com had actually been selling its $3 books for more than a year by then, or that it had rarely sold more than ten in a day, or that it was about $2 million in debt? These were just details, and as a Cliffs Notes competitor, PinkMonkey.com did not deal in details.

Two days after the release, PinkMonkey's share price had risen 1700 percent. The company was worth a quarter of a billion dollars.

Many people wanted to get a look at Pat Greene's operation, but the first supplicants were told PinkMonkey.com was a "virtual organization" without need for physical space. When it became clear they would not go away, Greene gave company headquarters as One Liberty Plaza, Liberty, Texas.

At Liberty's town hall, the secretary asked over her shoulder, "Y'all ever heard of One Liberty Plaza?" The answer came back: "Nope." Other Libertians didn't know, either. An associate of Pat Greene's gave directions to a modest ranch house, across from a pasture, beneath two ancient live oaks. The sign in the driveway read, "Pat and Twinkle." Twinkle was the pretty blonde who looked up from her gardening. Pat was the fiftyish fellow at the door with the ponytail and the pipe.

One Liberty Plaza?
"Oh, that just sort of, heh heh heh, doesn't make us look so bad," he said. "Sounds better than a guy in his garage, heh heh heh."

The house smelled of new paint, and it was Pat's idea to give a tour. There were new hardwoods on the floor, new furniture in the dining room. Pat rang the gong on the table and pointed out the new glass sculpture "by a noted artist whose name I can't remember." The backyard had been newly landscaped, but the seven dogs preferred the air-conditioning. At the end of the house, a macaw named Butterfly shared a large den with many cockatiels. The big-screen TV was tuned to a cooking show; the birds were watching the chef prepare chicken Kiev.

"Welcome to the Monkey House," said Greene.
He led the way back to the other side of the house, to the old garage. It was now mission control. Greene sat down at a bank of computer equipment, beneath a bare light bulb on a string. He pulled the cord. The only light was the computer screen, which displayed the Yahoo! Finance Web site and the latest price of PinkMonkey stock. Greene, with pipe smoke swirling about his head, leaned back and said the company had come a long way since last we spoke, and "what kind of article are we going to do this time -- another slash and burn?"

He hadn't liked what I wrote a year and a half before, when PinkMonkey, like a young turkey, was first attempting to fly. It was true that he was a "flamboyant promoter," he said, and that he occasionally used colorful language -- but it wasn't fair of me to quote it. The board of directors convened afterward and directed Pat Greene never to speak with the media again. He ignored them. Who were they to muzzle him? This was his idea, and he was the CEO, and the fact was, his company could use any publicity at all, even from "a down in the trenches kind of tabloid" like the Houston Press.  

I told him I had come this time to chronicle his success. He drew deeply on his pipe and said reporters were always looking for something nefarious, but he had done nothing wrong. For speaking with me, he set two conditions: "No cuss words" and the inclusion of this quote: "No one should ever invest in a stock without doing good basic research. When I say what a stock may sell for, that has no basis in reality. You shouldn't buy off press releases."

This was Pat Greene's caveat emptor, his way of saying he cannot be trusted.

In November 1997 the smoke he blew was cigar, and Greene had sat on a bar stool, spinning a tale of himself as the last tycoon. He began his career in Houston as an accountant, analyzing corporate stocks and finance. But venture capitalism was more his speed. Greene liked to make deals. It was a game to him, "like Monopoly with real money."

He set up public companies, helped build parks and power plants, he said. "I cut my eye teeth on Apollo." Pat Greene was worldwide. His global conquests were interrupted at some point by a little receptionist named Rita. She was "one of these people who talks to rocks and trees and heals people and hangs out with Native Americans," he said. "A truly good person, not like me at all." Rita became "the twinkle" in his eye, and Greene left his wife to marry her.

And it was while he and Twink were traveling in Nepal (When? "Oh, son, I'd have to look it up in my records") that Greene sat down and ate some wild boar with the prime minister ("I forget his name") and told him he would arrange funding for that $11-billion dam.

It was "just something you do for friends," said Greene. "You make deals, and if you make a little money, all the better. But that's not business. Business is running a company. That's tough."

It was difficult to confirm most of what Greene said. Most of his acquaintances considered reporters "the scourge of the earth," and he wouldn't subject them to me.

He was, though, clearly a man of big ideas, and he said his colleagues had always tried to hold him back. When his investment firm was gobbled by a larger investment firm, Greene was the one they declined to swallow. He got out of Galleria traffic then and withdrew to Twink's hometown. He spent his days reading (20,000 words a minute), writing (science fiction), playing golf and dreaming up grand schemes. "One of my brilliant ideas to make a billion," he says now, chuckling, was the grand golf scheme. This was a computer system that would allow a man to practice his golf swing indoors. A wide-screen television would track the virtual ball down a virtual green. It seemed a certain winner, until Greene realized that few people had the ceilings or computer expertise for it.

There were other ventures. His name is familiar in Liberty only for the failed Pat Greene Ford, which he doesn't mention.

"You know, everything I did didn't turn out right, son." He started to say there were more bad deals than good, but he stopped himself.

A few years ago, according to custom, Greene was sitting in Wal-Mart, chewing his breakfast, when the idea struck for PinkMonkey. This was his biggest idea of all time. Ever alert to any shift in global forces and the money to be made there, Greene had decided a mother lode awaited on the Internet. The Internet could be publisher, stockroom and delivery man. An Internet bookstore, Greene realized, could hold more stock than the largest building. Its doors would never close. Its prices would never be inflated by middlemen.

Greene decided to open such a store. He decided to compete with Cliffs Notes, because Cliffs seemed to him books that people needed. PinkMonkey was a name everyone could remember and "almost any idiot could spell." By the time I met him, he had gone to India for cheap labor and had hired a corps of Indian writers. They were busily digesting and condensing English literature for American students, and an American high school teacher was trying to make sense of it all. PinkMonkey.com had an office on Richmond. About 25 Monkey Notes had been loaded onto the Web site. Monkey Notes were one-third the price of Cliffs, and as Greene saw it, Cliffs' stronghold in the bookstores would be threatened if the company began selling cheaper on the Web.  

So the money would soon start rolling in, and PinkMonkey.com would evolve, according to plan, into a cultural power. By 2010, there would be a PinkMonkey University. Before long, university campuses would cease to exist, and the inefficient tenured professor would become obsolete. What people knew and when they knew it would all be up to Pat Greene. He would be the minister of information.

He really liked the idea, but then his marvelous plan went marvelously awry. The problem was, he's an idea man, he explained. Details have never been his strong suit. His goal was to have about 300 Monkey Notes on-line by August 1998, but by June of that year, the selection still hovered around 25.

As a free sample, the company offered the Monkey Note for George Orwell's 1984, but few people bit. Cliffs Notes had become available on the Web (for a dollar more than the store price), and it was as though PinkMonkey didn't exist. Advertising was word-of-mouth. Monkey workers posted bulletins in chat rooms ("This hot site saved me" and "Pink monkey is ready to roll out a whole bunch of hot new features for the new school semester" and even "This site is filled with HOT, Hardcore study guide action"), but rumor of the company's service hardly spread like wildfire. According to unaudited reports he later issued, Greene had 15 employees and practically no income. Somehow, the company fell $2 million into debt. Bankruptcy looked imminent, but Greene wouldn't let go.

"Stay in business, that's the big thing," he said. "If you don't stay in business, you won't be there to reap the reward."

He believed his idea just needed time. Time required money, and Greene said he thought going public would be a good way to get money. The trick was, how can you sell something that has no value? It was a practical question, not an ethical one. Greene quickly found a way.

A "reverse merger" allowed Greene to avoid the legal fees and official scrutiny of registering his stock. He located a company that seemed to exist for exactly the purpose he had in mind, a Nevada corporation called North American Natural Resources. It had earned no revenues in three years but was traded over an exchange reserved for companies of negligible assets. In return for stock, the directors of North American agreed to absorb PinkMonkey and then to step aside. The sixth name the company carried became PinkMonkey.com. On June 26, 1998, PMKY first appeared on the OTC Bulletin Board, under the category "Industrial."

Someone bought 300 shares that day, but PinkMonkey stock seems to have suffered the same problem as the Web site: No one knew it was there.

Greene's bookstore did indeed sound like Amazon.com, and the comparison he would later make was not entirely off base.

Both Web sites originated in a garage. Both founders are tireless promoters. Amazon's CEO, Jeff Bezos, was described, in a recent New York Times story, as "one of the world's most ascendant capitalists, with apparently boundless ambitions." Greene, if he is not yet as prominent, can certainly match Bezos for ambition. Bezos, in turn, is familiar with failure. Amazon.com, whose value on the stock market compares with Texaco's, has never turned a profit.

The burden of being a virtual store is always having to prove that you exist. Storefronts are expensive and limiting, but without one the merchant is invisible. Advertising must stand in for brick and mortar, at a much higher rate. According to the Times, on-line retailers last year spent an average of $26 per sale on marketing, while physical rivals spent just $2.50.

The difference usually wipes out profits. Web site companies stay in business by marketing their potential. They owe their lives largely to a corps of computer users, enamored of computer stocks. These are the daytraders, whose investment strategy involves nothing more than staring at the computer screen, trying to buy low and rising, hoping to sell high and falling.

The wonder of the Web is the abundance of available information -- but daytraders want only a tip. Even more than other traders, they seek something for nothing, profit without knowledge or work. In other words, they're PinkMonkey's target customer.

The ventures they've bought into include eel farms, even exploration of near-earth asteroids.

"They only have themselves to blame," said Bob Green, analyst for the financial service Briefing.com. "Greed's usually punished in the long run. I don't have any sympathy for them at all."  

The momentum gathered behind Amazon.com that would push its stock to a $300 peak on December 16. PinkMonkey's stock remained unknown. In late November it was selling for about a dollar. And then the trumpets sounded.

"PinkMonkey.com Poised to Become the Amazon.com of the Educational Study Aid Market."

The release spoke of the "launch" of a "new service" that will "quickly reach" a "significant" market share. Buried in the text was the intimation that only the Web site's design was new, but either no one read that far or no one cared. PinkMonkey.com, only 8,700 shares of which traded during all the previous days of November, traded on the last day of the month more than 100,000 shares. The price tripled that day, and the next day it tripled again, and by the third day, PMKY was selling for $17 a share. More than a million shares were traded in those three days. Finally and truly, PinkMonkey was hot.

"Wow... wish I had some," wrote one Alan Boyd in a chat room.
"This is hilarious," wrote the daytrader named Lucky.
"I hope they keep going up today," wrote Tuan Ta.

The black line rose until the fourth day, when Greene chose to issue another press release. The industry is "intensely competitive," he said. Revenues have been "nominal." The company will probably incur "operating losses for the foreseeable future."

"Management of PinkMonkey.com is unaware of the reasons for the recent runup of the price of the company's common stock, as there have been no material recent developments."

And as hot as PinkMonkey had been, Greene's correction was really cold, and the price began falling like a bomb. People began running for the doors. And not everyone got out in time.

"I think it is going down to the pennies," wrote Tuan Ta again. "Should have found this out a couple days ago."

The stock settled in the $2 range, which for early investors was still a 100 percent return. To the suggestion that he had taken advantage of the daytraders, Greene said they should gamble in Vegas "because at least there you get a free drink." People suspected he had pulled the old pump and dump, hyping his stock and then selling it high. If that were established, he could be sued for return of the money, fined and banned from trading and potentially put in jail. But he wasn't worried.

"I know almost every rule," said Greene, "and we haven't broken a rule."
The Securities and Exchange Commission never confirms who it is investigating, but its resources are extremely limited. Pump and dump cases are notoriously difficult to prove. A securities lawyer who read Greene's news releases was impressed at how the second had legally squared the misimpressions of the first. He even wanted a copy of it. There was really no way to prove anything, he said, unless something showed up on the record of stock transactions.

When asked for that, Greene began squirming. He said a Form B4 would show the same thing, but there's actually no such form. He said it would probably take weeks to get the report from the transfer agent, and it would probably be very expensive. "I mean I think we're talking twenty or thirty thousand dollars, but if you want to pay that, go ahead."

The transfer agent charged $20 for copying. The time between request and receipt was one hour. The report showed again the kind of negotiating Greene has done to stay in business -- the 85,000 shares paid to a law firm, the 85,000 to a marketing specialist, and even 125 to the transfer agent. The directors of North American Natural Resources had been paid well, too. "Not that I know of" have they sold their stock, said Greene, but chief financial officer David Loev confirmed they had, at the peak of the frenzy.

Most names in the transfer list were hidden under group names. There was no proof that Greene had cashed in his stock, nor any that he hadn't. But Greene had certainly benefited.

He insisted the run on his stock was all a meaningless paper event -- "If that stock went up to 100 tomorrow, it would probably be more trouble than it's worth" -- but the stock had demonstrated its potential, and what it had done once, it might do again. On that basis, Greene sold a chunk of the company to private investors for 2.5 million real dollars. It was the stake he needed. He was back in the saddle again, on top of the world. The $50,000 renovation of his home began at once.

"We had to fix it up," he explained, "because we have a lot of people coming down here now, a lot of people from New York. And we had to make it nice."  

Greene occupied himself with "mergers and acquisitions" -- doing big business, just like the old days. He became close with his Web site developer, Houston InterWeb Design. President Harry White was made a member of the PinkMonkey board. After PinkMonkey's public debut, Houston InterWeb became interested in a similar coming out. The company claims to have created 40,000 Web sites, among them AT&T's, but AT&T has never heard of Houston InterWeb, and the company has disclosed life earnings of only $3,100. A shell of a company turned to a shell of a company: In exchange for 750,000 shares of stock, Greene found another loophole through which Houston InterWeb could be publicly traded.

"It's one of the things, being an old investment banker, that I did for my shareholders," Greene explained with a grin. "Let's just say it sells at $5 a share. That's a $4-million dividend. That ain't bad, from the garage."

Something was always happening at the Monkey House. On April 12, in a PinkMonkey chat room, someone under the name Bobsugar posted a message that read: "From what I'm hearing, a run to $17 may be low!" The user profile of Bobsugar showed that he shared several interests with Pat Greene: from PinkMonkey.com to golf to Wal-Mart. In one message, he mentioned he was in Texas. "Tomorrow will be a busy day on this thread!" Bobsugar wrote. In another chat room, he predicted, "This stock will be Huge on news tomorrow!"

Whirlybird wrote back: "Bob, where are you hearing about news? I have owned some of this for a while, and I just don't find much talk about it anymore."

"Hey, Bird," Bob replied, "the information is from a source I consider pretty reliable."

And then the next day, the news was that PinkMonkey.com had hired a management company to make it profitable. It would be operated out of a San Francisco office by a company called Anila Systems. Anila's founder had been on PinkMonkey's board of directors, but the release didn't mention that.

"I hope it's more than just this that is supposed to cause all the excitement today," wrote one investor. PinkMonkey's stock, which had climbed about 50 percent the day before, fell that far again, to about $2.50. News of solid ground beneath PMKY was not good news to the daytraders.

There was something else he wanted to show me in the garden shed. We walked back there, and Greene opened the door onto a pleasant redheaded woman seated at a table. His "Director of Visionary Sales," he said, having her visions, apparently. Greene closed the door gently.

It has to do with the diversification of PinkMonkey, he explained back in the garage. The Monkey is expanding. The latest subsidiary is Twink Inc., "a Web site with a spiritual, metaphysical ambience." Basically, something to meditate by, for a fee. Here, I'll show you, he said, and he reached up to pull the light cord. In the darkness, a great vortex appeared on the wall, and the garage was filled with the sounds of wind, of birds, of a woman breathing, "aaaahh."

And it looked like something that just might work. Certainly, it was easy to see how you could get caught in Pat Greene's spell.


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