SEC Freezes $2.5 Mln From Sale of Two Internet-Related Stocks
New York, Feb. 18 (Bloomberg) -- Glittergrove Investments Inc. illegally sold unregistered shares of two Internet-related companies, and regulators have frozen $2.5 million they are trying to recover from the Irish investment company, according to complaint filed by the Securities and Exchange Commission.
The agency is seeking to force Glittergrove to give up $2.9 million in proceeds from the sale of shares in Citron Inc., an Internet marketing company, and Electronic Transfer Associates Inc., which is developing an online discount shopping mall, according to the complaint filed yesterday in U.S. District Court in New York. The SEC also seeks unspecified penalties.
The company was about to wire $2.5 million to a bank account on the Isle of Man, in the Irish Sea between Ireland and the U.K., when the SEC persuaded U.S. District Judge Sidney Stein to freeze the funds. Glittergrove had already transferred $350,000 outside the U.S.
The SEC halted trading of Citron and Electronic Transfer Associates shares for two weeks beginning Jan. 29 after determining that the public lacked adequate or accurate information about the companies.
Peter C. Tosto, 34, a former stockbroker who is free while awaiting sentencing after pleading guilty to one count of securities fraud, arranged for Glittergrove and seven related offshore companies to buy more than 60 percent of the shares of Citron and Electronic Transfer, according to the complaint. Glittergrove and its affiliates then sold some of the shares to investors.
Tosto, who is also known as Peter Lybrand, pleaded guilty in connection with his role in an unrelated kickback scheme involving shares of San Diego Bancorp, the complaint says. In 1991, he received a three-year suspended sentence after he was convicted of conspiracy to commit wire fraud.
Thomas Telegades, president of Electronic Transfer Associates, said in an interview that he has never heard of Glittergrove, and was unaware of the freeze on Glittergrove's assets.
''I have no knowledge of it,'' said Telegades. ''The SEC hasn't contacted the company about that.'' He declined further comment on the advice of his attorney.
Citron executives weren't immediately available for comment.
The seven additional offshore entities involved include six based on the of Isle of Man: Admiral Investments Ltd., McDonalds Investments Ltd., Oasis Enterprises Ltd., Greenford Investments Ltd., Drawbridge Investments Ltd., and Grafton Investments Ltd. The seventh, Compulink International Corp., is an offshore entity whose location is unknown.
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