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This bears repeating:
V. THE DEFENDANTS' USE OF THE INTERNET TO DEFAME THE
ZWEBNERS AND MANIPULATE STOCKS
The Internet
18. The “Internet” is a global array of computer networks accessible all over the world.
19. Use of the Internet as a conduit of information has exploded as more and more
people have signed up as Internet users. There are now many millions of Internet users
worldwide. The Internet has become a social and commercial force of immense
importance, where information can be immediately posted and relayed throughout the
commercial world.
20. Throughout the Internet, there are dozens of “stock talk” bulletin boards, news
groups, and chat rooms. Included among these is the “Silicon Investor,” the Web
address of which is http: www.techstocks.com/investor/main.
21. Individuals have posted hundreds of thousands of messages to these bulletin boards.
There are more than three so-called threads or posts regarding DCI on Silicon Investor
bulletin boards. These threads are accessed by the home name “DCTC.” These posts
are read by people around the globe. Silicon Investor, whose bulletin boards include
one or more for DCI, receives between 2.5 and 4 million hits per day on its site.
22. People who post on bulletin boards (once they register with Silicon Investor) are not
required to disclose their real identities or whether the information they are disseminating
is accurate. They may thus hide behind a shield of anonymity believing they can fabricate
and intimidate with no risk of repercussions.
The Defendants' Scheme to Defame the Zwebners and Manipulate Stock Prices
23. Using their aliases, “bgtit”, “Spider Valdez”, and “Rico Staris,” defendants Dumont,
Doe I and Doe II, acting in concert with other Doe defendants attempting to manipulate
the stock of DCI, posted false and defamatory information about the Zwebners on
Silicon Investor Internet chat lines.
24. The defendants went so far as to create a new chat line called “No Bash for
Legacy” for the specific purpose of ridiculing the plaintiff, Michael Zwebner and his
brother, Charles Zwebner, and the public company of which the Zwebners are directors
and officers.
25. The defendants deliberately copied and posted defamatory and false information
regarding Michael Zwebner and his brother Charles on an Internet interactive board
established for public discussion about another company, Airstar Technologies, Inc.
(“ASTG”), knowing full well that the Zwebners were attempting to acquire this
company. The defendants' dissemination of false and defamatory information misled
ASTG directors and shareholders and caused the Zwebners to abandon the proposed
acquisition.
26. The defendants either knew the statements they posted on the Silicon Investor chat
lines regarding the Zwebners to be false or otherwise made them with reckless disregard
as to the truth of the information and with the intent to harm the Zwebners and influence
the prices of publicly traded stocks.
27. For many months the management of DCI has been attempting to secure institutional
investors and/or a purchaser of the Company. For some time, DCI has thus been the
subject of merger and acquisition rumors.
28. In order to maximize the value of the Company and hence the amount potential
suitors would pay for DCI, the current management and insider shareholders of DCI
have been trying to make the Company appear to be financially healthy and to have the
potential for high profits.
29. For most of the past six months, the Company and its stock have not performed
well.
30. On information and belief, the defendants, acting in concert with DCI insiders, have
been attempting to divert attention away from the Company's poor performance by
blaming fictitious outside forces for causing indicia of poor corporate performance, such
as, among other things, depressed stock prices.
31. To this end, the defendants have been disseminating lies over the Internet, falsely
accusing the Zwebners of, among other things, short selling DCI stock and otherwise
manipulating DCI stock prices.
32. In truth, it is defendants, and those DCI insiders acting in concert with them, that are
manipulating DCI stock prices by employing falsehood and deceit in an effort to deceive
investors into believing that the Zwebners and others are to blame for the stock's poor
performance. The defendants have sought to deceive investors and potential suitors into
believing that the Company is not performing as poorly as corporate indicators suggest,
but that rather the Zwebners are somehow distorting the true financial picture of the
Company through purported sales of “invalid stock” and manipulation of stock prices.
Irrespective of the defendants' motive and purpose in disseminating this information,
these remarks that the defendants have widely and maliciously published over the
Internet are absolutely false and defamatory.
33. The Zwebners have repeatedly notified defendants through the Internet and
otherwise that the information they are disseminating is false. Defendants nevertheless
persist in smearing the Zwebners' names and reputations, for their own commercial
purposes, through the publication of malicious falsehoods and innuendo over the
Internet.
Lies Perpetrated by Defendant Dean Dumont a/k/a “bgtit”
34. On August 3, 1998, defendant Dumont intentionally made false statements regarding
the sale of DCI stock by Michael Zwebner and his brother, Charles. Using the alias
“bgtit”, Dumont posted on the Silicon Investor that the Zwebners had “illegally sold”
their shares and that “ball is already rolling” on “an investigation by the NASD in the
S.E.C.” These statements were false. No shares of DCI stock had been sold illegally by
the Zwebners and there has never been any governmental “investigation” of the sale of
DCI stock by either Michael or Charles Zwebner.
35. Later that same day, using the alias “bgtit”, defendant Dumont again posted that the
Zwebners were selling DCI stock illegally, falsely stating that the Zwebners “were
committing a few illegal acts and fraud is just one of them.” This statement is false. The
Zwebners' sale of DCI securities was not illegal. They committed no fraud or other
wrongdoing.
36. A few days later, on August 6, 1998, defendant Dumont posted a message falsely
accusing Charles Zwebner of previously denying that he and other former Cardcall
shareholders had ever sold any of their DCI stock and insinuating that Mr. Zwebner's
purported efforts to conceal his sale of DCI stock evidenced some impropriety in the
sale. Using the alias “bgtit”, defendant Dumont claimed that “Mr. Zwebner stated in his
last post that [Cardcall share]holders weren't selling [DCI] shares.” This statement was
false. In fact, neither Charles nor Michael Zwebner has ever posted a message on the
Internet claiming that the former shareholders of Cardcall were not selling any shares of
their DCI stock. Indeed, Charles Zwebner had made official filings with the SEC which
are publicly disclosed, so declaring his sales of shares.
37. Most recently, defendant Dumont, continuing to use the alias “bgtit”, disseminated
false information purporting that Michael Zwebner has violated the law by not making
required Securities Exchange Commission (“SEC”) filings. On December 6, 1998, for
example, defendant Dumont falsely posted on the Internet a message accusing Mr.
Zwebner of having said he was “up to date in all filings and [yet did] not hav[e] them
done.” That day Mr. Dumont also again falsely insinuated in an Internet message that
Mr. Zwebner had not made required filings: “Is there something in LGCY you are failing
to disclose. Like not filing an 8K for the assumption of the Board of Directors. The 8K
for the $10 million deal for the real estate . . . S.E.C. and the NASD frown upon those
tactics.” In that same posting, Mr. Dumont proceeded to frame additional false
statements within questions: “How did you and yours manage to gain control of a public
company without [sic] shareholder consent? Why is there NO FILINGS MR.
ZWEBNER, what are hiding? . . . You have not filed any of the appropriate
paperwork.”
38. Two days later, on December 5, 1998, “bgtit” continued his onslaught of
fabrication: “Mr. Zwebner in his own words, and several other times . . . has stated that
he is up to date on his filings, yet there are no filings.”
39. All of these statements are false. Michael Zwebner has made all of the regulatory
filings required of him.
False Statements Made By Defendant John Doe I a/k/a “Spider Valdez”
40. On October 19, 1998, defendant John Doe I, in concert with “defendant John Doe
II, using the aliases “Spider Valdez” and “Rico Staris,” posted a message on a Silicon
Investor chat line falsely accusing the Zwebners of having “shorted invalid stock” and
having financed [LGCY, the public company for which Michael Zwebner currently
serves as chairman] in a questionable manner.”
41. Two days later, on October 20, 1998, so-called “Spider Valdez” elaborated that
his fabrication as to the Zwebners' “selling invalid stock short” was in reference to stock
they owned in DCI. The defendant referred to the “short position at [DCI] that is
backed by invalid stock and zwebner brothers.” These statements are all false. Neither
Michael nor Charles Zwebner have ever sold invalid stock short.
42. On October 24, 1998 defendant Doe I a/k/a “Spider Valdez” falsely informed the
Internet world that the plaintiff was in trouble with the SEC and the FBI in connection
with their “deeds” concerning DCI stock: “i look at [DCI] squeeze and deeds of
Zwebners. sec and fbi have matters in hand.”
43. In truth, there has been absolutely no investigation by the FBI or SEC concerning
actions of the Zwebners related to DCI stock.
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