Eventually, the music stopped when the markets stopped trading in the GENI shares, and the brokerage firms that had lent money to Ultimate Holdings were left holding the bag of mostly worthless stocks.

FORBES: Khashoggi: Margin Scheme Leads Personal Liability For True Beneficial Owner Under Alter Ego Theory; Undercapitalization and Domination

Meanwhile, he and his son were looting Ultimate Holdings by taking distributions from a company which had no real assets, since the GENI stock was effectively valueless but the margin loans against the stock were still outstanding.

FORBES: Khashoggi: Margin Scheme Leads Personal Liability For True Beneficial Owner Under Alter Ego Theory; Undercapitalization and Domination

Finally, the court held that Ultimate Holdings was used to perpetrate a wrong on its creditors, since it was little more than a part of the scheme to inflate the GENI stock, cash it out while at an artificially high value, and let the losses go to the brokerage firms who had extended margin credit to Ultimate Holdings.

FORBES: Khashoggi: Margin Scheme Leads Personal Liability For True Beneficial Owner Under Alter Ego Theory; Undercapitalization and Domination

El-Batrawi had also started a company called GENI, and was leveraging the shares for cash through Ultimate Holdings.

FORBES: Khashoggi: Margin Scheme Leads Personal Liability For True Beneficial Owner Under Alter Ego Theory; Undercapitalization and Domination

While Ultimate did own a large illiquid stake in GENI, most of these shares were tied up in the stock loan chain which Native Nations was demanding be unwound.

FORBES: Khashoggi: Margin Scheme Leads Personal Liability For True Beneficial Owner Under Alter Ego Theory; Undercapitalization and Domination