May 26, 2004

Dear Sir,

I am sending this complaint to the Securities Exchange Commission ( to describe the illegal actions being taken by BayStar Capital LP, Boies Schiller & Flexner, Jeff Hunsaker, Microsoft Corporation, Thomas Raimondi, Royal Bank of Canada, The SCO Group, Inc., and Vulcan Capital. These entities have committed numerous crimes centered around the recent activities of The SCO Group, Inc.

My specific complaints are:

1.  SCO is grossly exaggerating the value of its intellectual property by
    claiming ownership of operating systems actually owned by other people.
    This exaggerated claim is a fraud on the investing public.

    Among my experiences in investing I learned to understand the Vancouver
    Exchange gold mine fraud which seem to always be with us.  Typically a
    Vancouver Exchange gold mine promoter finds some gold, which is easy to do,
    but of course the gold deposit is too small or too dilute to be profitably
    mined.  Then the promoter forms a penny stock company which owns the gold
    claim and begins hyping the stock.  There is actually some gold in the
    company's mining claim but the promotion propaganda exaggerates the claim
    into the greatest strike since the Comstock lode.  If the promoter succeeds
    in creating a stock price bubble then he sells as much stock as he can until
    the bubble bursts leaving the current crop of gullible investors with heavy
    losses.  I am sure that the investigators at the SEC are thoroughly familar
    with Vancouver Exchange gold mine stock frauds.

    Now comes SCO with a new twist on the Vancouver Exchange gold mine fraud.
    SCO has a contested claim to ownership to an obsolete computer operating
    system called System V which has a microscopic share of the market for
    operating systems.  SCO has hyped this asset into a claim of ownership of
    several other Unix style operating systems sold by competing companies.  The
    SCO propaganda has created a stock price bubble in SCOX stock and the SCO
    insiders are methodically selling SCOX stock at inflated prices.

    A. SCO sells a computer operating system called System V which SCO sells
       under the brand name of UnixWare.

       UnixWare has a small share of the operating system market.  That share
       has been steadily shrinking for several years because UnixWare is
       gradually becoming obsolete.

    B. Linux is a operating system written by Linus Torvalds and an army of
       volunteers who donate their creativity for free.
       To my personal knowledge IBM has at least a 40 year history of competing
       development projects. IBM has often developed both software and hardware
       products by setting up two development projects unbeknownst to each other
       and giving both project teams the same assignment. Then IBM chooses to
       market the project with better product results and gives the axe to the
       unsuccessful project.  When this happens there is great consternation
       among the members of the losing project team.

       The Monterey project was started as a joint venture with SCO to
       create an operating system based on System V code which works on large
       IBM computers. Then later IBM started a second project team with the
       same goals as Monterey except the second project was based on Linux.
       Great was SCO's consternation when Monterey was axed in favor of IBM's
       Linux project.

       SCO sued IBM for contributing operating system code allegedly owned by
       SCO to the Linux operating system.

       IBM has contributed code to the Linux operating system.  SCO claimed that
       the contributed code was written and owned by SCO.  This claim was widely
       and repeatedly publicized.

       quoting MozillaQuest:
       "Simply take a look at this excerpt from the letter Darl McBride and
       SCO-Caldera sent out to at least 1,500 companies, including Fortune 500
       and Forbes 1000 top companies. It is that letter that precipitated the
       German Linux community's successful legal counterattack against
       SCO-Caldera. That letter, dated 12 May 2003, states in part:

       Linux is, in material part, an unauthorized derivative of UNIX . . . We
       have evidence that portions of UNIX System V software code have been
       copied into Linux . . . legal liability that may arise from the Linux
       development process may also rest with the end user . . . We intend to
       aggressively protect and enforce these rights . . . we are prepared to
       take all actions necessary to stop the ongoing violation of our
       intellectual property or other rights."

       SCO told the investing public that SCO would reap huge profits from the
       damages that IBM would have to pay for illegal distribution of SCO code.

       In the SCO v IBM court hearings SCO lawyers have dropped their claim that
       System V code was contributed to Linux after SCO was unable to produce
       any evidence supporting that claim.  SCO now claims that the code in
       question was written by IBM but belongs to SCO anyway.
       This is in spite of clear legal precedents, most notably AT&T v BSD,
       which clearly state that the code written by SCO belongs to SCO and the
       code written by IBM belongs to IBM.

       The code that IBM has contributed to Linux is publically available to
       anyone.  IBM has demanded that SCO identify which lines of that code
       are the stolen code. SCO has never answered that question.  On December
       5, 2003 Judge Brooks Wells ordered SCO to answer that question in
       great detail within 30 days.
       On March 3, 2004 Judge Brooks Wells found that SCO had not complied with
       the December 5 order and issued the order again with a 45 day deadline.
       Even when ordered to do so in a court case that SCO must win in order to
       survive as a company, SCO cannot provide specific evidence that IBM gave
       any SCO intellectual property to Linux.
       IBM explains the importance of the absence of evidence to Judge Kimball
       this way.

    C. SCO claims ownership of Linux.  SCO's claims are partially based on their
       claimed ownership of the IBM code contributed to Linux.

       SCO also claims that 65 Linux programs were copied from SCO's version of

       Linus Torvalds has documentary proof that he wrote the code claimed by

       SCO claims ownership of Linux and is demanding that corporations which
       use Linux pay SCO a licensing fee to use Linux.  SCO sent a letter to
       1500 corporations claiming ownership of Linux and threatening to bill for
       Linux.  These threats have never been carried through because SCO would
       be indicted for mail fraud, billing for something that they do not own.
       SCO is asking operating systems resellers to sell an "Intellectual
       Property License for Linux".  SCO expects the threat of lawsuits to
       create new revenue for both the resellers and SCO.
       However the investing public has been repeatedly told that SCO owns Linux
       and is about to bill 1500 major corporations huge amounts of money in
       Linux licensing fees.

    D. Two German courts ruled that SCO's claims to own Linux was a criminal
       offence in Germany and SCO must stop making such claims in Germany.
       Subsequently, SCO was fined 10,000 euros for continuing to make false
       claims in Germany that SCO owns Linux.

       May 28, 2003
       The Bremen, Germany Regional Court ruled in favor of Univention GmbH and
       issued a preliminary injunction against SCO-Caldera.

       "The order prohibits SCO-Caldera from circulating:
       'the idea that the Linux Operating System illegitimately acquired and
       contains the Intellectual Property of SCO UNIX and/or that the end users
       of LINUX can be made liable for patent/copyright infringements against
       SCO's intellectual Properties.'"

       The injunction was based on the fact that SCO had no proof of any of its
       intellectual property claims.  The injunction gave Univention the right
       to ask for a permanent injunction if SCO did not provide such proof
       within 30 days.

       June 5, 2003
       The Munich, Germany District Court ruled in favor of Tarent GmbH and
       issued a permanent injunction against SCO-Caldera which is very similar
       to the Bremen injunction.

       September 2, 2003
       SCO Group was fined 10,000 Euros (about US$11,000) by the Munich court
       for violating the June 5 injunction.
       February 18, 2004
       Univention GmbH and SCO Group GmbH agreed to an out of court settlement
       of the Bremen case.  In this agreement:
          "1) SCO Group GmbH (German branch of SCO) has agreed not to allege any
          more that Linux contains SCO's unlawfully acquired intellectual
          2) The settlement also forbids SCO from claiming that if end users
          are running Linux they might be liable for breaches of SCO's
          intellectual property.
          3) Also they cannot say that Linux is an unauthorized derivative of
          4) Finally SCO Group GmbH is prohibited to threaten to sue Linux users
          unless they bought SCO Linux or Caldera Linux."

       Here is the agreement in German.

       Here is an English synopsis of the agreement.
       So in Germany the courts have ruled that SCO's claims against Linux are
       completely unsubsantiated.  And in spite of the German court orders SCO
       is still fraudently claiming in Germany that SCO will make "millions or
       up to billions of profit" by selling licenses for intellectual property
       that SCO does not own.

    E. Red Hat is a company whose main product is distributing Linux operating
       systems.  Red Hat sued SCO in the United States to contest SCO's claims
       to own Linux.

    F. Embedded Linux is a small version of Linux used in such things as mobile
       phones and handheld computers.
       SCO claims ownership of Embedded Linux and demands a $32 fee for each
       embedded device using Linux even though SCO has absolutely no logical or
       legal basis for such a claim.  SCO's claim to Linux is that IBM donated
       SCO code to Linux.  The code that IBM has contributed to Linux allows Linux
       to work well on extremely large computers.  Such code is inappropriate for
       embedded devices and it is impossible for embedded devices to run the IBM

       Once again the general investing public has been told that SCO will reap
       huge amounts of money by selling an operating system, embedded Linux,
       that SCO does not own.

    G. BSD is an operating system that was developed at the University of
       California, Berkeley using government grants handed out to develop the
       Internet. AT&T sued the University of California claiming that AT&T
       owned the BSD operating system.  Early in the trial the court ruled that
       the code written by AT&T was owned by AT&T and the code written by
       University of California was owned by the University of California.
       The story is complicated because both operating systems have changed
       ownership.  BSD is currently owned by Berkeley Software Development and
       System V ownership is currently disputed between Novell and SCO.

       There is a court sanctioned 1994 agreement between (now) BSD and Novell
       deliniating what code is owned by each.  Also the agreement states
       that Novell or its successor, SCO, (if in fact SCO is Novell's successor
       as SCO claims and Novell denies) can never again sue over the BSD code.

       SCO claims ownership of BSD even though Novell thoroughly lost any and
       all claims to BSD in 1994 so that Novell can not possibly have sold BSD
       to SCO.  SCO has threatened to reopen the BSD suit even though to do so
       is forbidden by the agreement settling the case.  This creates the false
       impression among public investors that SCO owns BSD.

    H. SCO claims ownership of all Unix operating systems.

       Eric Raymond gives a comprehensive explanation of why SCO's claims to own
       all of Unix are false.

       In fact SCO owns only a disputed claim to System V.  Claiming ownership
       of all the other Unix operating systems is a gross exaggeration of SCO
       assets and is a fraud against the investing public.

    I. Novell is the company from which SCO obtained a contract to sell System
       V.  Novell strongly disputes the exaggerated size of the intellectual
       property claimed by SCO.  Novell's position is that SCO has the right
       to sell System V but SCO does not own System V.
       Here is the agreement between Novell and SCO.
       Here is the correspondence between Novell and SCO.
       In the list of assets excluded from the sale are:
       "Schedule 1.1(b) Excluded Assets (Page 2 of 2)
        V. Intellectual Property:
        A. All copyrights and trademarks, except for the trademarks UNIX
           and UnixWare.
        B. All Patents"
       SCO is suing Novell in an attempt to obtain clear title to Unix.

       SCO is deceiving the investing public by falsely claiming to have
       purchased Unix in its entirety from Novell.

    J. BSD has a valid claim to partial ownership of System V.  BSD allows
       anyone to use BSD code as long as the source code displays the BSD
       copyright notice.  In the law case explained in section G, AT&T barred
       BSD from using AT&T code but BSD said that AT&T was welcome to use BSD
       code, provided that it was copyrighted as BSD code.  SCO accidently
       showed that some of System V code actually belongs to BSD when SCO held a
       public viewing of some code that they claimed was SCO code illegally
       added into Linux.  The BSD code would also be legal in System V if SCO
       included the BSD copyright notice in the code.  SCO did not include the
       BSD copyright notice in the example of BSD code that they claimed was SCO
       code illegally incorporated into Linux.

       Therefore System V contains some BSD code but the amount of BSD code in
       System V is not public knowledge.  SCO says that there are millions of
       lines of SCO code in Linux.  If in fact there are millions of lines of
       BSD code in both Linux and System V then a very significant portion of
       System V is actually owned by BSD.
       Ransom Love is a former CEO of the company now called SCO.  When
       discussing the possibility of releasing SCO code as Open Source software
       Ransom Love said, "Some code, however, can't be open sourced because
       other companies own it."

       By not providing information as to how much of System V is owned by BSD
       SCO is misleading the general investing public about the value of the
       System V asset.  By claiming ownership of BSD code SCO is committing

    K. SCO has sent letters to about 6000 SCO customers stating that SCO owns
       Linux and that the terms of the contract between SCO and each customer
       forbids the customer from using Linux unless the customer pays SCO for
       Linux.  SCO demanded that each customer certify that they had not
       inserted any SCO code into Linux..
       This letter has received wide publicity and creates the false impression
       among investors that SCO will receive money for Linux from the existing
       SCO customers.

    L. When SCO sued IBM, SCO hired a prominent law firm, Boies, Schiller, and
       Flexner to handle the case.  SCO initially told the general investing
       public that Boies, Schiller, and Flexner was working on a contingency
       basis.  This created the false impression among the general investing
       public that Boies, Schiller, and Flexner was so confident of SCO's
       chances of winning the IBM case that they would accept the case on
       a contingency fee basis.

       "SCO's legal costs are being paid under a contingency arrangement,
       McBride said. In such cases, lawyers typically are paid not by the hour,
       but with a percentage of whatever money they can win for their clients in
       the case."

       In fact Boies, Schiller, and Flexner is being paid a retainer fee and is
       billing SCO at hourly rates, as well as a 20% contingency fee on windfall
       profits from equity sales.

    M. The SCOX stock price has risen spectactularly since SCO began claiming
       exaggerated worth of their intellectual property.
    N. SCO insiders have registered the following SCO stock sales with the Securities
       Exchange Commission during the period of March 6, 2003 through April 7, 2004.

       SCO insider sales from March 6, 2003 through April 7, 2004
          Date           Name                Shares          Amount
       04/08/2003     Robert Bench            4,100      $11,890.00
       03/10/2003     Robert Bench            7,000      $21,420.00
       04/08/2003     Robert Bench            4,100      $11,890.00
       06/03/2003     Opinder Bawa           15,000      $90,000.00
       06/04/2003     Opinder Bawa            7,916      $52,245.60
       06/06/2003     Jeff Hunsaker           5,000      $44,500.00
       06/09/2003     Robert Bench            3,000      $27,788.00
       06/11/2003     Michael Olson           6,000      $51,820.00
       06/20/2003     Reginald Broughton      5,000      $55,446.00
       06/25/2003     Reginald Broughton      5,000      $50,000.00
       07/08/2003     Robert Bench            7,000      $77,213.00
       07/09/2003     Jeff Hunsaker           5,000      $59,000.60
       07/11/2003     Michael Olson           8,000      $84,208.00
       07/14/2003     Sean Wilson             6,000      $65,045.00
       07/15/2003     Sean Wilson             6,000      $64,240.00
       07/22/2003     Reginald Broughton     20,000     $242,893.00
       07/23/2003     Jeff Hunsaker           5,000      $66,694.00
       07/30/2003     Reginald Broughton      5,000      $64,001.00
       08/05/2003     Reginald Broughton      5,000      $62,819.00
       08/08/2003     Robert Bench            7,000      $76,300.00
       08/11/2003     Michael Olson           5,000      $46,270.00
       08/13/2003     Jeff Hunsaker           5,000      $50,000.00
       08/19/2003     Reginald Broughton      5,000      $52,028.00
       08/25/2003     Jeff Hunsaker           5,000      $71,400.00
       08/26/2003     Reginald Broughton      5,000      $73,700.00
       09/02/2003     Reginald Broughton      5,000      $73,555.45
       09/09/2003     Reginald Broughton      5,000      $90,262.00
       09/11/2003     Michael Olson           7,000     $122,850.00
       09/14/2003     Reginald Broughton      2,450      $49,000.00
       09/15/2003     Reginald Broughton      2,550      $51,199.00
       10/08/2003     Robert Bench            6,800     $112,880.00
       10/13/2003     Michael Olson          10,000     $141,486.50
       12/29/2003     Duff Thompson          10,000     $174,860.00
       01/07/2004     Thomas Raimondi        11,841     $210,189.59
       01/26/2004     Larry Gasparro          5,259      $81,076.06
       02/04/2004     Thomas Raimondi        11,841     $170,510.40
       03/03/2004     Thomas Raimondi        11,841     $143,276.10
       04/07/2004     Thomas Raimondi        11,481     $128,736.45
       04/07/2004     Jeff F. Hunsaker        5,976      $66,733.84
                                            -------   -------------
       Totals                               268,255   $3,149,426.59
2.  Microsoft has invested in SCO equity above the 5% reporting threshold without
    revealing their true identity.

    A.  SCO's strategy of suing their own customers and potential customers for
        using Linux or for ignoring SCO's demands that the customers attest that
        they are not using Linux is economic suicide.  Existing customers now
        face the prospect of being sued in an attempt to force the customer to
        acknowlege that SCO owns Linux.  Potential customers face the prospect
        that signing a contract to buy SCO products dramatically increases the
        customer's chances of being sued by SCO.

        Such a strategy makes economic sense only if SCO has a way to make money
        from it.  There is strong evidence that Microsoft has committed to paying
        SCO large amounts of money for SCO to attack Linux users in an attempt to
        force Linux out of the operating system marketplace.

        Microsoft has legally purchased a license to use SCO technology for
        somewhere between 10 million and 30 million dollars.  Microsoft has
        absolutely no need to buy SCO technology licenses and the reasons
        Microsoft has given publicly are simply disinformation.

        So Microsoft has openly and legally given SCO money for reasons that
        Microsoft is unwilling to publicly reveal.

    B.  Microsoft is willing to finance an expensive lawsuit campaign by SCO to
        bludgeon customers who use Linux.

        Mike Anderer is one of the participants in the Microsoft money
        laundering scheme.  Here is his explanation of the purpose of
        Microsoft's support of SCO.

        "In a world where there are $500 million dollar patent infringement
        lawsuits imposed on OS companies (although this is not completely settled
        yet), how would somebody like Red Hat compete when 6 months ago they only
        had $80-$90 million in cash? At that point they could not even afford to
        settle a fraction of a single judgment without devastating their
        shareholders.  I suspect Microsoft may have 50 or more of these lawsuits
        in the queue. All of them are not asking for hundreds of millions, but
        most would be large enough to ruin anything but the largest companies.
        Red Hat did recently raise several hundred million which certainly gives
        them more staying power.  Ultimately, I do not think any company except a
        few of the largest companies can offer any reasonable insulation to their
        customers from these types of judgments. You would need a market cap of
        more than a couple billion to just survive in the OS space."

    C.  SCO has sent letters to about 6000 SCO customers stating that SCO owns
        Linux and that the terms of the contract between SCO and each customer
        forbids the customer from using Linux unless the customer pays SCO for
        Linux.  SCO demanded that each customer certify that they had not
        inserted any SCO code into Linux.  SCO then sued one of their customers,
        DaimlerChrysler, because DaimlerChrysler did not reply to the letter.

        Such lawsuits against SCO's existing customers are a strong incentive for
        SCO's customers to stop doing business with SCO.  This strategy of trying to
        extort money from existing customers by threatening to launch expensive
        lawsuits does not make any economic sense from SCO's viewpoint unless SCO
        has been promised large amounts of money by Microsoft for harassing
        companies that use Linux in line with the Microsoft strategy that Mike
        Anderer announced.

        SCO has also repeatedly threatened to sue Linux users who are not SCO
        SCO has sued AutoZone for using Linux.

        Coincidently, the Nevada court where SCO filed the Autozone lawsuit has
        infringed upon SCO's intellectual property rights to the exact same
        extent that Autozone has or has not infringed on SCO's intellectual
        property rights.

        SCO markets Linux licenses as a way to avoid lawsuits.

        The SCO attempt to sell Linux licenses has all of the earmarks of an
        extortion racket.  From a marketing viewpoint such an extortion campaign
        is economic suicide.  No Linux user will pay SCO a Linux licensing fee
        based on SCO's extremely flimsy claims to owning Linux.  This strategy of
        trying to extort money from Linux users by threatening to launch
        expensive lawsuits does not make any economic sense from SCO's viewpoint
        unless SCO has been promised large amounts of money by Microsoft for
        harassing companies that use or sell Linux in line with the Microsoft
        strategy that Mike Anderer announced.
        So I conclude that Microsoft has secretly and illegally invested money in
        SCO equity.  No sophisticated investor would seriously consider buying
        equity in SCO's lawsuit campaign against Linux because the SCO lawsuit
        strategy is a guarenteed loss to SCO and its investors.  Therefore any
        sophisticated investor would only be interested in investing in SCO if
        Microsoft compensated the investor for doing so.  Any efforts by
        Microsoft and the nominal investors to hide the fact that money invested
        in SCO originated from Microsoft is illegal money laundering.
    D.  BayStar and The Royal Bank of Canada invested in a private placement
        of SCO convertible preferred shares which amounts to 17.5% of SCO

        This is the contract between SCO and Royal Bank and BayStar.

    E.  Royal Bank has stated that it purchased the equity position in SCO
        as a hedge against client positions.  In fact Royal Bank purchased the SCO
        equity as a front for Microsoft or Microsoft's agents..

        In order for a hedge to work both sides of the hedge must be owned
        by the same investor.  The article in the Globe and Mail quotes the
        Royal Bank as saying that Royal Bank made the SCO investment to
        hedge a client's position.  If the client owns one side of the hedge and
        Royal Bank owns the offsetting position of the hedge then neither the
        client nor Royal Bank is hedged against anything.  In order for the
        client to be hedged the client must own the SCO equity position.  If the
        SCO equity position was purchased in Royal Bank's name but is
        beneficially owned by Royal Bank client then the client, and perhaps
        Royal Bank, has broken the United States securities law that requires
        any purchaser of a significant equity position to publicly announce
        their equity purchase and their reasons for the purchase.  The purchaser
        must also file a form with the United States Securities Exchange

        quoted from the Globe and Mail:
        'An RBC spokesman was reluctant to comment, saying the SEC filing was
        about how SCO operates its business. He said that RBC's "investment in
        SCO is passive, made to hedge an economic exposure resulting from
        client transactions."'
        In any case, the Royal Bank statement is nonsense meant to hide who
        really owns the SCO equity position.

    F.  I suspect that the money laundry trail that leads from Microsoft to
        Royal Bank passes through McGill University in Montreal, Quebec, Canada.

        "Vulcan Inc. Paul G. Allen, co-founder of Microsoft" is listed as an
        "angel", i.e. someone who has given McGill University a lot of money, by

        The same McGill web site also lists Royal Bank Business Plans as a
        business plans site and Royal Bank Capital Corporation as a venture
        capital site.

        I sent a letter to McGill on April 10, 2004 asking the following two

        1. During 2003 what investments did McGill University make, other than
           short term money, where the investments were greater than one million

        2. During 2003 what non-government grants, endowments, or other gifts
           did McGill University receive where the gifts were greater than one
           million dollars?

        McGill chose to ignore my letter.  Therefore I recommend that the SEC
        go through the Canadian authorities to ask McGill the following two

        1. Did Paul Allen, Vulcan Capital, or anybody else donate $30,000,000
           to McGill University's endowment, trust or other invested funds
           during the 2003 calendar year?

        2. Has McGill University invested $30,000,000 in SCO through Royal Bank?

     G. BayStar is also a front for a secret Microsoft investment in SCO. 
        Here is a leaked email from Michael Anderer of S2 Strategic Consulting
        to SCO which states that Microsoft provided the entire $50,000,000 which
        BayStar and Royal Bank invested in SCO:
        SCO has stated that the leaked email is genuine:
        Here is the contract between S2 Strategic Consulting and SCO.
        SCO paid S2 Strategic Consulting Services by giving them a warrant to
        purchase 25,000 shares of SCO stock at a price of $8.50 per share.
        Therefore S2 Strategic Consulting Services did something useful for SCO.
        This article explains that Paul Allen, the second largest Microsoft
        shareholder, is also a large investor in BayStar:
        Paul Allen makes most of his investments through Vulcan Capital:
        "Lawrence Goldfarb, managing partner of BayStar, says that senior
        executives at the software giant had telephoned him about two months
        before the investment."
        After BayStar invested in SCO, BayStar began exerting extreme pressure
        on SCO to abandon SCO's business of selling Unix operating systems and
        concentrate on attacking Linux in the courts:

        SCO does not want to give up selling Unix or make the other changes
        demanded by BayStar.

        BayStar's business plan for SCO is exactly what Microsoft, Paul Allen,
        and Vulcan Corp want SCO to do.  It is in Microsoft's best interest for
        SCO to stop selling System V which is a competing operating system to
        Microsoft's Windows operating system.  It is in Microsoft's best
        interest to intimidate software customers to not use Linux.  However
        such a plan is disasterous for SCO's very viability as a business.  This
        pressure from BayStar indicates that BayStar is primarily interested in
        SCO advancing Microsoft's interests even at the expense of SCO's, and
        presumably BayStar's, best interests.  Therefore I conclude that
        Microsoft has illegal hidden control of the BayStar investment in SCO
        and illegally laundered the money used to invest in SCO.

3.  BayStar, Boies, Schiller, and Flexner, Microsoft, Royal Bank, SCO
    management, and Vulcan Capital are engaged in insider dealing to the
    detriment of the outside SCO shareholders.

    A.  SCO entered into an agreement with the law firm Boies, Schiller, and
        Flexner where Boies will receive 20% of the value of any new equity
        issued by SCO.

    B.  Under the terms of that agreement SCO paid Boies, Schiller, and Flexner
        $10 million consisting of $1 million in cash and nominally $9 million in
        SCO stock as being 20% of the private equity placement to BayStar and
        Royal Bank.

    C.  BayStar and Royal Bank have objected to the terms of the agreement
        between SCO and Boies, Schiller, and Flexner.  The four parties have
        negotiated a new agreement dividing up the results of future SCO
        equity sales among BayStar, Boies, Schiller, and Flexner, Royal Bank,
        and SCO.


    D.  If, as Royal Bank stated in the Globe and Mail, the Royal Bank
        investment is passive then why is Royal Bank so actively trying
        to manage SCO equity sales strategy?  It is against U.S. law for a bank
        to manage a corporation.

    E.  This negotiation and resulting agreement is illegal insider dealing.
        Whether SCO equity growth results from SCO successfully stealing other
        people's operating systems, being a Microsoft mercenary, or from a pump
        and dump stock scam the resulting profit will be distributed according
        to an insider deal among BayStar, Boies, Schiller, and Flexner, Royal
        Bank, and SCO management to the detriment of the outside shareholders.

    F.  Since BayStar and/or Royal Bank are fronts for Microsoft and/or Vulcan
        Capital who actually owns a 17.5% interest in SCO then Microsoft and/or
        Vulcan Capital is also guilty of insider dealing.

    G.  On April 16, 2004 the deal among BayStar, Boies Schiller & Flexner,
        Royal Bank, and SCO began to unravel.  All parties involved were
        extremely vague as to what the problem was.
        On May 7, 2004 Royal Bank announced that it had sold 20,000 of its SCO
        Series 1-A preferred stock to BayStar.  Royal Bank converted its
        remaining 10,000 Series 1-A preferred shares into SCO common stock at a
        conversion price of $13.50 per common share.  This leaves Royal Bank
        owning 740,740 shares of SCO common stock which amounts to 4.8% of the
        outstanding SCO common stock.  Thus Royal Bank ownership in SCO drops
        below the 5% threshold for reporting the name of real owner of the
        position, although this action does not relieve Royal Bank of its
        responsibility to report who beneficially owned the equity position before
        May 7.
    H.  By buying 20,000 shares of SCO Series 1-A preferred stock from Royal
        Bank, Baystar moves from owning 40% of the Series 1-A preferred stock to
        owning 100% of the Series 1-A preferred stock.  According to the illegal
        insider deal described in section 3.F.

          "SCO is prohibited from completing any settlement, acquisition
          of SCO or investment in SCO, unless the holders of two-thirds of the
          preferred shares give written approval."

          "Previously, when RBC held 60 percent of the preferred shares, and
          BayStar had 40 percent, neither party had more than two-thirds. Now,
          BayStar holds all the preferred shares."

    I.  SCO cannot exist without more capital infusions.  Thus Microsoft has
        arrived at the position of illegal hidden control of SCO by having
        acquired veto power over new investment in SCO.  Such hidden control was
        obtained by illegal money laundering and illegal insider dealing.

        Microsoft intends to use their control of SCO to illegally destroy System
        V as a competitor to Microsoft software and to run a protection racket
        designed to drive Linux from the software market where it has begun
        successfully competing with Microsoft products.
4.  The SCO Group has illegally manipulated the price of their common stock.  I
    am asking the Securities and Exchange Commission to examine every trade made
    in SCO stock during the time period of March 29 through April 7 to see if
    SCO was manipulating the SCO stock price, making wash trades, and marking
    the close.  If such illegal trades were made then both SCO and the broker
    who made the trades for SCO have broken the law.

    A.  On March 10, 2004 SCO filed a report with the SEC stating that SCO
        intended to repurchase SCO common stock.

        SCO also issued a press release announcing the SCO stock repurchase

        SCO investing in their own, presumably undervalued, stock is legal.
        Stock market price manipulation is illegal. I think that during the time
        period of March 29 through April 7, 2004 SCO illegally manipulated its
        stock price in an attempt to create higher prices for their stock.

    B.  Between March 29 and April 7 "time and sales" shows there were frequent
        sequences of 100 share lots bought at about 10 minute intervals on
        constant upticks.  It is unlikely that random small investor purchases
        would occur with such regularity.  A large investor would not buy in
        such a large number of small lots because commission costs would

        Even more suspiciously, time and sales shows several final daily
        purchases on the Pacific Exchange where the final transaction was a 100
        share lot purchased on a large uptick. Such transactions are called
        "marking the close" and marking the close is illegal.  In the OPINION OF
        THE COMMISSION in the matter of Richard D. Chema the Commission stated:

            "In addition to his wash trades, Broumas engaged in the
            practice of "marking the close" by purchasing small amounts of
            JML on the AMEX and the Midwest Stock Exchange at or near the
            close of trading. [4]  Between January 18, 1989 and June 25,
            1990, he made 69 purchases of JML during the final 10 minutes of
            the trading day.  Of those purchases, 54 were the last trade of
            the day and 47 were executed on an uptick. [5]  On several
            occasions, Broumas' trades raised the closing price of JML stock
            by 1/8.  Broumas' purchases at the close of trading were
            beneficial to him in more than one respect.  Brokerage firms use
            the closing price of a security in determining whether they will
            extend margin on the security, whether a customer's account meets
            margin requirements, and the customer's equity in his margin
            account.  Moreover, the closing price of a security is quoted in
            the following day's newspapers.  Broumas admitted to one of his
            registered representatives that he was trying to create interest
            in JML, observing that "if nobody [bought] it on a certain day,
            it [wouldn't] show up in the [newspaper] listing." [6]"

        On and before March 29 there was a huge short interest in SCO stock.  In
        addition to the advantages to SCO for marking the close given in the
        case I just cited, marking the close helped SCO to squeeze the shorts by
        increasing the shorts margin requirements.

        Another advantage to SCO of marking the close is that the closing price
        of SCO stock sets the conversion price of SCO Series A-1 Convertible
        Preferred Stock under the agreement between SCO and BayStar and Royal

        So it is illegal for SCO to engage in marking the close for SCO stock.

    C.  SCO stock is not widely followed by stock market analysts because of its
        small market volume.  One person who has followed SCO for some time is
        Dion Cornett, a Decatur Jones analyst, who since January has been
        recommending that investors short SCO stock.  Dion Cornett has a target
        price of $2 per share for SCO stock.

        If SCO were investing in their own stock because it was grossly
        undervalued then SCO should purchase their stock at prices well below $2
        a share.  The fact that SCO is purchasing their stock in the $8.50 to
        $9.50 range indicates an attempt at stock price manipulation rather than
        investment.  This is not a closed end mutual fund buying back their own
        common stock that is trading at well under net asset value.  This is a
        pump and dump stock scam trying to raise the price of its stock to
        prolong the bubble.
    D.  SCO has made wash trades.
        SCO is in poor financial shape:

        Which creates a problem for SCO as to how to pay for all of the stock
        that it might have to buy to raise the stock price.  One way that SCO
        can prolong the time that it can support its stock price is by engaging
        in "wash trades".  Wash trades are where SCO acts simultaneously as the
        buyer and seller thus creating the appearance of a 100 share trade on an
        uptick at at no cost to SCO other than the commission cost.  One way
        that the SEC can check for SCO wash trades on the NASDAQ is to check to
        see if SCO made any trades where SCO told their broker to execute the
        trade with a particular NASDAQ dealer. Such a stipulation to a broker is
        a red flag for a wash trade or other illegal trade.  SCO is thinly
        traded enough that a series of 100 share wash trades on continuous
        upticks could raise the price of SCO stock.

        On April 7 a SCO insider, Thomas Raimondi, sold 11,481 shares of SCO for

        On April 7 a SCO insider, Jeff Hunsaker, sold 264,155 shares of SCO for

        These two trades are illegal wash sales. SCO cannot be buying up its
        stock at the same time that SCO insiders are selling SCO stock.
    E.  SCO may have illegally supported the SCO stock price.

        Looking at the SCOX stock chart shown above it appears that about April
        20 SCOX was likely due for a rally back up to the $8 support/resistance
        level driven by short covering.  There are 8 SEC Statement of Changes
        of Beneficial Ownership filings dated 04/22/2004.  I suggest that the
        SEC investigate whether SCO bought stock on April 21 and/or April 22,
        2004 to trigger the expected short covering rally.  If SCO did so then
        SCO was engaged in illegal stock price manipulation in an effort to
        support the SCO stock price above the exercise price of the 8 newly
        issued insider stock options.
5.  SCO has illegally manipulated its insider stock option plan.

    In order to balance the conflicting interests of the inside and outside
    shareholders in a corporation it is customary when granting stock options
    based on stock market prices to use the average closing price for some time
    period previous to the date that the option was issued.  The usual averaging
    period is 30 days.

    But SCO has used an entirely different method of setting the exercise price
    for the stock options issued to SCO insiders from March 6, 2003 through
    April 23, 2004.  SCO has been back dating the date that stock options are
    granted and then using the closing price on the transaction date as the
    exercise price for the stock option.  In fairness to the outside
    shareholders the stock options should have been granted at the 30 day
    average closing price on the issue date.  This fraud has resulted in 31 of
    the 32 stock options issued since March 6, 2003 being issued at exercise
    prices very advantageous to the SCO insiders and very disadvantageous to SCO
    outside shareholders.
    The SCO stock option reports filed with the SEC can be found here.

    The daily stock prices for SCOX can be found here.

    The following list shows each stock option issued, the issue date, the back
    dated transaction date, the 30 day closing price average on the issue date,
    the closing price on the transaction date, and the exercise price of the
    option. I then calculate the insider advantage amount by subtracting the
    exercise price from the 30 day average and multiplying by the number of

                     Insiders Stock Options Exercise Advantage

   Date         Name             Shares   30 Day  Close    Exercise
issued 03/27/2003                          $2.36  $2.27
03/18/2003  Robert Bench        100,000           $2.07      $2.07
                                          unfair insider advantage:  $29,000

issued 03/27/2003                          $2.36  $2.27
03/18/2003  Reginald Broughton   50,000           $2.07      $2.07
                                          unfair insider advantage:  $14,500

issued 03/27/2003                          $2.36  $2.27
03/18/2003  Michael Olson        50,000           $2.07      $2.07
                                          unfair insider advantage:  $14,500

issued 03/27/2003                          $2.36  $2.27
03/18/2003  Darl McBride        200,000           $2.07      $2.07
                                          unfair insider advantage:  $58,000

issued 06/09/2003                          $6.03  $9.05
03/18/2003  Jeff Hunsaker       100,000           $2.07      $2.07
                                          unfair insider advantage: $396,000

issued 07/08/2003                         $10.60 $11.01
06/26/2003  Fred Skousen         45,000          $10.25     $10.25
                                          unfair insider advantage:  $15,750

issued 07/24/2003                         $10.56 $14.84
05/16/2003  Ralph Yarrow         10,000           $4.75      $4.75
                                          unfair insider advantage:  $58,100

issued 07/24/2003                         $10.56 $14.84
05/16/2003  Duff Thompson        10,000           $4.75      $4.75
                                          unfair insider advantage:  $58,100

issued 07/24/2003                         $10.56 $14.84
05/16/2003  Darcy Mott           10,000           $4.75      $4.75
                                          unfair insider advantage:  $58,100

issued 07/24/2003                         $10.56 $14.84
05/16/2003  Steven Cakebread     10,000           $4.75      $4.75
                                          unfair insider advantage:  $58,100

issued 07/24/2003                         $10.56 $14.84
05/16/2003  Edward Iacobucci     10,000           $4.75      $4.75
                                          unfair insider advantage:  $58,100

issued 07/24/2003                         $10.56 $14.84
06/02/2003  Thomas Raimondi      10,000           $6.13      $6.13
                                          unfair insider advantage:  $44,300

issued 09/12/2003                         $13.61 $17.99
09/11/2003  Ryan Tibbits         30,000          $17.99      $8.71
                                          unfair insider advantage: $147,000

issued 09/12/2003                         $13.61 $17.99
09/11/2003  Ryan Tibbits         35,000          $17.99     $17.99
                                              insider disadvantage: $153,300-

issued 11/03/2003                         $16.87 $16.90
11/03/2003  Daniel Campbell      45,000          $15.99     $15.99
                                          unfair insider advantage:  $39,600

issued 12/12/2003                         $15.59 $15.99
06/02/2003  Thomas Raimondi      15,000           $6.13      $6.13
                                          unfair insider advantage: $141,900

issued 12/12/2003                         $15.59 $15.99
05/16/2003  Steven Cakebread     15,000           $4.75      $4.75
                                          unfair insider advantage: $162,600

issued 12/12/2003                         $15.59 $15.99
05/16/2003  Darcy Mott           15,000           $4.75      $4.75
                                          unfair insider advantage: $162,600

issued 12/12/2003                         $15.59 $15.99
05/16/2003  Ralph Yarrow         15,000           $4.75      $4.75
                                          unfair insider advantage: $162,600

issued 12/12/2003                         $15.59 $15.99
05/16/2003  Duff Thompson        15,000           $4.75      $4.75
                                          unfair insider advantage: $162,600

issued 12/12/2003                         $15.59 $15.99
05/16/2003  Edward Iacobucci     15,000           $4.75      $4.75
                                          unfair insider advantage: $162,600

issued 12/15/2003                         $15.85 $16.02
06/13/2003  Christopher Sontag    5,739          $11.21      $0.001
                                          unfair insider advantage:  $85,252

issued 01/30/2004                         $16.37 $14.85
05/16/2003  Ralph Yarrow         15,000           $4.75      $4.75
                                          unfair insider advantage: $174,300

issued 02/03/2004                         $16.07 $14.40
05/16/2003  Darcy Mott           15,000           $4.75      $4.75
                                          unfair insider advantage: $169,800

issued 04/22/2004                          $9.02  $6.08
04/20/2004  Thomas Raimondi      15,000           $7.18      $7.18
                                          unfair insider advantage:  $27,600

issued 04/22/2004                          $9.02  $6.08
04/20/2004  Edward Iacobucci     15,000           $7.18      $7.18
                                          unfair insider advantage:  $27,600

issued 04/22/2004                          $9.02  $6.08
04/20/2004  Daniel Campbell      15,000           $7.18      $7.18
                                          unfair insider advantage:  $27,600

issued 04/22/2004                          $9.02  $6.08
04/20/2004  Darcy Mott           15,000           $7.18      $7.18
                                          unfair insider advantage:  $27,600

issued 04/22/2004                          $9.02  $6.08
04/20/2004  Ralph Yarrow         15,000           $7.18      $7.18
                                          unfair insider advantage:  $27,600

issued 04/22/2004                          $9.02  $6.08
04/20/2004  Fred Skousen         15,000           $7.18      $7.18
                                          unfair insider advantage:  $27,600

issued 04/22/2004                          $9.02  $6.08
04/20/2004  Duff Thompson        15,000           $7.18      $7.18
                                          unfair insider advantage:  $27,600

issued 04/22/2004                          $9.02  $6.08
04/20/2004  Bert Young          150,000           $7.18      $7.18
                                          unfair insider advantage: $276,000

                                  total unfair insider advantage: $2,749,302


BayStar Capital LP
50 California Street
San Francisco, California  94111
Boies, Schiller, and Flexner:

Boies Schiller & Flexner
570 Lexington Avenue
New York, New York  10022
Jeff F Hunsaker
355 S 520 W, Suite 100
Lindon, Utah 84042

Microsoft Corporation
One Microsoft Way
Redmond, WA 98052-6399
Thomas P. Raimondi jr
1801 S. Federal Highway, Suite 100
Delrae Beach, Florida 33483
Royal Bank:

Royal Bank of Canada
200 Bay Street
Toronto, Ontario  M5J 2J5

The SCO Group, Inc.
355 South 520 West
Lindon, Utah  84042
Vulcan Capital

Vulcan Capital
505 Fifth Avenue South
Suite 900
Seattle, Washington 98104


Steve Stites

2933 Marshall Street
Falls Church, Virginia  22042