Xybernaut Securities Remission

This page provides the answers to the most frequently asked questions.

1.                  What was the case about?  

On August 13, 2010, the United States Government obtained a forfeiture of funds as a result of the criminal prosecution of Zev Saltsman and other principals of Xybernaut Corporation in the United States District Court for the Eastern District of New York (Case Number CR-07-641).   These funds will be returned to Xybernaut investors through a process called “remission.” 

 

2.                  What is remission?

Remission is a process whereby assets forfeited to the United States are returned to the victims of the crime underlying the forfeiture.  Authority to grant remission rests with the Chief of the Asset Forfeiture and Money Laundering Section of the United States Department of Justice.  The federal regulations governing remission appear in the Code of Federal Regulations, Chapter 28, Part 9 (2010).

 

3.                  How was my recognized loss determined?

Total Recognized Loss amount was calculated based on the following criteria:

All purchases and sales of Xybernaut common stock were matched in chronological order on a First-In, First-Out (“FIFO”) basis. A purchase or sale was deemed to have occurred on the “contract” or “trade” date, as opposed to the “settlement” or “payment” date. Commissions, brokerage fees, and similar expenses are not included in the Recognized Loss.

For shares of Xybernaut common stock purchased on or before May 13, 2005 the Recognized Loss per share is:  

                1) If sold prior to May 13, 2005, the difference between the purchase price and the sales price.

                2) If retained at the close of trading on May 13, 2005, the purchase price only.

An Investor will be eligible to receive a distribution only if the Investor had a net loss. All gains and losses (as calculated above) were combined and netted against each other. To the extent an Investor had a net gain from all transactions in Xybernaut securities during the relevant period, the Recognized Loss amount is zero. The recognized loss amount does not include losses on short sales.

Investors who received a prior distribution from the In Re Xybernaut Securities Fraud private securities litigation in the United States District Court for the Eastern District of Virginia had their Recognized Loss amount in the present distribution reduced by the amount of the prior distribution.

This methodology is different to that used in the 2008 case, and covers all shares purchased before May 13, 2005, rather than May 10, 2002 through April 8, 2005 for the 2008 case which is why approved loss amounts may differ from the previous determinations. The formula for calculating Total Recognized Loss is found in the Notice that was mailed to investors with the Petition form, and is also available on this website.

 

4.             How many valid claims were approved by the DOJ?  What was the total loss approved for those claims? 

There were 12,804 valid petitions in the DOJ case representing $136,538,145.61 in pecuniary losses. Petition forms were sent to a larger group of investors because of the difference in the class period. Some investors who didn’t respond in the 2008 case did respond in the 2012 case.

 

5.                  Claims Administration Fees 

The forfeited funds returned by the DOJ through the Xybernaut Securities remission process will be reduced by the cost of the remission claims review and distribution and de minimus government expenses. No funds will be withheld for the cost of Government employees, investigators and attorneys handling the Xybernaut matter. Claims administration fees are billed according to a competitively bid contract with the DOJ that Analytics/BMC was awarded on the basis of best value to the government. The total claims review and distribution costs deducted for the remission are estimated to be approximately $350,000 upon completion of the distribution.