Bunte freed:
Today is Mar-17-1998
NVID INTERNATIONAL Jury frees former official
By Michael Pollick STAFF WRITER
TAMPA -- Robert Bunte was found not guilty Monday of any wrongdoing in his fraud-via-the-Internet trial stemming from the Sarasota-based penny stock company NVID International Inc.
The eight women and four men who heard the complicated case listened to testimony and arguments for seven days, then wrestled with their decision for a day and a half before reaching a verdict on the 17 felony counts.
The decision stunned prosecutors because the fact that NVID had issued a long string of false information to potential investors while Bunte was the company president was not in dispute.
''I'm shell-shocked,'' said Assistant U.S. Attorney Michael Runyon.
Jury foreman Jim Tkacs said the issue was simple.
''When we started our deliberations, we did not feel like the state had presented their case well enough,'' said Tkacs, who lives in Plant City.
''Every count, there was doubt,'' he said. ''And when there is reasonable doubt you can't prove a man guilty.''
Bunte's attorney, Donald Horrox, said he believed the prosecutors' star witness backfired on them.
Matthew Klenovic -- who described himself as NVID's former ''control person'' and had already pleaded guilty -- testified that he and Bunte worked together in 1995 and 1996 to issue a stream of fraudulent press releases designed to persuade the public to invest in NVID stock. He also testified that the two looted NVID of $1.2 million, then cooked up a scheme to try to hide that fact.
''Klenovic was their whole case,'' Horrox said.
During the trial, Horrox pointed to flip-flops in Klenovic's statements and called him a pathological liar. He also presented a witness who said Klenovic had duped her into committing securities fraud at another company.
Bunte's defense revolved around a similar claim -- that although he was NVID's president he knew little about its operations and relied on Klenovic to tell him what to do.
A rejuvenated Bunte, 51, strolled away from the federal court building with his wife, Lynne, at his side.
''We're very pleased and look forward to rebuilding our lives again,'' he said.
The case had been important to prosecutors because it was thought to be one of the first to allege nationwide wire fraud through the Internet. Prosecutors said investors across the country lost $3.3 million because of NVID's lies.
In 1996 and early 1997, members of an Internet chat group, stimulated by NVID's claims of a $30 billion market for a new disinfectant called Microsafe, briefly turned the little company into a hot stock. The shares traded wildly, with 79 million shares changing hands in 1996, astounding volume for such an obscure stock. The shares gyrated between 17 cents and 65 cents that year.
The stock collapsed to about its current level -- 5 cents -- after federal and state agents staged a full-scale raid on NVID's headquarters in April 1997. Ironically, the raid came after a suspicious investor complained to authorities via the Internet.
For Runyon, the case was his first acquittal verdict in six and a half years as an assistant U.S. attorney. Despite the verdict, Runyon said prosecutors still had something to be proud of.
''We closed down the fraud and are proceeding with the SEC (Securities Exchange Commission) to obtain relief for investors. We prosecuted the two men we felt were responsible. One is going to jail and one is acquitted. That is the jury system.''
Klenovic ''is going to jail in April for about four years,'' Runyon said.
Sentencing for Klenovic is scheduled for April 21.
The prosecution team called more than a dozen witnesses and displayed many NVID documents to jurors on twin, wide-screen TVs.
Horrox put forward a much simpler case. He put Bunte on the stand and allowed him to explain himself to the jurors. He also called as a witness Karen Lacey, who testified that she previously had been conned by Klenovic into committing illegal acts without realizing what she was doing.
Lacey told the jurors she had been hired by Klenovic as a secretary when he was a top executive at another Sarasota-based company called Standard Oil and Exploration of Delaware.
It wasn't long before Lacey was appointed chief financial officer, and Klenovic asked her to execute stock transactions that she learned later were illegal.
''I discovered that almost every single transaction I did for Matt ... was illegal,'' Lacey testified.
She added that the SEC threatened her with prosecution for four years before agreeing that she was not culpable. She called Klenovic a pathological liar, a charge Horrox repeated in his closing argument.
Horrox said Lacey ''single-handedly dismantled Klenovic.''
''I think she was able to demonstrate to the jury from prior experience that it is possible to be rooked into a fraud scheme without knowing that fraud has been perpetrated until after the fact,'' he said.
Klenovic's activities at Standard Oil and Exploration had also landed him in trouble with the SEC. In January 1997, while he was already running NVID from behind the scenes, Klenovic had agreed to an SEC order barring him from serving as a director of officer of a public traded company for five years.
The SEC said investors were cheated out of $1.5 million in the Standard Oil deal. The agency allowed Klenovic and another man to settle without payment based on their ''demonstrated financial inability to pay.''
Tkacs confirmed that the jurors took note of one of the judge's instructions, an instruction that applied only to Klenovic:
Klenovic had made a plea bargain ''providing for the possibility of a lesser sentence than the witness would otherwise be exposed to,'' said Judge Richard Lazzara. ''...A witness who hopes to gain more favorable treatment may have a reason to make a false statement because the witness wants to strike a good bargain with the Government.''
Jurors ''should consider such testimony with more caution than the testimony of other witnesses,'' the judge said.
The verdict doesn't end the NVID case for Bunte.
Along with Klenovic and NVID, he still faces civil charges in a parallel suit filed by the SEC.
But the separate SEC case also worked in Bunte's favor in the criminal trial.
Klenovic has been acting in his own defense in the civil case. In correspondence with SEC prosecutors, Horrox showed the jury, Klenovic expressed views that were at odds with his testimony in Bunte's trial.
''To my knowledge, no press releases were ever put out by NVID International Inc. with ... intent of defrauding investors,'' Klenovic wrote to SEC prosecutors.
In Bunte's trial, Klenovic stood in front of jurors and marked up a poster-size copy of the first NVID press release regarding Microsafe, highlighting 15 words or phrases that he said were exaggerations, misstatements, or outright lies.
''Up until a month before he signed the plea agreement, he was making those assertions,'' Horrox said. ''Then he signs the plea agreement and changes sides.''
SARASOTA (FLA.) HERALD-TRIBUNE -- MARCH 17, 1998 |
