June 3, 2008: 11:00 AM EDT
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'Grand Theft Auto' mogul takes two

Ryan Brant may have broken a rule here and there, but there is always someone who will pay to do business with the videogame legend.

By Roddy Boyd, writer

NEW YORK (Fortune) -- Looks like Take Two Interactive Software co-founder Ryan Brant, the video game industry's enfant terrible, is launching his second act. And it sure looks like an interesting one.

Brant, who founded Take Two (TTWO) and held top posts there for more than a decade before leaving in December 2006 under a legal cloud, scored another business success last month. No, it wasn't Take-Two's record-breaking launch of "Grand Theft Auto IV," which garnered some $500 million in sales in its opening week. Brant was long gone by the time the game hit the street.

Instead, Brant agreed to sell the videogame company he recently founded, GreenScreen Interactive Software, to a company called Mandalay Media, whose co-chairmen are Peter Guber - the Hollywood producer behind "Midnight Express" and "The Color Purple" - and CEO Bruce Stein, a former Mattel and Sony executive.

Gruber's Mandalay Entertainment is a well-known film production and sports marketing company that owns several minor league baseball franchises. But for most of its 10 years, Mandalay Media has been little more than a name. The Beverly Hills company describes itself as "a public shell company with no significant operations," according to its most recent 10-K. The $130 million-market-cap company's shares are lightly traded on the over-the-counter market and its address and phone number are those of its largest shareholder, Trinad Master Fund L.P., whose general partner is Rob Ellin.

According to a regulatory filing, GreenScreen and Mandalay entered into merger talks after Mandalay pledged a $2 million bridge loan, collateralized by GreenScreen's corporate assets. While Mandalay can afford it - the company had a $7 million cash position as of last year - it also posted a 2007 net loss of $2.2 million, on no revenue. Terms of the prospective merger were not disclosed

Not much is publicly known about GreenScreen - or Brant's role in the company. Based in New York City, the company first appeared on the New York Secretary of State's books last June, with Brant's name listed at an address down the street from Take Two's headquarters. Nowhere does the company's Web site mention Brant, but in an April interview with a Newsweek blog, GreenScreen chief executive Ron Chaimowitz confirmed that Brant founded the company and said his role was purely strategic.

Brant's career with Take-Two was worthy of its own video-game, maybe even a film. He started Take-Two in 1993. Five years later, Take-Two bought BMG Entertainment's game unit, which included a small game with a loyal following called "Grand Theft Auto." GTA went on to become a controversial blockbuster (the uncovering of an explicit sex scene embedded in GTA caused the game to be pulled from many retail shelves in 2004), and is now at the center of Electronic Arts' (ERTS) hostile bid to acquire Take-Two.

Brant's fortunes changed three years ago, when he and three other Take Two executives settled Securities and Exchange Commission charges of accounting fraud. Brant, without admitting or denying guilt, paid $3.6 million in fines and disgorgement and agreed to a five-year ban from serving as an officer of a public company. Take-Two paid $7.5 million in fines.

Between 1999 and 2003 - including the two-year period when regulators alleged the Take Two was inflating its revenue - Brant sold more than $20 million in stock, as Fortune noted in August 2005.

Nonetheless Take Two's board allowed Brant to stay on as head of its 2K Games division, and he pulled in $7 million in 2003 and $4 million in 2004.

Brant left Take-Two in 2006, but his legal troubles didn't end. Last year he pleaded guilty to a felony count of falsifying business records related to 10 backdated options grants that Take-Two awarded him between 1997 and 2003.

The Manhattan district attorney said Brant "obtained several million dollars of improper and unrecorded compensation." Ultimately, Brant paid more than $7.2 million in fines and disgorgement and agreed to a lifetime ban on serving as an officer of a publicly-traded company.

A GreenScreen spokeswoman said no one was available to talk to Fortune.com, and calls to Brant's residence were not answered. A Mandalay Media spokesman declined comment.

Trinad, Mandalay's largest shareholder, is a hedge fund dedicated to investing in micro-cap companies. Trinad has regularly racked up double-digit returns, with help from dozens of positions in small, illiquid penny stocks like Mandalay Media, which goes weeks at a time without trading as much as 1,000 shares.

Ellin, Trinad's general partner, has a background in penny stock sales and was employed at penny stock shops like Stuart-James and Prestige Investors. In 2006, he admitted to a "minor regulatory incident more than 15 years ago" in a New York Post article but declined to elaborate. Ellin's Trinad also receives generous consulting payments from its portfolio of small bulletin board companies; in Mandalay media's case, the fees amounted to $360,000 last year.

Trinad isn't the only fund enjoying the flow of cash. One of Trinad's portfolio companies, video-game maker Majesco, has paid $880,000 since 2002 to Atlantis Equities, an investment company controlled by Ellin's wife Judith. Ellin didn't return an e-mail and phone call seeking comment.

Brant may well have turned a corner in the way he does business, choosing a quiet life of video game development over fraud and self-dealing. Mandalay might finally have a business strategy, rather than a few Hollywood names to drape over a corporate shell, and Trinad's Ellin may be building a portfolio of businesses, rather than a handful of penny stocks that pay Trinad management fees.

One way or the other, Brant's career, take two, is worth keeping an eye on. To top of page