Can you say IDID?
Judge orders company, individuals to stop
alleged stock fraud
WASHINGTON (AP) - A federal judge in New York City on Friday ordered
Electro-Optical Systems Corp. and several individuals and companies to stop
selling the company's stock after federal regulators sued them for allegedly
manipulating the shares.
The Securities and Exchange Commission alleged in a civil lawsuit that the
defendants created a controlled market for the company's stock, artificially
inflating its price and selling shares to unsuspecting investors - including
many small investors buying shares over the Internet. Electro-Optical Systems is
said to sell fingerprinting devices.
The defendants have fraudulently made at least $5 million on the sales, the
SEC said. It said the company's stock price artificially rose in one day from
around 25 cents to 50 cents to more than $5 a share - a price the defendants
allegedly maintained for several months by controlling the supply of the stock
and issuing false information about the company.
Judge Denise L. Cote, granting a request by the SEC in an emergency civil
lawsuit, also froze the defendants' assets pending resolution of the case. A
hearing was set for March 25.
In addition, the SEC suspended for 10 days trading in the shares of
Electro-Optical Systems, based in Stow, Mass., because of questions about the
accuracy of statements it filed with regulators. The trading halt will continue
through 11:59 p.m. EST on March 26. The stock is traded in the
over-the-counter market.
The other defendants included Thomas Edward Cavanagh, George Chachas,
Thomas Brooksbank, William Levy, Thomas Hantges, Cosimo Tacopino and the
companies U.S. Milestone, Optimum Fund, Agira Trading, Customer Safety,
Cambiares and Construcciones Solariegas.
Officials of Electro-Optical didn't immediately return a telephone call seeking
comment.
An attorney for Cavanagh, Harold Ruvoldt, said he hadn't yet seen the full text
of the SEC's complaint and therefore could not comment specifically. He said
he would present his client's case on March 20.
Copyright 1998 Associated Press. All rights reserved. |
