In the prospectus Facebook sent future investors just before today's monster initial public stock offering, the company warned that consumers' increasing use of smartphones and other "platforms" besides the company's traditional Website could hurt the company and slow its march toward profitability:

"If Facebook-integrated websites draw users away from our website, it may reduce or slow the growth of our user activity that generates advertising opportunities... in which case our business could be harmed."

But more likely, it'll be the other way around: Facebook threatens phone company profits, writes Bernstein Ressearch analyst Craig Moffett, in a report this morning to clients. Since Facebook works on many platforms, users will gravitate toward the cheapest or most incidental, directly threatening phone providers and their premium pricing.

"Facebook is many things. But what it is moslty is a communications platform," a more natural, self-selecting, group-friendly platform than the "point-to-point" phone services we inherit from phone inventor Alexander Graham Bell's day, Moffett writes. 

Phones are still ubiquitous. But look at what's grown up lately: Texting = leaving a note; Twitter = posting a sign in the public market; and Facebook = "a relatively rich mix" of "one-to-many communications" that can be read now or later; a natural and common way to communicate that is "instantly familiar" to us from "the real world."

Sure, phone companies can carry any kind of data. But they're not always good at getting paid for that service. For example, it's expensive for smartphones to carry movies and other bandwidth-hogging services -- "an economic abomination." By contrast, texting is high-volume, low-cost and high-profit for phone companies.

So too bad for phone companies that Facebook is not funded from user fees, but, like other Internet-based companies, "advertising driven," which means its goal is to keep people on the site as long as possible - and give away the related services, like texting, for free.

Last year, Moffett called the free-texting service Beluga an "existential threat" to the phone companies. Soon after, Facebook bought Beluga. Facebook "gives away" texting because it keeps viewers hooked. "Facebook itself, just like text and email before it, cannibalizes other forms of communications." 

Compare the Facebook threat to phones, to the Netflix threat to video and cable providers like Comcast. Moffett notes that video providers can price their service so challengers like Netflix aren't a long-term economic threat. By contrast, Facebook messaging hurts Verizon in the heart: by taking away or cutting prices for its most profitable business. 

UPDATE: Rhode Island Gov. Lincoln Chaffee says ex-Phillie Curt Schilling's computer-games company has belatedly paid $1.1 million it owes the state as interest on a $75 million loan.

The check cleared today; it was 38 Studios' second attempt this week to make the defaulted loan current; the first check was withdrawn after the company treasurer warned it would bounce.

But Gov. Chaffee (an independent whose Republican predecessor made the loan) says he's still refusing Schilling's request for more money. Get it from the private sector, he told the ex-star and sometime Fox News guest.. AP story here.

EARLIER: Two years ago Curt Schilling, the star Major League Baseball pitcher who spent more years with the 1990s Phillies than anywhere else, sweet-talked Rhode Island's Republican Gov. Donald Carcieri into lending $75 million to Schilling's nascent computer-games development firm, 38 Studios (named for Schilling's Phillies-Diamondbacks-Red Sox number), after venture capitalists turned him down. In return, Schilling promised to move the firm to Rhode Island from the Boston area, and start paying the money back this year.

38 isn't failing -- its Kingdoms of Amalur: Reckoning has sold something like $60 million as work progresses on the firm's main multiplayer concept, Copernicus -- but it's not enough.

38 missed its May 1 loan payment, Schilling is demanding more cash, and Carcieri's fellow Republicans are mad the state ever got involved, the Boston Globe's Mike Arsenault and Todd Wallack report here. 

NTP Marble Inc., owner of Colonial Marble & Granite, King of Prussia, must pay $4.2 million to Tasos Papadopoulos, who built the company's stone fabricating plant, for his share in the business, according to a verdict delivered by a Common Pleas Court jury on May 11 after a civil trial.

The jury in the breach-of-contract trial found Papadopoulos was entitled to one-third the value of NTP, whose sales totalled more than $27 million last year, based on their original agreement when he built the plant in 2004-06.

Papadopoulos testified he had been promised a share of the business for helping set it up. But after the firm began operating, owners Nikos and Tom Papadopoulos (they are father and son -- and unrelated to Tasos) and their partner, Angelo Bekas, tried to cut Tasos out.

When Tasos tried to claim his share, "the defendants forced him out, changed the locks, then destroyed or concealed many of the relevant documents reflecting his ownership interests," according to a statement by Tasos' lawyer, Francis Malofiy, of Francis Alexander, LLC, Philadelphia.

The partners originally claimed there were no documents showing Tasos had "the slightest nexus" with the company, according to attorney Max Kennerly of the Beasley Firm, who helped bring the case. The partners later claimed Tasos was invited to be a shareholder, but only if he contributed money in addition to his time.

The partners claimed Tasos lacked "the slightest nexus" with the company, according to attorney Max Kennerly, who helped bring the case.

Tasos' handwriting expert, William Reis, testifed that an IRS document submitted by the defedants in the case had been "fabricated," according to Malofiy. 

Despite the other owners' claims, Tasos' lawyers were eventually able to secure records from PNC Bank confirming his ownership interest.

Lawyers for the other owners didn't respond to messages seeking comment.

UPDATE: A reader sent a message reminding me I wrote a prescient column about corner-cutting at JPMorgan just two months ago. Read it here.

EARLIER: Just looking at the reporting and auditing rules that limit public company finance generally and commercial banks in particular, it's a wonder JPMorgan management could have been surprised by the extent of losses from its treasury unit trading, which boss Jamie Dimon disclosed last week, shocking the market and empowering critics who want to divorce big banks from risky trading..

Why does this happen? I asked veteran Philadelphia auditor John McLaughlin of BDO. 

It's happened before, McLaughlin noted, citing an earnings restatement under past General Electric Co. boss Jeff Immelt. No permanent harm was done:  Immelt got away with telling the world, more or less, that "the stuff is complicated, the regulations/rulings are extensive, we have controls to mitigate a variety of risks…but we made an error and we will correct it."

Similarly, "if I was Jamie Dimon I would point to the layers of control activities in place and the time, effort, and cost associated with Sarbanes-Oxley (SOX) Act compliance," McLaughlin told me. 

"Obviously, Dimon’s organization has many, many controls that are monitored by a variety of individuals -- SOX Compliance Team, Internal Audit, Chief Risk Officer, external auditors, regulators, Audit Committee -- that lead to management’s" personal Sarbanes-Oxley auditing-compliance statement and its outside auditor's attestation statements.

"In addition, many organizations have a SOX Section 302 certification process that is like a pyramid (that ought to be informing and protecting) Dimon and (his) chief financial officer.

"However, it is also clear that, broadly, management of many organizations have been striving to minimize the cost of SOX." By gaming the auditors -- remaining technically compliant but reducing the level of detail they sift -- cost-cutters risk "diluting the spirit of the law with respect to high-risk financial reporting assertions."

An accident in the long legal fight between Overstock.com boss Patrick Byrne and the Wall Street brokerages he contends conspired to drive down his company's stock price has exposed cynical traders' strategizing that Merrill Lynch and Goldman Sachs had wanted to keep secret.

"A rare slip-up by lawyers has helped to shed some rather interesting light on a high-profile legal battle," writes the Economist here. 

The lawsuit, filed by Overstock in 2007, alleges Merrill Lynch and Goldman Sachs engaged in "naked short selling."

- In regular short-selling an investor or broker who thinks a stock will go down arranges to borrow someone else's shares and bet on the difference between the current price and a future price; he'll keep (or eat) the difference.

- In "naked" short selling the bettor is bluffing about having shares to short; he may walk away if the price moves against him.

The Securities and Exchange Commission tends to consider naked shorting a kind of manipulation that interferes with honest markets. Byrne calls Overstock the victim of unfair, illegal naked shorting.

Overstock has collected five years of testimony and records it says back its position. The brokerages, says the Economist, have "argued that virtually everything should remain sealed, in part because the documents contained 'trade secrets'." The Economist, Bloomberg and Rolling Stone asked the court to make it public. The fight ground on.

And then last week, the brokerages' lawyers "presumably inadvertently" (says the Economist) attached an unedited six-page transcript of facts the brokerages want sealed to a court motion, exposing emails Goldman and Merrill hoped to keep secret.

Writes the Economist: "In a number of these, they discuss deliberately failing to settle client trades. One Merrill executive suggests the firm 'might want to consider allowing ... customers to fail,' to which a colleague replies: 'We are going to look into that.' Another asks: 'How and when can we prevent the delivery [of shares]?' ... In response to a question from a large client about efforts at 'cleaning up' fails, a Goldman man says that 'we will let you fail.' "

The brokerage's own "compliance officers repeatedly questioned this behaviour, according to the filing. A Merrill compliance person is quoted describing it as 'totally unacceptable — we are failing when we have over a million shares of stock available ... Is there a blanket agreement that we allow every market maker client to continue failing even if there is enough availability?' "

"The e-mails also suggest close commercial links between the two firms and at least one trading outfit that was a target of regulatory probes into shorting violations... 

"Other missives suggest a cavalier attitude to the rules. In a 2005 e-mail, the president of one of Merrill’s stock-clearing businesses responds to internal concerns about the intentional failing of short sales thus: 'F[---] the compliance area—procedures, schmecedures.' He has since assured the court that this statement was a joke, according to the filing.

"Goldman and Merrill have denied throughout that they participated in any sort of naked-shorting conspiracy."

Bloomberg ran this version of the story. Rolling Stone ran its own here - and noted the defense firm that "accidentally released" the "incredibly embarrassing" documents was Philadelphia-based Morgan Lewis.

Byrne went further, identifying the attorney who posted the confidential information as Joseph E. Floren. Floren so far hasn't returned my call to his San Francisco office. UPDATE: Morgan Lewis has no comment, spokeswoman Frances Marine Bravo told me.

Atlas Resource Partners LP, Philadelphia investor Edward E. Cohen's energy group, says it will issue new securities worth $184 million to pay for 250 billion cubic feet of "proved reserves and associated assets" in Texas' Barnett Shale gas-drilling country from seller Titan Operating LLC, Fort Worth. Statement here.

The deal, approved by Titan's board, is to close in July, and will be effective retroactive to Jan. 1. Atlas plans to fund the deal by selling 3.8 million shares and as many  3-year, $26.03 convertibles to Titan's investors.

JPMorgan was financial adviser, Jones Day and Philadelphia-based Ledgewood served as legal advisors. 

The so-called JOBS Act, a pro-Wall Street law rushed through Congress by both parties and signed by President Obama as election-year campaign financing accelerated last month, will spawn a new wave of investment scams through online "crowdfunding" appeals to raise money for no-name companies, the Pennsylvania Securities Commission predicts in this statement.

"The way the new law was written, it's pretty much 'buyer beware,'" says Steve Irwin, a Pittsburgh lawyer and former aide to lucky-handed stock-picking Sen. Arlen Specter, R-Pa/D-Pa, and one of the three state Securities Commissioners charged with keeping small-company Pennsylvania share sales honest.

"The lax oversight implicit in the new law is likely to attract people trying to game the system and scam people out of their hard-earned money," Irwin said in the statement.

"One of the problems with the Internet is that it's often hard to tell the good guys from the bad guys," added commissioner Vincent Gastgeb, a Pittsburgh-area county councilman and fast-food salesman.

Congress gave the SEC until year's end to write rules that would exempt online crowdfunding from regulation. "Before the SEC rules are adopted, investors should beware of promoters who jump the gun by offering investments through crowdfunding now," added PSC chairman Bob Lam, a Montgomery County real estate agent and ex-Cheltehnam Township commissioner, has been on and off the commission since 1965.

And then things'll get worse: "When the new regulations are adopted, crowdfunding investments will not be reviewed by regulators before they are offered to the public, nor will they be required to provide the same level of disclosures to investors or regulators required of securities offerings. Investors will need to prepare themselves to be bombarded with all manner of offerings and sales pitches."

(Versa Capital deal added after Berkshire deal)

In a vote by the richest American for the future, or at least the financial value, at current prices, of the battered American regional-news business, billionaire investor Warren Buffett's Berkshire Hathaway Corp. has agreed to buy the Richmond Times-Dispatch, the Winston-Salem Journal, and 61 smaller Southern daily and weekly newspapers from Media General Corp. for $142 million.

Buffett, a longtime investor in insurance, railroads and other cyclical industries, is a voracious newspaper reader, the owner of the leading Buffalo and Omaha dailies, and a board member and investor in the Washington Post Co.

But he has been famously been skeptical of the industry's future, calling his financial interest in the business "not rational" back in 2008 as ad sales and share values were falling.

The deal doesn't include Media General's flagship Tampa Tribune and associated Florida papers, which are for sale separately, or the company's TV stations. Berkshire will also lend Media General more than $400 million to pay down debt. Statement here, list of papers Media General owns here.

ALSO TODAY: Philadelphia-based Versa Capital Management, a troubled-company investor backed by casino owner, Penn State sports funder and investment manager Ira Lubert (whose clients include Pennsylvania's state worker retirement fund), has bought four Midwestern newspapers, including the Sedalia (Mo.) Democrat and others in Lima, O., Jacksonville, Ill., and Alton, Ill., from Freedom Communications, adding to previous papers Versa owns. Price not immediately disclosed. 

What are the wages of sin -- if the sin is getting caught ripping off friends, family members or private investors who trusted you?

Try nearly a million dollars, on average, for a year -- according to a Main Line professor's review of a dozen post-Madoff pyramid-schemers convicted of fraud and sentenced to prison.

Julie Ragatz, director of the Center for Ethics in Financial Services and assistant professor of ethics at American College, the insurance and investment school in Bryn Mawr, compiled the numbers from court records and news accounts.

Individual sentences varied, sometimes a lot. Terence Mayfield of Phoenixville, convicted in 2009 of duping members of a Toms River, NJ church into buying investment real estate -- and pocketing the proceeds or paying it back to other investors as if it were profits -- was sentenced to 8 years in prison, even though his fraud totaled a comparatively modest $1 million.

By contrast, Broomall investment manager Joseph Forte, who falsely told clients he'd turned their $35 million into profitable investments, while instead giving away big chunks to his son's prep school and other high-status causes, was sentenced to around five months per million.

Some of those convicted had previously clean records; that's part of why they were so trusted. By contrast, Philadelphian Robert Stinson, who got the longest sentence in the group -- 33 years, for stealing $14 million from homeowners, falsely promising high returns, and using the money for family-related businesses and other personal ends -- was a repeat offender: It was, as Ragatz noted, Stinson's fifth fraud conviction.