Laser Photonics Corp: The Culmination of 25 Years of Fraud

Laser Photonics Corp is a new shell for a long-running fraud orchestrated by company insiders. The previous incarnation of the company was called Fonon Corp. (OTC: FNON). In that case, shareholders were defrauded through undisclosed related party transactions and were left with nothing. Fonon never filed a single audited financial statement and simply disappeared. The company's registration was later revoked by the SEC.

Initial Disclosure: After extensive research, we have taken a short position in shares of Laser Photonics Corp. (NASDAQ: LASE). This report represents our opinion and is not financial advice. Do your own due diligence and don't take financial advice from strangers on the internet. Please read our full disclaimer at the bottom of this report.

We believe LASE is worthless and will end like all of Nikitin’s previous ventures, with investors wiped out, and new lawsuits alleging fraud.

• Nikitin has a long history of financial fraud, including using shell companies, misleading investors, and leaving a trail of losses for investors, creditors, and customers.
• LASE is the reincarnation of a company called Fonon Corp. (OTC: FNON), which was founded and controlled by the same people.
• We uncovered a multimillion dollar fraud at Fonon, where the company paid a related party $5m in shares for a worthless solar system.
  • Fonon granted the related party $200k in shares when the company went public.
  • The related party purchased the solar farm in a bankruptcy auction for $160k.
  • The auction was held to sell off the assets of Nikitin’s previous company, BlueChip Energy, which went bankrupt after defrauding customers, lenders, and the US government.
  • Fonon then purchased the solar farm from the related party for $5m in Fonon shares.
• LASE is using decades-old technology recycled from previous failed ventures and is simply repackaging old assets into new companies in a scheme to defraud investors and enrich themselves.
• Despite the stock surging from $1 to $16, recent filings and insider activity indicate the company is worth far less than the current market price.
• A recent private placement valued shares at $2.00, 87% lower than the current stock price, a clear indication that the company knows the current share price is unsustainable.
• The company recently restated its financials, admitting that none of the last six reports can be relied upon — a major red flag for any public company.
• The Nikitins have been sued numerous times, with allegations including:
  • Stealing company funds
  • Lying to investors
  • Hiding assets in a complex web of shell companies
  • Defrauding government subsidy programs
  • Defrauding customers with counterfeit products
  • Selling assets which they did not own
  • Destroying evidence in a federal lawsuit
• Nikitin lives a lavish lifestyle on the proceeds of his frauds. He used stolen money to purchase a boat, a luxury car, and a second home in Florida.
• Nikitin and his wife have a long history of financial misdeeds and unpaid debts, including:
  • A federal tax lien on their home for $81,500 in unpaid taxes
  • A lien on their home for not paying the company that did construction work on their swimming pool
  • Bank of America garnished Dmitri Nikitin’s wages for unpaid debts
  • A tax collector’s warrant for failure to pay county property taxes
  • The Nikitins filed for bankruptcy to avoid paying over $10m in debts including millions of dollars in court judgments against them.
• In the Nikitins’ bankruptcy case, multiple creditors alleged that the Nikitins had hidden assets including some overseas.
• The Nikitins’ financial troubles are not the result of a single setback or rough patch. The couple has for decades lived beyond their means and sustained their lifestyle through unpaid debts and numerous frauds.
• The Nikitins have a pattern of ripping off lenders. On more than one occasion they have signed sale lease-back agreements, collected the cash, and stopped making payments within three months of signing the deals.

Introduction

Laser Photonics Corp (NASDAQ: LASE) is a recently public company, having IPO’d in September 2022. However, the company is not new, rather, it’s the latest incarnation of a company that has been ripping people off for over 25 years.

The company’s founder and controlling shareholder, Dmitri Nikitin, is a notorious fraudster with a long history of financial misdeeds. Recently, Laser Photonics restated its financials, admitting that none of its last six reports can be relied upon, raising a bright red flag for investors.

Despite the stock skyrocketing from $1.12 to $16 this year, the reality behind the scenes suggests that the company is worthless. The best way to understand what’s really happening at LASE is through a timeline that reveals this is the fourth iteration of a fraud orchestrated by Nikitin. Laser Photonics isn’t a new company with promising technology; it’s simply reusing decades-old assets and technology from prior failed ventures, repackaged under a new name. This recycled operation mirrors Nikitin’s previous scams, from Fonon Corporation to BlueChip Energy, following the same playbook of deceiving investors while leaving a trail of financial destruction.

Fraudulent Activity #1: Laser Company “PTG Precision Technology”

Overview

PTG Precision Technology, a laser manufacturer specializing in cutting glass and silicon, was founded in the late 1990s. The company initially attracted investor interest but quickly fell victim to fraudulent activity orchestrated by Dmitri Nikitin.

Key Events

May 2000: Advantage Capital Florida Partners invested $2 million into PTG.

December 2000: Dmitri Nikitin began looting company funds: using the money to finance a lavish lifestyle, including buying an expensive home, a beach house, a boat and a luxury vehicle to tow it. Even after being fired, Nikitin accessed company bank accounts and stole additional funds.

source: Orlando Business Journal; Dec 18, 2000

After Nikitin’s theft was discovered, he was embroiled in a dispute with PTG’s former general counsel, Robert Butterfield, with each accusing the other of embezzlement.

It was later discovered that Butterfield, who was hired by Nikitin to be the company’s in-house lawyer, was practicing law without a license. The Florida Bar obtained a court order barring him from practicing in the state, and Butterfield was also arrested for passing bad checks.

Nikitin was subsequently sued by investors for stealing company funds to finance his lavish lifestyle:

While Nikitin ran PTG, the company was also successfully sued by customers for fraud.

Nikitin was ultimately fired from PTG, the company he founded, for stealing company funds. The company accused him of committing various frauds over the span of years.

Fraudulent Activity #2: Solar Energy Company “BlueChip Energy LLC”

For his next venture, Nikitin founded BlueChip Energy LLC, a solar panel manufacturer. The company wasn’t entirely new, it was actually a pivot from Nikitin’s existing laser business, Laser Photonics LLC which made lasers for cutting glass and silicon.

Nikitin planned to use his laser technology to produce solar panels which would then be sold by BlueChip Energy and its subsidiaries. This shift exemplifies how Nikitin recycles his laser business to create seemingly new companies.

Demitri Nikitin, CEO and Founder of BlueChip Energy LLC.

source: Orlando Business Journal; April 2013

Significantly, Laser Photonics LLC, one of the companies named in the SunTrust lawsuit against BlueChip, shares the same company name and principals as the current public entity Laser Photonics Corp ($LASE). This is a pattern we’ll see again and again, where Nikitin uses a complex web of shell companies to shuffle assets and seek new investors. In each case, the new company is a reincarnation of the old, with the same people, the same technology, and often using the same business addresses.

Nikitin Defrauded Lender SunTrust

BlueChip Energy borrowed $5 million from SunTrust using an equipment lease agreement. A mere two and a half months after pocketing the lender’s money, the company defaulted on the loan. In court filings this was cited as a “badge of fraud”. It’s also a pattern that Nikitin repeated in a future venture.

BlueChip Energy was also accused of selling assets which it had already sold to SunTrust through the sale leaseback agreement. This was documented through affidavits filed in the case, showing clear evidence that BlueChip Energy was trying to sell assets it didn’t own.

The court ruled in favor of SunTrust, awarding a judgment of $4,478,440 against several of Nikitin’s companies, including Advanced Solar Photonics, LLC, BlueChip Power, LLC, BlueChip Energy, LLC, Laser Photonics, LLC, ICT Investments, LLC, and US Investing Corporation.

The Nikitin’s were the sole owners of both Laser Photonics and ICT investments. Both of these companies will later play an active role in the public companies Fonon and LASE.

Accused of Defrauding Customers and Government Subsidy Programs

BlueChip Energy faced significant cash flow problems and, as a result, compensated by producing inferior equipment for installation. One installer accused BlueChip of intentionally supplying substandard products as part of a scheme to over-collect on government refunds. This accusation was documented in new articles and it was cited in a lawsuit against the company.

Counterfeit UL Certification

On April 15, 2013, UL (Underwriters Laboratories) issued a warning that Advanced Solar Photonics (ASP), also known as BlueChip Energy LLC, had photovoltaic panels with counterfeit UL certification marks. These panels had not been evaluated for safety standards, which means they could not be connected to the power grid and would not qualify for government tax credits and subsidies.

BlueChip Energy was forced to recall the panels which broke the company financially and customers lost millions of dollars.

Fraudulent Activity #3: Laser Company “Fonon Corp”

After the collapse of BlueChip Energy, Nikitin needed to pay off his debts including the $4.5m judgment against him in the SunTrust lawsuit. To do this, he reformed his laser company under the name Fonon Corp and took it public via a reverse merger with Mabew Minerals Inc, an OTC-listed mining company.

In the merger, Fonon was valued at $10m and 98m shares of the company were issued as payment. Shares were issued to Nikitin, his associates, and to entities that Nikitin was indebted to from his prior failed venture.

Merged With Another of Nikitin’s Companies

Four months after the reverse merger, Fonon merged with another of Nikitin’s companies, Applied Photonics LLC. Through this transaction, Nikitin and his associates were issued millions of additional shares.

Merger Agreement between Fonon Corp and Applied Photonics, LLC; September 30, 2015

The merged company never reported any revenue, which suggests that Applied Photonics was a worthless shell company used to extract more value from shareholders.

$5m Fraud Through Undisclosed Related Party Transactions

In Nikitin’s most blatant fraud, Fonon paid $5 million for a worthless solar panel system. We believe this transaction was done to steal company funds and pay off Nikitin’s debts from his previous fraud.

The rooftop solar system was built by Nikitin’s previous company, BlueChip Energy, with solar panels bearing counterfeit UL certification marks. Because the panels have not been safety tested and certified, they cannot be connected to the grid. Further, insurance companies will not insure the system, and it’s likely that operating the panels would void the building’s insurance policy.

For these reasons, the solar system is worthless. In fact, when BlueChip Energy went bankrupt, the system, which was once valued at $7 million, was auctioned off and the building’s landlord bought it for $160,000.

source: Orlando Sentinel; August 6, 2021

Fonon then purchased the solar system from Rinehart Development and Investment Group (Rinehart) for $5 million. Rinehart is owned and controlled by the Fonon’s landlord, the same landlord who bought it at auction for $160,000.

Fonon also mysteriously paid Rinehart over $200,000 in shares in the reverse merger that took Fonon public. We suspect that Nikitin had Fonon buy the solar farm in the reverse merger and then he fraudulently sold it to the company again months later for $5 million.

source: Fonon Press Release; Sep 2015

There is also evidence that at one time, Nikitin himself owned the rooftop solar system through US Investing Corp aka US Investment Corp. This entity is wholly owned and controlled by Nikitin and on its website it claims to own the Rinehart solar system.

source: https://www.us-investmentcorp.com/portfolio/

Fonon Disappears Without Filing a Single Audited Financial Statement

Within a year of going public through a reverse merger, Fonon stopped filing financial reports. The company had filed three quarterly reports and not a single audited financial statement.

Having never reported any revenue, the company simply disappeared and investors were completely wiped out. The company was delisted from the OTC markets, and the SEC revoked its registration. This left investors with no recourse and marked another significant fraud orchestrated by Nikitin.

Fonon Was a Fraud from Inception

We believe that Nikitin took Fonon public with the express purpose of defrauding investors, to settle his adverse court judgments, and mounting personal debts. Had Nikitin failed to pay the judgments, the plaintiffs would have likely reported to the authorities, making it improbable for ICT Investments and Laser Photonics ($LASE) to exist today as public entities.

Another Leaseback Fraud, this time with Laser Equipment

Laser Photonics LLC entered into a Master Lease Agreement with SGEF, under which Laser Photonics would lease commercial laser equipment. However, by June 2009, Laser Photonics defaulted on the lease, failing to make payments as required.

Just like last time, the company took the lender’s money and stopped making payments within 3 months. Given Nikitin’s past actions, we believe he took the lender’s money with no intention of paying it back.

Fraudulent Activity #4: Laser Co #3 “Laser Photonics Corp (Nasdaq: LASE)”

For all intents and purposes, Laser Photonics is Fonon. The two use the same company names, have the same key insiders, and use the same addresses, phone numbers, and websites.

Attempts to Hide LASE’s Connections to Fonon

During Laser Photonics’ ($LASE) initial public registration, the company attempted to hide its connection to Fonon Corporation from the SEC. The SEC questioned the omission of Fonon, and the response downplayed the relevance of Fonon’s late filings, attributing it to a “strategic decision” by new management. This attempt to distance LASE from Fonon’s fraudulent history reinforces the notion that Laser Photonics is simply a rebranded continuation of Nikitin’s prior scams.

source: SEC correspondence; June 23, 2020

Nikitin Pays Himself Through Related Party Transactions

Nikitin used multiple related party transactions to extract value from LASE in exchange for generic IP with little or no value. Through these transactions, Nikitin extracted cash and millions of shares in the company.

source: LASE S-1; Sept. 13, 2024

Nikitin Controls LASE Through Fonon and ICT Investments

Nikitin controls LASE through his ownership of ICT Investments, LLC (ICT), Fonon Corporation, and Fonon Technologies.

ICT owns 36.2% of LASE, while Fonon owns 24.5%, making Nikitin the majority shareholder.

source: LASE S-1; Sept. 13, 2024

Conclusion

Dmitri Nikitin has had many ventures over the past 30 years. All have involved the same laser technology. All have been riddled with allegations of fraud. And all have led to losses for shareholders and lenders.

Nikitin’s history shows clearly that he is a serial fraudster with no regard for the law. He has committed fraud again and again. The only reason he’s not in prison, is that when he’s in trouble, he starts a new fraud to pay back those who threaten to expose him.

LASE is a continuation of Nikitin’s previous frauds. It is a shell that reuses the same products, technology, personnel, and addresses from his prior frauds. We believe LASE will end up like all of Nikitin’s previous ventures, with investors wiped out and new lawsuits exposing Nikitin’s never-ending fraud.

• Laser Photonics Corp
• LASE