And the second...
THE RICO ENTERPRISE
65. Between approximately June 1, 2002 and the present, both dates being approximate and inclusive, the defendants HOHENHOUSE, MAUCK, KIRK, SHAHSAVAR and JOHN DOE'S #1 through 15, together with Long and Short Reports, ragingbull.com and certain subscribers to Long and Short Reports and others, were members and associates of an enterprise as defined in Title 18, United States Code, Section 1961(4), that is, a group of individuals associated in fact (hereafter, the "Enterprise"). The Enterprise operates in the Western District of Arkansas and elsewhere through extensive use of the internet; it operates in the United States as well as abroad. The Enterprise engaged in, and its activities affected, interstate and foreign commerce. Certain elements of the Enterprise are directed by a foreign national operating in Winnipeg, Manitoba, Canada who maintains an office in New York City, New York.
66. The chief purposes of the Enterprise are to promote some stock issues in "pump and dumps" and also to obtain money or free trading stock of the Plaintiff and other for its members and associates by extortion or by trading on material, nonpublic information that has been misappropriated from law enforcement databases and/or authorities; by manipulating the market to deflate artificially the price of Plaintiff's stock that had been short sold, and by attempting to extort free shares of stock from company insiders. The fraudulent scheme is wide ranging and utilizes extortionate conduct as a routine element of its operations.
67. Among the means and methods by which the defendants HOHENHOUSE, MAUCK, KIRK, SHAHSAVAR and JOHN DOES #1 through 15, and other members and associates, conducted and participated in the conduct of the affairs of the Enterprise were various criminal activities, including conspiracy, and various acts of wire fraud, mail fraud and extortion. In furtherance of their criminal enterprise, the defendants and each of them inflicted economic damage upon plaintiff as retaliation for failure to submit to extortion.
68. The Enterprise was led by the defendants KIRK, MAUCK and SHAHSAVAR who own and operate Long and Short Reports and its public investment website, named longandshortreports.com, its subscription e-mail newsletter and its subscription-based investment website. The Enterprise constitutes an ongoing organization whose members function as a continuing unit for a common purpose of achieving the objectives of the enterprise. Various persons periodically affiliate or associate with the named actors.
COUNT ONE
(Racketeering Conspiracy)
69. The allegations contained in paragraphs 1 through 68 are realleged and incorporated as if fully set forth herein.
70. In or about and between June 1, 2002 and the present, both dates being approximate and inclusive, within the Western District of Arkansas and elsewhere, the defendants HOHENHOUSE, MAUCK, KIRK, SHAHSAVAR and JOHN DOES #1 through 15, together with others, being persons employed by and associated with an enterprise as defined in Title 18, United States Code, Section 1961(4), that is, a group of individuals associated in fact (hereafter, the "Enterprise"), knowingly and intentionally conspired to violate Title 18, United States Code, Sections 1962(c), 2 and 3, that is, to conduct and participate, directly and indirectly, in the conduct of the affairs of the Enterprise, which engaged in, and the activities of which affected, interstate and foreign commerce, through a pattern of racketeering activity as defined in Title 18, United States Code, Sections 1961(1) and 1961(5). Each defendant agreed that at least two acts of racketeering would be committed in the conduct of the affairs of the Enterprise as set forth in the pattern of racketeering described below. Each defendant aided and abetted the other in the commission of the offenses.
PATTERN OF RACKETEERING ACTIVITY
Racketeering Predicate Act One
(Wire Fraud Conspiracy with
Associated Securities Fraud Violations)
71. The defendants HOHENHOUSE, WILDING, KIRK, MAUCK, SHAHSAVAR, and JOHN DOE#1 through 15 together with others, inclusive committed the following acts involving wire fraud, any one of which alone constitutes the commission of Racketeering Act One.
A. Wire Fraud and Securities Fraud Conspiracy - Insider Trading
72. The allegations contained in paragraphs 1 through 70 are realleged and incorporated as if fully set forth herein.
73. From on or about and between June 1, 2002 and the present, both dates being approximate and inclusive, the defendants HOHENHOUSE, WILDING, SHAHSAVAR, MAUCK, KIRK, JOHN DOES#1 through 15, together with others, did knowingly and willfully conspire to use and employ manipulative and deceptive devices and contrivances directly and indirectly, by use of means and instrumentalities of interstate commerce, interstate wire telecommunication devices, the internet and the mails, in contravention of Rule 10b-5 of the Rules and Regulations of the United States Securities and Exchange Commission (Title 17, Code of Federal Regulations, Section 240.10b-5), and directly and indirectly to (a) employ devices, schemes and artifices to defraud; (b) make untrue statements of material facts and omit to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; and (c) engage in acts, practices and a course of business which would and did operate as a fraud and deceit upon members of the investing public and the Plaintiff, in connection with purchases and sales of securities, in violation of Title 15, United States Code, Sections 78j(b) and 78ff, all in violation of Title 18, United States Code, Sections 1343 and 371. Nothing in this allegation should be construed as meaning or intending that any defendant acted as a broker-dealer, rather, that their actions were taken in violation of the statutes as part of an overall scheme to inflict economic damage upon the Plaintiff through actions that also violate the above cited federal statutes. The nexus of the fraudulent scheme was to inflict economic injury to the Plaintiff in retaliation for failure to comply with the extortionate demands of the defendants and each of them. The defendants, having adopted the above described fraudulent scheme, violated the provisions of Title 18, United States Code, Sections 1343, 371, 2 and 3 in execution of the scheme.
74. It was a part of the conspiracy that between May, 2000 through the present, both dates being approximate and inclusive, the defendants HOHENHOUSE, KIRK, MAUCK and SHAHSAVAR, and JOHN DOES# 1 through 15 solicited, obtained and corruptly received from Robert Balfe and JOHN DOE#1 material, non-public information concerning an employee of Plaintiff, to wit: confidential law enforcement information from the FBI?s National Crime Information Center database ("NCIC"), which contained confidential criminal history information, which information had been unlawfully misappropriated from the Federal Bureau of Investigation by JOHN DOE#1 and Robert Balfe and/or other JOHN DOE defendants corruptly, and in violation of their fiduciary and other duties of trust and confidence, and which information was obtained and received before the information was publicly disclosed to the investing public.
75. It was a further part of the conspiracy that, from on or about and between June 1, 2002 and the present, both dates being approximate and inclusive, after obtaining and receiving this material, non-public information about the Plaintiff's employee, but prior to the information being publicly disclosed to the investing public, the defendants MAUCK, SHAHSAVAR and KIRK, WILDING, and HOHENHOUSE together with others, short sold stock of the Plaintiff through brokerage accounts, including Standard Securities Capital Corp. in Toronto, Canada and elsewhere.
76. In furtherance of the conspiracy and to effect the objectives thereof, the defendants HOHENHOUSE, MAUCK, KIRK, SHAHSAVAR, WILDING and JOHN DOES#1 through 15, inclusive, and their coconspirators committed and caused to be committed the following:
OVERT ACTS
Internet Postings, Use of Interstate Wire Communication Devices and Use of Deceptive Identities, Corrupt Practices and Corrupt Influences
a. Defendant HOHENHOUSE previously has created a compendium of "alias" names to use when posting on "ragingbull.com." She has an identified alias of "chohenhous," but previously is alleged, upon credible information and belief, to have adopted and used: suntzu01, SunTzu06, offshoreacct, and others.
b. Defendant MAUCK previously created a compendium of "alias" names to use when posting on "ragingbull.com." These names include "ljvmauck" and "longandshortreports," and others.
c. Defendant JOHN DOE#2 (hereafter, variously "JOHN DOE#2 or "YaMoron") previously created a compendium of "alias" names to use when posting on "ragingbull.com." These names include YaMoron, JohnnyHype and others.
d. Defendant KIRK previously created a compendium of "alias" names to use when posting on "ragingbull.com." These include "haybail_out," tycoma1, robot_cloaks, rat_james_rat, senior_paid_basher, and others.
e. Defendant WILDING previously created a compendium of "alias" names to use when posting on "ragingbull.com." These include "radar_picks" and others.
f. Defendant SHASAVAR previously created a compendium of "alias" names to use when posting on "ragingbull.com." It is alleged upon information and belief that these include "rocky_the_squirrel." All of these aliases were created in furtherance of committing and concealing various acts of wire fraud, all in violation of Title 18, United States Code, Sections 1343, 371, 2 and 3.
g. Defendant JOHN DOE#2 (YaMoron) corruptly influenced one or more employee(s) (JOHN DOE#4, et al) of Lycos, Inc., who are responsible for electronic supervision and management of the Lycos, Inc. owned "ragingbull.com" messaging system for the purposes of:
(i.) Providing the defendants herein with account information of other "ragingbull.com" account holders;
(ii.) Selectively terminating the accounts and removing the messages of third parties who were critical of or who questioned the veracity of manipulative and false information the defendants would and did periodically post on the "ragingbull.com" message system, including messages posted at the "GECC" message board;
(iii) Providing concealment of the true identities of these various defendants who operate various "alias" accounts on the "ragingbull.com" system;
(iv) Selectively concealing or destroying, on an after-the-fact basis, various messages posted on the "AARW" and GECC message boards at "ragingbull.com," which messages were previously posted from on or about May 2000 through the present and referred to inter alia, communication by and between Robert Balfe and Susie Randall, Patricia K. Sharp, Mark S. Thetford, defendants KIRK, MAUCK, HOHENHOUSE, SHAHSAVAR, JOHN DOE#2 (YaMoron) and others wherein Balfe would and did, periodically provide negative, adverse, material non-public information which was calculated to be used to influence the trading in, and price of, various securities traded in the NASD supervised market, including tickers AARO, AARW and GECC.
B. Wire Fraud & Securities Fraud Conspiracy -
Market Manipulation
77. The allegations contained in paragraphs 1 through
76 are realleged and incorporated as if fully set forth herein.
78. From on or about and between June 1, 2002 and the present, both dates being approximate and inclusive, the defendants HOHENHOUSE, WILDING, MAUCK, SHAHSAVAR, KIRK and JOHN DOES#1 through 15, together with others, did knowingly and willfully conspire to create a fraudulent scheme; to use and employ manipulative and deceptive devices and contrivances directly and indirectly, by use of means and instrumentalities of interstate commerce and the mails and avenues of interstate wire communication, in contravention of Rule 10b-5 of the Rules and Regulations of the United States Securities and Exchange Commission (Title 17, Code of Federal Regulations, Section 240.10b-5), and directly and indirectly to (a) employ devices, schemes and artifices to defraud; (b) make untrue statements of material facts and omit to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; and (c) engage in acts, practices and a course of business which would and did operate as a fraud and deceit upon members of the investing public and the Plaintiff, in connection with innocent third party purchases or potential purchases and sales of various securities, in violation of Title 15, United States Code, Sections 78j(b) and 78ff, all in violation of Title 18, United States Code, Sections 371, 1962(d), 1343, 2 and 3.
79. It was a part of the conspiracy that between June 1 to the present, both dates being approximate and inclusive, the defendants HOHENHOUSE, WILDING, MAUCK, SHAHSAVAR, KIRK, and JOHN DOES#1 through 15, together with others, devised and intended to devise, implemented and oversaw a fraudulent scheme to deflate artificially the price of Plaintiff common stock trading under the ticker symbol GECC that they had short sold and then to profit by buying it back later at a lower price. HOHENHOUSE, WILDING, KIRK, MAUCK and SHAHSAVAR and others sought to accomplish their manipulation by coordinating the release of negative information with short selling in a manner designed to exaggerate the negative market sentiment for the stock, and to additionally inflict economic injury upon Plaintiff through the unlawful acts complained of.
80. In furtherance of the conspiracy and to effect the
objectives thereof, the defendants MAUCK, KIRK, HOHENOUSE, SHAHSAVAR and JOHN DOES# 1 through 15 and their coconspirators committed and caused to be committed the following:
OVERT ACTS
a. From on or about June 1 through the present, using one or more of the "ragingbull.com" aliases described above, each defendant repeatedly and at various times would and did post via the use of an interstate wire communications facility, proscribed material non-public information and other adverse and negative information with the sole intent of adversely affecting the market price of the publicly trading securities of the Plaintiff.
b. At a time not presently known with certainty, but which is discoverable, defendant JOHN DOE#1 and/or Robert Balfe searched the NCIC database and found criminal history information regarding Jim Bolt, an employee of Plaintiff and principal extortion target of the defendants.
c. On or about June 12, 2002, the defendant HOHENHOUSE and others, began posting information regarding Jim Bolt?s alleged criminal record on "ragingbull.com." Defendant HOHENHOUSE posted on "ragingbull.com" on the GECC message board at post number 5123 information clearly implying corrupt and unlawful possession of an NCIC report regarding Plaintiff's employee Jim Bolt.
d. On or about June 20, 2002 Defendant HOHENHOUSE posted on "ragingbull.com" at the GECC message board at post number 11430 information clearly implying possession of a non-public and allegedly material information regarding Plaintiff's employee Jim Bolt. In context, defendant's post read against other similar posts of defendant KIRK would and did clearly imply that Robert Balfe was corruptly providing these defendants allegedly material, non-public information which these defendants and others cast as "negative" or "adverse."
e. On August 13, 2002, Robert Balfe, then being a duly sworn officer of the State of Arkansas in the form of a Prosecuting Attorney, while claiming to be a specially appointed agent or investigator or person acting at the direction, insistence and urging of the Arkansas Department of Securities, the United States Department of Justice, the Federal Bureau of Investigation and the United States Securities and Exchange Commission unlawfully and corruptly provided to KIRK, MAUCK, HOHENHOUSE and SHAHSAVAR and JOHN DOE#2, material, non-public information, which, on August 13, 2002, KIRK transmitted via the internet to "ragingbull.com" where it was posted as message 29292 on the "GECC" message board.
f. On August 13, 2002, between 9:19 PM and 10:53 PM, EDT, KIRK posted via the internet on "ragingbull.com" at the "GECC" message boards four sequential messages, numbers 29327, 29286 29292, and 29297 all of which clearly imply that has corruptly influenced an employee or officer of the United States Securities and Exchange Commission, hereafter referred to as JOHN DOE#3; that he has corruptly influenced and unlawfully obtained material, non-public information from a state of Arkansas public official, Robert Balfe; and has transmitted and received information via a means and avenue of interstate commerce, to wit: an interstate wire communications facility to and from Robert Balfe and KIRK has alluded to such information at the date, time and place stated in the original messages posted as:
(i) Message 29286: "Interesting letter I just received from one of my sec contacts. I'll post it tomorrow after I source it, though it seems legit."
(ii) Message 29292: "Lenny-and the truth seems to be tonight that Rusk is no longer a 1st affiliate. Least that's what we hear. As in out of a job. And ready to sing."
(ii) Message 29297: "Judging from what I know from confidential documents, I would rate these guys as toast."
(iv) Message 29327: "Dr. Cliff-any further information to the SEC would be duplication:)"
d. From on or about June 1, 2002 and continuing through the present, defendants HOHENHOUSE, MAUCK, WILDING, SHAHSAVAR, KIRK, and JOHN DOES#1 through 15 each aided and abetted the other as they transmitted electronic messages in furtherance of their fraudulent and extortionate schemes in interstate commerce via the internet from diverse points in the United States and to the Western District of Arkansas. The majority of such messages were sent to "ragingbull.com."
f. On June 15, 2002, the defendant HOHENHOUSE, aided and abetted by all other defendants, transmitted an extortionate message via "ragingbull.com" on the GECC message board as post 6429 in which she apparently directs a message to Plaintiff's employee Jim Bolt, demanding that the Company file a SEC Form 8-K verifying her claims as to Mr. Bolt's purported criminal history. In her electronic message is the following words and figures:
"MESSAGE TO JIM W. BOLT Sir your game is up. I received information today that absolutely proves, that at the very least, this company better file an 8-K disclosing your not so reputable past. In the interest of potential investors, I am extending you the courtesy of giving you until Tuesday to have this 8-K filed. If you have and doubts about the validity of my claims, let me give you a small hint. 5-31-51, 431-06-****"
g. On June 17, 2002, the defendant HOHENHOUSE, aided and abetted by all other defendants, transmitted the following message via "ragingbull.com" on the GECC message board as post 8485 in which she stated:
"JAMES W. BOLT. You are a Convicted Felon...why
don't you just admit it."
h. On July 2, 2002, the defendant HOHENHOUSE, aided and abetted by all other defendants, transmitted the following message via "ragingbull.com" on the GECC message board as post 16807 in which she stated:
"myopic, that is only the tip of the iceberg for their problems. Good work though...have heard rumors that Bolt filed personal bankruptsy (sic)...have not confirmed it yet though. Tell you the truth I forgot about it until you posted about Robinson. Will see what I can find. Seems to be some interesting connections starting to develop in Kansas also."
(i) In June 2002, defendant HOHENHOUSE claimed in a "ragingbull.com" posting to have e-mailed adverse information about the Plaintiff to a list of 55,000 e-mail recipients.
Racketeering Predicate Act Two
(Extortion)
81. The defendants MAUCK, HOHENHOUSE, SHAHSAVAR, WILDING, KIRK and JOHN DOES#1 through 15, and other members and associates of theirs including Mark S. Thetford and Robert Balfe, committed the following acts involving extortion, any one of which alone constitutes the commission of Racketeering Act Two.
A. Extortion Conspiracy
82. The allegations contained in paragraphs 1 through
80 are realleged and incorporated as if fully set forth herein.
83. From on or about and between June 1, 2002 and continuing through the present, both dates being approximate and inclusive, the defendants HOHENHOUSE, MAUCK, KIRK, WILDING, SHAHSAVAR, JOHN DOES# 1 through 15 and others, including affiliates and associates of theirs, did knowingly and intentionally conspire to obstruct, delay and affect commerce, and the movement of articles and commodities in commerce, by extortion, as that term is defined in Title 18, United States Code, Sections 1951(a), (b)(2), 2 and 3, in that the defendants and others conspired to obtain, through extortionate demands, property, to wit, stock, with the consent of the owner of such stock, which consent was to be induced by the wrongful use of actual and threatened force, violence and/or fear.
B. Extortion
84. The allegations contained in paragraphs 1 through
83 are realleged and incorporated as if fully set forth herein.
85. From on or about and between June 1, 2002 and the present, both dates being approximate and inclusive, the defendants HOHENHOUSE, MAUCK, SHAHSAVAR, WILDING, KIRK and JOHN DOES#1 through 15, and others, did knowingly and intentionally obstruct, interfere with, delay and affect commerce, and the movement of articles and commodities in commerce, by extortion, as that term is defined in Title 18, United States Code, Sections 1951(a),(b)(2), 2 and 3 in that the defendants and others attempted to obtain, through extortionate demands, property, to wit, stock, through an unlawful demand for the consent of the owner of such stock, which consent was to be induced by the wrongful use of actual and threatened force, violence and/or fear.
Racketeering Predicate Act Three
(Extortion Conspiracy)
86. The allegations contained in paragraphs 1 through
84 are realleged and incorporated as if fully set forth herein.
87. From on or about and between June 1, 2002 and continuing through the present, both dates being approximate and inclusive, the defendants HOHENHOUSE, WILDING, MAUCK, KIRK, SHAHSAVAR and JOHN DOES#1 through 15 and others, did knowingly and intentionally conspire to obstruct, delay and affect, commerce, and the movement of articles and commodities in commerce, by extortion, as that term is defined in Title 18, United States Code, Section 1951(b)(2), in that the defendants and others conspired to obtain, through extortionate demands, property, to wit, stock, with the consent of the owner of such stock, which consent was to be induced by the wrongful use of actual and threatened force, violence and fear. (Title 18, United States Code, Sections 1951(a), 2 and 3.).
Racketeering Predicate Act Four
Wire Fraud
88. The allegations contained in paragraphs 1 through
87 are realleged and incorporated as if fully set forth herein.
89. From on or about June 1, 2002 and continuing through the present, both dates being inclusive, the defendants devised and intended to devise a common scheme to defraud the Plaintiff of marketable securities in the form of common stock through various acts of extortion and market manipulation which was done for extortionate means. In furtherance thereof, and in order to facilitate their interpersonal communication and to communicate with Robert Balfe, Mark S. Thetford, David L. Goodman, Jeffrey Wood and others, the defendants MAUCK, HOHENHOUSE, WILDING, KIRK, SHAHSAVAR, and JOHN DOES#1 through 15 would and did periodically utilize avenues of interstate wire communication, both oral, internet and telefacsimile, place telephone calls and transmit electronic messages from various telephone numbers in Texas to telephone numbers in Arkansas and Oklahoma, and between themselves in Georgia, New York, Texas, Florida, Canada and elsewhere, all in violation of Title 18, United States Code, Sections 1343, 2 and 3.
90. Plaintiff has been injured in business and property as the result of the foregoing conduct and demand is made for treble actual damages and for punitive damages to be determined at trial. Plaintiff demands trial by jury.
GOLF ENTERTAINMENT, INC., PLAINTIFF:
by:__________________________________
John C. Dodge, Attorney at Law
Ark. Bar No. 78041
1008 S. Clayton St.
Springdale, AR 72764
479-751-2300
479-751-2273 (fax) |
