https://www.youtube.com/watch?v=xLpfbcXTeo8
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"Players who swooped in during 2009 to drive the company into BK"
WHAT??? How can a short-seller drive a company into bankruptcy unless it is nothing other than a share-selling scam?
Revenues come from sales - REAL sales - of which Spongetech had very. very little. If they really ahd $70 million in sales in one quarter, they would not have had any reason to be bankrupt.
Shortsellers don't keep people from buying sponges. And they cannot drive a profitable business into bankruptcy.
What nonsense.
Every scheme in the book has been tried by the NSS unicorn hunters to cause a fictional NSS squeeze - from the old standby scam of pulling certs to spinning off new stock in a spinoff corp as dividends that a supposed NSS would not have access to deliver (thus forcing a cover before spinoff share dividend distribution).
Guess what - none of these schemes has ever worked - because the NSS unicorns are just that - unicorns.
These are plain penny stock scams. No matter how many lawsuits are filed and dismissed for lack of evidence nor how many failed schemes to squeeze the mythical unicorns - nobody can show an actual unicorn.
OPTIONS contracts are not shares of stock. There is no registered transfer agent for OPTIONS contracts, and thus OPTIONS contracts can be naked shorted. STOCKS cannot.
Thus nobody can ever find the unicorn, because the unicorn does not exist.
Horses do. Zebras do. But unicorns are not horses or zebras, and stocks are not options or futures contracts.
Selling short against the box. Holders of restricted 144 shares often use offshore or Canadian brokerages to sell short against their restricted 144 shares. This is called shorting the box (the 144 shares are "in the box") and is a synthetic sale of a long position, but it shows up as a short sale on SHO.
The 144 shareholders who shorted the box would appear to uneducated people as the unicorn "naked shorts" when they look at SHO numbers or blue sheets.
Every scheme in the book has been tried by the NSS unicorn hunters to cause a fictional NSS squeeze - from the old standby scam of pulling certs to spinning off new stock in a spinoff corp as dividends that a supposed NSS would not have access to deliver (thus forcing a cover before spinoff share dividend distribution).
Guess what - none of these schemes has ever worked - because the NSS unicorns are just that - unicorns.
These are plain penny stock scams. No matter how many lawsuits are filed and dismissed for lack of evidence nor how many failed schemes to squeeze the mythical unicorns - nobody can show an actual unicorn.
Reality popped your NSS bubble idea sport. The CMKX cases brought by Al Hodges were dismissed for complete lack of evidence. Bill Frizzell was allowed to cross-examine the transfer agent and others and he found zero NSS. Nada.
Roofie made big promises about some big revelations in pre-trial discovery - he came up with nothing. Then he was going to blow the lid off the unicorn conspiracy at the trial - and he failed to find a single unicorn - so he fled like a frightened little kid and hid in a closet. Now he's hunting black unicorns in FCI-Texarkana until 2031 and giving his purty mouth a workout.
Your NSS unicorn still cannot be found. And your unicorn conspiracy websites have been spewing the same crapola and making the same promises for a decade - and still no unicorns.
Keep looking for the unicorn-riding sasquatch that was abducted by UFOs. It is amusing to watch the NSS moonbats ramble on and slam into endles failure because reality does not match their warped delusions.
These scams were run by crooked insiders selling smoke and boolsheet - like CMKX with fake diamond claims and no business and CONV with no Venezuelan bonds and no business. They have no assets - never did. Pure frauds.
GailsWaters Monday, January 11, 2010 4:16:13 PM Post # of 168622
See you took down the cmkx law suit. Did you notice all the corrution outlined in the suit that Rufus warned all us about? Is the truth of CSHD beginning to enlightened those blinded for so long? One who just can stand seeing the truth
WHITE FLAG time. It is over
What happened to the CMKX lawsuit? It is OVER. No NSS were found. Al Hodges had nothing. Bill Frizzell had nothing. Your big conspiracy theory collapsed.
You're right - CMKX is OVER and so is CSHD. I'm sure when Roofie gets out of prison in 2031 he can devote his remaining life to searching for the missing Venezuelan bonds or helping OJ find the real killers.
06/15/13: Moskowitz ENDORSES US Federal Penitentiary - Lewisburg's's warden JEFF THOMAS!
"Steven Moskowitz endorsed the skills and expertise of Jeff Thomas
Jeff is endorsed for United States Penitentiary Warden."
_________________________________________
In 2012, Jeff Thomas replaced Bryan E. Bledsoe as Warden of USP Lewisburg.[12] USP Lewisburg is currently facing a civil trial for allegedly keeping prisoners shackled for days at a time. [13]
Tell me: WHY?
Why Jeff is endorsed for Federal Penitentiary Warden?
United States Federal Prison Warden!
FEDERAL
PRISON
WARDEN
!
WHY?
Here is the ending: in 2031, at age 64, Rufus will released from prison and will need to find a job, as he has very little Social Security credits or retirement savings. Rufus, at age 64, will be bagging groceries at Piggly Wiggly until he is 75 or dies.
That is how this will end.
It's OVER, hon. Just like CMKX.
BTW, there never was any Venezuelan bond. There never was a business. There were no assets.
I believe Seagram's Seven Crown was just put on the FCI-Texarkana commissary list. Right after spicy chicken ramen noodles and before tolnaftate foot creme and shower shoes.
By 2031 the $500 billion dollar Venezuelan bond will have matured and Roofie can redeem it and buy $500 billion worth of Pabst Blur [sic] Ribbon or a ticket to the Moon colony flying on Virgin Extraterrestrial.
Will they have cold PBR on tap at the Moon colony?
Al Hodges - LOL! Hey, I believe Bill Frizell is already milking some SPNG bagholders with the blue sheets data from the trustee. This is CMKX II.
"she failed to under the nature and laws of contracts and contractural obligations."
This bogus nonsense has nothing at all to do with anything. He may as well have claimed that he was the victim of the Rule Against Perpetuities. His motion is babbling nonsense. Contracts and contractual obligations have zero to do with his basic assertion that he as "not involved in the crimes".
The law clerk at the Circuit Court of Appeals who is assigned this motion to review will get a chuckle out of it. The DOJ will wonder how to craft an opposition motion replying to this jumbled nonsense. How do you make a counter-argument to rambling, incomprehensible statements that just make no sense from a legal standpoint?
"First the Central Government implemented Federalism therein violating Appellant' rights under Amendment X. Then the prosecutor violated Appellant's rights under IXth Amendment by interfering with the rights between two persons to contract."
First, the statement itself is pure nonsense, second there is zero interference with anyone's right to contract, and third there is no applicability of contract law to the charges Roofie and Ben were convicted of in the case - it is irrelevant.
He clearly cribbed this argument from another case in which the appellant was challenging the underlying LAW that they (in the other case) were being charged under as being an unconstitutional law. That is not Ben's argument however. Ben is not claiming that the laws against Federal securities fraud, wire fraud, and conspiracy are unconstitutional and invalid law.
Other than that, it's spot-on - LOL!
I say they should instead blame the Rule Against Perpetuities and rail against the 14th Amendment claiming they are being held as slaves in prison. It would make as much or more sense than what was written in the appeal motion.
Plus it makes ZERO sense. An "evil short" would have no reason to have a 144 opinion letter forged. All that does is to UNRESTRICT 144 stock for trading.
If the "evil short" is short, he would not need to UNRESTRICT 144 stock to trade it. Unless he owned the 144 stock - in which case he is not a short, he is a LONG who wants to sell his 144 stock. And even if that party had "shorted against the box" - selling short against already-owned 144 restricted stock - it is still not a short because that is simply a long flattening his position against 144 stock - not a net short and not a "naked short". A "Bomart letter" to lift the trading restriction on stock that is already owned has nothing to do with an "evil short".
The David Bomart letter did not serve to benefit an "evil short", it only served to release for TRADING restricted 144 stock that was held by entities that owned that stock and thus were long.
No matter what theory you use, the David Bomart letter could only have benefited "evil LONGS".
The "evil shorts" bribed MOSKOWITZ to forge and lie in his NY State Tax Court case where the court found that he presented fake, false, and forged documents and made provably false statements to the court - solely for his own personal benefit.
LOL - "the evil shorts bribed me do it" - Steve Moskowitz
MOSKOWITZ has a long history of being bribed by "evil shorts" to forge documents and lie. ROTF!
"The shorts" must have also done the forgeries and in-court false testimony of STEVEN MOSKOWITZ in his NY State Tax case where the court found that he presented fake, false, and forged documents and made provably false statements to the court.
LOL - "the shorts made me do it" - Steve Moskowitz
Maybe MOSKOWITZ got her a job at one of his five imaginary companies - SA Trading Company, US Asia Trading, Dubai Export Import Company, Fesco Sales Corp., and New Century Media.
If she can just get an endorsement from Sultan Ahmed, she will have it made. If not, she can always buy advertising space at sports stadiums and publicize her name.
Worked for MOSKOWITZ selling SPNG shares as fast as he could print them and fax his infamous David Bomart legal opinion letters to unrestrict the stock.
JACK SCHWARTZBERG didn't know how much Spongetech would order. As a potential vendor, it was in his interest to go along with their story, parrot whatever they said, and hope they would place big orders with his company.
But who cares what JACK SCHWARTZBERG said anyway - he is NOT an expert in the market for sponge sales. Just a DISPLAY and PACKAGING VENDOR.
And they are still clearing the unsold inventory of sponges leftover from the SPNG bankruptcy liquidation, BTW, if some of the posts claiming the product is still for sale online somewhere are to be BELIEVED.
JACK SCHWARTZBERG is in DISPLAY AND PACKAGING, not in SPONGE SALES. As a potential service and product vendor to Spongetech for DISPLAY and PACKAGING, he has all the incentive to blow smoke up the fat axxes of Spongetech investors and even PROVEN LIAR AND FORGER (see NY State Tax Court finding) and criminal FELON STEVEN MOSKOWITZ, because JACK SCHWARTZBERG may sell more DISPLAY and PACKAGING if Spongetech inflates their sales forecasts and orders more DISPLAY and PACKAGING from JACK SCHWARTZBERG's business.
A service and product vendor will go along with the nonsense spewed by a client's CONMEN like CONVICTED FELON and PROVEN LIAR STEVEN MOSKOWITZ because the CLIENT places orders with vendors who make them look good and parrot the nonsense told to them by the CONVICTED FELON and PROVEN LIAR CFO who selects the vendors, places the orders, and pays the vendor invoices (until he doesn't). You do not bite the hand that feeds you, you go along with their nonsense numbers and cash the checks!
JACK SCHWARTZBERG would not care if MOSKOWTZ'S fake, fraudulent, and false sales numbers were real or imaginary - as long as convicted felon and proven liar MOSKOWITZ placed the big orders for DISPLAY and PACKAGING materials and services and PAID THE INVOICES. The more the better for JACK SCHWARTZBERG.
JACK SCHWARTZBERG knows nothing about the market for sponges. All he knows about the market for sponges are the LIES that STEVEN MOSKOWITZ told him about tens of millions of fake, fraudulent, made-up sales numbers for fake, fraudulent, made-up sales to five fake, fraudulent, made-up companies that were the figments of MOSKOWITZ'S imagination.
So JACK SCHWARTZBERG'S comments are based on MOSKOWITZ'S NONSENSE about how well Spongetech's sponges were selling to imaginary customers, not because JACK SCHWARTZBERG is any expert in the sponge market.
STEVEN MOSKOWITZ lied to lots of people who believed his crapola and it made them look foolish. Look in the mirror.
The target-rich subpopulation for pennystock scams is novice, unsophisticated single males - age 18-35 - the same demographic that the Spongetech sports ads were directed to.
They were not selling sponges except as a sideshow - the real thing they were selling were all the shares Moskowitz was printing.
To dumb, young punks chasing illusory pennystock fortunes. The same clowns who waste money on sports betting in casinos or with bookies. The ones who never grow up wind up at the horse race tracks always looking for the "system" that will finally make them other than what they are - losers. The same type of suckers who chase illusions of NSS - from CMKX to CONV to hundreds of other penny stock insider pump & dumps where the bagholders search for the unicorns (aka "Group B") that they can never find but are sure they are there. Ask Bill Frizzell how many NSS he found in CMKX - answer: zero.
So sports ads are a natural place to sell the stock name - note that not many of the sports ads even showed the product (well, the nominal product - sponges). Just the name (and in a few cases the ticker symbol!) of the scam company - Spongetech.
None of the charges against Moskowitz have been dismissed with prejudice. In fact, all the counts remain pending except the securities fraud count he pleaded guilty to presumably as part of a secret, sealed plea agreement.
Note carefully that none of the counts had been dismissed in any court paper - not by action of the court, and while the guilty plea to the securities fraud charge was accepted by the court, the court DID NOT dismiss any of the counts not did the Dept of Justice move to have any counts dismissed.
Why? Well because the secret, sealed plea agreement likely only provides for the DOJ to move to have certain of the remaining counts dismissed with prejudice IF Moskowitz is able to yield up other big fish criminals and they are convicted. That obviously did not happen with the targeting of Metter by having Mosky wear a wire - Metter didn't cough up evidence that led to a major conviction of him, so Metter skates and Mosky didn't provide a scalp of Metter the DOJ can tout. Unless Mosky is able to actually provide evidence that leads to high-profile major convictions of big fish, it is likely the DOJ will move forward with the prosecution of the remaining counts (which are still pending before the court) and they already have pocketed his conviction on the securities fraud count - the fact of which can also be used against him in the prosecution on the other counts if Mosky takes the stand.
Now, some ask why did the DOJ select the securities fraud count rather than perjury as the one to have Mosky plead to first - as a prerequisite for them to even entertain a contingent plea agreement. That answer is simple. The plea agreement likely calls for Mosky to cooperate in the prosecution of others (e.g., Metter) and it would be counterproductive to the DOJ's goals if they needed Mosky to testify regarding, for example, the wire he wore and the taping of Metter, when Mosky could be cross-examined by the defense and point out that Mosky should not be believed because he is already convicted of perjury. So they chose a less inflammatory count - securities fraud - which would be less injurious of Mosky's credibility as a witness than would a conviction of perjury.
SO, take home the following lessons:
(1) none of the counts against Moskowitz have been dismissed, but the securities fraud count is resolved by a guilty plea (with a potential 20 year sentence). The other counts remain pending but may be the objects of a contingent plea agreement which is sealed. Mosky's guilty plea to SECURITIES FRAUD cannot be withdrawn - and he will be SENTENCED. A plea agreement cannot specify the sentence he will get - that is up to the judge entirely - all it could do is have the US Attorney RECOMMEND A DOWNWARD DEPARTURE from the mandatory sentencing guidelines - which for a $52 million dollar stock fraud will be a stiff sentence as the sentencing guidelines use the amount of money defrauded in the calculation of the sentence.
(2) The DOJ had Mosky plead guilty to securities fraud because that still has the maximum sentence of any count yet it is less injurious than perjury (which has a shorter maximum prison term) that could be used to impeach Mosky as a witness for the government in prosecution of others.
(3) If Mosky is unable to deliver any significant convictions of any big fish, the plea agreement likely allows the DOJ to move forward on certain or all of the remaining pending counts.
If you persist in believing that any counts against Moskowitz have been dismissed with prejudice, then please provide the court paper that shows that the remaining counts have been dismissed by the court. You will find no such document.
Why is Moskowitz not yet sentenced? Likely because his lawyers are still telling the DOJ that Mosky can deliver one or more of these big fish convictions, so they should wait. It is essentially Mosky buying time before he goes to prison for a long time. Eventually, the DOJ will tire of the delay if no big fish are landed and Mosky will then be facing not only sentencing on the securities fraud conviction, but also a trial on the remaining counts as well.
I meant Stanley, not Horton.
He should have gone with a diminished capacity basis. The motion would support that.
"First the Central Government implemented Federalism therein violating Appellant' rights under Amendment X. Then the prosecutor violated Appellant's rights under IXth Amendment by interfering with the rights between two persons to contract."
Well, now I am convinced. Conviction overturned.
LOL! By far the most nonsensical motion I've ever read, with the proviso that I haven't seen Rufus' masterpiece yet.
Serious question: does anyone know whether Horton has a learning disability and/or is known to have diagnosed cognitive disabilities?
This motion could have been written by a moderate-to-severe stage Alzheimer's patient, a mentally retarded person, or someone who has suffered brain damage and/or is currently on strong psychoactive drugs.
I can't wait to see Rufus' legal tome cribbed from random passages of Black's Law Dictionary and citing to the Magna Carta and Code of Hammurabi.
"America is the land of the free. (Scott-Key v. Great Britain (1775)). The illegal Federal government, through the unconstitutional Bureau of Prisons, has denied my right to be free. On this basis alone, I am being illegally detained and the Federal government has defrauded me, for which I bring claim under the Federal Tort Claims Act and demand my immediate release and the arrest of the trial judge and jurors for kidnapping and illegal detainer. Failure of this Court of Appeals to order this would be contrary to the Geneva Convention and require me to file with the International Criminal Court in the Hague to imprison all Court of Appeals personnel who would be committing crimes against humanity against me. Don't make me go all Medieval on you!"
There is no "Sultan Ahmed of S A Trading". Moskowitz's S A Trading and his claim that S A Trading had a "Sultan Ahmed" are both nothing but figments of Moskowitz's imagination. Citing an address given by Moskowitz for a fictional company he made up is meaningless. If there is a Bay Trading Co. at at particular address and Moskowitz choose that information when he MADE UP a fictional trading company (SA Trading with a phony Sultan Ahmed), that only shows that Moskowitz picked an address where he knew there was a trading company to add a patina of legitimacy to his fictional company.
Administrative courts do not have legal authority to hire a prosecutor. They are impartial judges and do not prosecute crimes.
The fact is that the NY Tax appeals court found that Moskowitz lied to the court and submitted false documents and false testimony to the court. That is perjury and that is a fact.
Crimes are crimes whether the criminal is caught and prosecuted for the crime or not. Surely you have heard of people who were caught by cops speeding (or even more serious offenses!) and were let go without a citation - or maybe never got caught and prosecuted because their crime was only noted by a meter maid and no cop was present to pursue the criminal.
In this case, there was no cop (prosecutor) present to pursue the crime and charge Moskowitz for it.
And prosecutors are overloaded with criminal matters, so they prioritize and often a lot of crimes don't get prosecuted - even in cases where a prosecutor knows about a crime in another non-criminal proceeding. Perjury in civil litigation is not often prosecuted.
Perjury is a crime. Not all crimes are prosecuted. When there is no DA involved in a proceeding with motivation to prosecute acts of perjury, oftentimes acts of perjury go unprosecuted. As in administrative proceedings and administrative law proceedings like a NY state Tax Appeal before an administrative law judge without any prosecutor - as is the case with Moskowitz's failed tax appeal where the judge found that he lied to the court and submitted false and unverifiable documents and testimony to the administrative tax court.
An administrative court is not a criminal court and the judge has no standing to charge a defendant with a crime - that requires a prosecutor such as the state's attorney or a local DA. Since neither were involved in this tax law case, Moskowitz was found to have lied and submitted fake documents to the tax court by the judge, but no prosecutor picked up that finding and brought and pursued a criminal case for perjury in a criminal court.
Too bad. Moskowitz is a proven perjurer, but was not punished. This time, however, he has been caught by a criminal prosecutor and the charge of perjury and all remaining charges are still pending against Moskowitz. No charges against Moskowitz have been dismissed with prejudice.
"The finding that, contrary to his testimony, petitioner signed the returns in question undermines the credibility of his testimony"
NY Tax Court found that Steven Moskowitz lied to the court. He gave false testimony. He filed false written statements.
He should have been criminally prosecuted for that perjury, but there was no district attorney involved because it was only an appeal of a tax ruling and not a criminal proceeding.
Bottom line: Steven Moskowitz is a proven perjurer.
NY Tax Court finds Steven Moskowitz a proven liar.
"Petitioner's case rests largely upon his claim that his signature was forged on the withholding tax returns for the quarterly periods ended December 31, 2001 through December 31, 2002 and the annual sales tax return for the period ended February 28, 2003. Petitioner offered his testimony in support of this contention but did not offer any corroborating testimony such as that of an expert or a third party familiar with his signature. I have closely compared the signature on these returns with the known examples of petitioner's signature in the record and, based on such review, I conclude that the returns in question were in fact signed by petitioner. Moreover, the printed name and title ("Pres") next to petitioner's signature on the withholding tax returns for the periods ended December 31, 2001 and March 31, 2002 and the sales tax return clearly matches the printed writing of petitioner on his petition and his letter to the Division of Tax Appeals dated February 27, 2006.
The finding that, contrary to his testimony, petitioner signed the returns in question undermines the credibility of his testimony that he was not an officer of the corporation; that he did not sign any tax returns; that he was involved only in product development and sales; and that he left the corporation in December 2001. It is noted that no witnesses other than petitioner testified at the hearing.
The letters of Richard Heller and Martin Pelman submitted in support of petitioner's position are properly given little weight herein as such letters are unsworn, and neither individual testified, thus their credibility cannot be evaluated. Additionally, it is noted that the content of the Heller letter dated February 4, 2002 does not support petitioner's position. That letter indicates that petitioner loaned money to the corporation and thus indicates a level of involvement greater than that of a sales employee.
Mr. Schlanger's signature on a check in payment of FUTA tax also does not provide support for petitioner's position. The check was drawn on the account of Flo Weinberg, Inc., not that of the Romantic Moments, Inc. Additionally, it is unclear from the record whether the FUTA return as filed indicated that Mr. Schlanger was president of the corporation (see, Finding of Fact "15").
Petitioner also contended that he was never paid by the corporation. If proven, such a fact might support petitioner's position. Petitioner, however, failed to establish this factual contention, as he submitted only the unsworn letter of Mr. Pelman and an unsworn statement from an accountant as documentary support."
http://www.nysdta.org/Determinations/820444.det.htm
So the COURT found as a matter of fact that Steven Moskowitz LIED by claiming he did not sign and file the tax returns when his signature and writing were provably the same as that on the pettion to the tax court and the letter he filed on the matter, and that the letters he submitted to support his false claim that he was not involved in managing the company were UNSUBSTANTIATED and likely forged by Moskowitz - including one from his own FLO WEINBERG holding company.
Surely such an honest man would never make up fake businesses and fake sales numbers! Nor would he forge fake attorney opinion letters for fake lawyers like the fictional DAVID BOMART. Surely he would not provide a FAKE list of FAKE business names to Speranza and instruct him to create FAKE websites to defraud investors into believing these FAKE customers as reported in the FAKE sales number and FAKE customers that MOSKOWITZ REPORTED in the FAKE 10-Q.
Oh wait, he did.
SPONGETECH DELIVERY SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
February 28, 2009
NOTE A –
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
7.
Revenue Recognition
Sales and services are recorded when products are delivered to the customers. Provision for discounts, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. In instances where products are configured to customer requirements, revenue is recorded upon the successful completion of the Company’s final test procedures. For the nine months ended February 28, 2009, six customers, SA Trading Company, US Asia Trading, Dubai Export Import Company, Fesco Sales Corp., New Century Media and Walgreens, accounted for 99.4 percent of sales.
--------------------------------------------------------------
So the five bolded names are NOT actual companies and never existed. Yet Spongetech CFO Moskowitz (the source for the information in this 10-Q) claimed that over 90 percent of sales over 9 months (Walgreens invoices were trivial) were to five non-existent business entities that have never paid a cent to Spongetech, that Moskowitz had never even run a Dun & Bradstreet credit check on (which would have shown them not to exist), that Moskowitz has no documentation of ever demanding payment from, and that in his deposition Moskowitz admitted he had never met anyone associated with these fake businesses. That Moskowitz had George Speranza set up FAKE websites for these FAKE business names in order to dupe investors into believing his FAKE information. That Moskowitz personally handed Speranza the list of these FAKE business names and instructed Speranza to create the FAKE websites.
Moskowitz is the one who reported this false information on the 10-Q.
Any claim that these five phony business names and the reported phony sales are anything other than conjured from the criminal felon mind of Steven Moskowitz is simply not plausible.
George Speranza, an independent consultant hired by Spongetech to market its products, copped to one count of perjury in May, admitting to prosecutors that he lied during a U.S. Securities and Exchange Commission investigation about helping the soap-filled sponge maker mislead shareholders with fake client websites.
Speranza faced up to five years in prison, but asked for leniency, calling himself an “unwitting dupe” in the company’s fraud. Spongetech hired him to set up virtual offices for supposed supplier-customers, but he didn’t know at the time the clients were all bogus, Speranza said.
"Mr. Speranza is relieved to have this ordeal behind him, and thankful to the court's understanding of his limited role in the Spongetech affair," his attorney, Richard Rosenberg, told Law360 on Monday. "It was never his intention to mislead investors or contribute to any fraudulent scheme."
The SEC and the U.S. Department of Justice filed parallel suits in May 2010 against Spongetech CEO Michael Metter and senior executive Steven Moskowitz, saying they touted millions of dollars in bogus sales orders to a handful of customers who never existed in order to drive up stock demand.
Prosecutors say Metter, Moskowitz and Spongetech flooded the market with the false information to fraudulently inflate the stock price, and later dumped about 2 1/2 billion shares by illegally selling them to the public through affiliated entities in unregistered transactions.
The company produced phony sales documents in an attempt to legitimize the make-believe customers it hyped to the public, and exaggerated sales figures through bogus press releases and fraudulent regulatory filings, according to court documents.
Spongetech officers then spent portions of their illicit profits in highly visible sponsorship deals with professional sports teams to further create the aura that Spongetech was a well-known and prosperous business, according to the DOJ.
Speranza said Moskowitz handed him a list of suppliers and asked him to set up websites where shareholders could contact them, on the pretense that the companies were being inundated with investor calls.
Speranza oversaw the website designs, using the company’s existing foreign supplier websites as a template and replacing the company names with the new supplier list given to him by Moskowitz, he said.
Speranza used his own identity to establish the virtual offices, unaware of the true purpose Spongetech had in wanting the websites set up, he said.
"George Speranza, an independent consultant hired by Spongetech to market its products, admitted to prosecutors in May that he lied during a U.S. Securities and Exchange Commission investigation about helping the sponge-filled soap maker mislead shareholders with fake client websites. He copped to one count of perjury, and faces up to five years in prison.
Less than three weeks before his Oct. 17 sentencing trial, Speranza asked for leniency from the judge in a memorandum, calling himself an “unwitting dupe” in the company’s fraud. Spongetech hired him to set up virtual offices for supposed supplier-customers, but he didn’t know at the time the clients were all bogus, Speranza says.
“Mr. Speranza made an egregious error in not being truthful in his testimony to the SEC, but he was not a man engaged in an ongoing massive fraud or one with any motive to engage in covering up that fraud,” the memorandum said. “Moreover, it strains belief that Spongetech would confide [its] fraud to an outsider such as Mr. Speranza.”
The SEC and the U.S. Department of Justice filed parallel suits in May 2010 against Spongetech CEO Michael Metter and senior executive Steven Moskowitz, saying they touted millions of dollars in bogus sales orders to a handful of customers who never existed in order to drive up stock demand.
On Sept. 23, a New York magistrate judge recommended the court order Speranza to cough up $135,000 in civil restitution for lying to the SEC.
Speranza knowingly benefited from and contributed to the fraudulent sale of Spongetech’s securities by repeatedly aiding and abetting the misleading of Spongetech shareholders, U.S. Magistrate Judge Joan M. Azrack said.
Speranza denied such claims Thursday, saying in his memorandum that Moskowitz handed him a list of suppliers and asked him to set up websites where shareholders could contact them, on the pretense that the companies were being inundated with investor calls.
Speranza oversaw the website designs, using the company’s existing foreign supplier websites as a template and replacing the company names with the new supplier list given to him by Moskowitz, according to the memorandum."
http://www.law360.com/articles/275112/spongetech-consultant-wants-break-on-perjury-sentence
SPONGETECH DELIVERY SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
February 28, 2009
NOTE A –
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
7.
Revenue Recognition
Sales and services are recorded when products are delivered to the customers. Provision for discounts, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. In instances where products are configured to customer requirements, revenue is recorded upon the successful completion of the Company’s final test procedures. For the nine months ended February 28, 2009, six customers, SA Trading Company, US Asia Trading, Dubai Export Import Company, Fesco Sales Corp., New Century Media and Walgreens, accounted for 99.4 percent of sales.
--------------------------------------------------------------
So the five bolded names are NOT actual companies and never existed. Yet Spongetech CFO Moskowitz (the source for the information in this 10-Q) claimed that over 90 percent of sales over 9 months (Walgreens invoices were trivial) were to five non-existent business entities that have never paid a cent to Spongetech, that Moskowitz had never even run a Dun & Bradstreet credit check on (which would have shown them not to exist), that Moskowitz has no documentation of ever demanding payment from, and that in his deposition Moskowitz admitted he had never met anyone associated with these fake businesses.
Moskowitz is the one who reported this false information on the 10-Q.
Any claim that these five phony business names and the reported phony sales are anything other than conjured from the criminal felon mind of Steven Moskowitz is simply not plausible.
Crain's New York (http://www.crainsnewyork.com/article/20120805/MEDIA_ENTERTAINMENT/308059976), New York Post (http://www.nypost.com/p/news/business/fine_for_penny_stock_scam_zsphNfwXxUetGwOiEE2eEP), New York Times (http://dealbook.nytimes.com/2010/05/06/s-e-c-charges-spongetech-with-fraud/), CNBC (http://www.cnbc.com/id/38345759) et seq.
Wrong. Somebody has to take the fall for Spongetech. It is too high profile, too many people lost money, too much press attention, too much money lost for the DOJ not to pin somebody to the wall - and with Metter gone, that leaves the FOUNDER, Steven Moskowitz.
Unless he can cough up a much bigger fish and get them convicted, Mosky will be going in the hole for a very long time. He and his lawyers know this than that is why they are playing for time before sentencing and claim to look for anything that would be that big fish he needs. Because once he goes in, it will be a long time if ever before he will be coming out. If he can get a bigger fish convicted, he might get as little as 6-10 years - that is his best hope.
For the DOJ, somebody has to pay for these crimes or the DOJ will lose face (especially after they blew the case against Metter). Unless Mosky finds somebody much bigger and gets them convicted, he will be the one who pays the big price for the DOJ to get their glory.
Remember, while the DOJ lost all their leverage on Metter when the computer records were excluded by the judge so they had to bargain with Metter to get him to plead, they already have Mosky convicted on securities fraud (20 year max sentence) and they don't need to negotiate with him at all anymore.
Mosky already rolled over and ratted out the minor players like Tepfer and Speranza. He's out of tricks now that Metter walked. And when Mosky gets to prison and the word gets out that he's a rat and rolled over on his co-criminals and wore a wire, he's going to be doing some very unpleasant time. Rats in prison are treated like chimos (child molesters).
dpilon: Please review the court record closely. None of the charges against Moskowitz have been dismissed with prejudice. In fact, all the counts remain pending except the securities fraud count he pleaded guilty to presumably as part of a secret, sealed plea agreement.
Note carefully that none of the counts had been dismissed in any court paper - not by action of the court, and while the guilty plea to the securities fraud charge was accepted by the court, the court DID NOT dismiss any of the counts not did the Dept of Justice move to have any counts dismissed.
Why? Well because the secret, sealed plea agreement likely only provides for the DOJ to move to have certain of the remaining counts dismissed with prejudice IF Moskowitz is able to yield up other big fish criminals and they are convicted. That obviously did not happen with the targeting of Metter by having Mosky wear a wire - Metter didn't cough up evidence that led to a major conviction of him, so Metter skates and Mosky didn't provide a scalp of Metter the DOJ can tout. Unless Mosky is able to actually provide evidence that leads to high-profile major convictions of big fish, it is likely the DOJ will move forward with the prosecution of the remaining counts (which are still pending before the court) and they already have pocketed his conviction on the securities fraud count - the fact of which can also be used against him in the prosecution on the other counts if Mosky takes the stand.
Now, some ask why did the DOJ select the securities fraud count rather than perjury as the one to have Mosky plead to first - as a prerequisite for them to even entertain a contingent plea agreement. That answer is simple. The plea agreement likely calls for Mosky to cooperate in the prosecution of others (e.g., Metter) and it would be counterproductive to the DOJ's goals if they needed Mosky to testify regarding, for example, the wire he wore and the taping of Metter, when Mosky could be cross-examined by the defense and point out that Mosky should not be believed because he is already convicted of perjury. So they chose a less inflammatory count - securities fraud - which would be less injurious of Mosky's credibility as a witness than would a conviction of perjury.
SO, take home the following lessons:
(1) none of the counts against Moskowitz have been dismissed, but the securities fraud count is resolved by a guilty plea. The other counts remain pending but may be the objects of a contingent plea agreement which is sealed.
(2) The DOJ had Mosky plead guilty to securities fraud because that still has the maximum sentence of any count yet it is less injurious than perjury (which has a shorter maximum prison term) that could be used to impeach Mosky as a witness for the government in prosecution of others.
(3) If Mosky is unable to deliver any significant convictions of any big fish, the plea agreement likely allows the DOJ to move forward on certain or all of the remaining pending counts.
If you persist in believing that any counts against Moskowitz have been dismissed with prejudice, then please provide the court paper that shows that the remaining counts have been dismissed by the court. You will find no such document.
Why is Moskowitz not yet sentenced? Likely because his lawyers are still telling the DOJ that Mosky can deliver one or more of these big fish convictions, so they should wait. It is essentially Mosky buying time before he goes to prison for a long time. Eventually, the DOJ will tire of the delay if no big fish are landed and Mosky will then be facing not only sentencing on the securities fraud conviction, but also a trial on the remaining counts as well.