Dear Richard,
You are a fraud and as big as they come.
VI. OTHER FALSE OR MISLEADING STATEMENTS
A. Naked Short Selling Statements
74) In September 2003, Altomare began publicly suggesting that so-called "naked short selling" of Universal shares had artificially depressed Universal's stock price. In early October, Altomare stated in an interview that without the downward pressure of "naked shorting" Universal's share price would be much higher. In fact, as of September 30, 2003, the total "fails to deliver" of Universal's shares outstanding was de minimis.
75) In addition, none of Altomare's public statements regarding naked short selling disclosed Universal's issuance of hundreds of millions Universal shares to the re-sellers who had dumped these shares into the market.
76) In a subsequent interview with Dow Jones Newswire, Altomare falsely stated that Universal provided the Commission enforcement staff with 11,000 to 12,000 pages of documents in response to a staff subpoena requesting documents relating to short selling of Universal shares. In fact, Universal's total production in response to the SEC subpoena was only 295 pages, none of which provided evidence that investors or brokers were intentionally failing to deliver Universal shares in connection with "naked short selling."
B. Announcement of Airline Acquisition
77) In fall 2003, Altomare and the owner of North American Airlines ("North American"), signed an option for the sale of the airline to Universal. To fund the 50% non-refundable $1 million deposit required by the owner, Altomare and Neuhaus agreed that Neuhaus would wire the $1 million on Universal's behalf in exchange for 20 million "free trading" Universal shares and 20 million restricted Universal shares. With Universal's stock trading at $0.05 at that time, Altomare and Neuhaus knew that Neuhaus could recover the entire $1 million cost of the deposit by selling the 20 million "free trading" shares even if Universal's announcement of the deal failed to cause a jump in Universal's stock price.
78) On October 7, after North American's owner resisted Altomare's requests to make an exception to the contract's confidentiality provisions so that Universal could issue a press release announcing the contract, Neuhaus sent the owner an e-mail falsely stating that SEC rules required Universal to make a public announcement.
79) After receiving Neuhaus' e-mail, North American's owner relented and on Sunday, October 12, 2003 Altomare issued a press release, reviewed by Neuhaus, announcing the contract. In an apparent attempt to convince investors that Universal and Altomare had a serious stake in completing the acquisition, the release, quoting Altomare, stated: "We have paid a $1,000,000 deposit, 50% of which is non-refundable."
80) The release failed to disclose that the deposit had been financed through an illegal issuance of Universal shares to Neuhaus and that Neuhaus planned to sell the shares into the market after the announcement.
81) On Monday morning, October 13, 2003 the stock opened at $0.108, an increase of 50% over the previous Friday's close, and traded as high as $0.131 on volume of 132 million shares.
82) Neuhaus sold more than 1 million shares on October 13, 2003 and continued selling an average of 1 million shares per day over the next several weeks. The sales covered the entire cost of the $1 million deposit by October 22 and generated another $1 million in proceeds by November 6, 2003.
83) Mendiratta sold more than 500,000 Universal shares on October 13, 2003 and continued selling substantial amounts thereafter.
C. Statements Regarding Private Postal Network Membership
84) Each of Universal's eight most recent filings with the Commission falsely stated that its private postal network, called WorldPost, had 8,000, and in later filings 9,000, members. In fact, stores listed on the network's web site as members of the network are not actually members.
D. False Sarbanes-Oxley Certifications by Altomare
85) In each of Universal's periodic filings with the Commission since its June 30, 2002 Form 10-KSB, Altomare falsely certified that to the best of his knowledge there were no untrue statement of material fact or omission of a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading.
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