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Canada Stockwatch
SEC targets Internet tout Liberty Capital
by Brent Mudry
A Bellingham-based Internet tout who received nearly $1.2-million (U.S.) in cash and stock to promote seven companies including American Copper is among 44 penny stock promoters targeted by the United States Securities and Exchange Commission in a massive crackdown on Internet stock promotions revealed Wednesday. In what it calls an "unprecedented nationwide sweep," the SEC filed 23 enforcement actions for "committing fraud over the Internet and deceiving investors around the world." Following the path blazed by its previous prosecutions of Florida Internet tipster George Chelekis and New York radio tout Sonny Bloch, the SEC notes its investigators targeted "purveyors of fraudulent spam, online newsletters, message board postings and web sites."
The SEC claims the Internet tipsters unlawfully touted more than 235 "microcap" companies by either lying about the companies, lying about their own "independence" from the companies, and/or failing to properly disclose the nature, source and amount of compensation paid by the companies. "The sweep, the first orchestrated coast-to-coast operation by the SEC to combat Internet fraud, involved actions filed by SEC offices in Atlanta, Boston, Chicago, Denver, Fort Worth, Los Angeles, Miami, New York, Philadelphia, Salt Lake City and Washington, D.C.," stated SEC enforcement director Richard Walker at a press conference in Washington.
Liberty Capital Group and principal Jason Greig were the targets of one of three Denver SEC prosecutions in the sweep of touts. In a complaint filed Tuesday in the United States District Court for the Western District of Washington, the SEC seeks a permanent injunction and unspecified monetary penalties against Mr. Greig and Liberty Capital. SEC attorney Thomas Carter notes that Mr. Greig touted 20 penny stocks from April 1996 to April 1998 through Jay Greig's Liberty Letter. The civil complaint focuses on his touting of seven companies: American Copper, Computerized Thermal Imaging, Empire Capital, Delsoft Consulting, California Pro Sports and Power Technology.
The SEC notes that Liberty was incorporated in December 1995 and began operating in early 1996, with Mr. Greig as its sole officer, director and shareholder. During 1997, Mr. Greig developed a Liberty web site and promoted seven companies as "Hot Stocks." The commission claims that Liberty failed to disclose the existence of particular agreements with the Hot Stock companies, relating to compensation, but Mr. Greig began making general disclosure of compensation in July. The SEC notes that CTI agreed to pay Liberty $150,000 (U.S.) and options for 300,000 shares, Empire agreed to pay $103,000 (U.S.) and 250,000 options, and Global agreed to pay $250,000 (U.S.) and 225,000 shares.
According to the SEC's court filing, Liberty agreed in July to promote Power Technology and American Copper, and touted the stocks as "Hot Stocks" through September without disclosing the specific agreements and the amounts of compensation received. The complaint does not note how much money or shares these two companies agreed to pay Mr. Greig and Liberty. The SEC notes generally that Liberty and Mr. Greig's touting package included web site promotions, bulletin board postings and e-mails for client companies. The commission notes that Mr. Greig and Liberty violated Section 17 (b) of the Securities Act, which makes it unlawful to tout stocks "without fully disclosing the receipt, whether past or prospective, of such consideration and the amount therof."
Stockwatch was among the publications Mr. Greig used to advertise his Internet hosting services to potential corporate clients.
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