Open Letter to Depository Trust and Clearing Corporation First Deputy General Counsel Larry Thompson on the Largest Breach of Public Trust in History
PLANTATION, FLORIDA, April 5, 2005, /PRNewswire-FirstCall/ -- Eagletech Communications Inc. (OTCPK: EATC), today released its response to the Depository Trust and Clearing Corporation First Deputy General Counsel Larry Thompson’s recent postings at http://www.dtcc.com/ seeking to mislead the public about the DTCC’s role in the largest breach of public trust in history.
Dear Mr. Thompson:
I wish to remind you that on March 4, 2005 Eagletech Communications, Inc.’s Attorneys announced the ruling of the Supreme Court of the State of New York, wherein the DTCC was compelled to produce the Company’s trading records
Today, more than one month later, the records have not been forthcoming as ordered by the court. Instead, as First Deputy General Counsel for the DTCC, I believe you have undertaken a campaign to disseminate misinformation, lies, and half-truths when confronted with facts made public by your detractors.
On March 5, 2005 one day after the announcement of the aforementioned court ruling, your interview @dtcc.com, entitled “Naked Short Selling and the Stock Borrow Program”, stated: “One of these companies has been cited for failing to file financial statements since 2001.” Congratulations! You did get one right. On February 15, 2005, the Securities and Exchange Commission deemed it necessary for the protection of investors to institute proceedings pursuant to Section 12(j) of the Securities Exchange Act of 1934 In the Matter of Eagletech Communications, Inc., Respondent.
On the same day The SEC also filed an Enforcement Action against 17 Defendants, all associated with the Company’s first Investment Banking firm, for manipulation of the Company’s stock. Also on that day, a New Jersey Grand Jury unsealed an Indictment charging 4 of the 17 with criminal charges. I was not surprised since the evidence used by the SEC and the Justice Department in both investigations was obtained from discovery in the Company’s 2001 civil lawsuit against several of the same perpetrators. The evidence was obtained from defendants residing in the Bahamas, outside both of the agencies’ jurisdictions. Plaintiff’s Attorneys shared the discovery evidence freely with the investigative agencies.
What was surprising was that the Company’s three official complaints of naked short selling, counterfeiting of the Company’s stock, and other criminal misconduct made in 2002 to the SEC were to my knowledge ignored. The first complaint to the SEC transmitted the Company’s civil lawsuit alleging that 5 of the managing directors of Salomon Smith Barney along with other SSB employees worked in concert with criminal securities manipulators.
Three years of evidence gathering implicates now convicted securities manipulator Anthony Elgindy, his associate Peter Michaelson, members of organized crime, manipulator Jonathan Curshen, his Offshore Management Company Red Sea Management, Market Makers WIEN Securities, Knight Securities, and scores of Wall Street professionals. Additional evidence obtained from the SEC’s own website contributes to the description of a scheme to destroy the value of the Company’s stock and ultimately the Company for the profit of the perpetrators. A second complaint to the SEC resulted in the presentation of pattern of evidence of naked short selling and counterfeiting of securities in 200 companies, to SEC Enforcement Attorney Justin Arnold at a meeting in the SEC’s Miami office. The third complaint submitted by U.S. Congressman Peter Deutsch on the Company’s behalf received no acknowledgement from the SEC at all.
Mr. Thompson, in your interview you state (referring to Eagletech): “Frankly we believe that the allegations are an attempt to purposely mislead those who are not familiar with this program.” Consider this. Forensic Economist and Professor of Finance at Fordham University Graduate School of Business, John D. Finnerty after four years of research in March 2005 released what will likely become the definitive work on this subject for Juries across America. In his 73 page Treatise entitled, Short Selling, Death Spiral Convertibles, and the Profitability of Stock Manipulation, Professor Finnerty on page 37 has this to say about the Stock Borrow program:
“…The stock borrow program can facilitate naked shorting in two ways. First, sellers can continue to fail to deliver because the NSCC can borrow the shares it needs to meet its clearing obligations through the stock borrow program. It does not have to force the seller who fails to deliver to buy in shares, nor does it have to go into the market to buy in the shares. It simply borrows them from another member firm to effect the buy-in. Since the NSCC covers the short position, the buyer of the stock also never has to buy them in. Second, the stock borrow program allows the shares to be recycled. Each stock loan gives rise to another stock futures contract. Any single share could actually be relent multiple times, giving rise to multiple futures contracts. Each futures contract credited to a broker-dealer’s sub-account at the DTC continues to be reported on the broker-dealer’s books as a share held either in its proprietary account or in a customer account. In either case, the account holder believes he owns a real share with all the rights attached to it. Consequently, the stock borrow program effectively creates additional unauthorized shares of the issuer’s stock. These undated stock futures contracts, which the financial press has referred to as phantom shares, inflate the amount of stock that is available for trading and also increase the amount of stock that is available for lending to short sellers…” The entire text is available for download at: http://papers.ssrn.com/abstract=687282.
Mr. Thompson maybe you don’t realize that just as it is against the law to counterfeit United States currency it is also a Class B Federal felony punishable by up to 25 years in prison to create counterfeit corporate securities. The law makes no distinction between the counterfeiting of a development stage startup public company and for example, Microsoft Corporation. By the way, while listed on the “Pink Sheets” in 1975 Microsoft reported three employees and income of $16,000 for the period. Lucky for Microsoft that the Stock Borrow program wasn’t created until 1981! Lucky for me, I could be typing this letter on a typewriter! I’ve included this link to United States Code, Title 18, Chapter 25, Section 514, also refer to Section 513 for definitions: http://caselaw.lp.findlaw.com/casecode/uscodes/18/parts/i/chapters/25/toc.html.
Eagletech Communications, Inc. representing itself Pro Se has answered the charges of the SEC with the Affirmative Defense that grandfathering all pre-Regulation SHO delivery failures and that seeking to de-register the Company’s stock in order to protect future shareholders is a subterfuge to misrepresent its real intentions. In my opinion this action against the Company is designed to conceal its own culpability in, using the SEC’s own words, “delivery failures greater than a company’s total public float.” De-registration of the Company’s shares stands to reward manipulators just as a bankruptcy would, since the manipulators would never have to purchase the stock to close out delivery failures still on the DTCC’s books. In my opinion the SEC’s decision to grandfather known criminal securities manipulation has violated the Constitutional 5th Amendment rights of Eagletech shareholders by an inverse taking of their property without due process and without compensation.
In a motion to SEC Administrative Law Judge William T. Kelley filed on March 22, 2005, I have asked that the approximately 100 pages of evidence of criminals in the act of manipulating the Company’s stock filed with the Company’s answer, and by reference Eagletech’s trading records ordered to be produced by the DTCC, be referred to the U.S. Secret Service, the U.S. Justice department and as 18-USC-514 states “any other such agency having such authority.
Since the DTCC is incorporated as a State of New York Special Purpose Trust Banking Organization I believe Elliot Spitzer, New York’s Attorney General, would have that authority. It would also appear that the SEC’s Congressional Oversight Committees, the Senate Banking Committee and the House Financial Services Committee would have such authority to investigate these crimes. Since viewing Senator Robert Bennett’s impassioned admonition to SEC Chairman William Donaldson in a Senate Banking Committee hearing that “Regulation SHO in not working” I have hope that other members of the SEC’s Oversight Committees can be convinced to take a serious look at this issue.
For your convenience I have included a link to the video record of the hearing: After installing Real Player navigate to 1:19:30 for video of the Senators admonishment,
The appropriate response to this letter would be with facts not rhetoric. In the @dtcc interview you ask yourself the question “does the Stock Borrow program counterfeit shares?” Only by producing Eagletech’s court ordered trading records will the real answer be known!
In addition, would you please include with any response to this letter, (1) your Bar number and (2) the State in which you are admitted to practice law. And just so there is no confusion about the authenticity of my allegations I will be posting the evidence of the alleged criminal misconduct on the Company’s website at http://www.eagletech1.com/.
Sincerely,
Rodney E. Young
Eagletech Communications, Inc.
Founder, President, CEO, and Sole Protector of Existing Shareholder Property Rights!
This press release may contain forward-looking statements. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted, or quantified. Future events and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. The risks and uncertainties to which forward-looking statements are subject include, but are not limited to, governmental regulation, competition, and other material risks.
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