Industrial Enterprises of America Inc fka IEAM

[scion]

Company sues Weisberg over ‘pump and dump scam’

Written by Matt Spillane
Sunday, 24 April 2011 00:00
http://www.acorn-online.com/joomla15/lewisboroledger/news/localnews/91639-company-sues-weisberg-over-pump-and-dump-scam.html

A Pittsburgh chemical company is suing Waccabuc resident Martin Weisberg and his former law firm over allegations that the firm engineered the company’s downfall.

Mr. Weisberg and Baker & McKenzie LLP are being sued for the financial collapse of Industrial Enterprises of America Inc. (IEAM), according to a complaint filed in U.S. Bankruptcy Court in Wilmington, Del., in which the plaintiffs are seeking punitive damages and restitution for full value of improperly issued shares of stock.

IEAM alleges that Baker & McKenzie defrauded the company out of $150 million and is seeking $600 million in damages.

Lawyers for IEAM said in the complaint that the defendants “created a legal structure that enabled an unlawful pump and dump scam, misleading or outright false NASDAQ and SEC filings, and participation in a host of internal corporate malfeasances designed to raid the company of its working capital.”

According to the complaint, Mr. Weisberg and his firm were illegally issued millions of shares of freely traded stock, which benefited company executives and their girlfriends and attorneys. The shares were supposed to be reserved for employees, outside directors and consultants of IEAM.

This is not the first run-in with the law for Mr. Weisberg, who left Baker & McKenzie in 2007. In 1991, he was indicted for conspiring to defraud investors in a currency-trading scheme, according to the complaint. He was indicted in 2007 for securities fraud, money laundering and conspiracy in a short-selling scheme that allegedly netted him unlawful kickbacks. In 2008, he was indicted again for allegedly stealing more than $1 million in interest from a client’s escrow account.

According to the complaint, Mr. Weisberg’s scheme began in 2002, when he worked as an attorney and investor to acquire the assets of a New Jersey corporation with “an intention to move the assets into a public company to raise assets to steal.” In 2002, he became legal counsel and a company shareholder for IEAM, which wasn’t told about Mr. Weisberg’s prior indictments for securities-related fraud before working with Baker & McKenzie, according to the complaint.

In 2004, Mr. Weisberg helped draft IEAM’s stock option plan and began making “false filings, committing sins of both omission and commission in its public filings” with other Baker & McKenzie employees, according to the complaint. He began improperly receiving IEAM shares the next year.

IEAM declared bankruptcy in 2009 after its public shareholders lost $450 million from Baker & McKenzie’s scheme, according to the complaint.

http://www.acorn-online.com/joomla15/lewisboroledger/news/localnews/91639-company-sues-weisberg-over-pump-and-dump-scam.html