Replies to post #284163 on Spongetech Delivery Systems Inc (fka SPNGQ)

[Fire Lane]

umm you can start with the non existant buyers, and you can end with the fraudulent legal opinions with the bounced checks in between. it clear cut and overwhelming evidence

[puppydotcom]

please show actual proof of fraud

if the wells notice does not convince you .. you'll just have to wait for the main attraction .. coming soon ..

[Jim Bishop]

Here's a SUMMARY of the SEC complaint.

http://sec.gov/litigation/complaints/2010/comp21515.pdf

1. This case involves a scheme to increase demand illegally for, and profit from, the unregistered sale of publicly-traded stock in Defendant Spongetech Delivery Systems, Inc. ("Spongetech" or the "Company"), a company that sells soap-filled sponges.

Defendants Michael Metter ("Metter"), Steven Moskowitz ("Moskowitz"), and Spongetech accomplished this by, among other things, "pumping" up demand for Spongetech stock through false public statements about non-existent Spongetech customers, bogus sales orders, and phony revenue. The purpose of flooding the market with false public information was to fraudulently inflate the price for Spongetech shares, so Metter, Moskowitz, and Spongetech could then "dump" the shares by illegally selling them to the public through affiliated entities in unregistered
transactions.

2. Defendants Metter, Spongetech's Chief Executive Officer and a former registered representative with a long disciplinary history, and Moskowitz, its Chief Operating Officer, control both Spongetech and Defendant RM Enterprises International, Inc. ("RM Enterprises"},Spongetech's majority shareholder. RM Enterprises is one ofthe conduits through which Metter, Moskowitz, and Spongetech illegally distributed approximately 2.5 billion Spongetech shares at inflated prices.

3. Defendants Metter, Moskowitz, and Spongetech repeatedly and
fraudulently exaggerated the demand for pre-soaped sponges by announcing in press releases and public filings that Spongetech had received tens of millions ofdollars in orders for Spongetech products from five primary customers: SA Trading, US Asia
Distribution Company or US Asia Trading ("US Asia"), Dubai Export Import Company ("Dubai"), Fesco Sales Corp. ("Fesco"), and New Century Media (''New Century"). Defendants Metter, Moskowitz, and Spongetech knowingly, or recklessly, issued materially false or misleading press releases and made materially false or
misleading statements in Commission filings when they knew that these customers and their orders did not exist.

4. Defendant George Speranza ("Speranza"), a self-employed consultant associated with Spongetech, knowingly, or recklessly, participated in the fraud by, among other things, creating internet websites and virtual office space for the fictitious
customers with which Spongetech claimed to be doing millions of dollars of business so that actual or prospective shareholders would believe the customers were legitimate.

5. Defendants Metter, Moskowitz, and Spongetech further advanced and concealed the fraud by causing the creation of false purchase orders, invoices, and bills of lading, purportedly documenting the fictitious orders received from, and sales to, non-existent customers.

6. Defendants Metter, Moskowitz, and Spongetech illegally distributed approximately 2.5 billion Spongetech shares in unregistered transactions through Defendant RM Enterprises and other affiliates, which acted as conduits for the Defendants to distribute restricted shares in unregistered transactions to the public.

7. As part of their scheme, Defendants Metter, Moskowitz, Spongetech, and RM Enterprises used false and baseless attorney opinion letters rendered by Defendants Joel Pensley ("Pensley"), who is subject to an anti-fraud injunction and who was the subject of an order pursuant to Rule 102(e) as a result ofhis role in another scheme to sell securities in unregistered transactions, and by Jack Halperin ("Halperin") to distribute shares of Spongetech to the public. Defendants Pensley and
Halperin knowingly, or recklessly or negligently, made false or misleading statements in their attorney opinion letters to Spongetech's transfer agents who then improperly removed the restrictive legends from Spongetech shares. This allowed RM Enterprises and other affiliates to distribute the shares illegally in the public market in unregistered transactions.

Defendants Metter, Moskowitz, and Spongetech also used false and
misleading attorney opinion letters, forged in Pensley's name and in the name of a fictious lawyer, David Bomart ("Bomart"), which Moskowitz transmitted and caused to be transmitted to Spongetech's transfer agents.

8. Defendants Metter, Moskowitz, and Spongetech also repeatedly and fraudulently understated the number of Spongetech's outstanding shares in press releases and public filings. These Defendants knew, or were reckless in not knowing, that Spongetech actually had hundreds of millions more outstanding shares than they reported.

9. Defendants Metter, Moskowitz, and Spongetech spent portions of their illicit profits to advertise with professiomil sports teams and events to support their claims that Spongetech was prosperous, such as highly visible sponsorship deals with
professional teams in Major League Baseball, the National Football League, the National Basketball Association, the National Hockey League, and the United States Tennis Association.

10. At the direction of Defendants Metter and Moskowitz, Spongetech made false and fraudulent periodic filings with the SEC that contained material misrepresentations about Spongetech's orders, sales, and revenue derived from transactions with the fictious customers and which understated the number of authorized and outstanding shares issued by Spongetech. Metter and Moskowitz signed and certified each of these filings as true and accurate when they knew, or were reckless in not knowing, that the filings contained materially false and misleading statements.

11. Spongetech failed to maintain, and Metter and Moskowitz failed to implement, effective internal controls. They also failed to file certain reports required under Section 13(a) of the Securities Exchange Act of 1934. Metter and Moskowitz
directly or indirectly made millions of dollars in profit from the sale of Spongetech shares that eventually were distributed to the public market.

12. On October 5, 2009, the Commission suspended the trading of
Spongetech securities. The order stated that there was a lack of current and accurate information concerning the securities of Spongetech because questions had arisen regarding the accuracy of assertions in press releases to investors and in periodic reports filed with the Commission concerning, among other things:

(1) the amount of sales and customer orders received by the company; (2) the company's investment agreements; and (3) the company's revenues as reported in its financial statements.

In addition, the order stated that Spongetech had not filed any periodic reports with the Commission since the period ended February 28, 2009. Since the expiration ofthe 10 day trading suspension, Spongetech shares have continued to trade on the grey market, in which trading takes place involving securities that are not quoted in any quotation service. Since that date, Defendants Metter, Moskowitz, and Spongetech have continued to issue materially falseand misleading press releases regarding Spongetech.

13. By engaging in this conduct, all the Defendants violated, and unless restrained and enjoined will continue to violate, the antifraud provisions of the federal securities laws; Defendants Spongetech, Metter, Moskowitz, RM Enterprises, Pensley, and Halperin violated, and unless restrained and enjoined will continue to violate, the registration provisions of the
federal securities laws; and Defendants Spongetech, Metter, and Moskowitz violated, and unless restrained and enjoined will continue to violate, the books and records and internal controls
provisions of the federal securities laws.

Finally, Defendants Metter and Moskowitz have violated, and unless restrained and enjoined will continue to violate, Section 304 ofthe Sarbanes- Oxley Act of 2002 ("Sarbanes-Oxley Act") [15 U.S.C. § 7243(a)].

[GnomeOfZurich]

Read the FBI docs.

Thanks.

I loved the PM's.