From yesterday's CHICAGO TRIBUNE:
CYBERFORCE PATROLS THE INTERNET
AS STOCK CHAT FRAUD MOUNTS, SEC TAKES ACTION
By Merrill Goozner, Tribune Staff Writer.
SAN DIEGO
The Silicon Investor Internet site has one of the hottest stock chat rooms in the nation. Each day, hundreds of investors post notices lauding some relatively obscure high-tech firm whose stock is poised for blastoff.
So it wasn't unusual a little over two years ago when the Springfield, Ill.-based Strategic Investment Advisory Inc. (SIA) began a thread on the Silicon Investor site about a company called American Biomed Inc. of Woodlands, Texas.
SIA didn't have much to say about the firm's high-tech medical devices, which still have negligible sales though $29 million was spent on development over the past 14 years. Despite that track record, SIA "initiated coverage" with a "strong buy." The company was sure to grow to $5 to $6 a share from its current $1 level, the Internet posting said.
In its Internet posting, SIA also failed to note that its president, 31-year-old Wayne F. Gorsek, and three other officers of the firm had received tens of thousands of shares of American Biomed as payment to promote the firm, according to a Securities and Exchange Commission complaint filed in Washington earlier this month.
Most important, SIA officers didn't tell readers, who quickly pushed the stock past $2.50 a share, that they were simultaneously dumping their American Biomed shares, realizing a $40,000 profit, the SEC complaint charged. Gorsek's attorney, who has 60 days to respond, would not comment on the complaint.
In one sense, SIA's alleged scam is nothing more than the latest example of one of the oldest stock fraud schemes in the book. Longtime SEC officials call it the pump-and-dump.... |
