Investigative Reports
May 23 2006
Infinium Labs, Inc. (OTCBB: IFLBE) promised to deliver a unique new video game called the "Phantom Gaming System." Instead, it seems the Company's founder and former CEO was playing a far different game – scheming with a penny stock promoter to manipulate the price of Infinium shares. On May 16, 2006, the Securities and Exchange Commission charged Timothy Roberts, the Company's current Chairman of the Board and ex-CEO, with participating in a fraudulent "junk fax" scheme to promote the Company's stock.
According to the SEC, in November 2004, Roberts hired stock promoter Michael O'Brien to conduct a fax campaign promoting Infinium. Over the following months, Roberts distributed tens of thousands of faxes touting the Company and distorting facts. The spam faxes suggested, among other things, that Infinium was on the verge of launching its flagship product, the Phantom Gaming System. In fact, Infinium lacked the financial resources to complete development of Phantom. The faxes also included baseless stock price targets, predicting at one point that Infinium shares would rise by as much as $3,000 in the coming weeks. They also falsely claimed that Infinium was run by a developer of the Microsoft X-Box. See, Infinium Labs, Inc. - Waiting For A Phantom.
The fax campaign achieved its intended results. Trading volume for Infinium shares increased significantly, allowing Roberts to dump his own holdings for approximately $422,500. The SEC's complaint alleges that Roberts paid Pickens with 4 million shares of his own Infinium Labs stock in violation of the registration provisions of the federal securities laws.
The Commission is seeking to enjoin Roberts from future violations of the antifraud provisions of the federal securities laws and has asked a United States District Court in Florida to order Roberts to disgorge his ill-gotten gains plus prejudgment interest, impose a civil money penalty, and bar him from participating in penny stock offerings and from serving as an officer or director of a publicly-traded company.
Pickens was previously charged by the SEC for his role in a scheme to manipulate the market for several small-cap companies, including Infinium, and is under criminal indictment in the Southern District of New York. See, No "Dr. Michel" in the House. |
