Spongetech Delivery Systems, Inc. (fka SPNGQ)

[cowtown jay]

My motion, which was filed in June of 2014, was not denied until Steven's sentencing decision was handed down in November of 2014. See scion's post

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=107956962

I was basically saying that the DOJ could not obtain clear title to Steven's shares, because the certificates were converted into street name, and at that point, there was no way to verify who owned the shares held in Cede's name. In fact, because of the naked shorting violations by Penson, C2, and the CBOE, it was not even possible to verify the authenticity of the Cede shares (as our brokerages tell us when WE want certificates). Nonetheless, the DOJ prevailed, and my motion was denied.

However, the IRS has a completely different slant on this. A shareholder was attempting to claim a theft loss for the shares he purchased. He was denied. The decision reads, in part, as follows.

"Plaintiff... purchased Spongetech stock on the open market using his Fidelity brokerage account. None of his purchases were “directly from Spongetech, its affiliates, or any individuals associated with Spongetech.”82/ True, Moskowitz and the other Spongetech executives were profiting from this scheme by selling unregistered shares through corporations they controlled. But how the money got to them matters. Unlike the cases Plaintiffs rely on, here there was no direct transfer from (Plaintiff) to the wrongdoers or their corporate alter egos."

The shareholder's stock, and most of the stock forfeited to the DOJ, were in Cede's name. So why can the DOJ trace the Cede shares back to Steven, but the IRS says that is not possible for the shareholder who wanted to claim a theft loss?