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To: Jeffrey S. Mitchell who wrote (2487)	2/14/2002 11:15:47 AM
From: Jeffrey S. Mitchell	Read Replies (1) \| Respond to of 12465

Re: 1/30/02 - MSNBC: Internet stock buyer beware; Web allows greater risk of bogus financial offerings Internet stock buyer beware Web allows greater risk of bogus financial offerings by Lisa Napoli A recent poll by Harris Interactive predicts that in the next six months, the number of online investors will grow two thirds to 8.6 million people. With more people using the Internet as a tool to research, buy and trade stocks-more caution than ever is needed. MSNBC Internet Correspondent Lisa Napoli filed this report about one of the most tricky forms of financial scams there is. Lisa Napoli reports on stock market scams on the Internet and how to avoid them. THE INTERNET TURNS anyone with a computer and a modem connection, guys like 26-year-old computer programmer Brian Levine, into a stock trading financial independent. Even if trading isn’t their line of work. “Everyone wants to get in on IPOs and buying Internet stocks, I’m able to sit at work, look at the ticker on my desk, and act on it immediately,” says Levine. But with the increase in people trading stocks comes an increase in people trying to take advantage of them. Online, no one knows if you’re a bona fide financial guru dispensing words of wisdom or if you’re a scam artist. More frequently these days, scams come in the form of an unsolicited email, known as spam. Often, it’s chatty and familiar in its tone, like this one, that sounds as if a friend sent it along. I don’t know someone with this screen name, but look at this message: “Hey check this stock out, I think it will pop!” ----- Seen a potential on-line fraud? Tell the SEC about it with their online complaint from: sec.gov “Everyone wants to get in on IPOs and buying Internet stocks, I’m able to sit at work, look at the ticker on my desk, and act on it immediately.” — BRIAN LEVINE Computer Programmer ----- These kinds of suspicious stock tips are proliferating online, say officials at the Securities and Exchange Commission, the governmental agency that administers federal security laws. Though they look like they’re coming from an unbiased source, these e-mails may actually be from the company being touted or from someone who has a substantial holding in it . There are bogus offerings of stock in companies that don’t exist at all — offerings of stock based on hype and inaccurate information, attempt at manipulations over the Internet. The tricks aren’t new. Before the Net, shysters used to set up telephone banks to call would-be investors to pass along bogus tips. But with the Internet, news travels fast-and anonymously. And tracking down the perpetrators is like chasing a ghost. The SEC says it is trying to keep a watchful eye. Last year it started an office of Internet enforcement, where more than 200 people surf the Net looking for potential problems. But some say the government isn’t moving fast enough to keep up with the volume and speed of stock trading schemes, which proliferate at warp speed on the Internet. “The whole notion that people can go out and trade online without being thoroughly educated and experienced is really ridiculous. But it’s happening,” says Kevin Lichtman, who runs an financial advice Web site. “People are being encouraged to trade online. There really is no mandatory consumer education,” he says. And until there is, or until the government finds a way to control the program, traders have to be wary of online offers that sound just too good to be true. msnbc.com

To: Jeffrey S. Mitchell who wrote (2487)	2/14/2002 8:44:04 PM
From: s martin	Respond to of 12465

It seems to penalties meted out by the SEC do nothing to deter these penny stock promoters. Barclay and Loretta Davis were charged by the SEC in at least 3 other penny stock companies. SEXI, TFCH and CCIC. In one of the cases he was also accused of pushing the company accountant down the steps to prevent his testimony. There was a great deal of discussion of them on the SEXI threads at that time. Stiffer penalties might be in order. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. LITIGATION RELEASE NO. 15600 / December 22, 1997 ACCOUNTING AND AUDITING ENFORCEMENT RELEASE NO. 998 / December 22, 1997 SECURITIES AND EXCHANGE COMMISSION v. BARCLAY DAVIS and WORLD SYNDICATORS, INC., Civil Action No. 97-CV03056(GK)(D.D.C.) U.S. v. BARCLAY DAVIS, CR-S-97-201 (D.C. Nev.) The Securities and Exchange Commission ("Commission") today filed a Complaint against Barclay Davis ("Davis"), a Las Vegas, Nevada based penny stock promoter and serial stock manipulator, and World Syndicators, Inc. ("World Syndicators"), an entity through which Davis conducted his business, in the United States District Court for the District of Columbia. The Complaint alleges that Davis manipulated the market for the securities of three separate publicly traded companies: (1) Systems of Excellence, Inc. ("SOE"); (2) Combined Companies International Corp. ("CCIC"); and (3) Bio-Tech Industries, Inc. ("Bio-Tech") (formerly Twenty First Century Health, Inc.). The Complaint seeks a permanent injunction enjoining Davis and World Syndicators from violations of the securities registration and antifraud provisions of the federal securities laws, a permanent injunction enjoining Davis from violations of the reporting and recordkeeping provisions of the federal securities laws, an accounting, disgorgement, and a permanent and unconditional bar from Davis acting as an officer or director of a public company. The Commission’s Complaint alleges the following: • Systems of Excellence In August 1996, Davis entered an ongoing scheme to manipulate the market for SOE. Through World Syndicators, he was given unregistered shares of SOE stock by Charles O. Huttoe, the former CEO and Chairman of SOE, to facilitate the use of a registered broker-dealer to push SOE stock on the public. Then, when SOE’s independent auditor discovered that SOE had distributed unregistered stock, Davis engineered a massive effort to falsify registration statements and periodic filings to create the appearance that SOE was in compliance with the federal securities laws. Davis sold SOE stock he was given for proceeds of approximately $1,128,000. • CCIC and Bio-Tech Davis controlled both CCIC and Bio-Tech, and used them as vehicles for market manipulations. Davis directed the preparation of financial statements for both issuers that materially overstated the companies’ assets, and obtained false audit opinions on these financial statements. CCIC’s materially false financial statements and audit reports were then filed with the Commission, and Bio-Tech’s were supplied to broker-dealers to induce them to make a market in the stock. As part of a deliberate effort to increase the price of Bio-Tech stock, Davis also directed the issuance of a series of materially false press releases in which the company claimed an exclusive license to market "breakthrough" medical devices, highly successful efforts to market a new line of nutritional supplements, and the acquisition of what appeared to be a successful and nationally- known tea company. While Davis was manipulating the price of SOE, CCIC, and Bio-Tech stock, Davis and World Syndicators sold substantial amounts of both securities through accounts they controlled in the U.S. and Canada. The Commission also announced that today Davis pleaded guilty to one count of conspiracy to commit securities fraud and bank fraud, and one count of money laundering, in the United States District Court for the District of Nevada. Davis' plea was in connection with, among other things, a securities fraud scheme involving the manipulation of CCIC. The Commission previously has made several announcements concerning these matters. See Lit. Rel. 15571 (November 25, 1997);(Lit. Rel. 15490 (September 12, 1997); Lit. Rel. 15286 (March 12, 1997); Securities Exchange Act Rel. No. 38345 (February 27, 1997); Securities Exchange Act Rel. No. 38260 (February 10, 1997); Lit. Rel. 15490 (January 31, 1997); Lit. Rel. 15185 (December 12, 1996); Lit. Rel. 15153 (November 7, 1996); Securities Exchange Act Rel. No. 33791 (October 7, 1996). The Commission is cooperating with separate investigations in this matter carried on by the United States Attorney's Offices for the District of Nevada and the Eastern District of Virginia, and the Criminal Investigation Division of the Internal Revenue Service. The Commission's investigation in this matter is continuing. sec.gov -------------------------------------------------------------------------------- Home \| Previous Page Modified:12/22/1997 sec.gov