If this was published before,my apologies--but this is hot--it really
reveals this pumper twosome---come on SEC,let's nail these guys.Max90
BUSINESS
DON BAUDER
Cybertouts often have a way of stretching the truth
DON BAUDER
02/14/99
The San Diego Union-Tribune
1 2 3
Page I-2
(Copyright 1999)
Late in December, the online tout service, www.superstockpick.com,
boasted that its best selection of the year was Virtual Gaming
Technologies of San Diego.
The online Internet tout had recommended Virtual's stock at $3.50 in
March, and it had soared to $11 in June. In late December, however,
superstockpick.com (from now on to be called SSP.com) did not point
out that at that very time, the stock was down to $3.75.
SSP.com had a juicy motive to make its original recommendation highly
bullish: Virtual Gaming, which operates online gambling, had forked over
36,000 shares of its own common stock to SSP.com in return for the
plug. "We have no relationship with them (SSP.com) now," says Bruce
Merati, chief financial officer of Virtual Gaming. "We are now hosting our
own Web site." Merati thinks it was somewhat misleading for SSP.com
to boast of its March pick in December without mentioning that the stock
had come back down. SSP.com is one of many similar operations in the
world of cybertouts, or Web sites that promote shares of companies in
return for some of those shares and other considerations.
SSP.com's parent, 1st Net Technologies, is based in Rancho Bernardo
and has three other online newsletters. Like many of the stocks it
recommends, 1st Net is on the Bulletin Board. The stock has climbed
from $1.50 in late December to the recent $4 level.
The Denver company that publishes SSP.com merged into 1st Net last
year. The chief executive of 1st Net, Gregory D. Writer Jr., who spent
most of his career in the Denver speculative stock snake pit, has quite a
record. It's available from the National Association of Securities Dealers,
or NASD, and the Colorado Division of Securities.
Among many things, Writer was barred from the securities business by
the NASD in 1990 for quarterbacking the upward manipulation of a
stock, selling stocks through unregistered accounts, failing to inform
customers of material facts and making "false, inaccurate and misleading
statements to the staff of the NASD," according to the NASD. Writer
was censured and fined $200,000 as well.
Three years later, despite that ban, Writer was prohibited from any
further solicitation or violation of Idaho securities laws.
Before the 1990 ban, Writer had been suspended by the NASD for
distributing a misleading fund solicitation letter and, earlier, for failing to
keep accurate books and records.
His license was also revoked in Kansas, and he was slapped by the
NASD for advertising a brokerage while the application was pending.
Before that, he had pleaded guilty to charges of possession of marijuana.
According to Colorado records, he was growing plants on his balcony in
1981.
Writer and his wife, Mary E. Writer, who is 1st Net's registered agent,
filed for Chapter 7 bankruptcy in Colorado Springs in 1987.
1st Net's attorney, R. Blair Krueger II, correctly points out that SSP.com
reveals its financial ties to companies it promotes and was not included in
the Securities and Exchange Commission's enforcement actions against
cybertouts last fall.
Gregory Writer denies that he made false statements to the NASD and
manipulated the stock in the incident that got him banned. He says the
Idaho misadventure actually happened before he forfeited his NASD
license. He also denies falsifying loan information and making excessive
markups that got him in trouble in Kansas. He blames the poor
bookkeeping on an employee.
And, he says he no longer smokes marijuana and regrets the incident,
adding that the bankruptcy was a result of medical bills.
How does 1st Net rake in all those shares of stocks it plugs? For
enthusing that Engineering Power Systems Group, a builder of
barge-mounted power plants, is working on "the most exciting and
far-reaching business project of any we have ever encountered,"
SSP.com received 150,000 options on the stock, exercisable at $1 and
$2. For lauding the "unparalleled" management of AXYN, a Y2K fix-it
company, SSP.com got 16,000 shares. For plugging LDDI, a reseller of
long distance service, the cybertout got 200,000 shares.
Last month, SSP.com gave a rave review to San Diego-based Laforza
Automobiles, which assembles an Italian sports car here, and is selling
four cars a month for $45,000 to $60,000, says president David Hops.
SSP.com got 300,000 shares of Laforza at 50 cents a share and five
Laforza cars. It's also getting $5,000 a month. "They raised $700,000 for
us, did our Web page, handled our investor relations. We have a great
relationship," Hops says..
Gregory Writer "told me up-front about the bad times in Denver," Hops
says. In the bullish reports, SSP.com takes pains to sprinkle a few
caveats among the plaudits. "They package their featured stocks to make
them look like independent recommendations," says columnist Susan
Antilla of Bloomberg News.
She hoots at claims that followers of the reports can make 100 to 300
percent in 12 to 18 months.
Just recently, 1st Net put on what it billed as "the first live, Internet
video/audio multimedia presentation" using software provided by InterVu
of San Diego.
Also, 1st Net has a radio show on KCEO AM 1000, but it doesn't plug
stocks. "It's an educational show," says Jeffrey Chatfield , 1st Net's
vice president of investor relations and a former San Diego broker. The
new radio show is called the "Angel Network Radio Hour."
Don Bauder's e-mail address is don.bauder@uniontrib.com
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