$toney's Word

[$UPERMAN]

The manipulation started in early 2003, when Mr. Peever and Mr. Curtis paid for favourable coverage in two tout sheets, according to the complaint. One was an electronic newsletter, called the OTC Journal. It stated in a March 29, 2003, report, "If you want upside potential in a microcap, you won't find any story more exciting." Another tout sheet, called The Intrepid Investor, promoted the stock through hard copy newsletters sent to about one million potential investors. It claimed that the company was "on the edge of a potential BILLION DOLLAR ROYALTY GUSHER."

The Intrepid Investor received $600,000 and 42,000 SHEP shares, while the OTC Journal received 100,000 shares, the SEC said. Neither sheet disclosed that Mr. Peever and Mr. Curtis paid for the touting and that they intended to sell shares.

In spite of the favourable coverage, the promotion did not have the start that Mr. Peever envisioned. The complaint quoted a Feb. 24, 2003, phone call in which he explained the slow start to Scott Lines. "Jesus Christ ... we haven't sold a fucking share," he said. "I mean [OTC Journal's publisher] I think just brought the fucking shorts to us."

The next day, Scott Lines assured Mr. Peever that the shorting troubles would end. "Give them a day. I mean, fuck, if they get shorter today, you get more buying and then I think ... they'll start covering. They'll have to cover up because they don't want to be short at the end of the month." (It is not entirely clear where the phone transcripts came from. Evidence presented early in the case indicated that LOM had an internal system that recorded some phone conversations.)

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