What happened to Envoy Solutions?

Thank you for visiting envoysolutions.com. My name is Marc Davis. I originally founded Envoy Solutions, LLC to develop and market my Systems Management technology known as EnvoyCenter. In 2005, the LLC partners sold our business and product to Michael Scharaga, formerly of Cisco Systems. Within 6 months of acquiring Envoy Solutions, Mr. Scharaga defrauded the LLC partners, now employees and part owners of Envoy Inc, and forced the partners to leave the company they created. It’s a long story, and it is not over yet.

The Beginning

It started out with a simple idea – There must be a better way to manage Windows-based computers than large, expensive products like Microsoft SMS™ or IBM Tivoli™.

In 2002, a large portion of the IT staff was laid-off from INRANGE Technologies – myself among them. I had this idea and some money from my severance package, so I decided to spend the summer developing the idea into a marketable product. By September of 2002 I had finished the design of a management platform based on the ASP model, or as I called it: a Managed Service (think SalesForce). The product, EnvoyCenter, would live on the Internet and users would subscribe to the service. Being a service, there were no capital costs, no hardware to buy, and no software to license. I was now at a stage where I needed some help to get the company to the next level. I invited two long-time friends and colleagues from INRANGE, also impacted by the layoffs, to come in and look at the technology. After only a few days of discussions both enthusiastically came on board – and Envoy Solutions LLC was born.

Envoy’s first test was at Comdex Fall 2002 in Las Vegas. I used what money I had left to rent a 10x10 booth. We shipped down all the bits to demo the system – and produced some initial literature and promotional material. We didn’t know exactly what to expect. What we got was a lot of interest in the technology. We gathered a lot of feedback on what people were looking for – some of which was in the product already – some which we had on the drawing board – and some things that we never even thought of. While Comdex was not a sales success, it was a huge success in the information we gathered and to hear what customers were looking for.

Out of Comdex we learned one important thing which shaped everything that was to follow. The market was not ready for Systems Management as a service. We noticed some resistance to having systems and asset data that was living in a separate datacenter – even if it was gathered and stored in a secure manner. Several parties commented they would buy the product if it was something that could live in their data centers. So we took those comments and brainstormed several ideas. What we did not want to do was to create another ‘shrink-wrapped’ product that people would have to buy and license. In addition to our software, they would need hardware to install it on, and a database product to hold the data. All of these have substantial costs and complexity in managing. We knew we had to continue to differentiate ourselves – and the solution was an Appliance. Within 6 months we retooled EnvoyCenter into an easy-to-install Appliance – a 1U rack mount device that contained the application software, a database, and a set of management tools. The appliance was designed to be plug-n-play. Simply attach power and networking, connect a PC, and use a standard web browser to configure the device in a matter of minutes. We had found our niche. Sales were coming in.

Michael Scharaga

In April 2004 we were introduced to a Systems Engineer from Cisco Systems – Michael Scharaga. Michael met with us several times to discuss the EnvoyCenter technology and how it could work with managing CallManager phone systems for their customers. Cisco asked us to make some changes to our product to enhance the management of their product. After several successful demos – we met again with Michael and he expressed a separate interest in acquiring the Envoy intellectual property and our services in a new company he would form. We spent the rest of the year negotiating the sale of our company to Michael, which culminated in an agreement the night before Thanksgiving of 2004. Within two days I began to regret my decision. The deal started changing – things we agreed to simply weren’t possible. The upfront cash all but disappeared and the post-sale cash completely disappeared. Yet – as my partners pointed out – it was still the best and only deal on the table. We decided to continue on.

Envoy Solutions Inc.

We finally signed the official agreement of sale in May of 2005 – after months of legal wrangling and more broken promises. Yet I tried to remain hopeful that good things were coming. We moved into our first real office in June and we had a couple of deals in the pipeline that did turn into early sales. But by September, things started to go south. The CFO left under questionable circumstances; vendors starting complaining about invoices not being paid; the bills started to mount. Then payroll checks started to bounce. Michael insisted that the problems were related to technical issues with our payroll company. He insisted the company was solvent. By mid October, it was clear that we were being misled. Payroll checks continued to bounce. Michael was in the office less and less. It was time for answers.

The partners and I began to investigate Michael and the state of the company. Examinations of emails and company records revealed that Michael had misrepresented the state of the company and his sources of funding. It also revealed secret invoices where he was directing customers to pay him directly for work done by Envoy employees. Emails and documents also revealed that the CFO was warning Michael of these financial problems and our unsustainable burn rate as early as August. By the time Michael began seeking outside help in the form of venture capital, the company was too far gone. In January 2006 I was able to secure $20,000 in emergency funding from various personal sources. This kept us afloat while we desperately tried to complete the VC funding process with several parties. I also put up over $10,000 personally to fund the company’s healthcare payments so all of the employees would keep their coverage. All of these monies were to be repaid by Michael or the company as soon as funds were available.

In March, the partners discovered that Michael had decided unilaterally to begin looking for funding for a new venture – called “Envision Communications”. This new company would use all of the Envoy assets and intellectual property – but be made up of a new management team – one in which the original LLC partners would not be a part of. This was done to avoid payments required under the Asset Purchase Agreement. On discovering this, the partners and I confronted Michael on March 17, 2006. The meeting was brief and resulted in the partners being forced to leave Envoy Solutions.

A month later, the partners met again separately with Mr. Scharaga and his ‘HR Representative’ Tom Mains, to supposedly work out our separation issues. By this time, Mr. Scharaga had realized I had accessed his corporate email and private documents (It should be noted that all employees signed an agreement that email was not private and subject to review by the company; and I had proper access and authority has a shareholder to review such material). It was very clear that Michael was extremely worried at what I may have read. I was threatened with legal action by both individuals during the course of the meeting. By the end of the meeting, an agreement was made to repay the money I advanced the company, money I was owed in salary, and money unpaid from terms in the asset purchase agreement. Michael failed to honor this agreement with me and in June of 2006 I was forced to commence legal actions against him, Envoy Solutions, and Envision Communications to recover my losses.

The Lawsuit

Michael failed to respond to the complaint and I was initially awarded a default judgment. After receiving notice of the judgment, Mr. Scharaga retained counsel and filed a counter-complaint against me and had the judgment vacated. Discovery proceeded through the fall of 2006 and was constantly delayed by the defense failing to respond to motions and requiring me to obtain orders to compel cooperation with the proceedings. In January 2007 we finally were able to bring Mr. Scharaga in for a deposition. It was during the first few minutes of the deposition that I, and Michael’s own counsel, learned that Mr. Scharaga had filed for Chapter 13 bankruptcy in September of 2006. We immediately ended the deposition and proceeded to wage a battle in the bankruptcy court to show that Mr. Scharaga had purposefully not included me as a creditor and committed fraud by failing to disclose income he was taking out of Envoy Solutions.

Ultimately, Mr. Scharaga’s bankruptcy was revoked due to failure to pay into the plan and for a fraudulent application.
In the intervening time, Mr. Scharaga continued to operate Envoy Solutions in a limited capacity. Monies from consulting were taken out of the company by Mr. Scharaga to pay for personal expenses and not declared as income on his taxes.

Customers began calling me directly to find out what was going on and why they could not get help from Envoy Solutions. Unfortunately there was little I could do under the circumstances.

I eventually was able to depose Mr. Scharaga and learned of even more fraud and outright theft of money from what was my company. The deposition revealed personal trips, paid for with company money, which Mr. Scharaga took while supposedly visiting customers and potential investors. On these trips he was frequently accompanied by Ms. Kathy Tatom of Wilmington DE, a woman who he has been having an affair with for the past 10 years.

The deposition revealed that Envision Communications became an entity known as IP Telecommunications Inc, which led us to Dynamic Strategies Inc – a company with which Mr. Scharaga has done business with in the past. Both companies run out of the same office complex in Cranbury, NJ.

In April of 2008, I was finally granted a judgment for $208,869.44. I have thus far been unsuccessful in collecting on this judgment.

Today

Envoy Solutions Inc is currently being run out of a cube that Mr. Scharaga is renting from Michael DeSimone of The DeSimone Group in Cherry Hill, NJ. It has no known working phone number.

The Envoy Servers have since been removed from the Internet – stranding existing customers without support, critical updates, and hot-fixes.

Mr. Scharaga allowed the envoysolutions.com domain name to expire, allowing me to re-acquire it at my own expense.

Lessons Learned

The single biggest lesson I learned from this experience is to do proper due diligence on whoever you decide to do business with. There were clear signs of something wrong early on and I went against my gut feeling and placed an inappropriate amount of trust in an individual that clearly does not know the meaning of the word.

To The Envoy Customers

I regret that Envoy Inc and Mr. Scharaga did not live up to their obligations. If and when the intellectual property comes back under my control I am willing to work with you to resolve any technical issues you may be having with the product.

To Michael Scharaga

How much more do you want this to cost you? Funny thing is that all I originally wanted was the $10K I advanced the company for the healthcare payments. If you had honored your agreement I was going to cut my losses and be done with you. You could have avoided all of this. Now, I can sit on this judgment for years – let you get comfortable again – then come back and freeze your accounts, garnish your wages, and generally make your life a living hell.

References

Superior Court of New Jersey, Law Division
Camden County
Docket No. L-925-08
Marc Davis v. Envoy Solutions Inc, and Michael Scharaga

If you want to reach Envoy Solutions Inc or Michael Scharaga – here is a list of known addresses:

Envoy Solutions Inc
c/o The DeSimone Group
6 Esterbrook Lane
Cherry Hill, NJ 08003

Dynamic Strategies, Inc
110 Melrich Road
Unit 1
Cranbury, NJ 08512
888-777-9733

IP Telecommunications, Inc
110 Melrich Road
Suite 5
Cranbury, NJ 08512
866-420-4210

Michael Scharaga
24 Wakefield Court
Medford, NJ 08055
609-651-1891
609-760-1423

smaineframe@yahoo.com

Questions? Comments? Feel free to email WhatHappened@envoysolutions.com

Product/company names referenced in this article are the property of their respective owners.