World Surveillance Group Inc (fka WSGI)

[coastiretired]

Straight from the SEC.

I'm sure Globetel had a legitimate need for the services of a race car driver when they signed the same deal with Neuhaus. http://www.secinfo.com/d14D5a.2qDu.a.htm Neuhaus was pulling the same scam with many other penny stock frauds. The services he actually provided was a venue for the companies to sell shares of their own stock while avoiding red flags to the SEC, but the SEC caught onto the act. Charges against other companies expose some the details of the scam. One would have to assume that Globetel really required and received services from Neuhaus to believe they were not conducting themselves similarly. These quotes are directly from the SEC so Mide can't quibble about the source.

The Commission alleges that Universal, Altomare, and Universal's counsel Chris G. Gunderson, Jr., distributed stock through Mark Neuhaus, George Sandhu, Spiga Limited, and Tarun Mendiratta (collectively, the "Resellers") purportedly as consultants to the company. According to the Complaint, the Resellers paid Universal in excess of $9.1 million for the stock, resold the shares to the public for a quick risk-free profit, and then used the proceeds to finance their subsequent share purchases in the ongoing scheme to distribute the shares into the public market. The Complaint further alleges that as the dilutive issuances weighed on Universal Express' stock price, Altomare issued a series of false press releases from May 2002 to April 2003 announcing funding commitments for a total of $885 million and thereafter made other false statements in public interviews, press releases, and Universal Express' filings with the Commission. http://www.sec.gov/litigation/litreleases/lr18636.htm


On June 30, 2000, the end of Universal's 2000 fiscal year, the company had approximately 19 million shares outstanding. By December 31, 2003, Universal's outstanding shares exceeded 650 million . . .

To create the appearance that the issuance of stock to the re-sellers qualified for a simplified type of registration on Form S-8, Gunderson prepared consulting agreements between Universal and the re-sellers purporting to obligate them to perform services, as required in the registration statement, in exchange for "registered" Universal shares.

however, the Form S-8 registration statements filed by Universal purportedly to register the issuances covered just 50 million shares, one-tenth of the total number of shares issued to the re-sellers. Further, no registration statement covered the public distribution of that stock by the re-sellers.

Notwithstanding Gunderson's knowledge that the number of shares issued to the re-sellers exceeded the number covered by Universal's first Form S-8 registration statement, when one of Neuhaus' brokers questioned the registration of the Universal issuances to Neuhaus, Gunderson prepared a legal opinion falsely stating that the shares were "covered by the company's S-8 registrations for its common shares."

Gunderson drafted purported stock purchase agreements with the re-sellers to disguise the nature of the illegal capital raising scheme.
Gunderson drafted fraudulent consulting agreements for the re-sellers to disguise the nature of the illegal capital raising scheme.

to Neuhaus or his affiliates a total of 270 million shares. Neuhaus or his affiliates paid a total of $5 million for the stock.

Each of the filings fraudulently stated that the shares issued to the re-sellers were "advisory fees . . . prepaid to consultants retained by the Company to provide advisory services." Each filing also falsely stated that the funds transferred to Universal by the re-sellers were payments for "stock rights," which the filings defined as "amounts received from investors for their future rights to purchase shares of stock."

issued four false or misleading press releases that announced Universal's receipt of large funding commitments for acquisitions. Each release was followed by a substantial increase in Universal's share price and trading volume, permitting the re-sellers to dispose of large amounts of Universal shares.

faxed to Neuhaus the language they wanted Neuhaus to put in his letter, including the statement: "[M]y hedge fund and partners enthusiastically commit to the funding of Universal Express' strategic acquisition . . . ." Although Neuhaus did not manage a fund of any sort, he copied Altomare's text onto Coldwater letterhead, added his signature, and on May 22, 2002 delivered the letter to Altomare.

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.

"advances" to Altomare and his wife after April 2001 were made from the proceeds of the illegal sales to the re-sellers.

http://www.sec.gov/litigation/complaints/comp18636.htm