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To: keithcray who wrote (9863)	8/7/2001 1:21:30 AM
From: Frederick Langford	Respond to of 208838

Hoaxer sentenced in Emulex 'atomic bomb' Monday, 6 August 2001 20:40 (ET) Hoaxer sentenced in Emulex 'atomic bomb' By HIL ANDERSON LOS ANGELES, Aug. 6 (UPI) -- A youthful Southern California trader who set off what a federal judge Monday called "an atomic bomb on the stock market," was sentenced to 44 months in prison on fraud charges stemming from a phony press release that torpedoed the stock of Emulex Corp. U.S. District Judge Dirkvan Tevrizian also ordered that Mark S. Jakob, 24, El Segundo, be placed on three years supervised release. Jakob pleaded guilty last December to two counts of securities fraud and one count of wire fraud after engineering first the fall and then the rise of Emulex stock last Aug. 25 with a false press release that allowed him to turn a tidy $54,696 profit by selling the stock short. "He stole more than Jessie James," Judge Tevrizian said during Monday's hearing in Los Angeles. "This is a big-time heist." The faux release announced that Emulex's chief executive officer had resigned, the company was lowering its previous earnings report, and the Securities and Exchange Commission was investigating the Orange County company's accounting practices. The release, which was distributed over a reputable news release service -- where Jakob formerly worked -- was picked up by two financial news services during early East Coast trading, causing Emulex stock to tumble from $110 per share to a low of $43 per share before stunned company executives on the West Coast, who responded to the situation with a three-hour time difference, could react. Judge Tevrizian said the release was like "dropping a bomb on the stock market," costing traders some $110 million in losses on the day. Prosecutors said Jakob cooked up the scheme in mid-August when he sold Emulex stock short in the anticipation the price would fall to $81 per share. The shares instead climbed past $100 at the same time Jakob's online brokerage service issued a margin call that left him facing losses of some $97,000. Once the bogus press release that Jakob e-mailed from his former community college library to Internet Wire on Aug. 24 was made public, the stock price collapsed as stockholders unloaded shares while still others shorted the stock. Jakob was able to scoop up the unwanted shares he needed at $62.34 and $51.82 per share. He covered his previous short sales and also sold 3,500 shares at $105.20 per share on Aug. 28 after Emulex had recovered its losses. There were, however, shareholders who lost money as Emulex fell, and were also burned again when the stock resumed trading at $120 per share rather than the basement price it had hit when trading was halted. "People lost a fortune; I lost $30,000 and that was a fortune to me," lamented Lynn Melton, 38, of Seattle, Washington. Melton told United Press International that she had been "hit coming and going," as she both shorted shares as the stock fell and then was forced to purchase the shares at the inflated price to cover herself when the stock commenced trading at the higher price and she was not able to cancel her order. "People are terrible," said Melton. "What ever sentence he gets won't equal what he did to people's lives." Jakob, who will begin serving his sentence Sept. 5, did not comment while leaving the courthouse, although his lawyer told reporters her client was sorry for the pain he had caused. "He expected to be punished," said attorney Andrea Levine. "He knew he had done wrong." -- Copyright 2001 by United Press International. All rights reserved.