Bad Stock Picks

[dragon52]

COCO is going to the dogs

imminent BK later this year... closing all of its schools for good and all up for sale currently.

If you are in... get out now before they declare BK... just saying.

[dragon52]

I like your signature...

WHEN YOU DEPEND ON OTHER'S PERCEPTIONS TO MATCH YOUR EXPECTATIONS,YOU'RE SETTING YOURSELF UP FOR DISAPPOINTMENT.

And so right you are

[dragon52]

yes... it can happen to the best of us

not saying that I am any better... far from it.

HAWK's moves were just too good and too promising. The one thing I wanted to see was the removal of the Harlands... but alas, they are still there.

[Dwrvt]

I followed you in on that one, your argumetns were sooo awesome, to bad it cost me $$,$$$ (....too bad for me.

[dragon52]

GLER was a very bad call...

Everything was all set until they started to lie... lol

Then it fell apart and died.

[dragon52]

XMDCQ is starting reek as the CEO tries to back peddle his way out...

[dragon52]

More on Rufus Harris

http://wallstreetsmostwanted.blogspot.com/2011/06/rufus-paul-harris-benjamin-stanley-and.html

[dragon52]

Maybe closure on CSHC....

Three execs guilty in stock fraud case

Atlanta Business Chronicle
Date: Friday, May 27, 2011, 4:38pm EDT


A fugitive executive with a metro Atlanta firm, an accomplice from the area and another from Michigan were found guilty of running a multi-million-dollar stock ‘pump-and-dump’ scheme.

A jury in federal district court returned guilty verdicts against Rufus Paul Harris, 43, now a fugitive, originally from Adairsville, Ga., and Benjamin Stanley, 48, of Kennesaw, Ga.

A third defendant, Darryl Horton, 50, of Okemos, Mich., pleaded guilty to conspiracy while the jury was deliberating the case.

Harris and Stanley were convicted by the jury on federal charges of securities fraud, wire fraud, and conspiracy in connection with a scheme to defraud investors of the publicly traded company Conversion Solutions Holdings Corp., which has Kennesaw as its headquarters.

According to U.S. Attorney Sally Quillian Yates, the charges and other information presented in court: When the criminal activity began in August 2006, Harris was the founder and CEO of CSHC, Stanley was the co-founder and chief operating officer and Horton was the chief financial officer. The evidence showed the three defendants issued false press releases and financial statements about the company to inflate the stock price, while at the same time they were secretly transferring shares to family members who sold at the inflated prices.

The defendants issued a series of press releases publicly claiming CSHC’s ownership of more than $1 billion in foreign bonds issued by the Republics of Venezuela and Finland. These bonds were, on their face, worth billions of dollars and paid tens of millions in annual interest.

In at least one of the press releases, Harris was quoted saying based on CSHC’s acquisition of such large quantities of sovereign debt: “We are looking at a new justifiable reorganization release price of $25.63 [per share].”

At the time, CSHC shares generally traded at less than $1 a share.

In October 2006, CSHC issued an annual report claiming as much as $800 million in assets, $500 million of which was in the form of foreign sovereign bonds as stated in at least some of the press releases.

Also according to this report and its attachments, CSHC's income included $19,869,792 in interest revenue from those bonds.

According to the evidence presented in court, the three defendants knew these public statements were untrue, and knew that CSHC had little if any assets of any value and did not own the foreign sovereign bonds and other assets that it claimed to have. CSHC also had little if any in the way of revenue or profit from any business activity.

During the weeks that the misrepresentations were being publicly disseminated via press releases and SEC filings, CSHC's stock price on the open market more than tripled. The stock, which was a "penny-stock" trading for less than $1 a share on the Over-The-Counter Bulletin Board in August 2006, appreciated to more than $3 a share in October 2006. During this time, Harris, Stanley and Horton transferred substantial quantities of CSHC stock to family members and others, who sold the stock in the open market at artificially inflated prices of between $2 to $3 per share.

On the first day of the trial, Harris waived his right to an attorney, instead electing to represent himself. Harris had been free on a previous bond and was staying at a local hotel. Investigation by the U.S. Postal Inspectors revealed that on May 23, 2011, at approximately 6:20 p.m., Harris checked out of the motel and exited the parking lot in a dark colored minivan. Harris failed to report to court on May 24 and a warrant for his arrest was issued.

The trial proceeded against all three defendants, in Harris’ absence.

Harris and Stanley could receive a maximum sentence of 25 years in prison and a fine of up to $250,000 for the securities fraud charge, 25 years in prison and a fine of up to $250,000 for the conspiracy charge, and 20 years in prison and a fine of up to $250,000 for each count of the wire fraud charges.

The false certification of a financial statement charge, as to Harris, carries a maximum sentence of 10 years in prison and a fine of up to $1 million.

Horton by virtue of his plea will likely receive the maximum sentence of five years imprisonment for the count to which he pleaded guilty, and also faces a fine of up to $250,000.

Sentencing is scheduled for Aug. 18.

http://www.bizjournals.com/atlanta/news/2011/05/27/three-execs-guilty-in-stock-fraud-case.html?page=all

[dragon52]

awesome...

and

ot - you lucky dog... lol

[Lawrence 147]

I just had to find a place to respond and this post seemed so appropriate. Check out these post on another I Hub board.

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=62669370
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=62725619
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=62861373
These 3 post concern our market and I am sure explain partially the post I am responding to.

This is the post that concerns me about WM.
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=62218362
I think you will find in this post why the judge is doing incomprehensible things.

OT I only made 10 and just barely, I turned in my papers and exited before my enlistment was up after my commander had threatened to court-martial me for marring the most beautiful love goddess in the world. This will make 19 years and 3 of the most wonderful kids in the world. I held a T/S clearance and she is Filipino. Makes a lumpia that is out of this world.
GLTY in WM

[dragon52]

dead cat bounce soon eom

[G. Falcone]

Dragon. Last P+D coming? What do you think? Seems like ideal timing...

[dragon52]

EVDR is coming on as very suspect right now...

they just filed their year end fins and it is amazing how it reads... no cash, no revenue, no money, just shares to sell....

they acquired ASCC a construction company, from VCTY by securing it with 800 mil shares of EVDR. The amazing thing is VCTY acquired ASCC for only 8 mil common shares of their own. guesstimated price: .002

smells... or starting to. LOL

[dragon52]

XMDCQ is lining up at the gates...

April 20 is the drop dead date... so to speak.

[dragon52]

LOL... yeah a little late but good to know stuff.eom

[poor_papa]

So much excitement.

[dragon52]

LONG ISLAND MAN PLEADS GUILTY TO “FREE-RIDING” SECURITIES FRAUD SCHEME

Earlier today, in federal court in Brooklyn, Noor Mohammed of Deer Park, New York, pleaded guilty to a one-count felony information charging him for his role in a “free-riding” securities fraud scheme in which he and others used checks to buy securities in brokerage accounts without having sufficient funds to pay for them. The guilty plea proceedings were held before United States District Judge John Gleeson. Mohammed faces a maximum statutory sentence of 20 years’ incarceration, as well as the payment of restitution to the victims of his crimes.

The guilty plea was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and Janice K. Fedarcyk, Assistant Director-in-Charge of the Federal Bureau of Investigation, New York Field Office.

To execute the scheme, Mohammed and others opened brokerage accounts with option trading privileges and deposited bad checks ranging from $30,000 to $190,000 into these accounts causing the brokerage firms to credit the accounts in the amount of the checks. Shortly thereafter, Mohammed and others purchased over $1 million worth of short-term option contracts that expired within a day prior to the time that the bad checks bounced. When the option contracts declined in value, Mohammed failed to fund the account, and the brokerage firm was left with the loss. When the option contracts increased in value, Mohammed deposited sufficient funds to cover the purchase price of the option contracts, sold the option contracts, and withdrew the trading profits. The scheme resulted in more than $600,000 in net trading losses to the brokerage firms who were victimized by the scheme.

Ms. Lynch expressed her grateful appreciation to the FBI, the agency responsible for leading the government’s investigation, and thanked the United States Securities & Exchange Commission for its assistance. Ms. Lynch added that the investigation is continuing.

The government’s case is being prosecuted by Assistant United States Attorneys Scott Klugman and Shannon Jones.

The Defendant:



NOOR MOHAMMED
Age: 47

[dragon52]

FIVE ADDITIONAL CORPORATE EXECUTIVES CHARGED IN CONNECTION WITH SECURITIES FRAUD AND OBSTRUCTION OF JUSTICE COMMITTED BY CHIEF OFFICERS OF SPONGETECH DELIVERY SYSTEMS, INC.

Defendants Collectively Charged with Securities Fraud, Obstruction of Justice, Money Laundering, Structuring, Contempt of Court, and Perjury

A superseding indictment was unsealed today in federal court in Brooklyn charging five additional defendants with crimes relating to Spongetech Delivery Systems, Inc. (Spongetech).1 The superseding indictment includes charges previously brought against Michael Metter, the Chief Executive Officer and President of Spongetech, and Steven Moskowitz, Spongetech’s Chief Operating Officer, Chief Financial Officer, Chief Accounting Officer, Treasurer, and Secretary.

Today’s superseding indictment charges former Spongetech employees Andrew Tepfer, Seymour Eisenberg, Thomas Cavanagh, and Frank Nicolois, as well as former Spongetech vendor George Speranza. Tepfer, Eisenberg, Nicolois, and Speranza were arrested this morning. Their initial appearances are scheduled today before United States Magistrate Judge Robert M. Levy at the United States Courthouse, 225 Cadman Plaza East, Brooklyn, New York.

The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, Janice K. Fedarcyk, Assistant Director-in-Charge of the Federal Bureau of Investigation, New York Field Office, and Charles R. Pine, Special Agent-in-Charge, Internal Revenue Service, Criminal Investigation, New York.

As alleged in the superseding indictment, between January 2007 and May 2010, Tepfer, and Eisenberg, together with Metter, Moskowitz, and others, executed a fraudulent scheme to publicly report materially overstated Spongetech sales figures to create artificial demand for, and increase the share price and trading volume of, Spongetech common stock. Tepfer and Eisenberg face one count of conspiracy to commit securities fraud, one count of money laundering conspiracy, and one count of securities fraud.

Cavanagh and Nicolois face one count of structuring and one count of contempt of court. The superseding indictment alleges that from January 2008 and December 2009, Cavanagh and Nicolois cashed checks written in amounts less than $10,000 at a financial institution for the purpose of evading federal currency transaction reporting requirements. The indictment also alleges that in doing so, Cavanagh and Nicolois violated a court order entered in a 2004 lawsuit brought by the United States Securities and Exchange Commission (SEC) against them and others.

Speranza faces one count of conspiracy to obstruct justice, one count of obstruction of justice, and one count of perjury. The superseding indictment alleges that Speranza gave false testimony under oath in an investigation by the Enforcement Division of the SEC into Spongetech’s publicly reported sales figures and financial statements.

If convicted, Tepfer and Eisenberg face up to 20 years’ imprisonment on the securities fraud counts. Cavanaugh and Nicolois face up to 10 years’ imprisonment on the structuring counts. Speranza faces up to five years’ imprisonment on the obstruction of justice count.

The government’s case is being prosecuted by Assistant United States Attorneys William E. Schaeffer and Jeffrey A. Goldberg.

This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

The Defendants:

MICHAEL METTER
Age: 58



STEVEN MOSKOWITZ
Age: 45



ANDREW TEPFER, also known as “AVI”
Age: 47



SEYMOUR EISENBERG, also known as “JIMMY”
Age: 66

GEORGE SPERANZA
Age: 43



FRANK NICOLOIS
Age: 62



THOMAS CAVANAGH
Age: 56





_____________________________

1 The charges are merely allegations, and the defendants are presumed innocent unless and until proven guilty.

[dragon52]

CHIEF OFFICERS OF SPONGETECH DELIVERY SYSTEMS, INC., ARRESTED AND CHARGED WITH CONSPIRACY TO COMMIT SECURITIES FRAUD AND OBSTRUCTION OF JUSTICE

CEO and CFO Defrauded Shareholders by Reporting and Touting Phony Sales Figures That Overstated Actual Revenue and Then Obstructed SEC’s Investigation

A criminal complaint was unsealed this morning in federal court in Brooklyn charging Michael Metter, the Chief Executive Officer and President of Spongetech Delivery Systems, Inc. (Spongetech), and Steven Moskowitz, Spongetech’s Chief Operating Officer, Chief Financial Officer, Chief Accounting Officer, Treasurer, and Secretary, with conspiracy to commit securities fraud and obstruction of justice.1 The defendants’ initial appearances are scheduled to be held later today before United States Magistrate Judge Ramon E. Reyes, Jr., at the United States Courthouse, 225 Cadman Plaza East, Brooklyn, New York.

The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, George Venizelos, Special Agent-in-Charge of the Federal Bureau of Investigation, New York Field Office, and Patricia J. Haynes, Special Agent-in-Charge, Internal Revenue Service, Criminal Investigation, New York.

As alleged in the complaint, between approximately January 2007 and May 2010, the defendants Michael Metter and Steven Moskowitz, and others, executed a scheme to defraud Spongetech’s existing and potential investors by publicly reporting — in its filings with the United States Securities and Exchange Commission (SEC) and in numerous press releases — false and grossly overstated sales figures. Specifically, Metter and Moskowitz publicly reported that Spongetech had secured purchase orders from and/or had made sales to five customers that, in reality, did not exist. The complaint charges that the amounts of these orders and sales were material. For example, for the nine months ended February 28, 2009, Spongetech reported that sales to these five customers constituted approximately 99% of Spongetech’s revenue.

The complaint states that beginning in or about early September 2009, the SEC’s Enforcement Division issued subpoenas to various entities and individuals, including Metter and Moskowitz, as part of its investigation of Spongetech. Since then, Metter and Moskowitz allegedly obstructed the SEC’s investigation by fraudulently attempting to fabricate the existence of the five purported customers by (1) seeking to create Internet websites and virtual offices for the customers, (2) furnishing phony purchase orders purportedly issued by the customers, and (3) producing documents they falsely claimed were proof of payments by the non-existent customers.

According to the complaint, Spongetech designs, produces, markets, and sells various cleaning care products, including pre-loaded soap sponges such as the SpongeBob SquarePants soap-filled bath sponges for children. Its headquarters is in New York City, and its shares trade over the counter.

“The defendants in this case — Spongetech’s highest corporate officers — are charged with executing a bold scheme to portray Spongetech as a company that was performing at a level far above reality,” stated United States Attorney Lynch. “As detailed in the complaint, the audacity of their scheme was matched only by their obstructive efforts during the course of the SEC’s investigation. This Office will use all available resources to protect investors from fraud.”

Ms. Lynch thanked the SEC for its assistance. The SEC today filed a corresponding civil complaint in the United States District Court for the Eastern District of New York.

FBI Special Agent-in-Charge Venizelos stated, “As charged in the complaint, the blatant fraud carried out by these defendants went beyond fictitious reporting of sales and receivables to inflate Spongetech’s financial condition. They allegedly created out of whole cloth the very existence of some of the companies with which they claimed to have done business. The FBI is committed to protecting investors and preventing the windfall of unjust enrichment that comes of fraudulent schemes like this one.”

IRS Special Agent-in-Charge Haynes stated, “These recent enforcement actions should serve as a continued warning to those involved in financially based fraud schemes. IRS Criminal Investigation remains committed with our law enforcement partners in bringing those responsible to justice.”

If convicted of conspiracy, each defendant faces up to five years’ imprisonment.

This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

The government’s case is being prosecuted by Assistant United States Attorneys William E. Schaeffer and Jeffrey A. Goldberg.

The Defendants:



MICHAEL METTER
Age: 58



STEVEN MOSKOWITZ
Age: 45





_____________________________

1 The charges are merely allegations, and the defendants are presumed innocent unless and until proven guilty.

[dragon52]

INVESTMENT FIRM PRESIDENT AND FOUR OTHERS ARRESTED FOR SECURITIES FRAUD

Investors Lose More Than $17.5 Million In Investment Advisory Fraud Scheme

Earlier today, Kenneth Marsh, the president and owner of Gryphon Holdings Inc., a purported financial advisory firm located in Staten Island, and four Gryphon employees, Baldwin Anderson, Robert Anthony Budion, Jeanne Lada, and James T. Levier, were arrested on charges of conspiracy to commit securities fraud and wire fraud.1 The defendants’ initial appearances are scheduled for this afternoon before United States Magistrate Judge Marilyn D. Go at the U.S. Courthouse, 225 Cadman Plaza East, Brooklyn, New York.

The charges and arrests were announced by Benton J. Campbell, United States Attorney for the Eastern District of New York, and Ronald J. Verrochio, Inspector-in-Charge, New York Division, United States Postal Inspection Service.

According to the complaint, since approximately January 2007, the defendants and others defrauded victims of more than $17.5 million for fees and investment advisory services. Gryphon victims, many of whom were elderly retirees, typically received unsolicited emails and telephone calls touting the firm’s services and directing them to its website. These communications and the website allegedly contained multiple misrepresentations concerning Gryphon’s employees, services, customers, history, and even the location of its office, including:

• Traders “Michael Warren” and “Kenneth Maseka,” graduates of Harvard, Oxford, Columbia, and Wharton and alumni of Lehman Brothers and Goldman Sachs, headed the firm, its billion dollar hedge funds, and its legendary trading desk. In fact, “Warren” and “Maseka” are fictional, and the firm has no hedge funds or trading desk.

• [Global financier and philanthropist] George Soros stated that, “Alone the traders of Gryphon Financial are incredible, together the[y] are unstoppable.” Mr. Soros did not make this statement.

• Gryphon operates from offices on Wall Street, London and Sydney. In fact, it is run from a strip-mall on Staten Island.

As alleged in the complaint, once the victims provided contact information, the defendants called and, employing additional misrepresentations and high pressure sales tactics, sold increasingly more expensive versions of Gryphon’s services. Despite Gryphon’s public representations that it was only a publisher of financial newsletters, during the sales calls the victims were fraudulently offered personalized advisory services, including investment recommendations, portfolio analysis, and money management.

“Fair capital markets depend on the protection of the small investor, and we will vigorously investigate and prosecute operators of fraudulent investment advisory schemes that seek to prey on their clients,” stated United States Attorney Campbell. Mr. Campbell expressed his grateful appreciation to the United States Secret Service and the Securities & Exchange Commission for their assistance in the investigation.

Postal Inspector-in-Charge Verrochio stated, “Postal Inspectors will pursue those who would prey on Americans by defrauding them of their hard earned income with phony investment schemes.”

If convicted, the defendants each face a maximum sentence of 20 years’ imprisonment.

The government’s case is being prosecuted by Assistant United States Attorney Roger Burlingame.

The Defendants:



KENNETH MARSH
Age: 43



BALDWIN ANDERSON
Age: 55



ROBERT ANTHONY BUDION
Age: 28



JEANNE LADA
Age: 44



JAMES T. LEVIER
Age: 34



_____________________________

1 The charges announced today are merely allegations, and the defendants are presumed innocent unless and until proven guilty.

[dragon52]

FRAUDULENT SPOT FOREIGN CURRENCY TRADER SENTENCED TO 188 MONTHS’ INCARCERATION FOR HIS PARTICIPATION IN $66 MILLION PONZI SCHEME

Earlier today, at the federal courthouse in Brooklyn, United States District Judge Dora L. Irizarry sentenced Michael Richard MacCaull to 188 months’ imprisonment for his role in a Ponzi scheme involving the spot foreign currency exchange market that defrauded investors out of $66 million. As part of their guilty pleas, the defendant and his co-defendant, Bradley David Eisner, forfeited over $28 million in U.S. currency and property to the United States.

The sentence was announced by Benton J. Campbell, United States Attorney for the Eastern District of New York.

Beginning in 2001, the defendants held themselves out as traders on the foreign currency exchange market, also known as the forex market, and solicited investments from the public through their company, Razor FX. From shortly after its inception, however, Razor FX began operating as a fraud on its investors, conducting almost no trading in the forex market. Instead, the defendants simply deposited the investments in a bank account from which they paid their personal living expenses, including luxury homes and automobiles. To conceal the scheme, the defendants sent out phony account statements to investors reporting non-existent trades and profits. Whenever investors sought to withdraw funds, the defendants paid them from funds received from other investors.

Over the course of the scheme, the defendants took in more than $110 million from investors, returned tens of millions of dollars in order to perpetuate the scheme, and retained or spent the remaining funds.

In announcing the sentence, Mr. Campbell expressed his grateful appreciation to the U.S. Postal Inspection Service, New York Office, the agency responsible for conducting the government’s investigation.

The government’s case is being prosecuted by Assistant United States Attorneys Sarah Coyne, Paul Tuchmann, Kathleen Nandan, and Karen Hennigan.

The Defendant:



MICHAEL RICHARD MacCAULL
Age: 38

[dragon52]

FIVE CHURCH LEADERS PLEAD GUILTY TO SECURITIES FRAUD CONSPIRACY

Investor Losses Total Approximately $10 Million

Late Friday afternoon, at the federal courthouse in Brooklyn, Isaac Ovid, the former Chief Executive Officer and Executive Chairman of Jadis Capital, Inc., an investment management company previously headquartered in Uniondale, New York, pled guilty to conspiring with other senior executives of Jadis Capital to commit securities fraud in connection with two hedge funds the firm managed. The plea proceedings were held before United States District Judge John Gleeson. Ovid’s guilty plea was the latest in a series by Jadis Capital executives before Judge Gleeson, including those of Aaron Riddle (former Chief Financial Officer), Joseph Jonathan Coleman (former Chief Marketing Officer and CEO), Timothy Smith (former First Vice-President and Chief Business Strategist), and Robert Riddle (former Northeast Regional Vice-President of Sales).

By their guilty pleas, the defendants, all of whom held leadership positions in a Forest Hills church, admitted to their roles in a securities fraud scheme that involved two hedge funds, the Logos Multi-Strategy I, LP, and the Donum Fund, LP, which Jadis Capital created in February 2005 and August 2005, respectively. The defendants admitted that they conspired to market the hedge funds to prospective investors, including numerous members of their own church, employing material misrepresentations and omissions contained in private placement memoranda and other marketing materials concerning the management, supervision, and historical and expected trading performance of the funds. In total, the defendants collected approximately $9.3 million in investments in the Logos Fund and approximately $3 million in investments in the Donum Fund.

Rather than using the investors’ capital to support the two funds, the defendants used the vast majority of investor money to purchase lavish gifts for their friends and themselves, including a $200,000 Bentley automobile used by Ovid and others; to pay the inflated operating and payroll expenses of Jadis Capital, including an approximate $1.6 million renovation of the Uniondale offices; and to satisfy debts that Ovid incurred before starting Jadis Capital. In September 2005, the defendants, without disclosing the misappropriation of investor funds and extremely poor trading performance of the Logos Fund, fraudulently solicited and accepted a $3,000,000 investment from another victim for the Donum Fund. In total, the defendants collected approximately $12.3 million in investments for the two funds and either lost or spent $10.2 million of investors’ money.

Mr. Campbell expressed his grateful appreciation to the Federal Bureau of Investigation, the agency responsible for leading the criminal investigation, and thanked the United States Securities & Exchange for its assistance.

The government’s criminal case was prosecuted by Assistant United States Attorneys James G. McGovern and Michael L. Yaeger.

The Defendants:



Name: ISAAC OVID
Age: 29



Name: AARON RIDDLE
Age: 35



Name: JOSEPH JONATHAN COLEMAN
Age: 41



Name: TIMOTHY SMITH
Age: 36



Name: ROBERT RIDDLE
Age: 60

[dragon52]

INVESTMENT ADVISOR WHO RAN A $45 MILLION PONZI SCHEME SENTENCED TO NINE YEARS’ IMPRISONMENT

Earlier this afternoon, at the federal courthouse in Brooklyn, New York, Edward T. Stein, an investment advisor based in Roslyn, New York, was sentenced to nine years of imprisonment for securities fraud and wire fraud. The sentence was imposed by United States District Judge Jack B. Weinstein.

On June 22, 2009, Stein pled guilty to operating a Ponzi scheme by inducing investors to purchase interests in several funds and partnerships that he controlled between 1998 and the date of his arrest in April 2009. While Stein falsely assured investors that he would make investments on their behalf with the funds provided to him, he used millions of dollars for other purposes, including personal expenses, investments in his own name, and to pay redemptions to other individuals who had invested money with him. The scheme resulted in over $45 million in losses to approximately 100 investors.

United States Attorney Benton J. Campbell expressed his grateful appreciation to the Federal Bureau of Investigation, the agency that led the government’s investigation, and thanked the Securities and Exchange Commission for its assistance.

The government’s case was prosecuted by Assistant United States Attorneys Scott Klugman, Winston Paes, and Claire Kedeshian.

The Defendant:



EDWARD T. STEIN
Age: 59

[dragon52]

FORMER CREDIT SUISSE BROKER ERIC BUTLER SENTENCED TO FIVE YEARS’ IMPRISONMENT FOR SECURITIES FRAUD AND CONSPIRACY TO COMMIT SECURITIES AND WIRE FRAUD

$5 Million Fine Imposed

Earlier today, at the federal courthouse in Brooklyn, United States District Judge Jack B. Weinstein sentenced Eric Butler, a former Credit Suisse broker, to five years’ imprisonment, three years of supervised release, $5 million fine, and forfeiture of $250,000 for securities fraud, conspiracy to commit securities fraud, and conspiracy to commit wire fraud. Butler was convicted following a three-week jury trial in August 2009.

The sentencing proceeding was announced by Benton J. Campbell, United States Attorney for the Eastern District of New York.

The evidence at trial established that Butler and Julian Tzolov, another former Credit Suisse Broker, defrauded their clients in order to obtain higher sales commissions.1 Butler and Tzolov sold auction rate securities (“ARS”) backed by mortgages to Credit Suisse clients who, in fact, had placed orders to buy ARS backed by government-guaranteed student loans. Butler and Tzolov told their clients that student loan-backed ARS were very low-risk investments guaranteed by the United States government and that the market for the securities was very liquid. As a result, a number of the companies agreed to invest money in these ARS. However, without the knowledge or consent of the companies, Butler and Tzolov began to use the companies’ funds to purchase riskier higher-yield, mortgage-backed collateralized debt obligations, or “CDOs,” which paid Butler and Tzolov higher commissions. CDOs are asset-backed products built from a portfolio of fixed-income assets, including mortgages, subprime mortgages, and second mortgages, many of which were not guaranteed by the government. Butler and Tzolov concealed their scheme by falsifying the names of the ARS the clients bought and otherwise misleading the clients into believing they had bought ARS backed by student loans. In approximately August 2007, the scheme was discovered when the market for the mortgage-backed CDOs purchased by the companies collapsed and various auctions for CDO-ARS began to fail.

“The defendant’s fraud scheme aimed at enriching himself at the expense of his investors, who suffered staggering losses,” stated United States Attorney Campbell. “Those who engage in these schemes will be investigated and prosecuted to the full extent of the law.” Mr. Campbell expressed his grateful appreciation to the Federal Bureau of Investigation and the United States Securities & Exchange Commission for their assistance during the trial.

The government’s case was prosecuted by Assistant United States Attorneys Greg D. Andres, Daniel Spector, and John Nowak.

The Defendant:



ERIC BUTLER
Age: 38

_____________________________

1 Tzolov pleaded guilty to conspiracy, securities fraud, and other charges arising from the scheme on July 22, 2009. He has not yet been sentenced.

[dragon52]

MICHAEL J. MUZIO SENTENCED TO 163 MONTHS IMPRISONMENT FOR SECURITIES FRAUD TARGETING HAITIAN COMMUNITY

June 30, 2010

FOR IMMEDIATE RELEASE

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and John V. Gillies, Special Agent in Charge, Federal Bureau of Investigation, Miami Field Office, announced that a federal judge sentenced Michael J. Muzio to 163 months’ incarceration for crimes related to his scheme to defraud Haitian-American investors in South Florida, and others, by manipulating the stock price of a publicly traded company through materially false and misleading public statements and through coordinated stock purchases and sales designed to artificially impact share prices. Although national in scope, the fraud specifically targeted Haitian-Americans in this community.

On February 17, 2010, the jury convicted Muzio for one count of conspiring to commit wire fraud, two counts of substantive wire fraud, six counts of securities fraud, and two counts of lying to the Securities and Exchange Commission and Federal Bureau of Investigation, respectively. The fraud counts carried a maximum penalty of 20 years’ imprisonment while the counts for lying to federal authorities carried a maximum penalty of five years. The court will set a hearing to address restitution within the next 90 days.

Muzio solicited investors to buy stock in International Business Ventures Group, a public shell corporation with no assets and virtually no business activities. To induce investors to purchase the stock, the defendant created a false impression that an active market for the stock existed by engaging in illegal “wash trades” in which he simultaneously entered buy orders through one brokerage account under his control and offsetting sell orders at the same price through another brokerage account under his control. These trades had no real economic effect, but the defendant’s brokers unwittingly reported the trading activity and potential investors who saw the on-line reports were misled into believing that the stock was actively traded at the quoted prices. Muzio also issued false and misleading press releases claiming that International Business Ventures Group had deals to provide and offer pre-paid debit cards in Haiti; pre-paid calling cards targeting customers in Haiti; and that the company had exclusive rights to market pre-paid electric meters in Haiti. Investors were offered the chance to purchase free-trading shares of stock, but then received certificates for restricted shares which could not be traded and ultimately proved to be worthless.

The case was investigated by the Federal Bureau of Investigation. This case has been prosecuted by Assistant U.S. Attorney Karen Rochlin. Mr. Ferrer also commended the efforts of SEC Regional Director Eric Bustillo and his staff for their contributions to this investigation and its successful prosecution.

A copy of this press release may be found on the website of the United States Attorney's Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

Technical comments about this website can be e-mailed to the Webmaster. PLEASE NOTE: The United States Attorney's Office does not respond to non-technical inquiries made to this website. If you wish to make a request for information, you may contact our office at 305-961-9001 begin_of_the_skype_highlighting 305-961-9001 end_of_the_skype_highlighting, or you may send a written inquiry to the United States Attorney's Office, Southern District of Florida, 99 NE 4th Street, Miami, Fl. 33132.

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FORMER PRINCIPAL OF BOCA RATON STOCK BROKERAGE FIRM CONVICTED OF CONSPIRACY TO COMMIT SECURITIES FRAUD IN CONNECTION WITH THE LANCER HEDGE FUND SCHEME

July 23, 2010

FOR IMMEDIATE RELEASE

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and John V. Gillies, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, announced today that Laurence Isaacson, the former principal of a Boca Raton stock brokerage firm, was convicted by a jury on July 20, 2010 of conspiracy to commit securities fraud in connection with an investment scheme involving the Lancer hedge funds. Isaacson was convicted after a five-week trial before U.S. District Court Judge Adalberto Jordan, in United States v. Michael Lauer et al., Case No. 08-20071-Cr-Jordan. Sentencing for Isaacson is scheduled for October 21, 2010.

Isaacson was one of five defendants named in the indictment, which was unsealed in February 2008 in Miami. Included in the indictment are Michael Lauer, Martin Garvey, and Eric Hauser, who were the co-owners of management companies that directed the Lancer hedge funds’ investment activities. Isaacson and Milton Barbarosh, who were based in Boca Raton, Florida, had financial interests in several "shell" companies in which the Lancer hedge funds invested. During the relevant time, Isaacson was the principal of a stock brokerage firm named the Thornhill Group, which was registered with the Securities and Exchange Commission. Isaacson had previously been sanctioned by the National Association of Securities Dealers for failing to disclose his affiliation with several of the shell companies that the Lancer hedge funds invested in. Hauser and Barbarosh previously entered guilty pleas in this case.

According to the indictment, Lauer, as founder and primary manager, formed and directed several hedge funds, collectively known as the Lancer hedge funds. From October 1999 to July 2003, Lauer and several of his co-conspirators manipulated the closing market prices of thinly-traded shell company securities to falsely inflate the value of the Lancer hedge funds. Lauer, Isaacson, and Barbarosh identified "shell" companies, including ones owned by Barbarosh, in which the Lancer hedge funds would buy large quantities of "restricted" stock at pennies per share in private transactions. Lauer, Garvey and Hauser next directed brokers to buy small amounts of the same securities for the Lancer hedge funds at a much higher open market price and to make additional small purchases to drive up the price to a closing "target price." Lauer then falsely valued all of the securities held by the Lancer hedge funds, including those restricted shares obtained for pennies per share, at the much higher closing price. As a result, the indictment alleges that victims suffered more than $200 million in losses.

To cover up and perpetuate the scheme, the indictment alleges, Lauer created fake portfolios of the securities supposedly held by the Lancer hedge funds and obtained falsely inflated appraisals of the shell companies through Isaacson and Barbarosh. An indictment is merely a charge. All defendants are presumed innocent until proven guilty.

Mr. Ferrer commended the investigative efforts of the FBI. This case is being prosecuted by Assistant U.S. Attorneys Harold Schimkat and Christopher Hunter, and Jack Patrick, Senior Litigation Counsel in the Department of Justice’s Criminal Division's Fraud Section.

A copy of this press release may be found on the website of the United States Attorney's Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

Technical comments about this website can be e-mailed to the Webmaster. PLEASE NOTE: The United States Attorney's Office does not respond to non-technical inquiries made to this website. If you wish to make a request for information, you may contact our office at 305-961-9001 begin_of_the_skype_highlighting 305-961-9001 end_of_the_skype_highlighting, or you may send a written inquiry to the United States Attorney's Office, Southern District of Florida, 99 NE 4th Street, Miami, Fl. 33132.

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FORMER GLOBETEL CEO SENTENCED FOR SECURITIES AND TAX FRAUD CONSPIRACY

July 26, 2010

FOR IMMEDIATE RELEASE

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, John A. DiCicco, Acting Assistant Attorney General for the Tax Division, Daniel W. Auer, Special Agent in Charge, Internal Revenue Service, Criminal Investigation Division, and John V. Gillies, Special Agent in Charge, Federal Bureau of Investigation, Miami Field Office, announced that defendant Timothy Huff was sentenced today before the Honorable Judge Donald Middlebrooks.

Defendant Huff was sentenced to 50 months of imprisonment, to be followed by 3 years of supervised release. Huff previously pled guilty to a one count criminal Information that charged him with a dual object conspiracy to commit securities fraud and to defraud the United States, the United States Treasury Department and the Internal Revenue Service (“IRS”), in violation of 18 U.S.C. § 371.

According to the Information, Huff was the CEO of GlobeTel Communications, Corp. (“GlobeTel”), which purported to be in the wholesale telecommunications business. During 2002, 2003, and 2004, Huff conspired with Thomas Y. Jimenez, the CFO of GlobeTel, and others, to create fictitious revenue, purportedly from Trans Global Ventures, Inc. (“TGVI”), and GTCC Qualnet Mexico, LLC (“Qualnet Mexico”). Huff and his co-conspirators then caused GlobeTel to report that fictitious revenue on its books and in periodic filings with the SEC.

To execute the scheme, Huff and Jimenez created fraudulent invoices and fraudulent technical documents, known as “call detail records” (“CDR’s”), that appeared to corroborate the fictitious revenue GlobeTel was reporting. Huff and Jimenez provided the fraudulent CDR’s and invoices to GlobeTel’s independent auditor to mislead the auditors into believing that GlobeTel had, in fact, received the purported revenue. In this way, according to the Information, Huff and Jimenez reported more than $22,600,000 in fraudulent revenue.

Also part of the conspiracy, Huff and Jimenez deposited $300,000 into a SunTrust account in the name of a GlobeTel subsidiary and fraudulently recorded the transfer on GlobeTel’s books as a payment by TGVI. Additionally, Huff and Jimenez made six wire transfers between May, 2004 and February, 2005, totaling approximately $980,500. These funds were purported to be the proceeds of a stock-loan transaction between Huff and other GlobeTel executives. In fact, however, the transfers were the proceeds of a fraudulent stock sale.

Additionally, Huff, Jimenez and others caused stock to be issued as compensation to themselves and other GlobeTel officers and directors. Rather than reporting the stock as compensation, Huff, Jimenez, and others, disguised the transaction as a loan, by transferring the stock to C&M Management Consulting, Inc. (“C&M”), knowing that C&M would not hold the stock as collateral but would sell the stock. Huff and Jimenez fraudulently applied some of the proceeds from the stock transaction to falsely reduce GlobeTel’s accounts receivable. Thereafter, Huff and Jimenez failed to have Forms 1099 issued for the stock transaction, and failed to report the proceeds of the stock transaction on their personal tax returns for 2001 through 2004.

Mr. Ferrer commended the investigative efforts of the Internal Revenue Service, Criminal Investigation Division, and the Federal Bureau of Investigation. This case is being prosecuted by Assistant U.S. Attorney Thomas P. Lanigan and Trial Attorneys Gregory R. Bockin and Kathryn Ward of the Department of Justice's Tax Division.

A copy of this press release may be found on the website of the United States Attorney's Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

Technical comments about this website can be e-mailed to the Webmaster. PLEASE NOTE: The United States Attorney's Office does not respond to non-technical inquiries made to this website. If you wish to make a request for information, you may contact our office at 305-961-9001 begin_of_the_skype_highlighting 305-961-9001 end_of_the_skype_highlighting, or you may send a written inquiry to the United States Attorney's Office, Southern District of Florida, 99 NE 4th Street, Miami, Fl. 33132.

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UNDERCOVER OPERATION NABS MARKET INSIDERS AND PROMOTERS IN PENNY STOCK MARKET STING

October 7, 2010

FOR IMMEDIATE RELEASE

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and John V. Gillies, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, announced the filing of seven separate cases against “microcap” stock market insiders and stock promoters, charging numerous individuals with securities fraud and related charges. The term “microcap stock” refers to companies with low or “micro” capitalizations, meaning the total value of the company’s stock. Microcap companies typically have limited assets and its stocks tend to be low priced and trade in low volumes.

According to the charging documents and other court records, FBI agents conducted an undercover investigation into the alleged manipulation of thinly-traded companies with securities quoted in the over-the-counter market, commonly referred to as the “Pink Sheets.” As a result of the FBI’s efforts, public company officers, controlling shareholders, a transfer agent, and a promoter have been arrested and charged with conspiracy, securities fraud, mail fraud, and wire fraud. If convicted, the defendants face statutory maximums ranging from 5 years to 25 years in prison for each count of conviction.

The following seven criminal cases were announced today:

In United States v. Tzemach David Netzer Korem and Jean R. Charbit, Case No. 0-20732-CR-UU, defendants Korem, 57, a transfer agent from Los Altos, CA, and Jean Charbit, 65, a major shareholder from Miami, Florida, are charged with conspiring to manipulate the publicly quoted share price and trading volume of ZNext Mining Corp., Inc.

In United States v. Bruce Palmer, Case No. 10-60252-CR-MGC, defendant Bruce Palmer, 64, of Placitas, New Mexico, an officer of a publicly traded company, is charged with engaging in a scheme to manipulate the publicly quoted share price and trading volume of Accesskey IP, Inc.

In United States v. Larry Wilcox, Case No. 10-60260-CR-JIC, defendant Larry Wilcox, 63, of West Hills, California, an officer of a publicly traded company, is charged with conspiring to pay kickbacks to a pension fund fiduciary to induce the fiduciary to misappropriate money from a pension fund in order to buy restricted common stock at inflated prices.

In United States v. Anthony Mellone and Alex Parsinia, Case No. 10-3352-CR-WCT, defendants Anthony Mellone, 53, of Pompano Beach, Florida, and Alex Parsinia, 65, of Calabassas, California, each an officer of a publicly traded company, are charged with engaging in a scheme to pay kickbacks to a pension fund fiduciary to induce the fiduciary to misappropriate money from a pension fund in order to buy restricted common stock at inflated prices.

In United States v. Jeffrey Galpern, Case No. 10-3353-CR-WCT, defendant Jeffrey Galpern, 41, of Boca Raton, Florida, is charged with engaging in a scheme to manipulate the publicly quoted share price and trading volume of Crystal Properties Holdings, Inc.

In United States v. Steven Humphries and John Buckeye Epstein,Case No. 10-60259-CR-WPD, defendants Steven Humphries, 57, of Plano, Texas, and John Buckeye Epstein, 52, of Addison, Texas, each an officer of a publicly traded company, are charged with engaging in a scheme to pay kickbacks to a pension fund fiduciary to induce the fiduciary to misappropriate money from a pension fund in order to buy restricted common stock at inflated prices.

In United States v. Scott Sand, Case No. 10-60257-CR-WPD, defendant Scott Sand, 52, of Yucaipa, California, an officer of a publicly traded company, is charged with engaging in a scheme to pay kickbacks to a pension fund fiduciary to induce the fiduciary to misappropriate money from a pension fund in order to buy restricted common stock at inflated prices.

U.S. Attorney Wifredo A. Ferrer stated, “Securities fraud is an equal opportunity crime – it runs the gamut from very large to very small publicly traded companies. As today’s cases show, even microcap companies are plagued by fraudsters who seek to manipulate the stock market to line their own pockets. The prosecution of white collar crime, including securities, health care, and mortgage fraud, is one of my top priorities, and the U.S. Attorney’s Office will work cooperatively with law enforcement and regulatory agencies to bring these fraudsters to justice.”

John V. Gillies, Special Agent in Charge of the FBI’s Miami Office, stated, “Unsuspecting investors lose millions of dollars each year due to schemes that mislead investors and manipulate the prices of publicly traded securities through what are commonly referred to as “pump and dump” schemes. Securities markets must be regulated and transparent so investors can continue to trust and have faith in the system. Proactive investigations allow the FBI to prevent losses to victims by identifying those involved and holding them accountable for their unscrupulous actions.”

Also today, the Securities and Exchange Commission announced that it had filed separate civil cases against more than a dozen defendants for engaging in fraudulent kickback schemes involving micro-cap stocks.

Mr. Ferrer commended the investigative efforts of the FBI and the cooperative efforts of the Miami Regional Office of the Securities and Exchange Commission. These cases is being handled by Assistant U.S. Attorneys Ryan Dwight O’Quinn, Bertha Mitrani and Richard Murad.

An indictment, information or complaint is only a charging document and a defendant is presumed innocent until and unless proven guilty.

A copy of this press release may be found on the website of the United States Attorney's Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

Technical comments about this website can be e-mailed to the Webmaster. PLEASE NOTE: The United States Attorney's Office does not respond to non-technical inquiries made to this website. If you wish to make a request for information, you may contact our office at 305-961-9001 begin_of_the_skype_highlighting 305-961-9001 end_of_the_skype_highlighting, or you may send a written inquiry to the United States Attorney's Office, Southern District of Florida, 99 NE 4th Street, Miami, Fl. 33132.

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TRADER SENTENCED TO 5 YEARS FOR FRAUD, TAX CRIMES

Pensacola, Florida – Thomas F. Kirwin, United States Attorney for the Northern District of Florida, announced that David A. Owen of Destin, Florida, was sentenced yesterday to five years in federal prison and ordered to pay more than $1.7 million in restitution to his victims as a result of his convictions for commodities fraud, wire fraud, and tax crimes.

Owen, who was indicted in December 2009, operated a commodity pool known as Oasis Futures in Destin, Florida, since January 2005. Owen fraudulently solicited and accepted at least $2,200,000 from the public to invest in the commodity futures market. Owen made numerous false claims to his prospective investors in soliciting these funds, including fraudulently reporting fund profits, falsifying commodity account statements to conceal the true performance of the funds, and failing to disclose his prior convictions for securities and bank fraud. Owen fraudulently held himself out as a Certified Public Accountant. He failed to disclose that his license as a CPA had been revoked in 1989.

Owen’s actions resulted in a loss of more than $1.7 million to the investors of the commodity pool he operated.

Additionally, Owen failed to file federal income tax returns for the years 2005 through 2008. Owen had earned a gross income of approximately $125,573 in 2005, $88,757 in 2006, $98,076 in 2007 and $112,673 in 2008.

As a result of this conduct, Owen was convicted of commodities fraud, wire fraud, and failing to file federal income tax returns following his guilty plea in January of this year.
In addition to the prison sentence and order of restitution imposed by United States District Judge Lacey Collier, Owen was ordered to serve a term of three years’ supervised release following the expiration of his prison sentence. He also was ordered to file correct income tax returns and pay any tax due and owing to the Internal Revenue Service.

This case was investigated by the Internal Revenue Service – Criminal Investigation, the Commodity Futures Trading Commission and the State of Florida Bureau of Financial Investigations. It was prosecuted by Assistant United States Attorney Stephen Preisser.

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TWO EXECUTIVES IN PUBLICLY TRADED COMPANY CONVICTED OF FEDERAL CHARGES RELATED TO ILLEGAL STOCK SALES

November 1, 2010

LOS ANGELES – A federal jury has convicted two executives of a publicly traded corporation of illegally selling unregistered stock in their company.

Richard A. Bailey, 55, and Florian R. Ternes, 62, both of Las Vegas, Nevada, who respectively were the chief executive officer and the chief operating officer of Gateway Distributors, Inc., were both convicted Friday afternoon of two counts of issuing and selling unregistered stock. Immediately following the reading of the jury’s guilty verdicts, United States District Judge Otis D. Wright II remanded both Bailey and Ternes into custody.

During a week-long trial in United States District Court, federal prosecutors presented evidence that Bailey and Ternes issued more than $600,000 worth of Gateway stock in an effort to circumvent federal securities registration laws. At the time of the issuance in 2004, Bailey and Ternes claimed that the stock issuance represented payment of fees to a purported Gateway consultant, and they filed false stock registration statements with the Securities and Exchange Commission.

In reality, the stock was issued to a friend of Bailey and Ternes who provided no legitimate services for Gateway. In return, the friend sold the illegally issued shares, and the proceeds of the transaction were then covertly returned to Gateway. Bailey and Ternes used the proceeds of the stock sales to finance acquisition of a fishing lodge in Utah and a commercial office building/warehouse in Las Vegas.

Gateway was a Nevada-based company involved in the sale of nutritional supplements. Gateway’s stock was publicly traded on the Over-the-Counter Bulletin Board.

Judge Wright is scheduled to sentence Bailey and Ternes on February 14, 2011. At sentencing, both defendants face a statutory maximum penalty of 10 years in federal prison.

The investigation into Bailey and Ternes was conducted by the Federal Bureau of Investigation and IRS - Criminal Investigation, which received the assistance of the Chicago Regional Office of the Securities and Exchange Commission.

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Release No. 10-162

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EX-CEO OF HOMESTORE.COM SENTENCED TO 54 MONTHS IN FEDERAL PRISON FOR OVERSEEING FRAUDULENT ‘ROUND-TRIP’ SCHEME THAT ILLEGALLY INFLATED COMPANY’S REVENUE

LOS ANGELES – The former chief executive officer and chairman of the board of Homestore.com was sentenced this afternoon to 4½ years in federal prison for presiding over a scheme to commit securities fraud by artificially inflating the publicly traded company’s advertising revenue to appear to be more profitable to Wall Street analysts.

Stuart Wolff, 46, of Westlake Village, was sentenced by United States District Judge Gary A. Feess, who ordered Wolff to begin serving his sentence by June 21.

“The conduct caused widespread injury to untold numbers of people in the stock market,” Judge Feess said, referring to the Homestore scheme, which he called a “calculated deception of the public.”

Wolff pleaded guilty in January to one count of conspiracy to commit securities fraud through fraudulent, “round-trip” transactions that were designed to artificially inflate Homestore’s revenue in 2001. In the round-trip deals, Homestore paid millions of dollars to vendors for products and services that Homestore did not need or never used. The sole reason for paying the vendors was to start a circular flow of funds that would improperly return to Homestore as revenue. When he pleaded guilty, Wolff admitted that he entered into an agreement with other senior Homestore executives to record advertising revenue from those deals in order to make false statements to investors and federal regulators about Homestore’s true financial condition. Homestore improperly recorded more than $60 million in phony revenue from fraudulent transactions during the first three quarters of 2001. As a result of the financial scandal that erupted when the round-trip scheme was revealed, Homestore’s stock price dropped sharply, and more than $1 billion in shareholder equity disappeared. The company was forced to eliminate more than 1,000 jobs to cut costs and stay out of bankruptcy. While the company still operates under the name Move, Inc., its stock still trades at a price far below what it once did in 2001.

“Wolff was a hands-on, brilliant executive who participated in all major
(and many minor) corporate decisions for Homestore,” prosecutors wrote in a sentencing brief that noted Wolff participated in the scheme by approving huge cash transfers for the deals, assisting in the collection of fraudulent revenue from business partners, and publicizing Homestore’s fabricated financial results to
investors. “Along the way, Wolff profited personally by selling millions of dollars of stock at inflated prices when he knew Homestore was deceiving the market about its financial results,” according to the sentencing memo, which argued Wolff realized profits of more than $8.6 million when he sold his stock in 2001.

In 2006, Wolff was convicted at trial of more than a dozen criminal charges and was sentenced to 15 years in federal prison. However, the U.S. 9th Circuit Court of Appeals reversed the conviction in January 2008, finding that the trial judge should have been recused from the trial. The case was returned to the District Court and was reassigned to Judge Feess.

Wolff is the twelfth individual convicted of federal charges and sentenced in relation to the Homestore scheme. The other 11 defendants convicted in this case previously received sentences ranging from probation to 27 months in custody.

The investigation into the securities fraud violations by individuals at Homestore.com was conducted by the Federal Bureau of Investigation. Move, Inc. fully cooperated in the investigation.

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Release No. 10-070

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FIVE CHARGED IN INSIDER TRADING RING THAT GENERATED MORE THAN $1.7 MILLION IN ILLEGAL PROFITS

LOS ANGELES -- Special agents with the FBI this morning arrested two of five defendants charged in an insider trading scheme in which the participants secretly used confidential information obtained from two investor relations firms to generate more than $1.7 million in illegal profits.

Ahmad Haris Tajyar, 34, of Encino, was arrested without incident at his residence after being indicted for his role in two separate insider trading conspiracies. The first conspiracy involved trades based on confidential information obtained from an insider at the New York-based investor relations firm Lippert Heilshorn. The second conspiracy involved trades based on confidential information from clients of Haris Tajyar’s own investor relations firm, which was based in San Fernando Valley.

The second person arrested today was Zachary Bryant, 39, of Stamford, Connecticut, who previously worked as an account executive and vice president in the Los Angeles office of Lippert Heilshorn & Associates.

A federal grand jury returned an indictment against four defendants yesterday afternoon. The indictment, as well as a criminal information filed against a fifth defendant, outline how the conspirators secretly obtained inside information in advance of upcoming press releases and used that information to generate hundreds of thousands of dollars in illegal profits before the news was announced to the public.

Those charged in the scheme are:

Ahmad Haris Tajyar, the owner and president of the Sherman Oaks-based Investor Relations International, Inc., who allegedly made more than $1 million in illegal profits from his insider trading;

Zachary Bryant, who allegedly provided confidential information to Haris Tajyar;

Omar Tajyar, 30, of Porter Ranch, a cousin of Haris Tajyar who previously worked at Investor Relations International and who allegedly made more than $300,000 in illegal profits from trades based on inside information;

Ahmad Noory, 35, of Ladera Ranch, a former Investor Relations International employee and current operator of a Beverly Hills investor relations firm, Nexus Investor Relations, who alleged earned at least $78,000 in illegal profits through insider trading as part of the conspiracy; and

Vispi Shroff, 57, of Canyon Country, who has admitted receiving more than $165,000 in illegal profits, in part from allowing Haris Tajyar to use his investment account to buy and sell stocks, with the agreement that they would split the profits from those trades.

The indictment alleges that while Bryant worked at Lippert Heilshorn, he secretly disclosed information to Haris Tajyar about upcoming press releases for the firm’s investor relations clients, including information related to press releases for Connetics Corporation; Medivation, Inc.; and Halozyme Therapeutics, Inc. Haris Tajyar is accused of illegally profiting from this information by trading in securities of those companies immediately before the announcements were made. The indictment also alleges that Haris Tajyar in turn disclosed the inside information from Bryant about the upcoming press releases to Omar Tajyar, Noory and Shroff, who also traded immediately in advance of the press releases. After the press releases were issued and the market reacted to the news, the conspirators quickly closed out trading positions, reaping huge profits in a short period of time, typically one or two days.

Haris Tajyar is also charged in a second scheme involving confidential information from the clients of his investor relations firm, Investor Relations International. The indictment alleges that as part of this scheme, Haris Tajyar told Shroff about an upcoming press release for one of the firm’s clients, LJ International, a jewelry manufacturer, designer, and retailer based in Hong Kong. Haris Tajyar then used one of Shroff’s investment accounts to buy tens of thousands of shares of LJ International before the press release was issued, and Shroff separately bought shares of LJ International as well. After Haris Tajyar and Investor Relations International issued the press release for LJ International, Haris Tajyar and Shroff sold their shares for a combined profit of over $260,000.

“Everyone involved in the financial industry has fiduciary and ethical duties, but in this case those responsibilities were ignored in favor of profits derived from illegal stock trading,” said United States Attorney André Birotte Jr. “Prosecuting violations of those duties helps to maintain the integrity of America’s financial system and to ensure that the public is able to maintain a high degree of trust when trading in the financial markets.”

Haris Tajyar is expected to make his initial court appearance this afternoon in United States District Court in Los Angeles. Bryant made his initial court appearance this morning in United States District Court in Connecticut and agreed to appear in Los Angeles federal court for an arraignment on Monday. Omar Tajyar and Noory are expected to surrender to authorities this afternoon and then make their initial court appearances. Shroff has entered into a plea agreement with the government and has agreed to appear in United States District Court in Los Angeles on April 12.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until proven guilty.

Haris Tajyar is charged in the indictment with two counts of conspiracy to commit securities fraud and 13 counts of securities fraud. Bryant is charged with one count of conspiracy and 13 counts of securities fraud. Omar Tajyar is charged with one count of conspiracy and four counts of securities fraud. Noory is charged with one count of conspiracy and two counts of securities fraud.

The charge of conspiracy to commit securities fraud carries a maximum statutory penalty of five years in federal prison. Each count of securities fraud carries a statutory maximum sentence of 20 years in federal prison.

If they are convicted of all the charges in the indictment, Haris Tajyar would face a statutory maximum sentence of 270 years in federal prison, Bryant would face a maximum sentence of 265 years in federal prison, Omar Tajyar would face a maximum sentence of 85 years in federal prison, and Noory would face a maximum sentence of 45 years in federal prison.

Shroff has agreed to plead guilty to two counts of securities fraud. Once he pleads guilty, Shroff will face a statutory maximum penalty of 40 years in federal prison.

This insider trading case is part of an ongoing investigation by the Federal Bureau of Investigation.

In June 2009, The United States Securities and Exchange Commission filed a civil complaint against Haris Tajyar, Bryant, Omar Tajyar and Shroff that accuses them of insider trading (see: http://www.sec.gov/litigation/litreleases/2009/lr21069.htm).

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Release No. 10-055

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EX-CEO OF HOMESTORE.COM AGREES TO PLEAD GUILTY IN SCHEME THAT ILLEGALLY INFLATED COMPANY'S REVENUE
January 7, 2010

The former chief executive officer and chairman of the board of Homestore.com has agreed to plead guilty to conspiring to commit securities fraud through a scheme that artificially inflated the company's on-line advertising revenue to make the publicly traded company appear to be more profitable to Wall Street analysts.

Stuart Wolff, 46, of Westlake Village, agreed to plead guilty to one count of conspiracy to commit securities fraud in a plea agreement filed today in United States District Court in Los Angeles. Wolff is scheduled to appear in court on January 12 to enter his plea pursuant. The plea agreement calls for a sentence of at least three years and up to the statutory maximum penalty of five years in federal prison.

In 2006, Wolff was convicted at trial of more than a dozen criminal charges and was sentenced to 15 years in federal prison. However, the U.S. 9th Circuit Court of Appeals reversed the conviction in January 2008, finding that the trial judge should have been recused from the trial. The case was remanded to the District Court and will be resolved if United States District Judge Gary A. Feess accepts the terms of the plea agreement.

Wolff is expected to become the twelfth individual convicted of federal charges related to the Homestore scheme. Wolff was Homestore's CEO and chairman from 1997 until he resigned in January 2002 during an internal investigation into the fraudulent scheme. The other 11 defendants convicted in this case previously received sentences ranging from probation to 27 months in custody.

Wolff and the other Homestore personnel prosecuted in this case participated in a scheme to execute fraudulent “round-trip” transactions to artificially inflate Homestore’s revenue in 2001. Those transactions fraudulently generated a circular flow of money in which Homestore recognized its own cash as revenue. In the plea agreement filed today, Wolff admitted that he entered into an agreement with other senior Homestore executives to record advertising revenue from those deals in order to make false statements to investors and federal regulators about Homestore’s true financial condition.

The plea agreement with Wolff follows a recent order by Judge Feess in which the court rejected a claim by Wolff that prosecutors in the case engaged in misconduct in the Homestore investigation. In response to a defense motion, Judge Feess issued an order that expressly stated “there is nothing in the record to suggest that the government has engaged in any improper conduct in connection with the investigation and prosecution of this case.”

Homestore shareholders suffered losses of at least $100 million when the company's stock price dropped precipitously in 2001 after news of an investigation into accounting irregularities became public.

Homestore.com is now known as Move, Inc. and provides real estate listings and related services on the Internet. The company fully cooperated in the investigation, which was conducted by the Federal Bureau of Investigation.

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Release No. 10-002

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KCK MAN CHARGED IN $7.2 MILLION FRAUD SCHEME THAT TARGETED THOUSANDS OF INVESTORS NATIONWIDE




KANSAS CITY, Mo. – Beth Phillips, United States Attorney for the Western District of Missouri, announced today that a Kansas City, Kan., man has been charged in federal court for his role in a $7.2 million securities fraud scheme that victimized thousands of investors across the United States.

“A federal criminal complaint alleges that Petro America was an empty facade of a business run by deception and false promises,” Phillips said. “Petro’s founder is charged with defrauding unwary investors by selling them worthless stock in order to support his lavish lifestyle.”

Isreal Owen Hawkins, 55, of Kansas City, Kan., was charged in a two-count criminal complaint filed in the U.S. District Court in Kansas City, Mo. Hawkins is the president and CEO of Petro America Corporation. A related civil forfeiture was filed against Petro America on Friday, Oct. 22, 2010.

The criminal complaint charges Hawkins with securities fraud and with structuring financial transactions in order to evade federal reporting requirements. Hawkins founded Petro America, which bills itself as a holding company for crude oil and gold mines (among other claimed assets) in 2007.



Count One: Securities Fraud

According to an affidavit filed in support of the criminal complaint, Hawkins began selling shares of unregistered stock to investors in 2008. At the time, the affidavit says, Petro America had no oil, no realistic prospects for obtaining, transporting or storing large amounts of oil, no significant assets, no revenue and no other employees. The government is aware of no evidence that Petro America has seriously pursued any opportunities to acquire oil fields or conducted oil trading operations. Nevertheless, the affidavit says, Hawkins and others have touted excellent prospects for Petro’s rapid growth in the oil industry.

According to the affidavit, more than 9,000 victims have invested in excess of $7.2 million since August 2008, but instead of using that revenue for legitimate business-related purposes, Hawkins and his co-conspirators allegedly withdrew investors’ funds from Petro America’s bank accounts in cash, which they spent on personal expenditures such as a house by the lake, luxury cars, a $5,700 fur coat, a $37,000 boat, a $5,200 piece of Louis Vuitton luggage purchased in Switzerland, expensive jewelry and travel.

Hawkins, the only full-time employee of Petro America, paid himself an annual salary of $595,000 under a contract that also granted him a $175,000 bonus, 500 million shares that are immediately exercisable, a company car, a company apartment in Missouri, and a dining card. Hawkins drew his salary in cash, in random amounts at inconsistent times, and the company did not withhold taxes.

Conspirators often recruited investors through churches and used religious language in their pitches, the affidavit says, including promoting Petro America as a once-in-a-lifetime opportunity to “share the blessing.” Petro America cultivated a relationship with the African American Ministers Alliance Group, the affidavit says, and according to its records made large payments to multiple Kansas City-area pastors, religious leaders and a local civil rights activist.

Investors lost from $100 to $100,000 each. Initially, many of the investors were drawn into the scheme with the promise that $100 would buy 100,000 shares of Petro America stock, the affidavit says, which Hawkins claimed was “book valued” at $2 per share. As the scheme progressed, conspirators raised the price to invest and claimed an ever-higher “book value” for the shares. The affidavit alleges that this allowed conspirators to unload shares to new investors at an increasing profit. To date, the affidavit says, the stock has never been properly registered or listed on any exchange.

Hawkins allegedly promised “meteoric returns” on investments. At the height of the scheme, the affidavit says, up to $700,000 flooded into the company each month.

Hawkins claimed that Petro America would be “the first African-American holding oil company to go public in the United States,” according to the affidavit. Investors were frequently told that they would be rich when the company “goes public.” Going public, the conspirators allegedly have said for over two years, is just weeks away. In reality, the affidavit says, the company has no significant assets or revenue stream (other than investor proceeds).



Alleged False Claims

Today’s affidavit alleges that Hawkins and co-conspirators provided materially false information to investors. For example, Petro America’s Web site includes a prominent photograph of the luxury office building at Two Pershing Square, ostensibly Petro’s “world corporate headquarters.” In reality, the affidavit says, Hawkins contracts with Regus Management Group LLC, a secretarial service that provides such services as telephone answering, fax and mail handling, use of the address and 16 hours of office usage for an initial monthly fee of $225.

According to the affidavit, conspirators have touted Petro America acquisitions in gold and rock mines as valuable holdings worth hundreds of billions of dollars. In reality, the affidavit says, Petro America’s interests in the gold and rock mines are essentially worthless. Petro America allegedly adopts wildly high valuations for the mines, most or all of which are not producing anything. Many or all of the mines are not actually mines at all, but mining claims. A mining claim is merely a plot of government-owned land upon which a person or corporation has filed a claim of rights to a mineral deposit, which may or may not actually exist.

Based on these representations, Hawkins and others claim that Petro’s assets are worth more than $284 billion. According to the affidavit, if this valuation were accurate, Petro America would be the second-largest company in the United States by market capitalization, larger than Wal-Mart, Apple or Microsoft. America’s largest company is Exxon Mobil, which has a market capitalization of $312.28 billion.



Count Two: Structuring Financial Transactions

Under federal law, banks are required to file Currency Transaction Reports for financial transactions that exceed $10,000 in one day. It is illegal to conduct multiple cash withdrawals in amounts less than $10,000 for the purpose of evading that federal reporting requirement.

The affidavit alleges that Hawkins and others made large cash withdrawals from Petro America’s bank accounts, which were structured to avoid bank reporting laws. For example, according to the affidavit, Hawkins and an unidentified co-conspirator visited Mazuma Credit Union several times each week. Sometimes they made big deposits of multiple checks into the company’s bank account; on most visits, the affidavit says, they withdrew $7,500 to $9,800, often on consecutive days. In this manner, Hawkins obtained at least $537,515 in cash from Petro’s account at Mazuma. The affidavit also alleges that Hawkins structured currency withdrawals out of Petro America accounts at U.S. Bank and Bank of America.


Web Site Support For Fraud Victims

Two Web sites have been established to collect information from the victims of the alleged securities fraud scheme and to provide updated information about the status of the case. Investors of Petro America are encouraged to provide information via an online form at http://www.postalinspectorsurvey.com/PetroAmerica Due to the volume of expected responses, this process has been automated and placed online; all communication from potential victims regarding the case should be made via this Web site. Updates about the status of the case will be posted at http://www.justice.gov/usao/mow/petro.html

Phillips cautioned that the charges contained in this complaint are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.

This case is being prosecuted by Assistant U.S. Attorney Daniel M. Nelson. It was investigated by IRS-Criminal Investigation, the U.S. Postal Inspection Service and the Office of the Missouri Securities Commissioner.

****************

This news release, as well as additional information about the office of the United States Attorney for the Western District of Missouri, is available on-line at

http://www.justice.gov/usao/mow/index.html

[dragon52]

Came across one called TBJK

dilution starting to set in and they are clueless. oh well... be cautious on that one... very cautious.

[dragon52]

boy it's been a while since I posted anything here.... LOL

guess I'd better start somewhere soon...

[dragon52]

ENFORCEMENT PROCEEDINGS
Commission Orders Hearings on Registration Suspension or Revocation Against Twelve Companies for Failure to Make Required Periodic Filings

In conjunction with today's trading suspension, the Commission also instituted two separate public administrative proceedings to determine whether to revoke or suspend for a period not exceeding twelve months the registration of each class of the securities of ten companies for failure to make required periodic filings with the Commission:

In the Matter of Alyn Corp., et al., Administrative Proceeding File No. 3-13881

* Alyn Corp. (ALYNQ)
* American Holding Investments, Inc. (AHDI)
* American Midland Corp. (AMCO)
* American Millennium Corp. (AMCI)
* American Pallet Leasing, Inc. (APLS)
* American Stellar Energy, Inc. (n/k/a Tara Gold Resources Corp.) (TRGD)
* Amwest Environmental Group, Inc. (AEGI)

In the Matter of American Healthchoice, Inc., et al., Administrative Proceeding File No. 3-13882

* American HealthChoice, Inc. (AMHI)
* American Patriot Funding, Inc. (f/k/a Referral Holdings Corp.) (APAT)
* American Quantum Cycles, Inc. (AQCY)
* Americare Health Scan, Inc. (f/k/a United Products International, Inc.) (AMIT)
* Amnex, Inc. (AMXIQ)

In each Order, the Division of Enforcement (Division) alleges that the respective Respondents are delinquent in their required periodic filings with the Commission.

In each of these proceedings, instituted pursuant to Exchange Act Section 12(j), a hearing will be scheduled before an Administrative Law Judge. At the hearing, the judge will hear evidence from the Division and the Respondents to determine whether the allegations of the Division contained in the Order, which the Division alleges constitute failures to comply with Exchange Act Section 13(a) and Rules 13a-1 and 13a-13 thereunder, are true. The judge in the proceedings will then determine whether the registrations pursuant to Exchange Act Section 12 of each class of the securities of these Respondents should be revoked or suspended for a period not exceeding twelve months. The Commission ordered that the Administrative Law Judge in each proceeding issue an initial decision not later than 120 days from the date of service of the order instituting proceedings. (Rel. 34-62046, File No. 3-13881; 34-62047, File No. 3-13882)

[dragon52]

Has it been a year already? wow...

wishing another prosperous new year 2010....

[dragon52]

haven't been keeping up much here... but will start to hound dog

those pos stocks... lol

[dragon52]

GBDX is awfully quiet... lol

are they still trading?

[dragon52]

INIX looks like it bit the dust....

tanking down to obliv....

[dragon52]

EWRC Chap 7 filed... it's toast. eom

[dragon52]

Im surprised I didn't add INIX yet...

so it is... INIX is toast.

[dragon52]

GBDX eom

[dragon52]

LFGRQ is getting there... made the list eom

[dragon52]

IDMCQ doing a dead cat bounce on hyping....

watch your six on this one. Posters are claiming that the Holding corp was sold with the bank... sources say otherwise. The Holding Corp is still in Chap 7.

shareholders will get a rude awakening.

[dragon52]

HAPPY NEW YEAR TO ALL

wishing all a prosperous and happy new year!

[mrfence]

DJI...

[kenco]

AMNG is firing up their stock promoting machine.

[dragon52]

xkem added eom