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CIVIL ACTION AGAINST REFAEL SHAOULIAN
The Commission announced that on May 3, 2000, the U.S. District Court
for the Central District of California issued a temporary restraining
order against 24 year-old Refael Shaoulian (Shaoulian) barring him from
violations of the antifraud provisions of the federal securities laws.
The Court, also on May 3rd, issued an asset freeze against Shaoulian and
his father, Samuel Shaoulian.
In its original complaint filed on May 3rd (Original Complaint), the
Commission alleged that Shaoulian used the Internet to manipulate the
price of a thinly traded stock by spreading false information to various
Internet message boards, allowing him to reap more than $172,000 in
trading profits. The Original Complaint, also named Shaoulian's father,
Samuel Shaoulian, as a relief defendant based on his receipt of ill-
gotten gains from the manipulation. Based upon evidence of additional
manipulations by Shaoulian, on July 6, 2000, the Commission filed an
amended complaint (Amended Complaint) charging that from April 1999
through July 1999, Shaoulian engaged in virtually identical Internet
pump and dump schemes involving four additional stocks. With these four
additional stock manipulations charged against Shaoulian, the Commission
is seeking more than $388,000 in disgorgement from Shaoulian, his father
and brother, as well as civil penalties against Shaoulian. The Amended
Complaint also names Shaoulian's brother, Rabin Shaoulian of Beverly
Hills, as a relief defendant because he received some of the ill-gotten
gains from the manipulations.
According to the Commission's Original Complaint, in January 2000,
Shaoulian manipulated the common stock price of Universal Standard
Healthcare, Inc. (Universal), a stock traded through the NASD's OTC
Bulletin Board system, by posting numerous false messages on Internet
message boards. The complaint alleges that Shaoulian, a 24 year-old
Beverly Hills resident and UCLA graduate, obtained more than $172,000 in
profits from his Internet pump and dump manipulation of Universal stock.
Shaoulian did so by first buying a large block of Universal shares
between January 24 and 26, 2000. According to the complaint, during the
weekend of January 29th and 30th, Shaoulian posted hundreds of
messages,
under multiple pseudonyms, to Internet financial message boards using
publicly available computers located on the UCLA campus. These messages
falsely stated that Universal was about to be purchased by another
company and that Universal was profitable. In fact, Universal had
ceased all operations in August 1999, when it filed for Chapter 7
bankruptcy protection. Universal's stock price closed at $0.03 per
share on January 21, 2000, and peaked at $1.50 per share within the
opening hour of trading on January 31st, before declining precipitously.
On January 31 and February 1, 2000, Shaoulian sold all his Universal
shares for a $172,690 profit. After Shaoulian's Internet message
campaign ended, Universal's price plummeted. Based on this conduct, the
Commission in its complaint sought a temporary restraining order and a
preliminary and permanent injunction barring Shaoulian from future
violations of the antifraud provisions of the federal securities laws,
disgorgement of ill-gotten gains, and civil monetary penalties. On May
11th, the Court, with Shaoulian's consent, entered a preliminary
injunction against him and continued the asset freeze.
The Amended Complaint alleges that Shaoulian manipulated the stock of:
iChargeit, Inc., Worldtradeshow.com, Inc., Casino Pirata.com Ltd. and
E*TwoMedia.com, Inc. Each of these stocks traded on the OTC Bulletin
Board at the time of these manipulations. In each instance, the
Commission alleges that Shaoulian purchased a substantial block of
shares in these companies, posted hundreds of false messages about each
company to various Internet message boards using publicly available
computers at the campuses of UCLA and the University of Southern
California and then sold his own shares into the buying surge prompted
by the false Internet messages. In each instance, Shaoulian obtained
substantial profits.
In a related action, the Commission today announced civil charges
against two other individuals who, it alleged, participated in the
manipulations of iChargit, Worldtradeshow.com, Casino Parata.com,
E*TwoMedia.com and other issuers (See, SEC v. Aziz Golshani, et al.,
Civ. Action No. 99-13139, CBM, AJWx, C.D. Cal., LR-16620, July 6, 2000).
The Commission thanks the NASD for its assistance in this matter. [SEC
v. Refael Shaoulian, USDC, CDCA, Civ. Action No. 00-04614, CBM] (LR-
16621)
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