Re: 7/6/00 - SEC FILES NEW AND EXPANDED CHARGES AGAINST TWO DEFENDANTS IN NEI WEBWORLD INTERNET STOCK MANIPULATION CASE
SEC FILES NEW AND EXPANDED CHARGES AGAINST TWO DEFENDANTS IN NEI WEBWORLD INTERNET STOCK MANIPULATION CASE; BOTH PLEAD GUILTY TO CRIMINAL CHARGES
The Commission today filed an amended complaint against two Southern California residents detailing new and expanded civil fraud charges of manipulating the prices of thinly-traded stocks by spreading false information on Internet message boards. The SEC charges that defendants Arash Aziz-Golshani and Hootan Melamed carried out an Internet fraud scheme relating to the securities of several issuers, in addition to the securities of NEI Webworld, Inc., the subject of the SEC's original complaint filed in December 1999. In related criminal proceedings, the United States Attorney's Office for the Central District of California announced today that Aziz-Golshani and Melamed have pled guilty to charges based on the same conduct alleged in the SEC's original complaint.
The original complaint charged Aziz-Golshani, Melamed, and a third defendant, Allen Derzakharian, with stock price manipulation in violation of federal securities laws for disseminating fraudulent statements on the Internet in November 1999 falsely claiming that NEI Webworld, Inc. would be acquired, and trading to take advantage of that fraudulent information. The amended complaint alleges that Aziz-Golshani and Melamed engaged in similar fraudulent conduct with respect to the securities of other issuers during the time period April 1999 to October 1999. It alleges that Aziz-Golshani did so with respect to eleven issuers: JustWebit.com, iChargeit, Inc., WorldTradeShow.com, Inc., E*twoMedia.com, Inc., Encounter.com, Inc., Classified Online.com, Virtual Games, Inc., Foodvision.com, Inc., YouTicket.com, Inc., Fashionmall.com, Inc., and Casino Pirata.com LTD; and that Melamed did so with respect to JustWebit.com and Foodvision.com, Inc. It alleges that Aziz-Golshani made illicit profits of approximately $321,000, in addition to the $152,742 in illicit profits from his trading in NEI Webworld, Inc., for a total of $473,742. It alleges that Melamed made illicit profits of approximately $1928 in addition to the $211,250 in illicit profits held in a joint account with Derzakharian from his trading in NEI Webworld, Inc. A preliminary injunction and asset freeze against the three defendants remains in effect. [SEC v. Aziz-Golshani, et al., Case No. 99-13139 CBM, AJWx] (LR-16620)
sec.gov
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July 7, 2000
2 Plead Guilty in Online Securities Fraud
By DOW JONES
ASHINGTON, July 6 -- Two Southern California men have pleaded guilty to criminal charges that they engineered an Internet stock-fraud scheme involving a tiny shell company, NEI Webworld Inc.
Arash Aziz-Golshani, 23, of Beverly Hills, pleaded guilty to securities fraud and conspiracy. His colleague, Hootan Melamed, 24, of Pomona, Calif., pleaded guilty to one count of conspiracy to commit securities fraud, the United States Attorney's Office for the Central District of California announced today.
Both men also face expanded charges in a related civil case brought by the Securities and Exchange Commission, contending that they engaged in similar frauds involving 11 other companies.
According to the S.E.C., the two bought stock in the companies at low prices, used false names online to post bogus information about the companies on Internet message boards, and sold their shares as the prices of the stocks rose.
"NEI was by far the most profitable of these," generating $364,000 in gains for those accused, said Erich Schwartz, an assistant director in the S.E.C. enforcement division in Washington.
According to the S.E.C.'s expanded complaint, Mr. Aziz-Golshani manipulated 11 stocks, reaping about $321,000 in gains. Mr. Melamed was said to have made less than $2,000 on trades in two stocks: JustWebit.com and Foodvision.com.
nytimes.com
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July 7, 2000
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SEC Adds to Charges Filed
Against Men in Fraud Case
By a WALL STREET JOURNAL Staff Reporter
WASHINGTON -- The Securities and Exchange Commission filed an amended complaint listing additional allegations of Internet-based stock manipulation against two men who were named in a fraud complaint late last year involving defunct printing company NEI WebWorld Inc.
The SEC alleges in a complaint filed in U.S. District Court in Los Angeles that Arash Aziz-Golshani, 23 years old, of Beverly Hills, Calif., and Hootan Melamed, 24, of Pomona, Calif., engaged in a manipulation scheme on the Internet relating to 11 additional stocks.
In separate criminal proceedings related to the SEC's original December complaint, Los Angeles prosecutors said Messrs. Aziz-Golshani and Melamed pleaded guilty to charges that they posted untrue information about NEI on Web sites in a bid to drive up the company's stock price. They had purchased shares in the company before their postings and sold after the price rose, the complaint said. NEI, which was based in Dallas, hasn't been accused of any wrongdoing.
Since the original complaint was filed, the SEC learned of evidence showing the two defendants allegedly manipulated the shares of other companies from April to October last year. As a result of his trading, Mr. Aziz-Golshani made $321,000, in addition to the $153,000 from his trading in NEI, the SEC said. Mr. Melamed had gains of nearly $2,000, in addition to the $211,000 from NEI.
Michael Missal, Mr. Aziz-Golshani's attorney, said, "It's unfortunate the SEC has expanded its charges." He added that he and his client "expect to have the matter resolved in the appropriate manner." James Sanders, Mr. Melamed's attorney, couldn't be reached for comment.
interactive.wsj.com
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2 Plead Guilty in Internet Stock Fraud
Securities: Case underlines dangers of investments based on online chat room rumors.
By INDRANEEL SUR, Times Staff Writer
Two recent UCLA graduates accused by federal authorities last year of running a "pump and dump" stock scheme over Internet message boards have pleaded guilty to charges of securities fraud, prosecutors said Thursday, even as the Securities and Exchange Commission brought new civil allegations against them. The SEC also accused a third UCLA graduate of manipulating stocks in a similar scheme.
The cases, believed to be among the first filed against individuals for Internet stock fraud in shares of companies with which they were not affiliated, illustrate the growing danger of investing in securities based on rumors and tips posted to online chat sites, said Luis Mejia, assistant chief litigation counsel for the SEC in Washington.
Arash Aziz-Golshani, 23, of Beverly Hills, and Hootan Melamed, 24, of Pomona, both pleaded guilty to charges that they bought thousands of shares of Dallas commercial printer NEI Webworld Inc., and then inflated the price of the over-the-counter Bulletin Board stock through a swarm of phony messages that said the company would be acquired.
No merger was ever discussed, prosecutors said. But NEI investors persuaded by the messages bid the price of the stock up from under a dollar to $15.50 in less than a week, authorities said, allowing Aziz-Golshani and Melamed to sell their shares at a profit of nearly $350,000.
The phony postings were made through a cluster of public computers at UCLA, Mejia said, but authorities were able to trace them to the senders.
Aziz-Golshani pleaded guilty to charges of securities fraud and conspiracy to commit securities fraud on March 15, and Melamed pleaded guilty May 1 to a conspiracy count, the U.S. attorney's office in Los Angeles said Thursday. Both were free on bail pending sentencing, prosecutors said.
Lawyers for the men could not be reached for comment Thursday. The two will be sentenced in September. They face possible federal prison time and fines.
But the SEC later found that the men had run a similar scheme in 11 other OTC Bulletin Board stocks between April and October 1999. Those trades, the SEC said in an amended case filed Thursday in U.S. District Court in Los Angeles, allegedly yielded Aziz-Golshani an additional $321,000 and Melamed an additional $1,928.
The SEC also brought a civil securities fraud case against Refael Shaoulian, 24, of Beverly Hills, who allegedly engaged in similar trading of OTC stocks while posting phony messages from computer clusters at both UCLA and USC. He allegedly made $388,000 in profit from the sale of shares of Universal Standard Healthcare, IChargeit, WorldTradeShow.com, Casino Parata.com, and E-TwoMedia.com.
Shaoulian did not return calls seeking comment. He was a friend of Aziz-Golshani at UCLA, Mejia said.
The SEC has not resolved its case against a La Crescenta man, Allen Derzakharian 26, against whom it also brought civil charges over NEI stock fraud.
Manuel Abascal, the assistant U.S. attorney who helped prosecute Aziz-Golshani and Melamed, said the status of the cases was not disclosed previously because the investigation into the illegal trading was still underway at the time of the pleas.
latimes.com |
