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SEC Files Emergency Action to Stop Ongoing Microcap Stock Fraud FOR IMMEDIATE RELEASE 2006-50 Washington, D.C., April 6, 2006 - The Securities and Exchange Commission today filed an emergency enforcement action in federal court charging two New York men, Faisal Zafar and Sameer Thawani, with perpetrating an ongoing securities fraud over the Internet. The complaint alleges that since late 2004 and as recently as March 2006, Zafar and Thawani have engaged in a "pump and dump" scheme to manipulate the market for at least 24 thinly traded "microcap" or "smallcap" stocks. The defendants made over $873,000 by purchasing the stocks, anonymously disseminating false information about the companies on popular Internet message boards, and then selling the stocks at artificially inflated prices.
To deceive investors into buying these stocks, the defendants have preyed on public fears about terrorism and international health epidemics, among other topics. For example, after the London subway bombings and reports concerning a deadly "bird flu" virus, Zafar posted messages falsely stating that one issuer was receiving a contract from the Department of Homeland Security to improve security on New York City subways, and that another issuer was acquiring a company that produces "bird flu" vaccine.
Acting on the Commission's application for emergency relief, the United States District Court for the Eastern District of New York issued a temporary restraining order that, among other things, froze the defendants' assets and set a date for a hearing on the Commission's motion for entry of a preliminary injunction against further violations and other relief while the action is pending.
Mark K. Schonfeld, Director of the Commission's Northeast Regional Office, said, "Today's action underscores the Commission's continued vigilance against all forms of fraud involving the microcap market. Investors who participate in this segment of our capital markets are entitled to know that the securities laws will be vigorously enforced against all violators."
David Rosenfeld, Associate Regional Director of the Northeast Regional Office, added, "The defendants preyed on innocent investors by using the relative anonymity of the Internet to manipulate the market. We have acted today to stop a brazen fraud and hold the perpetrators responsible for the harm they caused investors."
The Commission's complaint further alleges as follows:
After buying shares at prevailing market prices, Zafar and Thawani used online aliases to post messages touting the stock and containing phony press release excerpts or other fake "news" about the issuer to deceive investors. In addition to capitalizing on actual events in the news, the phony headlines concocted by the defendants have also included false claims of huge business contracts, mergers and strategic alliances between these little-known issuers and an array of major corporations -- such as Google, Kmart and Sun Microsystems -- and other dramatic developments designed to make the targeted stocks appear to be surefire investment opportunities.
Zafar and Thawani are engaged in a classic Internet "pump and dump" manipulation scheme whose basic structure is as follows: (1) one or both of the defendants purchase shares of the issuer's stock in their online brokerage accounts; (2) the defendants register multiple online identities ("User IDs") with Internet message board services; (3) the defendants post multiple messages attributed to their User IDs on Internet message boards devoted either to the touted stock or to other, more widely followed stocks; (4) the messages contain materially false statements about the issuer and urge other investors to buy the stock; and (5) as soon as the stock price increases due to purchases spurred by the false statements, the defendants sell their shares at the inflated price for a quick profit. After their sales, the price of the stock quickly returns to its pre-manipulation level. These events sometimes all occur within the span of a single day.
The defendants have created at least 300 different User IDs and have used them to post well over one thousand messages fraudulently touting the stock of at least 24 small-cap issuers, some of them on multiple occasions. The defendants created these multiple online aliases in order to conceal their identities from investors and make it appear as if the same breaking "news" is coming from multiple independent sources. More recently, the defendants have also targeted specific investors by posing as moderators of Internet user groups devoted to low-priced stocks and sending emails to the group members while simultaneously posting false messages on different Internet message boards about the same stock under different user names. These emails purport to alert investors to imminent news about the stock and urge them to capitalize by buying the stock before the "news" is made public.
The complaint charges Zafar and Thawani with violations of the antifraud provisions of the federal securities laws. In addition to permanent and preliminary injunctive relief, the complaint seeks disgorgement of all illegal profits and the imposition of civil monetary penalties.
The Commission acknowledges the cooperation of the United States Attorney's Office for the Eastern District of New York and the Federal Bureau of Investigation in this matter.
# # #
For further information contact:
Mark K. Schonfeld (212) 428-1020 Regional Director, Northeast Regional Office
David Rosenfeld (212) 336-0153 Associate Regional Director, Northeast Regional Office
George N. Stepaniuk (212) 336-0173 Assistant Regional Director, Northeast Regional Office
-------------------- THE DEVIL HIDES IN THE DETAILS (DD) DO YOUR DD BOOOYAH :) Posts: 345 | From: central florida | Registered: Oct 2005
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I have been warning people for months about this mess in the Pinks/Greys and OTCBB'S...
You people had better take a hard look at many of the so-called Hero posters around here..
I firmly believe many posters are " dirty " as hell....Many probably move in and out of here by simply changing their IP...
Many dirty Posters have already been successfuly removed from Allstocks.
I am telling the ones who are "not involved" with these scamsters, you have not seen anything yet...The Tip of the Ice Berg is here, and the boards will clean themselves up or the FBI SEC is going to shut the whole damn thing down.
Support Bob Frey and all in Allstocks in their successful efforts to clean things up!
Con Artists and lying thieves beware, your day in court is coming..
And believe me, you can take that to the bank!
Posts: 10729 | From: oregon | Registered: Feb 2005
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quote:Originally posted by Dustoff101: I have been warning people for months about this mess in the Pinks/Greys and OTCBB'S...
You people had better take a hard look at many of the so-called Hero posters around here..
I firmly believe many posters are " dirty " as hell....Many probably move in and out of here by simply changing their IP...
I am telling the ones who are "not involved" with these scamsters, you have not seen anything yet...The Tip of the Ice Berg is here, and the boards will clean themselves up or the FBI SEC is going to shut the whole damn thing down.
Support Bob Frey and all in Allstocks in their successful efforts to clean things up!
Con Artists and lying thieves beware, your day in court is coming..
And believe me, you can take that to the bank!
-------------------- ***********************
It's all in the timing... Posts: 4303 | From: DSA | Registered: Dec 2003
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posted
Thanks to Bob Frey and Allstocks for keeping this site as clean as possible when these crooks show up...Also, thanks to the members of Allstocks who confront these scam artists every time they are here...Way to go...
Posts: 2660 | From: Pennyland USA | Registered: Jun 2004
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dustoff101: you are so right, lots of pumpers on these threads pushing BS stocks, sometimes i call them on it when my DD exsposes the bullsh!t, they usualy gang up on me as a basher! LOL! DD is the best way to guard yourself against a P and D scam. pumps usualy run but they ALWAYS fall leaving uninformed bag holders in thier wake! get in on the set up ( pump ) and sell on the spike never hold out for sky high gains pumpers promiss are coming! play them ( pumpers ) dont let them play you !
Posts: 2503 | From: connecticut | Registered: Mar 2005
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posted
When the Hammer of justice falls on Qbid, it will be very interesting seeing just who gets the FBI SEC Treatment.
Posts: 10729 | From: oregon | Registered: Feb 2005
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quote:Originally posted by madmoney: dustoff101: you are so right, lots of pumpers on these threads pushing BS stocks, sometimes i call them on it when my DD exsposes the bullsh!t, they usualy gang up on me as a basher! LOL! DD is the best way to guard yourself against a P and D scam. pumps usualy run but they ALWAYS fall leaving uninformed bag holders in thier wake! get in on the set up ( pump ) and sell on the spike never hold out for sky high gains pumpers promiss are coming! play them ( pumpers ) dont let them play you !
what if it wasn't a pump and you bashed. The stock company can sue. be careful.
posted
Maybe we'll see the end of the "front loaded" group plays here....Hope your listening Momo..Elliot Ness is lurking...
Posts: 2660 | From: Pennyland USA | Registered: Jun 2004
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quote:Originally posted by madmoney: dustoff101: you are so right, lots of pumpers on these threads pushing BS stocks, sometimes i call them on it when my DD exsposes the bullsh!t, they usualy gang up on me as a basher! LOL! DD is the best way to guard yourself against a P and D scam. pumps usualy run but they ALWAYS fall leaving uninformed bag holders in thier wake! get in on the set up ( pump ) and sell on the spike never hold out for sky high gains pumpers promiss are coming! play them ( pumpers ) dont let them play you !
what if it wasn't a pump and you bashed. The stock company can sue. be careful.
I never bash, i post only VARIFIABLE FACTS so i am not worried about being sued. if the company is not what the pumpers say it is and i can prove it i will post otherwise i just watch and play the game from the sidelines.
Posts: 2503 | From: connecticut | Registered: Mar 2005
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quote:Originally posted by madmoney: dustoff101: you are so right, lots of pumpers on these threads pushing BS stocks, sometimes i call them on it when my DD exsposes the bullsh!t, they usualy gang up on me as a basher! LOL! DD is the best way to guard yourself against a P and D scam. pumps usualy run but they ALWAYS fall leaving uninformed bag holders in thier wake! get in on the set up ( pump ) and sell on the spike never hold out for sky high gains pumpers promiss are coming! play them ( pumpers ) dont let them play you !
what if it wasn't a pump and you bashed. The stock company can sue. be careful.
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The Stock Company? You got that right..
They are a company in many cases that does not have buisness operations..
Their " Business " is to sell suckers stock!
You are the one who should beware!
Let um Sue me! They will lose the Malicious attempt at suing me, then the Judge will award me!
Posts: 10729 | From: oregon | Registered: Feb 2005
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posted
If you click through the links at the bottoms of the pages at the SEC site discussing this, you can get to the actual complaint filed by the SEC which states the Stocks that they say were manipulated. I don't recognize any of them.
Posts: 73 | From: Oklahoma City | Registered: Dec 2005
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The big question is what does the SEC. really do to these indivuals i haven't heard of anything much, tell me i am wrong. It seems that the only ones that get hurt our the investors, if they are going to start this type of action and control this problem, something needs to change in the penalties not just slap their hands. Otherwise we put on more Gov. workers to do the same thing. Just my opinion.
Posts: 3875 | From: ca. | Registered: Jul 2005
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quote:Originally posted by racjis: If you click through the links at the bottoms of the pages at the SEC site discussing this, you can get to the actual complaint filed by the SEC which states the Stocks that they say were manipulated. I don't recognize any of them.
------------------------------------------------- Do actually think they are done?
Geezz man, they are just getting warmed up!
Posts: 10729 | From: oregon | Registered: Feb 2005
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quote:Originally posted by IWISHIHAD: The big question is what does the SEC. really do to these indivuals i haven't heard of anything much, tell me i am wrong. It seems that the only ones that get hurt our the investors, if they are going to start this type of action and control this problem, something needs to change in the penalties not just slap their hands. Otherwise we put on more Gov. workers to do the same thing. Just my opinion.
------------------------------------------------- I am sounding out loud and clear!
Buisness as usual is OVER!
People are going to Prison, period.
Posts: 10729 | From: oregon | Registered: Feb 2005
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quote:Originally posted by madmoney: dustoff101: you are so right, lots of pumpers on these threads pushing BS stocks, sometimes i call them on it when my DD exsposes the bullsh!t, they usualy gang up on me as a basher! LOL! DD is the best way to guard yourself against a P and D scam. pumps usualy run but they ALWAYS fall leaving uninformed bag holders in thier wake! get in on the set up ( pump ) and sell on the spike never hold out for sky high gains pumpers promiss are coming! play them ( pumpers ) dont let them play you !
what if it wasn't a pump and you bashed. The stock company can sue. be careful.
I sure hope so but skeptical, i don't want them to increase the size of the SEC. again just to do the same thing. If the penalty increases that alone will stop a lot of this.
Posts: 3875 | From: ca. | Registered: Jul 2005
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lol if i was you ill be worrying on making YOUR next SUCCESFULL trade"
you guys are acting like if the world is going to end.....PLEASE....
you think youre the SEC...hehe or the FBI hehe
lol
------------------------------------------------- Very interesting?
Do you condone cheating and leaving the not so swift as bagholders on these pump and dump stocks?
Don't tell me about trading, I have posted between 12-20 100% - 400% gainers which are Nasdaq, Amex stocks.
These stocks still hold their gains months after being posted.
----------------------------------------------- The point is people do not have to play the garbage...........
Why even bother with the things when most people just become bagholders..
Maybe in time the playing field will be fair to the very, very few Pinks/Greys OTCBB'S that truly do have a future, for the the investor.
Posts: 10729 | From: oregon | Registered: Feb 2005
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