Couple charged in stock scheme
Henry K. Lee, Chronicle Staff Writer Friday, September 7, 2001
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A Sonoma County couple has been named in an 82-count indictment on charges of stock manipulation and money laundering through a series of "pump and dump" schemes involving Internet stocks.
F. Thomas Eck III, 56, a former attorney previously convicted of wire fraud, and his wife, Zahra R. Gilak, 54, were named in the indictment, which was unsealed yesterday after being handed down by a federal grand jury in San Francisco on Aug. 30.
Gilak was arrested yesterday by FBI agents at the couple's home in Penngrove. Eck turned himself in yesterday afternoon.
The defendants will plead not guilty today before U.S. Magistrate Bernard Zimmerman in San Francisco, their attorneys said.
"Stay tuned, there is another side to the story," said Eck's attorney, Bill Goodman of San Francisco. Gilak's attorney, Cristina Arguedas of Emeryville, said, "We're prepared to defend the case."
Eck and Gilak allegedly netted more than $15.4 million in profit -- and lived the high life, buying expensive jewelry and property in Sonoma and Marin counties -- while bilking investors of more than $100 million from 1999 to 2001, prosecutors said.
Authorities described the case as classic pump-and-dump schemes, in which promoters push up a stock's price by making false claims about the company and then sell their own shares to make a profit on the artificially high price.
Eck and Gilak allegedly inflated the share prices of three publicly traded companies: M&A West Inc., formerly of San Bruno -- which purported to be an "Internet incubator" by creating offshoot Internet companies -- and two subsidiaries, VirtualLender.com and Digital Bridge Inc. M&A West is now located in Liberty, Texas.
The couple and others had control of more than 80 percent of the shares of the companies, which they concealed through offshore accounts, prosecutors said.
The two created fake investor demand for the companies by writing press releases and Internet postings that promoted the companies' stock to potential investors, prosecutors said.
The defendants then allegedly "dumped" their shares by selling them through various brokerage firms before funneling sale proceeds back to themselves through wire transfers.
The government is seeking the forfeiture of five parcels of real estate, including the couple's 5.7-acre estate on Acacia Way in Penngrove; an oceanfront property in Dillon Beach; and lots in Santa Rosa, Fulton and Sonoma.
In a separate action yesterday, the Securities and Exchange Commission sued M&A West, along with Eck and several former executives. The group reaped more than $20 million in illegal profit, the SEC said.
Eck, a graduate of the University of Southern California law school who had practiced in Napa and Reno, resigned from the California and Nevada bars after a 1999 wire-fraud conviction in federal court in Kentucky.
E-mail Henry K. Lee at hlee@sfchronicle.com.
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