Penny Stock Fraud Info
SF Chronicle: “The Internet opens up a new avenue for penny stock fraud”
This article is from 7/8/04 and since then the stock spam I receive has increased at least 10 times.
The Internet opens up a new avenue for penny stock fraud
“… Some companies use false press releases. According to the SEC, Penny King Holdings Inc. owner Gabor S. Acs deceived investors with misleading releases and Web sites in 2002. The government also said he failed to acknowledge payments from two penny stock companies in exchange for his promotional services. In May, the SEC ordered Acs to make payments totaling nearly $643,000.
Acs could not be reached for comment; no phone number could be located for him.
Ives, who is serving a prison term on criminal charges related to the SEC’s civil case against his company, also could not be immediately reached for comment. Ives had two co-defendants in the civil case, James Kosta and Michael Harrison. Christopher Bruno, a lawyer for Kosta, whose case is still pending, said his client denied the charges against him, “and looks forward to having the matter resolved.”
Harrison, in a consent agreement, was ordered to pay nearly $9,500 in penalties. A phone call to his home was answered by a woman who said she doubted Harrison would want to comment.
While some brokers still operate out of 1920s-style “boiler rooms,” where false information is given out over the telephone, the Internet is the cheapest, fastest, and most anonymous way to pressure and mislead investors about penny stocks.
“As a vehicle for securities fraud, it’s really got to be up there with pornography,” Edmunds said.
Of the approximately 1,300 e-mails the SEC receives daily complaining about securities fraud, as much as 70 percent relates to spam mail, said John Reed Stark, chief of the SEC Office of Internet Enforcement.
But the trading trail is more pronounced when done electronically, Stark said, making online securities fraud easier to track.
“It’s certainly easier and cheaper to send out bulk e-mails than ever before,” he said. “But it’s also easier and easier to catch when it comes to securities fraud.”
Yet securities fraud has always been, and will probably continue to be, an issue for penny stocks.
“The SEC can’t change the fact that people are greedy, and that people can be untrustworthy,” Bob Robotti, president of Robotti & Co. Inc., said. ...”
The SEC certainly could step up enforcement. What are they doing about all the complaints they receive?
Why is AHFI still trading? Why are so few of these criminals sent to prison?
