News for 'ADOT' - (Trading Harsh Words: Ex-VP's Postings Lead to Lawsuit)
ALBUQUERQUE, N.M., Feb 28, 2005 (Albuquerque Journal - Knight
Ridder/Tribune
Business News via COMTEX) -- A city penny stock company and one of its
former
vice presidents are locked in a legal battle over what can -- and
cannot -- be
said on the Internet.
Advanced Optics Electronics is suing Susan Blumenthal, a former vice
president
for communications for subsidiary company Biomoda, for $13.5 million. The
suit
claims she has posted false accusations online that have hurt business and
ADOT's stock price.
Founded in 1996, the business says it is developing large flat-panel
displays
for outdoor signs and other applications. It has yet to complete a
commercial
installation of the technology.
Blumenthal, a freelance writer living in Placitas, has countersued ADOT
and
Biomoda for an unspecified sum, alleging the companies and their
attorneys'
"frivolous and malicious" lawsuits have damaged her reputation and cost
her time
and money.
She claims her comments are protected under the First Amendment.
1,200 posts The ADOT suit in Albuquerque's Second Judicial District Court
said
that between July 2003 and November 2004, Blumenthal made more than 1,200
anonymous posts to www.RagingBull.com, an online forum where posters
discuss the
performance of various company stocks.
The suit said her posts contained numerous false allegations of stock
fraud
involving ADOT, Biomoda and company executives. The suit said she has
accused
the company of operating a so-called "pump and dump" stock scheme and of
issuing
fake press releases.
It said Blumenthal's "public campaign to purposely harm ADOT and Biomoda
and
their respective shareholders" has had a negative effect on the company's
stock.
The suit said Biomoda is in the final stages of an initial public
offering, and
"is concerned about its ability to raise investment funds in light of the
attacks."
ADOT has a $600,000 investment, or about a 35 percent ownership share, in
Biomoda, which is working to commercialize lung cancer detection
technology
developed at Los Alamos National Laboratories. The two firms share
executive
officers and office space in Albuquerque.
Blumenthal said she observed a six-month moratorium on speaking about the
company after reaching a 2003 settlement regarding unpaid wages, and that
she
never directly alleged wrongdoing by the company or its officers as other
posters to the online forum Raging Bull have done.
"I just posted press releases and (Securities and Exchange Commission)
filings
so investors would have information so they could make the right
decision," she
said.
For example, when the company would issue a news release saying it was
close to
releasing a product, she would post previous company news releases saying
the
same thing but going back years.
Charles Armgardt, an attorney for ADOT and Biomoda, contends her
statements
about the company exceed the bounds of the First Amendment.
"As Oliver Wendell Holmes once said, the right of free speech does not
mean one
can falsely shout fire in a crowded theater or commit libel and slander,"
he
said. "In our society, speech has to be delivered lawfully."
CEO keeps quiet ADOT CEO Leslie Robins declined comment for this story but
did
say his company was on track for completing its first commercial billboard
contract early this tear.
In 2000, Robins told the Journal ADOT had finished the prototype board and
had
six orders on the books.
The ADOT suit alleges that Blumenthal's postings led to others posting
death
threats to company officials.
For instance, the suit cites one posting on March 25(2004) in which a
poster
using the moniker "inkogkneeetoe" wrote that company executives "will
taste the
anthrax."
The suit said Blumenthal encouraged the threatening posts, in one case
asking
for inkogkneeetoe's e-mail address "apparently so she could provide the
whereabouts of ADOT management."
Blumenthal says she only asked for the poster's e-mail in case the poster
wanted
to participate in a class-action lawsuit, should one be filed against the
company, and that some of her comments were taken out of context to
suggest
encouragement.
The legal issues surrounding what people can say in chat rooms and
bulletin
boards are still relatively new.
Judges in past lawsuits against so-called "cybersmearing" have largely
ruled in
favor of maintaining the anonymity of Internet posters, and many such
cases have
been dismissed. But one company CEO involved in a recent Miami case
against a
Raging Bull poster has managed to track down the identities and reach
settlements with four cybersmearers, according to Law.com, an online
clearinghouse of legal information and journalism.
New frontier "This bulletin board type stuff is relatively new in the
financial
reporting markets," said Richard Follingstad, CEO and chief investor for
Marketspace Financial. "So there is no past litigation to create some type
of
guideline on defamation of character."
Most sophisticated investors ignore such Internet chatter, he said.
Blumenthal posted on Raging Bull under the alias "athena_sword."
She said she told another Raging Bull poster her real identity, and the
poster
then revealed it to others on the bulletin board.
Blumenthal's screen name and posts were removed by Raging Bull in January.
She writes an online blog in which she chronicles the ongoing lawsuits and
company activities.
"It would be easier to print a retraction on Raging Bull and have it all
go
away," she says. "But as Americans, we have a responsibility to alert
people to
situations we think may not be right, and they can make their own
decisions.
I've done this for the public interest."
By Andrew Webb
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go
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(c) 2005, Albuquerque Journal. Distributed by Knight Ridder/Tribune
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