<OT>Hey, Gary. Did you see this one today! {:o)
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Man Arrested for Fake News Report
LOS ANGELES (AP) _ An employee of California-based PairGain
Technology Inc. was arrested today in North Carolina on federal
charges of fabricating a Bloomberg news service report and posting
it on the Internet, driving up the company's stock.
The FBI arrested Gary Dale Hoke, 25, at his Raleigh, N.C.,
home
on charges of securities fraud for allegedly disseminating false
information about the company, whose stock is publicly traded, the
U.S. attorney's office in Los Angeles said.
Hoke was arraigned in North Carolina, ordered to report to
California at an unspecified date and released on $50,000 bond,
said Assistant U.S. Attorney Christopher Painter. The prosecutor
described Hoke as a middle- level employee.
Securities fraud is punishable by up to 10 years in federal
prison and a $1 million fine.
The hoax was perpetrated by copying Bloomberg's Web page
design
and creating a false news story that on April 7 caused a dramatic
increase in the trading value of PairGain, a Tustin, Calif., maker
of telecommunications equipment.
The bogus report said PairGain would be acquired by an
Israeli
company, ECI Telecom, for $1.35 billion, or about twice its market
value at the time. During the day, the value of PairGain stock rose
as high as $11.12{ from a closing price the day earlier of $8.50.
When it was determined that the story was fake, the stock
price
dropped.
Hoke was accused of creating the false report in a federal
complaint filed late Wednesday in federal court and unsealed today.
The complaint charges that investors who paid the inflated price
for PairGain were defrauded.
The government complaint does not specifically allege that
Hoke
traded in PairGain stock on April 7, but an affidavit said Hoke has
a history of using online trading companies to purchase and sell
securities, and he traded PairGain stock as recently as January.
The complaint names one victim of the hoax, a Santa Ana,
Calif.,
investor who purchased 1,500 shares of PairGain stock after
learning of the report.
The complaint alleges Hoke used a free Web page service
operated
by Angelfire.com and a free e-mail service operated by Hotmail.com
to create the scam.
The FBI used recorded Internet addresses to make the trace,
the
U.S. attorney's office said.
According to prosecutors, Hoke also allegedly posted a bogus
e-mail message about PairGain under the subject line ''Buyout
News'' on a financial news message board operated by Yahoo! Inc.
The message contained a link to the bogus Bloomberg site.
This week, Bloomberg LP filed a lawsuit over the hoax in U.S.
District Court in New York City. The lawsuit identified the
defendants only as John Does and seeks unspecified damages. An
attorney for Bloomberg said the suit would help the company learn
the identities of those involved.
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They say the poor dumb b____ did it on his computer at work.
Sounds like some of our "friends" around here.
Best of luck,
George |
