GECC filed an Amended Complaint yesterday. Here's the first part:
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF ARKANSAS, FAYETTEVILLE DIVISION
GOLF ENTERTAINMENT, INC., )
Plaintiff, )
v. ) No. 02-5133
)COMPLAINT PURSUANT TO
Carla S. HOHENHOUSE, )18 U.S.C. § 1964 (c)(d)
Robert F. KIRK, a/k/a )
"Robin KIRK," a/k/a )
"Robert CHURCH," a/k/a/ ) JURY TRIAL DEMAND
"Richard CHURCH" )
LEONARD VAUGHN MAUCK, a/k/a )
"Lenny MAUCK" )
MAHMOOD JAMSHIDI SHAHSAVAR, a/k/a )
"Mac J. SHAHSAVAR" )
Scott H. WILDING )
John DOES #1 through 15 )
Defendants. )
1ST AMENDED COMPLAINT
The Plaintiff alleges that from on or about the 30th day of March, 1999, through the present, in the Western District of Arkansas, and elsewhere, including the state of Florida, the state of Oklahoma, the state of Georgia, the state of New York, the state of Texas, and the Province of Manitoba, Canada, the various Defendants described herein devised and intended to devise a common scheme to economically injure and unlawfully extort from the Plaintiff; to interfere with interstate commerce and cause economic injury to Plaintiff. In furtherance thereof, the Defendants adopted a common scheme, they utilized an extensive and sophisticated electronic interstate communications system to transmit and disseminate false, fraudulent, misleading or materially incomplete or untrue statements in furtherance of their schemes to defraud. In furtherance of such schemes as set out below, the Defendants would and did, from time to time, commit criminal violations of 18 USC §§1343, 1951, 1952, 2, and 3. Two or more predicate acts occurring within the ten (10) year period next preceding the filing of this Complaint are alleged below. Each defendant aided the other in the commission of the predicate offenses described below, all in violation of Title 18 United States Code, Sections 2 and 3.
VENUE & JURISDICTION
This Court has jurisdiction over the subject matter of the litigation by way of 18 USC § 1962, 1964, and §§ 2 & 3. This Court is of lawful venue pursuant to 18 USC § 1965(b). The various defendants live in diverse federal districts in the United States; one defendant resides in a foreign nation: Canada. This Court is of lawful and sufficient venue and jurisdiction as to render a final and binding judgment among the parties. The acts complained of herein stem from the establishment and operation of a Racketeer Influenced and Corrupt Organizations Act proscribed "Enterprise."
INTRODUCTION
May 2000 - the Aarow Environmental Group, Inc. Events
1. The defendant JOHN DOE#1, during May 2000, was a federal law enforcement officer assigned to a federal agency with offices in Oklahoma City, Oklahoma. JOHN DOE#1 would and did, from time to time, gain unlawful access to, and, disseminate information from an official government database known as the "NCIC" system. Thereafter, JOHN DOE#1 would and did further enable, assist and shield other persons described herein as part of an overall scheme of extortion, stock market manipulation, and related offenses.
2. During that time period, JOHN DOE#1 was acquainted with Derrick W. Cleveland, also a resident of Oklahoma City, Oklahoma.
3. Subsequent to an obvious stock manipulation of the publicly traded stock in Aarow Environmental Group, Inc., on May 1, 2000, which coincided with an unannounced change of control of that company, various persons manipulated the traded price of that stock from below $0.40 to $3.68. During May 1, 2000, a significant securities fraud event occurred in Aarow Environmental common stock.
4. Plaintiff has been credibly informed that Derrick W. Cleveland was acquainted with persons orchestrating the stock manipulation and assisted in the manipulation of that stock on the date stated above.
5. Thereafter, a suit was filed in the Chancery Court of Benton County, Arkansas, styled Bolt et al., v. Aarow Environmental Group, Inc., case number 000844-2. Thereafter, on May 10, 2000, that suit was settled. Prior to settlement, complaints were filed with federal regulatory agencies regarding the circumstances predating the May 1, 2000 "pump and dump event." One of the complainants in the suit was Jim Bolt of Rogers, Arkansas.
6. One of the major private investors in Aarow Environmental Group, Inc., prior to May 1, 2000 was Robert Thomas Kirk, Jr., he being a principal of a NASD member firm known as "Barron Chase Securities," with principal offices in Boca Raton, in Broward County, Florida.
7. Subsequent to the settlement described above, other Aarow Environmental Group, Inc., Arkansas resident shareholders sought representation and filed suit relative to their claims against the company, Aarow Environmental.
8. Subsequently, suit was filed in Washington County Chancery Court and Benton County Chancery Court, in Arkansas, naming the successor entity, Aaro Broadband Wireless Communications, Inc., (hereafter, "AARO") as a defendant in a securities fraud action.
9. Almost immediately thereafter, various persons began to post personally attacking messages regarding Mr. Bolt at various internet venues, including a site operated by Lycos, Inc., where a special board was designed for the use of persons with an interest in AARO.
10. On or about July 22, 2001, Patricia K. Sharp, (an acquaintance of Derrick W. Cleveland) she being an individual residing in Oklahoma City, Oklahoma, created and caused to be created through the use of an instrumentality of interstate commerce via a wire communication, an anonymous account through Lycos, Inc., at their RagingBull website, under the alias "zorro168."
11. On July 9, 2001, message traffic was posted to that website, on the "AARW" message board at "ragingbull.com" and was logged as message 19833, in which message the poster thereof clearly believed they were directing message traffic to Mr. Bolt, and described therein with absolute detail and accuracy his residence in Rogers, Arkansas, including the playtime habits of his minor child.
12. Later that same day, the same person posting anonymously at 3:04 PM, as message 20095, in violation of applicable criminal federal statutes, posted a threat of extreme violence against Mr. Bolt, his family, their real and personal property, which threats included physical assault, destruction of property through an act of arson, and the use of a firearm.
13. Although Patricia K. Sharp had created the "zorro168" account, she had previously created and posted messages on the same venue under the alias "patiens."
14. Following the posting of the threatening communication described above, Patricia K. Sharp and an associate, Susie K. Randall, on or about September 6, 2001, traveled in interstate commerce from Oklahoma City, Oklahoma, to Rogers, Arkansas.
15. On or about that date, Sharp and Randall entered the business premises maintained by Mr. Bolt at 1505 West Walnut Street, Rogers, Arkansas, under a ruse for the purpose of determining the viability of acting on the threat; e.g., nature of security systems, etc.
16. During the course of their entry into the premises described above, Sharp received a cellular telephone call in the immediate presence of Mr. Bolt. The nature of the cellular telephone was that its volume was turned up and it allowed persons in Sharp's immediate presence to hear the caller identify himself as "Bob Balfe." Sharp, realizing that the call was being overheard, Sharp left the interior of the premises and continued the telephone call.
17. Immediately upon concluding the conversation Randall and Sharp departed the subject premises and traveled to Bentonville, Arkansas, to conduct a personal meeting with Robert Balfe, he being the duly appointed Prosecuting Attorney for the 19th Judicial District of Arkansas.
18. Sharp and Randall had an ongoing dialog with Balfe as early as early July 2001, based upon information gathered from postings they made on the Lycos, Inc., RagingBull message system. Randall and Sharp, periodically, would encourage persons to contact Balfe in order to receive "private briefings" about Mr. Bolt, who had testified in several Arkansas court hearings against AARO. Other persons expressing repeated contact with Balfe was Mark S. Thetford, an attorney in Muskogee, Oklahoma, whose father, Jerry Thetford was the CEO and Chairman of AARO at the time of the litigation and resulting judgments being rendered against it. Thetford is also known by the alias "sugdad." Thereafter, Sharp, Randall, Thetford and others would and did periodically utilize material non-public information obtained from Robert Balfe to attempt to discredit witnesses against Aarow Environmental as civil securities fraud litigation proceeded against it.
19. On May 28, 2002, the Circuit Court of Washington County, Arkansas, in a non-jury bench trial, found for the plaintiffs Jim Steele and Mel Robinson against AARO, and made a finding of fact and conclusion of law that AARO was and had been an artifice of securities fraud since the inception of the conversion of it from Aarow Environmental Group, Inc., to Aaro Broadband Wireless Communications, Inc.
20. AARO has subsequently been "delisted" from trading on the NASD trading system, ceased filing required reports with the United States Securities and Exchange Commission and is now reasonably believed to be involved in a fraudulent bankruptcy proceeding in the Eastern District of Oklahoma.
21. At no time material to the death threat and other threats made against Mr. Bolt did Robert Balfe have any dealings with the perpetrator(s) of the threats other than to provide them with information he had garnered from purportedly official sources about Mr. Bolt, thereby aiding and abetting the offenses complained of herein. Balfe subsequently ignored an affidavit of complaint filed with his office by Mr. Bolt regarding the threats and appearance of Sharp and Randall in Rogers, Arkansas. Balfe would and did continue his pattern of corruptly providing persons committing stock fraud with information he had obtained from official sources, all in violation of federal law.
The May 2002 Stock Swindle by Scott H. Wilding
22. In May, 2002, an independent shareholder of the Plaintiff inquired as to the viability of that shareholder using its own resources or assets to hire a public relations consultant to assist in promoting a positive image of the Plaintiff, thereby hopefully increasing the value of the shareholder's portfolio.
23. The Plaintiff, in an act of cooperation with the shareholder, entered into discussions with a person holding himself out as an expert in public relations consulting matters, SCOTT H. WILDING (hereafter, "WILDING") of Pembroke Pines, Florida (in Broward County).
24. The company advised both WILDING and the shareholder that it would require that all such promotional and public relations activities be fully consistent with the rules and regulations imposed by the United States Securities Exchange Commission. Both agreed. Each were advised that the Plaintiff would strictly monitor all such activities for SEC compliance.
25. Thereafter, the shareholder transferred one-million of its Golf Entetainment, Inc., common stock shares to WILDING, on or about May 12, 2002. Thereafter, WILDING broke off all contact with the shareholder, never performed upon the contract and thereafter engaged in other unlawful conduct as set forth below.
The Collapsing of Plaintiff's Stock By Wilding Using Acts of Wire Fraud
26. Upon credible information and belief, WILDING, despite warranties and representations to both the Plaintiff and the shareholder, immediately dumped the stock he had obtained through trick, fraud and deception into the market, thereby collapsing the bid/ask price of the stock. WILDING made extensive use of interstate wire communication facilities in furtherance of his scheme to unlawfully obtain the common stock in question.
27. WILDING, upon credible information and belief, is alleged to have occasioned the stock dumping in conjunction with a short-selling scheme designed and operated by defendants MAHMOOD JAMSHIDI SHAHSAVAR, (hereafter, "SHAHSAVAR"), LEONARD VAUGHN MAUCK, (hereafter, "MAUCK") and ROBERT F. KIRK (hereafter, "KIRK").
28. The short selling scheme of the defendants identified in paragraph 27 was greatly assisted by the participation of WILDING who was able to collapse the stock price through massive dumping of shares.
Shasavar, Kirk and Mauck's Internet Operations
29. SHAHSAVAR is an Iranian expatriate living in Canada. MAUCK is a former NASD member broker dealer. SHAHSAVAR is familiar with public company operations and market operations as the result of his having served as the CEO of a formerly publicly traded Canadian company known as "National Healthcare Manufacturing, Inc." which operated for several years out of Winnipeg, Manitoba, Canada.
30. SHAHSAVAR moved his company several years ago to upstate New York and later, ceased filing reports with both the Canadian and United States securities regulators.
31. According to published press releases, SHAHSAVAR thereafter sold off various assets of the company to third parties.
32. On or about August 23, 2001, SHAHSAVAR obtained the internet registration of a website known as "longandshortreports.com."
33. This website is operated principally by MAUCK and SHAHSAVAR with the assistance of others including defendant ROBERT KIRK (hereafter, "KIRK").
34. KIRK purportedly writes "articles" for the website using the alias ROBERT CHURCH.
35. KIRK, MAUCK and SHAHSAVAR and others also maintain a website entitled "fakebash.org" which describes itself as the website of an entity or association of professional stock "bashers." The website promotes itself as a "for hire" association of persons who will post negative messages to internet message boards with the goal of driving down or manipulating a traded security.
36. The address of the "fakebash.org" website is the same as that of Taurus Mortgage, Inc., a Florida "for profit" corporation. The address listed for both entities is: 7520 W. Waters Avenue, Suite 7, Tampa, Florida 33615.
37. Florida incorporation records list defendant KIRK as an organizer, officer or principal of Taurus Mortgage, Inc.
38. Defendant KIRK maintains a residence at 5915 Hatteras Palm Way, Tampa, Florida, 33615 and has two or more listed telephone numbers at that address. One such number, 813-818-548 is listed as "Robin and Pat Kirk." The other number, 813-855-0258 is listed to a "Robert Kirk." (A cellular telephone number previously used by KIRK in a Florida Secretary of State filing is the same and identical telephone number used by "ROBERT CHURCH" as a contact number in a transaction establishing a website for "fakebash.com.")
39. Hillsborough County, Florida Property Appraiser records list the owners of the above described residence as Robert F. and Pat D. Kirk.
40. The same records system also lists ownership of real property at 8706 Bay Crest Ln., Tampa, Florida 33615, but describes the owners as "Robert F. and Patricia D. Kirk, Jr."
41. Florida state records of incorporation also list "Robert Kirk" as the incorporator of a now defunct entity called "Propsych Consulting, Inc."
42. Other Florida state records list ROBIN KIRK as a principal in another defunct enterprise, "Home Health Care of America, Inc." Plaintiff is presently examining signature exemplars obtained from Securities and Exchange Commission filings, Florida Secretary of State filings and other agencies to determine if the signatures of "ROBERT THOMAS KIRK, JR." and "ROBERT F. KIRK, JR." and "ROBIN KIRK, Ph.D" are in fact all the product of the same and identical person.
43. Defendant KIRK is alleged to be a person with business acumen and high degrees of stock market knowledge and stock trading/manipulation sophistication, as is WILDING, HOHENHOUSE, MAUCK and SHAHSAVAR. (As stated above, Plaintiff is now attempting to determine if "ROBERT F. KIRK" is in truth and in fact "ROBERT T. KIRK," a shareholder or former shareholder and promoter in AARO, and, a former principal in Barron Chase Securities and personally a holder of an NASD license which was revoked on May 2, 2002 for market and trading violations.)
44. MAUCK was formerly a NASD registered broker (CRD# 1704329). NASD records obtained by Plaintiff reveal that MAUCK has a history of disciplinary events related to fraud, misrepresentation and similar conduct. His NASD registration was terminated on March 8, 2001. The dollar amount assigned to the claims of fraud exceed one-half million dollars.
45. Defendant JOHN DOE#2, a/k/a "YaMoron," (hereafter, JOHN DOE#2) is affiliated in a control position with MAUCK, SHAHSAVAR, and KIRK. JOHN DOE#2 has made extensive use of electronic messaging facilities operating on the internet in interstate commerce to disseminate false, misleading, incomplete and inaccurate information regarding Plaintiff.
46. Defendants KIRK and JOHN DOE#2 (YaMoron) are in recurring and frequent contact with Robert Balfe, and, in turn, frequently posts material, non-public information obtained from Balfe regarding the Plaintiff and its employees in public venues, all in violation of various federal securities regulations. On August 13, 2002, Balfe, in an effort to garner information about Plaintiff, personally made verbal claims that he was conducting some sort of "secret investigation" for the United States Securities and Exchange Commission, the Federal Bureau of Investigation, the United States Department of Justice, the Arkansas Department of Securities, and some unnamed state agency in Florida. Regardless of the nature of Balfe's claims, he is corruptly furnishing on an ongoing basis, material non-public information to KIRK and JOHN DOE#2, who in turn disseminate it on various internet venues.
47. Defendants SHAHSAVAR, MAUCK, and KIRK and possibly JOHN DOE#2 (YaMoron) operate the "longandshortreports.com" website as a commercial venture, charging a monthly admission fee. Their website includes features such as opinion columns, "e-mail alerts," and a "premium service message/chat board." Such services frequently cost upwards of $90/month per subscriber.
48. The structure, means and methods of operation of the enterprise of the defendants are nearly identical to that of a similar stock shorting/fraud operation authored by Amr I. Elgindy, now charged in the U.S. District Court, Eastern District of New York with securities fraud and racketeering. Plaintff alleges that there is a recent, prior relationship between defendants SHAHSAVAR, MAUCK, KIRK and Elgindy. An essential part of the Elgindy enterprise was the use of corrupt public officials to provvide him with material, non-public information about target companies and their employees. Moreover, Elgindy, since 1999, as have the named defendants, cultivated an image that they are persons who devote their entire workday to take it upon themselves to "expose scam stocks." In truth and in fact, such claims are a ruse designed to explain and conceal their underlying criminal activities.
49. Defendants SHAHSAVAR, MAUCK and KIRK have used and are using their website as a means of spreading negative information about Plaintiff and other companies. These defendants gain from short selling, and, Plaintiff alleges upon credible information and belief that they have used this enterprise/website to artificially drive down stock prices of targeted companies including Plaintiff for illicit reasons such as facilitating "short covering."
50. In addition to operating the subject website, these same defendants and JOHN DOE#2 (YaMoron) frequently post negative and adverse information, including material non-public information corruptly derived from Robert Balfe, JOHN DOE#1 and others, to adversely affect the stock price of Plaintiff. Such information is always posted anonymously on the internet at various venues, utilizing a means or avenue of interstate wire communication or commerce to effect the message transmission, all in violation of Title 18, United States Code, Section 1343, 2 and 3.
51. Additionally, HOHENHOUSE, MAUCK, SHAHSAVAR, WILDING, KIRK, JOHN DOES#1 through 15 frequently encourage others to assist them in the dissemination of negative, adverse or other information calculated and designed to manipulate the market price for Plaintiff's stock downward. The goal of the defendants is to disseminate the information as widely as possible through anonymous sources. To that end, they have and are adopting a large number of internet "aliases" so as to avoid detection and liability.
Market Manipulation
52. After short selling the stock of the Plaintiff, the defendants SHAHSAVAR, MAUCK and KIRK, together with others, are alleged to have coordinated the release of negative and sometimes false information with their short selling in a manner designed to exaggerate the negative market sentiment for the stock. SHAHSAVAR's, MAUCK's and KIRK's paid subscribers are believed to receive the information and recommendations first, in order to position themselves to profit when the broader public market reacted to the exaggerated negative market sentiment for the stock of Plaintiff. Such stock purchases and sales were incidental to the overall scheme of extortion and wire fraud.
53. The defendants MAUCK, KIRK and SHAHSAVAR together with others, have reported negative information about the Plaintiff to the U.S. Securities and Exchange Commission ("SEC") and the Federal Bureau of Investigation
("FBI") in order to initiate regulatory and law enforcement action, which they knew might cause the stock prices to fall sharply if, or once such actions become public knowledge. Thereafter, each of them has utilized the internet to "suggest" that Plaintiff was facing regulatory or law enforcement action, and, encourage panic selling. They have encouraged third-parties to make groundless complaints to federal and other agencies.
Extortion Attempts
54. On or about June 12, 2002, the defrauded shareholder described above inquired of the Plaintiff as to the possibility of using "stop transfer" orders to freeze the stock that WILDING had obtained.
55. An outside director of the Plaintiff, who has over 20-years history of employment by the Plaintiff, agreed to make contact with WILDING in an effort to see if some compromise and restitution could be achieved with him.
56. During the course of a resulting telephone conversation initiated by WILDING, a third party was conferenced into the call by WILDING. That person was defendant CARLA SUE HOHENHOUSE (hereafter, "HOHENHOUSE").
57. HOHENHOUSE, clearly speaking as a representative of WILDING, stated that he would not return any stock or monies and that if the Plaintiff or anyone else pursued any action whatsoever at all against WILDING, the company would be "smeared" on the internet.
58. Subsequently, the Internal Revenue Service executed a levy upon one or more trading accounts belonging to WILDING. Thereafter, defendant HOHENHOUSE, assisted by Mark S. Thetford, undertook to begin to selectively release adverse and negative material or information on the internet, the effect being the destruction of the trading market for the securities of Plaintiff. In turn, the ability of the Plaintiff to secure financing in the private market, as each defendant well knew it would be, was destroyed or greatly impaired.
59. The defendants HOHENHOUSE, MAUCK, SHAHSAVAR and KIRK, and JOHN DOE#2 ("YaMoron") together with others, used confidential law enforcement and other information obtained from JOHN DOE#1, Robert Balfe and Mark Thetford to assess the viability of, then to attempt an extortion of an employee of Plaintiff. HOHENHOUSE made such a demand on or after June 14, 2002 upon the Plaintiff through its employee Mr. Jim Bolt based upon the premise that any public company, and/or Mr. Bolt, would be disinclined or too embarrassed to complain to law enforcement about such extortionate demands. The HOHENHOUSE extortionate demand was coupled with threats to report Plaintiff to the SEC or FBI for some imagined misconduct. The threat was communicated by HOHENHOUSE from a point in the state of Georgia to an employee of Plaintiff, Jim Bolt, while he was in Arkansas via the telephone, and was effected by using a means and avenue of interstate commerce to transmit the extortion demand. Subsequently HOHENHOUSE and others would and did make false, misleading or incomplete reports to an agent of the Federal Bureau of Investigation in Savannah, Georgia. Additionally, the defendants have each aided and abetted the other in making false, misleading, or materially untrue allegations, or, have delivered and caused to be delivered complaints to regulatory and/or other governmental agencies which they know to be materially false, incomplete and intentionally lacking information which is required in order to make the other statements they have made not misleading.
60. Between June 12, 2002 and the filing of this amended complaint, the defendants and/or members of their enterprise as described below, as a whole have posted in excess of 20,000 electronic messages, nearly all of which are negative or adverse, just on "ragingbull.com" system.
61. A large number of the electronic messages described in paragraph 60 are personal attack messages directed at Mr. Bolt, making good on the extortion threat communicated by HOHENHOUSE and each such message also violates Title 18, United States Code, Section 875, 2 and 3, the prohibition against "internet stalking."
62. Mr. Bolt has been an employee of the Plaintiff since on or about January 2, 2002.
63. In early August 2002, defendant KIRK transmitted a threat to Mr. Bolt via the internet by posting a message on "ragingbull.com" which message violated applicable federal criminal statutes. The purpose and intent of all such messages complained of was to injure the economic interests of the Plaintiff through a fraudulent scheme and a scheme of extortion, all the while using avenues, means and instrumentalities of interstate commerce to effect same.
64. From on or about June 12, 2002, and continuing through the present, the various defendants and their associates and affiliates committed several thousand felony violations of 18 USC § 875 through systematic internet stalking and harassment of Plaintiff's employees Mr. Jim Bolt; Dr. Tim Brooker, and others. Although these are not actionable under civil RICO, they are presented in order to demonstrate the robust and well organized nature of the RICO Enterprise described below. In addition, the defendants KIRK, MAUCK, HOHENHOUSE, WILDING, JOHN DOE#2 (YaMoron) and all other JOHN DOE defendants and SHAHSAVAR each aided and abetted the other in corrupting public officials including an Arkansas state prosecuting attorney, Robert Balfe, and one or more presently unknown (JOHN DOE) employees of the United States Securities and Exchange Commission. |
