Re: ZiaSun critic told to halt Net smears
By Bruce V. Bigelow
STAFF WRITER
February 9, 2000
A San Diego judge has ordered a self-styled stock critic to stop posting critical messages about a Solana Beach investor in an Internet "cybersmearing" case that is gaining widespread attention.
Lawsuits filed to halt the so-called stock bashers have raised questions about free speech on the Internet and prompted news accounts about the issue.
The temporary order prohibits Floyd D. Schneider of Saddle River, N.J., from stating or suggesting that Bryant Cragun of Solana Beach is dishonest, disreputable or a criminal.
Cragun, an investor and stock promoter, sued Schneider last year as part of a bid to douse an Internet flame war that has been raging over ZiaSun Technologies, an obscure holding company backed by Cragun.
The Jan. 31 order by Superior Court Judge Janis Sammartino also required Schneider to publish a retraction of several press releases he issued on the Internet, which announced "a strong sell recommendation" on ZiaSun.
According to the court's order, which was uncontested, Schneider's sell recommendation "was not based on an objective analysis of ZiaSun's stock and value."
The order also says that "derogatory statements made regarding Bryant Cragun, ZiaSun, and the officers, directors and employees of ZiaSun were false or implied false facts."
Cragun's lawyer, Daniel Pascucci, alleged that Schneider is a part of a group of eight Internet users who are working in a conspiracy with short sellers to drive down the price of ZiaSun shares.
"You can't say whatever you want to on the Internet or anywhere else," Pascucci said. "It's kind of like yelling 'Fire!' in a theater, and then charging an exit fee when people panic and are running for the exits."
Using aliases such as "truthseeker" and "Auric Goldfinger," members of the "ZiaSun 8" have posted thousands of taunting, scornful messages about ZiaSun in Internet stock chat forums.
Some of the messages mock ZiaSun's financial statements, detail the company's ties to Asian brokerage houses and reveal ZiaSun's prior incarnations as BestWay and Carlisle Enterprises.
Pascucci says the "ZiaSun 8" -- and Schneider in particular -- have posted defamatory statements about ZiaSun and Cragun, falsely claiming that the company is under investigation and Cragun is a criminal.
In response to a reporter's question, Pascucci acknowledged that Cragun was the subject of an investigation by the Securities and Exchange Commission that lasted for years. But no charges were filed, and Pascucci said emphatically that Cragun is not a criminal.
Schneider denied that he has been working with short sellers, or that he has worked closely with Amr "Tony" Elgindy, identified in Cragun's lawsuit as a Nasdaq short seller.
"I do mortgages for a living," said Schneider, a regional vice president with Real Estate Mortgage Network. "And I do investigative reports on companies -- and I'm very good at it."
Schneider said he publishes his investigations on his own Internet Web site, thetruthseeker.com, including reports he prepared on USA Talks and 2TheMart.com.
Schneider said he has not contested Cragun's lawsuit because he can't afford it.
ZiaSun, which trades over the counter, represents itself as an Internet company that operates at least nine business units focused on e-commerce and specialized online support service.
The Solana Beach company recently obtained a separate order from a U.S. District Court in Seattle, which prohibits Schneider from publishing "false statements" about ZiaSun.
The order stemmed from a libel lawsuit the company filed last year against Schneider and the seven other Internet users.
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