Today is Aug-08-1997
Promoter vows to repay duped investors Stock promoter Matthew Klenovic promised to make restitution to 1,000 investors who put their money into NVID International Inc., as part of a plea agreement made public Thursday by the U.S. attorney's office in Tampa.
While investors thought they were buying into a Sarasota company with a dream disinfectant product that could generate sales volume of $30 billion a year, Klenovic and others were ``looting the investors' funds for their own purposes,'' according to the plea agreement signed by him. [Menu Bar] Klenovic, who had no formal title at NVID, is expected to plead guilty before a federal judge to six felony counts of wire and mail fraud and conspiracy to defraud, which could mean he will receive a lighter sentence than the maximum penalty- 35 years in prison and $1 million-plus in fines.
In addition to the plea agreement, Klenovic acknowledged that he lied to the Securities and Exchange Commission and a federal court in December 1996. Hesaid then that he did not have any money to pay a $1.5 million civil penalty incurred in connection with a previous stock scam, Standard Oil and Exploration of Delaware.He also said he would refrain from serving as an officer of director of a public company for five years.
It could take another three months before Klenovic faces the judge for sentencing.
Klenovic's top associate, former NVID president Robert Bunte, is a co-defendant in the criminal case, according to Michael Runyon, the assistant U.S. attorney in charge of the prosecution.
``Bunte, we are still investigating,'' said Runyon.
Meanwhile, the SEC continues to move toward a trial in a parallel civil suit against NVID, Klenovic, and Bunte.
Both men were arrested in an April raid on their office that included FBI and Postal Service inspectors.
In Klenovic's plea agreement, he admits to conspiring to defraud about 1,000 investors of their money by selling them shares of NVID stock. The SEC estimates that investors lost about $3.2 million in the offerings, which took place between November 1994 and March 1997. The company made extensive use of electronic press releases to tout its disinfectant, dubbed MicroSafe.
By mid-1996, after the MicroSafe publicity campaign took off, NVID stock reached a peak of about 65 cents a share. The shares now change hands for six cents each.
While Klenovic is promising to make restitution as part of his criminal case, the SEC is taking the lead role in tracking down the money, said Runyon.
``We are continuing to actively litigate against the company in its current incarnation,'' said Elizabeth Evans, the trial counsel in the SEC's civil case.
In April, the SEC persuaded a federal judge to freeze the assets not only of NVID but also of Klenovic and Bunte. NVID's assets have since been unfrozen.
``The asset freeze still covers all of Mr. and Mrs. Klenovic's and Mr. Bunte's assets,'' said Evans.
Those assets include two expensive Sarasota homes as well as personal belongings. A third Sarasota house title in the name of NVID executive Andrew Arata is being held by NVID, and could be liquidated on behalf of investors as well, Evans said.
The SEC could allow NVID to remain in business or ask the court to order its liquidation, whichever move it believes will be of greater benefit to investors.
Evans says her own investigation shows that NVID ``is still engaged in efforts to market, to the extent there is anything to develop, MicroSafe.''
NVID's original business was the sale of electronic equipment designed to purify water through ionization. The process can be used to purify swimming pools or drinking water.
In mid-July, NVID's new management team, led by David Larson, agreed to sell its ionizer manufacturing unit, located in Huron, Ohio, to former employees of the company - Arata and Robert Tomzak.
The move was made to give NVID continued access to water purification equipment at wholesale prices while allowing the company to focus its limited resources on developing its disinfectant, which it has renamed AXEN.
Story Filed By The HERALD TRIBUNE, SARASOTA, FLORIDA |
