<Well Utha It looks like the two shareholders who sold were Richard Epstein and Alliance Equities. I bet the excited girl was in on also> <LOL>
WASHINGTON (Dow Jones)--Federal regulators filed civil and criminal charges
Wednesday against eConnect (X.ECE) and its Chief Executive Thomas Hughes
for allegedly operating a scheme that artificially inflated the company's
stock price.
In a lawsuit filed in federal court in Los Angeles, the SEC said Hughes
is in criminal contempt by violating the terms of a permanent injunction
issued against him in April of 2000 in a previous SEC case that prohibited
him from committing any future securities violations.
Both eConnect, based in San Pedro, Calif., and Hughes, 52, were previously
sued by the SEC in 2000 for issuing false press releases.
In Wednesday's action, the agency contends that Hughes issued false press
releases on behalf of eConnect for the purpose of increasing the value
of the company's stock.
The SEC previously suspended trading in eConnect stock on July 25. At
the time the agency said it was concerned with the company's stated projected
opening date of Bank eConnect and the value of a purchase order from another
company for certain eConnect services and products.
The company's stock reached a 52-week high of $7.52 on Oct. 29, 2001.
It last traded at 93 cents.
On July 15, eConnect announced that it has partnered with Alan J. Conner
& Associates to form Bank eConnect. The targeted opening date of Bank eConnect
had not yet been determined, but a preliminary target of Oct. 1 was indicated
in a company press release.
According to the SEC, the FBI arrested eConnect CEO Hughes early Wednesday
morning, with an initial appearance in federal court scheduled for the
afternoon.
If convicted of the securities fraud charge, Hughes faces a maximum sentence
of 10 years in federal prison and a $1 million fine, the SEC said in a
prepared statement. The agency said it also is seeking further injunctions,
an asset freeze, return of trading profits, civil penalties, and a bar
against Hughes from being an officer or director.
The SEC said it also filed an emergency action seeking more than $770,000
from eConnect shareholders Richard Epstein of Tampa and Alliance Equities
Inc. of Coral Springs, Fla.
Among other things, the agency alleges that since July 10, Hughes and
eConnect have issued false press releases and posted false statements on
the company's Web site claiming that it had received a $20 million investment
in "AA" rated asset-backed bonds from another issuer, when in fact these
bonds were not rated and have little value.
Price and trading volume of eConnect's stock increased by more than 500%
during the period when the false press releases were issued, the SEC said.
While the price was on the rise, Epstein and Alliance Equities allegedly
failed to supply the SEC and investors with "a host of information regarding
their eConnect stock," the SEC said.
Epstein and Alliance Equities apparently filed misleading documents with
the SEC concerning their holdings in eConnect and dumped more than 74 million
eConnect shares into the market for about $770,000 in profits, the SEC
added. Hughes also allegedly failed to file reports on his buying and selling
of eConnect shares and made about $70,000 on his trades.
Randall Lee, regional director of the SEC's Pacific Regional Office,
said the agency and other federal authorities took quick action in the
case, demonstrating the SEC's push for "real-time enforcement."
"By suspending trading in eConnect stock and then working closely with
the U.S. Attorney's Office and the FBI to bring criminal and civil actions,
all within two weeks, the SEC has taken immediate action to protect investors,"
Lee said.
Attorneys representing Hughes, Epstein and Alliance Equities weren't immediately available for comment.
Officials at eConnect didn't answer phone calls.
-By Phil McCarty, Dow Jones Newswires; 202-862-9251; phil.mccarty@dowjones.com |
