You could be next! Four arrested for peddling penny stocks
on Web
NEW YORK, Aug 18 (Reuters) - Four Long Island brokers were
arrested for fraudulently peddling penny stocks through a Web site
and E-mails, federal authorities said on Wednesday.
The four brokers, three of whom were barred from working in the
securities industry because of prior violations, promoted the stocks
through the stockplayer.com Web site from April 1997
through the present, according to a U.S. Attorney of the Eastern
District of New York statement. They then sold shares that they
received from the companies for their promotional services to unsuspecting investors at inflated prices, it
added.
The brokers are charged with manipulating the prices of eight penny stocks the Web site promoted and
failing to disclose that these companies gave them hundreds of thousands of shares of their stock.
The brokers were previously employed by Stratton Oakmont Inc., a Lake Success, N.Y., broker that
went out of business in 1996.
''It's illegal to promote these stocks without telling the public the full extent of the compensation,'' said
Joel Cohen, the deputy chief of the business and securities fraud division of the U.S. Attorney's
Brooklyn office in a telephone interview.
''What (the brokers) were doing was telling people on this Web site: 'We're getting 25,000 shares,'''
Cohen said. ''But in reality they were getting 500,000 shares.''
The brokers, who were arraigned in the U.S. Courthouse in Hauppage, N.Y. on Wednesday and could
face sentences ranging up to 20 years, are Vincent Napolitano, Irving Stitsky, Jordan Shamah and
Robert Kessler. The first three could not be reached for comment because they have unlisted telephone
numbers, and nobody answered calls to Kessler's house.
The stockplayer.com Website often misrepresented the business prospects of these eight companies
to entice investors to buy their shares, prosecutors said. The companies themselves have not been
charged with any wrongdoing because companies can issue stock to promoters under certain
circumstances, Cohen said.
Cohen said ''the investigation is continuing.''
The companies, most of which traded on Nasdaq's over-the-counter bulletin board of small stocks, were
ARXA International Energy Inc. (OTC BB:ARXA - news), Iron Holdings Corp., Collision King Inc. (OTC
BB:CKNG - news), Tilden Associates Inc. (OTC BB:TLDN - news), Detour Magazine Inc. (OTC
BB:DTRM - news), Tricom Technology Group Inc. (OTC BB:TRCM - news), Wineco Productions Inc
(OTC BB:WCPD - news), Fidelity Capital Group Holdings Inc. (OTC BB:FCGH - news)
ARXA, Tilden, Wineco, Fidelity and Detour officials were not immediately available for comment. Iron
Holdings, Collision King and Tricom could not be reached.
In addition to a string of bulletin board companies, the stockplayer.com Web site also lists blue-chip
computer maker Compaq Corp. (NYSE:CPQ - news) as one of the companies it profiled previously.
More Quotes
and News:
ARXA International Energy Inc (OTC BB:ARXA - news)
Collision King Inc (OTC BB:CKNG - news)
Compaq Computer Corp (NYSE:CPQ - news)
Detour Magazine Inc (OTC BB:DTRM - news)
Fidelity Capital Group Holdi |
