COLUMN: Cursed by techno babble; The abyss called the Internet

By Ric Swats

River Cities Business Journal

Emerging technology has been a blessing and curse.

For those of us who don't keep up with it, it is a curse. For those who try to keep up with it, well, there's a curse there too - you can't keep up with it.

The boons are things we all benefit from even if we don't know it. Stores don't run out of things as often because the inventories are computerized. We carry cell phones everywhere. Then there is the incredible volume of information at your fingertips via the Internet that was once the exclusive purvey of the public library.

The Internet has become a terrific resource for business. It allows people to market their products globally without leaving their office.

But, the Internet has a dark side when it comes to business. No, I'm not talking about porn or smut.

The Internet can work against you just as easily as it can work for you.

John and Brad Hoover, the brothers who run The Hoover Companies, have found that out the hard way over the past few months.

The Hoovers' primary source of funding is private investors. Because of the downward turn the housing market took in 2006 they have not been able to return investment money at the rate they anticipated or with the dollar appreciation they anticipated.

That naturally concerned some investors, but what could not be anticipated is what would happen as a result.

Someone started an Internet “blog” HOOVERFRAUD.blogspot.com.

The blog attacks the Hoovers on a number of fronts and makes numerous accusations.

The problem is the person who posted the blog is anonymous. So are the people who post comments to the blog.

The accusations vary widely but are primarily focused on fraud or a Ponzi scheme, accompanied with “give me my money.”

While it is true the Hoovers are unable to meet some of their payments because of a slow market, they are offering options that will give higher yields if the investors are willing to wait for the market to rebound.

“We have 219 creditors (including John and Brad Hoover),” Brad Hoover said. “John is meeting with every one of the 219. He has 16 left to talk to. Three people have said they had to talk to other people before they could answer. One person said ‘No, I don't want to do that.'”

Of 219 investors 197 have agreed to the new plan, Hoover said.

That leaves 20 possible people to account for the hundreds of derogatory comment posts on the blog.

I posted to the blog asking for someone to come forward and give me a name I could verify with an accusation. A week later I posted the same request and stating we were nearing deadline.

I finally got an e-mail from someone from the blog.

The problem is he would not confirm his identity. I called a cell phone number he left numerous times over a period of several days and never got an answer or a return call.

He sent another e-mail after I answered his first one. That is where another problem came up.

The two e-mails were inconsistent and some statements countered others.

With no way to speak to the man directly I can't use anything from the e-mails.

So, after nearly three weeks of investigating claims and accusations made on the blog, I have nothing.

The Hoovers have something though, a very damaged reputation.

“I was a police officer for 37 1/2 years and I thought I'd seen everything. But, I don't know what to do about this,” Brad Hoover said. “This has severely hurt our business. One meeting that the blog talks about we had three Phase 1 homeowners who were scared to death.

“Some investors have chosen not to invest because they are uncertain because of the blog.”

Interestingly, the blog talks about filing a class action lawsuit against the Hoovers. It asks to “join a large group of investors” in filing the suit.

It takes three people to file a class action lawsuit. If it has any veracity some lawyer somewhere will take it on for a percentage.

It could be done with no cost to the clients, except the percentage the lawyer keeps.

No lawsuit has been filed.

It talks about investigations by a host of law enforcement agencies. I called a number of them and was told “there is no investigation.”

“We'd welcome an investigation,” Brad Hoover said. “We want to put this behind us.”

The big question on the blog is “where did the money ($38 million in investor capital) go?”

“The money we have invested. $60 million in the golf course, the restaurant, the business plaza and infrastructure,” Brad Hoover said. “There's infrastructure to support 1,600 homes.”

Infrastructure includes electric lines and terminals, gas lines, water lines, sewer lines, phone lines, paving and roads and more.

“That's where it's gone,” Brad Hoover said. “We had a 100-year flood. Our golf course was designed to withstand a 100-year flood, but it was still a catastrophic event. A lot had to be redone.”

Overriding the question of whether The Hoover Companies are unable to pay returns to their investors according to schedule is the issue of the blog itself.

Perhaps there isn't anything illegal about it. Perhaps it is protected by the same First Amendment that protects journalists.

But, the second item on the blog is a list of John and Brad Hoovers work, home and cell phone numbers.

That crosses the line in terms of ethics. Maybe not legal, but certainly unethical.

What makes the whole thing so frustrating for the Hoovers is the bloggers refuse to identify themselves. If they would come to the bargaining table and talk they could be reasoned with, but they clearly don't want to resolve their issues.

“I think the only thing we can do is post a blog of our own,” Brad Hoover said.

That is also what makes it dangerous for every business in the world today.

Anyone, can say anything and do so without taking any responsibility for their words, because they can hide behind a veil of secrecy on the Internet.

“You, but for the grace of God, can be the next person this happens to,” Brad Hoover said.

The Hoovers have started a blog of their own and it addresses every issue on the HOOVERFRAUD blog.

It can be found on the Internet at www.hoover-blog.com.