Re: 8/00 - [BXM] Massachusetts Securities Division Complaint in the matter of Costanzo, Costanzo, and Ephraim (Part 1 of 2)
COMMONWEALTH OF MASSACHUSETTS
OFFICE OF THE SECRETARY OF THE COMMONWEALTH
SECURITIES DIVISION
ONE ASHBURTON PLACE, 17TH FLOOR
BOSTON, MASSACHUSETTS 02108
________________________________________________ )
IN THE MATTER OF: )
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RAYMOND V. COSTANZO )
RICHARD V. COSTANZO ) DOCKET NO. E-00-029
EPHRAIM EPHRAIM )
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RESPONDENTS. )
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ADMINISTRATIVE COMPLAINT
I. PRELIMINARY STATEMENT
The Enforcement Section of the Massachusetts Securities Division of the Office of the Secretary of the Commonwealth (the "Enforcement Section" and the "Division" respectively) files this complaint (the "Complaint") in order to commence an adjudicatory proceeding against the Respondents for violating M.G.L. c. 110A, the Massachusetts Uniform Securities Act (the "Act"), and 950 CMR 10.00 et seq. (the "Regulations"). The Division alleges that since April 1999, the Respondents, individually and in concert, have posted materially misleading and false information on the Yahoo! message boards for Biomatrics, Inc. ("BXM"), Genzyme Corporation’s Tissue Repair and Surgical Products Division ("GZTR") and Genzyme Corporation’s Biosurgery Division ("GZSP") in an attempt to manipulate the price of those stocks.
Therefore, the Division seeks an Order of the Division imposing an administrative fine on Respondents in such an amount and upon such terms and conditions as the Director or Hearing Officer may determine; requiring Respondents to disgorge any profits resulting from the manipulation of the stock prices; requiring Respondents permanently to cease and desist from violations of the Act and Regulations; and to take any other actions which may be in the public interest and necessary and appropriate for the protection of investors.
II. JURISDICTION AND AUTHORITY
1. The Massachusetts Securities Division is a division of the Office of the Secretary of the Commonwealth with jurisdiction over matters relating to securities as provided for by the Act. The Act authorizes the Division to regulate the offers and/or sales of securities and those individuals offering and/or selling securities within the Commonwealth of Massachusetts.
2. Pursuant to the Act and M.G.L. c. 30A, the Division has the authority to conduct an adjudicatory proceeding to enforce the provisions of the Act and all regulations and rules promulgated thereunder. This proceeding is brought in accordance with §§ 101 and 407A of the Act and corresponding Regulations.
3. The Division specifically reserves the right to amend this Complaint and/or bring additional administrative complaints to reflect information developed during the current ongoing investigation.
III. RESPONDENTS
4. Raymond V. Costanzo ("Raymond") is an individual whose last known address is 300 Woodcroft Parkway, #23B, Durham, NC 27713. According to Division records, Raymond has never been registered with the Division. Raymond uses, among others, the following message board user names: cd_438; allergic tochickenbits; onecutelittlegirl; cd_43eighttt; tea_pot_dome; spirit_of_ed_leshiner; computersdotcom; ef_438; iop_tom; rvcrvcrvc; rvcrvcrvc_1964; wtc_federalway; fg_438; i_should_have_listened; the_hunt_for_das_boot; and joe_everyman.
5. Richard V. Costanzo ("Richard") is an individual whose last known address is 300 Woodcroft Parkway, #23B, Durham, North Carolina, 27713. According to Division records, Richard has never been registered with the Division. Richard uses, among others, the following message board user names: meddraman; meddra_2k; meddra_2000; Meddra_man; 1_0000; one_year_of_the_bxm_police; weintraub_s; owned_cvd_since_the_beginning; and 1_00000.
6. Ephraim Morris ("Ephraim") is an individual whose last known address is 250 S. Elizabeth Way, #1046, Chandler, AZ 85225. According to Division records, Ephraim has never been registered with the Division. Ephraim uses, among others, the following message board user names: VoteRep; voterep_returns; vr_loves_the_nra; jenti_is_pro_life; jenti_is_very_pro_life; vote_Republican; vote_Republican_2000; missyx_2000; rnouth2857; connie_1976; bfriendly2me2; wens_old_guy; and supoena_the_qc_log_books.
IV. RESPONDENTS’ CONDUCT
A. Background
7 BXM is a Delaware corporation with a principal place of business in New Jersey. Its stock is traded publicly on the New York Stock Exchange ("NYSE") under the ticker symbol BXM. GZTR and GZSP are divisions of Genzyme Corporation, a Massachusetts corporation ("GENZ"). Both stocks trade publicly through the National Association of Securities Dealers Automated Quotation ("NASDAQ") system under the ticker symbols GZTR and GZSP. On or about March 6, 2000, GENZ entered into an agreement to merge GZBS and GZTR with BXM.
8. Since April of 1999, Raymond, Richard and Ephraim, using their various user names have attempted to manipulate the price of the stock of BXM by posting a series of false and misleading statements on the Yahoo! Finance message board for BXM stock.
7. Since March 2000, Raymond, Richard and Ephraim, using their various user names have attempted to manipulate the price of the stock of GZSP and GZTR by posting a series of false and misleading statements on the individual Yahoo! Finance message boards for GZSP and GZTR stock.
8 All three Respondents have engaged in a comprehensive scheme to artificially depress the price of the stock through the medium of the Yahoo! Finance message boards. Their tactics included repeatedly sending the same negative message to the three message boards (BXM, GZSP, and GZTR), sometimes within the same day and sometimes over a period of weeks. In addition, each of the Respondents actively employed five or more user names to simulate negative discussions of each of the stocks and to create the illusion that many different posters also felt negatively about the stocks. The Respondents also altered the user names of posters who had historically been positive about the stock by slightly altering their usernames, usually by one letter or number and then making negative posts under the altered user names creating the illusion that the positive posters had changed their minds and now hold a negative opinion about the stock.
9. The Respondents spent a large part of every day since April 1999, responding to posts from legitimate users and creating more negative posts. (Antalik Aff. at 7.) Out of over 33,000 messages on the Yahoo! Finance message boards for BXM, GZTR and GZSP, the Respondents’ posts comprise approximately 50% of the posted messages. (Antalik Aff. at 5.) The overall effect of the numerous posted messages has been to create a falsely negative atmosphere that subsequently influenced investors’ decisions to buy or sell the stock of BXM, GZTR, and GZSP. In April of 1999, BXM stock traded at approximately $35 per share and is currently trading around $21 per share.
B. Statements made by Raymond
10. Raymond under various usernames has posted the following statements on the Yahoo! Finance message boards for BXM, GZSP and GZTR: (See Exhibit A for complete postings and a list of locations and dates where the same or substantially similar message was posted.)
Titled: BXM to fall sharply tomorrow: With this quarter’s earnings and sales numbers now released, every intelligent investor is RIGHT NOW placing their sell orders.
DO YOU want to be the last one out?
Remember, the last one out LOSES the money.
We have watched as, time and time again, doctor’s have rejected Biomatrix’s pleas that they use Synvisc.
We have handled and tested the chemistry of Synvisc (and all other Biomatrix products) and understand better than anyone that it is glorified sugar water MARKETED as medicine (and yet doctors reject Synvisc, hmmmm).
We have read the "clinical trials" that can only marginally determine that Synvisc is only better than NOTHING at all.
We know the CEO, president, and other senior management personnel on a PERSONAL level. They are amoral, evil swindlers who have sold their souls for a promise of wealth.
We have watched as Synvisc was "launched" into the European market only to fall FLAT on its face (as Synvisc has done in ALL the markets that it has been "launched" into).
And we have watched as financial institutions ( with a lot of help from this board) have HYPED this stock with absurd PROMISES that BXM hasn’t and will never be able to keep.
It is not surprising that Synvisc should come under attack by federal authorities for unsafe levels of "endotoxins". It goes hand-in-hand with the continuous microbiology failures Synvisc has suffered.
It works like this:
1) Synvisc is manufactured.
2) Synvisc is tested for microbial growth ("mold").
3) Synvisc is found to contain unacceptably high numbers of living microbe colonies (colonies of growing "mold").
4) Synvisc is heated to kill these microbes.
5) The "mold" is now dead, but all those dead "mold" cells continue to float in Synvisc.
Those "dead mold cells" are called endotoxins. And high levels of endotoxins are just as dangerous as high levels of living "mold" cells.
If Synvisc was consumed orally it wouldn’t be a problem. Stomach acid would simply digest those "dead mold cells".
But when injected into a warm knee, those dead cells only provide food for other, living, parasites. This is why they are unacceptable in a "sterile" product.
Yet Biomatrix has, and continues to, release material which has been deemed UNFIT FOR HUMAN USE by their own specifications.
Specifications which are summarily ignored if it means losing money.
THESE are the monsters that you are investing in.
THESE are the monsters which we are trying to stop.
I worked at Biomatrix for over 6 years and reported directly to Dr. Balazs himself.
I KNOW exactly what kind of dangerous SCAM Biomatrix is.
And, slowly, the rest of the world is catching up.
This was originally posted by wtcrane1:
"Just found out some interesting information about Synvisc. Apparently the Swedish government is investigating Synvisc due to the high number of patients who are experiencing sever acute inflammatory reactions after the injections. The patients with these reactions are reported to have experienced pains, swelling and difficulties in walking. According to the government agency report, " in many cases the patient has been admitted to hospital for suspected infectious arthritis". This sounds very similar to the reactions to Synvisc that are increasingly being seen right here in the U.S.
The Medicines Agency there is theorizing that the "quantity of endotoxins" in Synvisc might be a contributing factor to these cases.
They are "investigating whether the side effects can be dependant upon a handling or quality problem or a combination of these."
Source: Journal of the Swedish Medicinal Products Agency; "Information" 7:99 of November 1999."
Title: Contaminated Synvisc is a FACT
All these testing failures I speak of, and the subsequent releases that followed, DID OCCUR!
Of course, it’s not the kind of thing that Biomatrix is likely to brag about, is it.
Yet it DOES explain the numerous adverse reactions DOCUMENTED BY DOCTORS.
AND the constant observation by the FDA.
Two things that Biomatrix will deny as long as it’s not in a court of law (something you angry, class action investors should keep in mind when issuing subpoenas).
NOT TO MENTION ALL THE INJURED PATIENTS!
Hmmmm, now THERE’s an idea. If YOU are a patient who has suffered an adverse reaction with Synvisc, SUE BIOMATRIX.
Force them to release the QC testing records to support your case, and DON"T FORGET TO DEMAND MILLIONS OF DOLLARS IN DAMAGES.
Just a thought.
I would NEVER use Synvisc or invest in this doomed stock so I am unlikely to be sueing (sic) Biomatrix anytime soon.
But everyone else should keep it in mind.
Title: More proof of the FAKE ‘merger’
How can Tissue Repair make a deal with Sentron Medical exchanging stock (equity) for licensing rights BEFORE the "merger" and WITHOUT consulting their "partners"?
Or doesn’t Tissue Repair give a damn?
Indeed, Genzyme Tissue Repair is continuing their business plan AS IF THERE IS NO "MERGER" SCHEDULED.
But then, Genzyme Tissue Repair already knows that this "merger" is just a financial institution ploy to STEAL INVESTOR’S MONEY.
Title: A year’s worth of declining earnings
It is clear that Biomatrix is collapsing.
The SCAM CALLED SYNVISC is rapidly unraveling and both sales and earnings reflect this.
BXM IS A SINGLE DIGIT STOCK.
Those that accept that FACT will protect their money. Anyone that tells you that this stock will increase in value is trying to STEAL YOUR MONEY.
You have been warned.
Title: 3 declining companies merging together?
Anyone that puts their money into BXM, GZTR, or GZSP will lose it as all three companies continue to decline.
Title: GZSP losses larger than last quarter!
Genzyme is spinning their financial results to give the FALSE IMPRESSION that they are doing better now than before.
However THEIR OWN FINANCIAL RECORDS prove otherwise.
Is it any wonder that this stock keeps going down?
Is it any wonder that its volume has dropped to anemic proportions?
Is it any wonder that the CRIMINAL management at Biomatrix and the CRIMINAL management at Genzyme want to combine forces to better STEAL YOUR MONEY with their endless LIES, HYPE, and FALSE PROMISES.
Investors, it is time to run for the hills from these CRIMINAL and FRAUDULENT stocks before you lose ALL the money you have naively placed in their SWINDLING hands.
Title: Synvisc is a DANGEROUS product
Not only are the side-effects of Synvisc more common than almost any other medical treatment (7%-10% adverse reactions by Biomatrix’s own data), they are extremely DANGEROUS and potentially LETHAL.
This is why doctors refuse to use Synvisc and why Synvisc has no end-use demand.
It is only the DISHONEST AND UNETHICAL accounting practices used by Biomatrix that gives the illusion of sales.
In reality, these "sales" only represent a build-up of inventory.
THIS IS A FACT!
Title: Rejected Synvisc is being sold by bxm
Aside from the ongoing FDA violations throughout the facility, Biomatrix had a near crisis involving its microbiology testing.
It seems as though damn near every batch made of Synvisc or one of its components was FAILING its compliance test for "microbial contamination".
To my understanding, MOST OF THESE CONTAMINATED BATCHES WERE RELEASED FOR PUBLIC CONSUMPTION DESPITE THEIR COMPLIANCE FAILURE.
I have no way of knowing for certain because the decision to release these microbial contaminated batches was made solely by Dr. Balazs and his QA vp and kept in extreme secrecy.
NO ONE ELSE WAS INVOLVED!
Yet I do know that HUNDREDS OF MILLIONS OF DOLLARS WORTH of contaminated product WAS NOT DISCARDED!
Now we are seeing ever increasing evidence of adverse reactions and inflamed knees upon injection of Synvisc.
The decline in price will continue
The financial institutions are trying DESPERATELY to dump their holdings of these 3 pathetic and over valued stocks.
BXM is a single digit stock that is slowly finding its way back down to its fair value.
GZTR and GZSP are both penny stocks that aren’t worth anything over $3.
All three of these stocks have been so HYPED by "pump and dump"ers that they are all currently selling 2-3 times the price that they should be.
As the "pushers" on this board keep telling investors to "buy in the dips", they fail to mention that these aren’t "dips". They are only brief pauses in the steady decline back down to their fair values.
The financial institutions just hope that there are enough SUCKERS out there that believe all the FALSE PROMISES made by ethicless "pushers".
By June, the "merger" will have fallen through and all 3 of these worthless stocks will have found new 52 week lows.
Remember, THERE WILL BE NO MERGER!
And these 3 stocks will only decline further.
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