I hate to do this guys, but I have to.
SEC, Publisher of On-Line Newsletter
Settle Fraud Case Involving the Internet
By Paul Beckett
02/26/97
The Wall Street Journal
(Copyright (c) 1997, Dow Jones & Company, Inc.)
WASHINGTON -- The Securities and Exchange Commission, in a beefed-up effort
to police investment advice published on the Internet, settled fraud allegations
against the publisher of a Florida-based on-line investment newsletter.
Without admitting or denying the charges, George Chelekis and two companies he
controls -- KGC Inc. and Hot Stocks Review Inc. -- agreed to pay fines totaling
$162,727.
The SEC, its lawsuit filed in U.S. District Court here, said Mr. Chelekis , of Tampa,
Fla., failed to disclose that he and the companies received at least $1.1 million and
275,500 shares of stock as payment for recommending companies' securities in his
Internet publications.
The settlement is one of about a dozen Internet-related cases the SEC has pursued
in the past two years and is only the second relating directly to an investment
newsletter, officials said. But they said scrutiny of on-line investment newsletters
and other financial publications is increasing.
"You're going to see a lot more of these cases," said Paul Gerlach, associate director
at the SEC's division of enforcement.
The SEC alleged that at least from January 1995 through August 1995, Mr. Chelekis
through his publications knowingly made "false and misleading statements" about
six publicly traded companies.
The six were among some 150 publicly traded U.S. and Canadian companies that
paid Mr. Chelekis and Hot Stocks publications for promoting them on the Internet,
Mr. Gerlach said. Mr. Chelekis and his two companies were charged with failing to
disclose the payments in what SEC officials said was one of the biggest alleged
Internet violations of stock-promotion rules.
According to court papers, the six companies were Luminart Inc., a Canadian sign
company; Nona Morelli's II Inc., a Colorado-based gambling, real-estate and food
company; Urban Resource Technologies Inc., a Canadian garbage processor;
* Advanced Viral Research Corp., a Florida-based antiviral-research company; and
Canmine Resources Corp. and Quest International Resources Corp., Caanadian
mining companies. Mr. Gerlach declined to say whether the companies themselves
were being investigated.
Since June 1994, Mr. Chelekis has written and published several investment
newsletters: Hot Stocks Review, Hot Stocks Whispers, Hot Stocks Confidential, Hot
Stocks Alert, Hot Stocks Flash and Hot Stocks Movers. The newsletters were
published on an Internet web site, and by mail, Telecopier, and electronic mail,
according to court papers. They have also appeared as supplements in investment
magazines and on private electronic news services. The number of subscribers
wasn't available.
Mr. Chelekis 's lawyer, Michael Schoeman of Schoeman, Marsh & Updike in New
York, declined to comment. Mr. Chelekis couldn't be reached.
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The latest word is some of the companies mentioned may be also investigated by the SEC.
NOT A GOOD SENARIO.. I am no longer a ADVR shareholder good luck. |
