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INTERESTING READ
Posted: 2:12 AM, September 22, 2009
A former attorney for SpongeTech, a New York company known for making soap-filled sponges it sells through infomercials, says the company forged dozens of legal documents tied to its issuance of stock.
SpongeTech, which boasts that sales skyrocketed 900 percent this year, received international attention earlier this month when tennis star Serena Williams screamed at a US Open tennis championship line judge in front of one of its ads.
But on Friday the company's stock was tagged with the financial equivalent of a scarlet letter: The letter "e" was appended to its ticker for failing to file financial results with the SEC. The company says it had to restate its last two years of financial results because of a problem with its auditor, and as a result is late with its annual filing.
The accusations of forgery and "identity theft" come from Norfolk, Conn. attorney Joel Pensley, who said in a letter to the Securities and Exchange Commission that he was "dumbfounded" to learn that his name was being used in "as many as one hundred opinion letters for various shareholders."
Pensley told the SEC that he would not have written such letters. "I question the legality of the transactions," he wrote.
A copy of the letter obtained by The Post shows it was addressed to Robert Khuzami, head of the SEC's enforcement division.
Neither Pensley nor the SEC responded to repeated requests for comment, but Pensley's business partner, Maureen Abato, confirmed the letter's authenticity.
"Why would they want to run that risk? I don't get it," said Abato, who is based in Brooklyn and whose name and address is on the letterhead with Pensley's. "It raises questions about their whole operation."
Abato said that after learning about the documents, their firm, Pensley & Abato, sent a cease-and-desist letter to SpongeTech. She said SpongeTech CFO Steve Moskowitz claimed the company had authority to use the law firm's name in the legal documents, but agreed to stop.
In June SpongeTech projected a whopping $50 million in revenue for the fiscal year ended in May, up from $5.6 million for 2008. But those numbers have raised questions within the industry.
Michael Popovsky, CEO of LA-based sponge maker Spongeables, a SpongeTech rival, scoffs at the idea that a company that sells sponges with soap in them can generate $50 million in annual revenue.
"Impossible," he said. "Categorically not."
Popovsky said industry sales tend to be in the $5 million to $10 million range.
Among Popovsky's biggest customers are national retailers such as Wal-Mart, CVS/Caremark and Rite-Aid.
SpongeTech, by contrast, lists among its biggest customers several lesser-known companies, like New Century Media, which a SpongeTech spokesman said is "based in Europe," declining to provide further specifics. Another company, SA Trading, is based in Caracas, Venezuela, he said. The only US record of an SA Trading shows a now-defunct company incorporated in Illinois.
It's also unclear how many shares SpongeTech currently has outstanding. Prior to its last quarterly filing, the company had 1.2 billion shares outstanding, putting it on par with eBay and overshadowing shares outstanding at both Apple and Pfizer combined.
"I am shocked and aggrieved that my name and reputation could be sullied in this manner," Pensley said in the letter to Khuzami. Pensley said in the letter that he learned of the forgery from New Jersey stock services company Olde Monmouth Stock Transfer Co.
A letter from Olde Monmouth's attorney, Richard Fox, also addressed to Khuzami, said the forged documents relate to stock issued to RM Enterprises, SpongeTech's largest shareholder. RM Enterprises is controlled by the company's executives, including Moskowitz and CEO Michael Metter, according to SEC filings. Metter recently denied to The Post that he's a director or officer of the company.
Fox, when reached by The Post, said he couldn't comment before abruptly hanging up the phone. kaja.whitehouse@nypost.com
http://investorshub.advfn.com/boards/board.aspx?board_id=12641
Also fined a complaint with SEC against PALC & NITE for Short Selling. It's time to start looking into criminal activities.
Someone call JD and tell him not to release any more PR's
I don't know about your Nanny, but my Fanny hurts after today
I have never seen a stock drop like this on news
I agree JD totally killed this
Was hoping for a more high end grocer.
Piggly Wiggly is the BIG LOTS of grocers. People who shop there don't want to remove stains. Their proud of them.
Piggly Wiggly 100 stores. Now that's dissapointing news. No money the be made with the Pig
Has anyone talked to the CEO lately?
Does anyone think that there will still be acquisitions?
Thanks Rocket. Was out of town Friday
Correct me if I'm wrongb but did they file another 504 on 9/11/09
How about SCAM
Forward
I believe it will be SPNGQ
If I remember correctly. SPNG used the NAZ uplisting about 3 months ago right before a massive dilution
Do the math. If there will be 300M A/S after a 100:1 R/S then the current A/S is 30 Billion
Let's see, they just dumped 100M shares at .04 = $4M. Yes I guess they can afford the simulator
TXWATCHER
DO YOU HONESTLY BELIEVE WHAT YOU JUST POSTED?
SPNG IS THE SCAM OF THE YEAR
R/S "THE KISS OF DEATH" THIS WILL BE SUB-PENNY BY THE END OF THE MONTH
This stock should be .02+
To much BID WHACKING
50K shares. I'm not that rich. lol
That 50K was me. I'm still adding
MMs never tip their hand. Accumilating for the run that starts tomorrow
Better jump on board that .037 you'll never see it that low again.
I love this companies approach. Don't publish financials. Just keep trading accountants.
Does anyone think we'll see a delay on the 28th like we did on the 7th
I believe we'll close at .014
I think we'll close GREEN today
Thank you 4kids
Does anyone know
Has this stock been shorted?
Well all I can say is
THANKS FOR THE CHEAP SHARES
This is a classic case of MM manipulation.
They filled my buy order at the bid and show it as a sell. They know as well as we do that much good news is coming soon. The lower they take it the better chance of having a huge run. More money in their pockets. IMO
Does anyone know where the money is coming from to make these
acquisitions?
Nothing wild about that. This company has the potential to do it!!!!!
When EXPH gets out of the Pinkies
and on the BB we will see .50+ pps
Now Children if you're good little boys and girls, your stocking will be filled with sponges.
(I DON'T THINK THE KIDS ARE GOING TO BUY THAT)
Does anyone know if the Uncle Norman Pet Sponge
was named after Norman Bates (Psycho)
Wow, just what everyone wants. A frirrin sponge for Christmas
With 2200 Home Depot locations @ $400.00/display = $880,000.00 for initial order.