Here is an interesting article.
THREE SETTLE SEC CHARGES IN NEI WEBWORLD INTERNET STOCK MANIPULATION CASE;
TWO SENTENCED TO PRISON IN RELATED CRIMINAL PROSECUTION
The Commission today announced settlements in its previously filed NEI
Webworld, Inc. Internet stock-price manipulation case. That case was
originally filed as an emergency action seeking preliminary relief
including asset freezes on December 15, 1999. The Commission alleged
that the three defendants, all recent college graduates, acquired large
blocks of stock of NEI Webworld for pennies per share, created demand
for the stock by disseminating false statements on the Internet that NEI
Webworld, Inc. would be acquired by another company, and then sold their
stock into the rising market for profits totaling nearly $364,000. The
Commission subsequently amended its complaint to allege a scheme to use
the Internet to manipulate the market for eleven additional issuers that
continued for nearly six months. Yesterday Hootan Melamed and Allen
Derzakharian, two of three defendants named in the Commission's
complaint, agreed to settle the case, without admitting or denying the
allegations in the amended complaint, by disgorging their trading
profits and consenting to the entry of permanent injunctions against
future violations of the Section 17(a) of the Securities Act of 1933,
Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5
thereunder. Melamed and Derzakharian agreed to surrender the contents
of a previously frozen brokerage account containing their $211,250 in
illegal trading profits from trading in NEI Webworld, together with
prejudgment interest earned thereon. Melamed agreed to disgorge an
additional $2,066 in profits and prejudgment interest from his trading
in two other securities. Neither Melamed nor Derzakharian will be
ordered to pay penalties based on the sworn statements of financial
condition that each submitted. The Commission also filed a new action
naming a fourth individual, Arash (Danny) Molayem, for participating in
the NEI Webworld and other Internet manipulations. Simultaneous with
the filing of the Complaint against him, Molayem also consented to the
entry of a permanent injunction and agreed to disgorge his trading
profits of $16,006 plus prejudgment interest. Because of Molayem's
early and substantial cooperation in the investigation of this matter,
the Commission did not seek to freeze his assets, and settled without
seeking civil penalties against him. The Commission's complaint against
Arash Aziz-Golshani, the third defendant in the original case, remains
pending.
Separately, the United States Attorney for the Central District of
California prosecuted Aziz-Golshani and Melamed criminally for their
manipulation of NEI Webworld. Aziz-Golshani pled guilty to one count of
securities fraud and one count of conspiracy to commit securities fraud.
Melamed pled guilty to one count of conspiracy to commit securities
fraud. Aziz-Golshani was sentenced on January 22, 2001 to 15 months
incarceration, and ordered to pay restitution in an amount to be
determined. Melamed was sentenced on January 12, 2001 to 10 months
incarceration and also ordered to pay restitution in an amount to be
determined. [SEC v. Arash Aziz-Golshani, et al., USDC, CD Cal., Civil
Action No. 99-13139, CBM, AJWx]; [SEC v. Arash Molayem, USDC, CD Cal.,
Civil Action No. 01-00649, CBM, CTx] (LR-16867
I would NOT at all be surprised if a number of the VALH hypesters have similar proceedings against them at some point in the future. In fact, I suspect there are ongoing investigations as we speak. |
