Tuesday, October 10, 2006

Allen's "Worthless" Stock Options

George Allen has said that the stock options he failed to report in his discloure forms were, in fact, worthless. Facts, however, are one thing Allen is very short on these days. From Bloomberg:

In March 2000, Allen held 60,000 options when Xybernaut shares closed at an all-time high of $23.75. That would have made the options worth $1.1 million, less commissions and fees, had Allen exercised them.

At that time, Allen could have paid $5.47 and $1.56 respectively for two groups of options, sold them and pocketed the difference. He was awarded another 50,000 options in October 2000.

Greg Walden, an attorney at Patton Boggs LLP in Washington who represents Allen, said the options with Xybernaut expired 90 days after Allen left the board in December 2000.

Walden said Allen never exercised the options. They became worthless as the share price fell. The company went bankrupt in 2005.

A filing by Allen, which Xybernaut forwarded to the SEC in February 2001, shows that he had the right to exercise all the options at the end of 2000. The options were to begin to expire in 2008. Allen also reported owning the options on his 2002 and 2003 Senate financial disclosures, long after Walden said they had expired.

Now, you might be thinking that Allen isn't corrupt, just dumb. (By the way, he isn't that bright) What you need to know about Xybernaut is that Allen was actively pimping the company for new contracts with the Army while he was holding. Allen knew that if he could get the Army to buy enough of Xybernaut's junk, his options would be worth far more than the $1.1 million that they topped out at. Why wouldn't he, nobody anywhere wastes more money than the Pentagon.

Also, thumbs up to Bloomberg for refuting the lies of Allen's attorney in the next paragraph after he states them.

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