"FindEx.com was trading at $17 a share before Elgindy posted his analysis of the stock’s value: “pure shit…very strong smell.” Two weeks later, it was trading at $6 a share.
voxpopnet.net
What dopes. Findex was a stock rig by Lionel Reifler loon. He just got out of prison for securities fraud .
1. LIONEL REIFLER 38260-019 68 White M 07-27-2007 RELEASED
bop.gov
Take the case of FindEx.com Inc., which last month bought a shell company called Reagan Holdings Inc. FindEx.com is an Omaha, Neb., online supplier of business and financial and religious information. In announcing the Reagan purchase, FindEx.com said that buying the shell gave it "fully reporting" status that it didn't have before.
But investors might have been better served if FindEx.com had reported more about itself. Investors started digging into FindEx.com in May of last year after the company's stock price soared (it is currently at about $6). Internet stocktraders found on a news-release service a FindEx release dated May 17, 1999, announcing a new president and chief executive, Joe Szczepaniak.
A contact phone number for Mr. Szczepaniak led not to Nebraska but to the Florida offices of Lionel REIFLER and Yanni Koutsoubos.
Mr. REIFLER, according to SEC records, has three SEC civil injunctive actions against him enjoining him from future violations of securities laws, and a 1989 stock-fraud conviction. In a 1999 phone interview, Mr. REIFLER strongly denied having any connection to FindEx.
Mr. Koutsoubos, in a phone interview last year, said he worked for a firm that owned FindEx shares. He acknowledged having been sued by the SEC but couldn't recall the details. SEC records show that the only case involving a Koutsoubos in the past 20-plus years ended with the person, identified as Ioannis Koutsoubos, being enjoined in the early 1990s from future violations of securities laws in connection with an alleged illegal stock-sale scheme. A federal court in San Antonio in a civil-lawsuit judgment concluded that a Yanni Koutsoubos also goes by the first name Ioannis, but Mr. Koutsoubos in the interview denied being Ioannis.
Also during a phone interview last year, FindEx's Mr. Szczepaniak said he knew Mr. Koutsoubos and had met Mr. REIFLER but that he didn't think either had a role at the company. As for their phone number in the release, Mr. Szczepaniak said he met that day with his FindEx predecessor at Mr. Koutsoubos's office. He added that he didn't know why the meeting was held there and said that Mr. Koutsoubos didn't attend. Messrs. Szczepaniak, Koutsoubos and REIFLER didn't return phone calls seeking comment for this article.
Shell Companies on OTC Market
Attract Attention of Regulators
By JOHN R. EMSHWILLER
Staff Reporter of THE WALL STREET JOURNAL
Cleaning up the market for very-small stocks has once again proved as frustrating as weeding dandelions.
Recent moves by some companies on the scandal-scarred OTC Bulletin Board, where some of the tiniest non-Nasdaq stocks are listed, have drawn a sharp reaction from the Securities and Exchange Commission.
Dozens of small companies -- including some with possible connections to stock swindlers -- have found a way to perhaps get around the new rules that are designed to delist from the Bulletin Board any that don't make enough financial disclosures. How? The companies are simply buying up dormant shell companies that technically meet the new reporting status.
Presto: The clever companies can argue they are in compliance with the rules, and thus can stay on the Bulletin Board. One regulator calls it a "loophole" in federal securities laws to get around the new listing requirements.
"We are very concerned," says Richard K. Wulff, chief of the SEC's office of small business. He and other SEC officials say they fear that some companies are using their shell purchases as a way to put off reporting vital corporate information for months -- thus frustrating the very aim of the Bulletin Board reforms. Mr. Wulff said such reporting gaps would be "outrageous."
The Bulletin Board is operated by the National Association of Securities Dealers, but is separate from the NASD's Nasdaq Stock Market, which has higher requirements. Most of the 6,000 stocks on the Bulletin Board aren't of a questionable nature, of course. But there have been problems with many of the stocks there, and officials estimate that by June they will weed out about half the companies there for failing to meet the new reporting-status requirements.
The issue comes as Bulletin Board companies have drawn the interest of online traders, which has produced huge volume and volatility in many stocks and helped set the stage for some major stock frauds, according to law-enforcement officials.
The shell boomlet caught regulators by surprise, says Lisa Roberts, the NASD's director of Nasdaq listing qualifications. She estimates that several dozen Bulletin Board companies have already taken this route.
Earlier this month, the SEC sent the NASD a letter about what it called this "back door" registration procedure. The SEC said shell purchasers would have to file audited financial statements with the commission within 15 days of using this method to claim reporting status.
There is a reason, clearly, that regulators want small companies to disclose more about themselves.
Take the case of FindEx.com Inc., which last month bought a shell company called Reagan Holdings Inc. FindEx.com is an Omaha, Neb., online supplier of business and financial and religious information. In announcing the Reagan purchase, FindEx.com said that buying the shell gave it "fully reporting" status that it didn't have before.
But investors might have been better served if FindEx.com had reported more about itself. Investors started digging into FindEx.com in May of last year after the company's stock price soared (it is currently at about $6). Internet stocktraders found on a news-release service a FindEx release dated May 17, 1999, announcing a new president and chief executive, Joe Szczepaniak.
A contact phone number for Mr. Szczepaniak led not to Nebraska but to the Florida offices of Lionel REIFLER and Yanni Koutsoubos.
Mr. REIFLER, according to SEC records, has three SEC civil injunctive actions against him enjoining him from future violations of securities laws, and a 1989 stock-fraud conviction. In a 1999 phone interview, Mr. REIFLER strongly denied having any connection to FindEx.
Mr. Koutsoubos, in a phone interview last year, said he worked for a firm that owned FindEx shares. He acknowledged having been sued by the SEC but couldn't recall the details. SEC records show that the only case involving a Koutsoubos in the past 20-plus years ended with the person, identified as Ioannis Koutsoubos, being enjoined in the early 1990s from future violations of securities laws in connection with an alleged illegal stock-sale scheme. A federal court in San Antonio in a civil-lawsuit judgment concluded that a Yanni Koutsoubos also goes by the first name Ioannis, but Mr. Koutsoubos in the interview denied being Ioannis.
Also during a phone interview last year, FindEx's Mr. Szczepaniak said he knew Mr. Koutsoubos and had met Mr. REIFLER but that he didn't think either had a role at the company. As for their phone number in the release, Mr. Szczepaniak said he met that day with his FindEx predecessor at Mr. Koutsoubos's office. He added that he didn't know why the meeting was held there and said that Mr. Koutsoubos didn't attend. Messrs. Szczepaniak, Koutsoubos and REIFLER didn't return phone calls seeking comment for this article.
The new shell games at Bulletin Board firms started after the SEC and the NASD began moving to toughen the requirements for being listed on the Bulletin Board. Last year, regulators began requiring that all companies wishing to retain their listing would have to become "reporting" firms. This meant the companies would have to begin filing periodic financial statements and other reports with the SEC or other appropriate agencies -- a practice long required of companies on Nasdaq and on the New York Stock Exchange. NASD officials set staggered deadlines under which each of the Bulletin Board companies would have to be fully reporting.
NASD officials say hundreds of companies have already been removed. (Companies that are dropped are still publicly traded, usually in the so-called Pink Sheets, but investors could have a harder time getting stock-price quotations.)
Many of the dropped companies haven't been able to get their initial registration statement, which includes detailed financial information, cleared quickly enough by the SEC because of agency questions about the accuracy or adequacy of the filing.
PayForView.com Corp.'s choice of the shell route was a matter of "purely timing," says Marc Pitcher, president of New York Internet distributor of entertainment events. "We were approaching zero hour of being dropped to the Pink Sheets," says Mr. Pitcher, adding that his firm plans to promptly and regularly file with the SEC all necessary financial information.
This new source of demand has "made it more of a seller's market for shells," says Louis Taubman, a New York lawyer and part of a group that recently created and sold three shells to Bulletin Board companies.
Write to John R. Emshwiller at john.emshwiller@wsj.com
(Voluntary Disclosure: Position- No Position)
Market place: Corporate wrongdoers often are repeat offenders
Wednesday, March 13, 2002
By FLOYD NORRIS, New York Times News Service
NEW YORK — As securities fraud cases go, the crime that LIONEL REIFLER admitted to on Tuesday was not particularly extraordinary. He pleaded guilty to conspiring to rig the price of a stock traded on the over-the-counter bulletin board.
The stock in question was one few have ever heard of, FinancialWeb.com Inc. Back in the happy days of early 2000, when it was possible to sell almost anything with a connection to the Internet, shares in that company, which operated a financial web site, sold for as much as $10.44 a share. On Tuesday, the price was one-tenth of a cent, and the Web site was nowhere to be found.
Had federal investigators not managed to record a couple of telephone conversations in which several people discussed a plan to drive the stock up so that one shareholder could dump his stock, that rise and fall would probably have gone unnoticed by everyone save those who made and lost money in the case.
As it was, REIFLER on Tuesday became the fifth person to plead guilty to charges relating to that pump-and-dump scheme. A sixth defendant is expected to enter a plea soon.
His plea was entered before Judge Sidney H. Stein of U.S. District Court in a 23rd floor courtroom in the new federal courthouse in Manhattan. Had this reporter not attended the plea, there would have been no witnesses aside from those required to be present.
It may be no surprise that his family did not turn out. In addition to a charge of conspiracy to commit securities fraud, he pleaded guilty to two counts of credit card fraud. In those cases, he was charged with obtaining credit cards in the name of two of his daughters and running up bills he had no intention of paying.
What is remarkable about REIFLER, who will turn 63 later this month, is his long history. He has been in and out of trouble for various financial crimes for most of his adult life. This was his seventh conviction, but only two of his previous convictions caused him to be sent to prison. In each case, he served a little more than a year, said his lawyer, Martin Rafkin of Miami.
Over the years, REIFLER, a resident of Boca Raton, Fla., has been involved with savings and loan frauds, a phony mutual fund and even a brokerage firm that prosecutors said was tied to the Mafia. He has testified that he was once dangled out a seventh story window by mobsters upset about an unpaid debt.
In most of those cases, he does not appear to have been the organizer of the fraud. He was, rather, a guy you could call to get help if you needed to rig a stock or find a way to cash in some dubious or worthless securities.
"Every time I have been arrested resulted in a conviction," he told a lawyer for the Securities and Exchange Commission in 1993.
But while a bank robber caught that many times would probably have faced long sentences, REIFLER managed to have different convictions punished with concurrent sentences and had sentences reduced by his willing cooperation with the authorities.
That pattern began early in his career. In 1971, he willingly testified before a .Senate committee after he was convicted of conspiring to defraud an insurance company. It was there that he told his tale of being dangled outside a seventh-floor window of his Manhattan office. Reading the testimony now, he sounds like an earnest but naive man who may not have been especially honest but did not completely understand what he was getting into.
"We have heard a lot about suckers in these hearings," Sen. John L. McClellan of Arkansas said to him. "Are you pleading guilty to being a good sucker?"
"Yes I am, Senator" REIFLER replied. "One of the biggest."
Asked whether he had sought a ruling from the SEC that one dubious transaction was legal, he replied, "At that time I didn't even know what the SEC was."
These days, he knows what the SEC is, but it is not clear that he has paid much attention to it. The SEC has obtained three injunctions barring him from violating securities laws, but his career does not seem to have been affected by that.
Such white-collar recidivists are receiving attention these days. "I have only been back at the commission three months," Harvey L. Pitt, the SEC chairman, said in a speech last November, "but I am appalled by the number of repeat offenders we seem to confront at virtually every commission meeting." He said the commission hoped to see more criminal prosecutions.
On Tuesday, REIFLER declined to be interviewed after he entered his plea and was released on bail, with his sentencing set for June 28.
The Justice Department wants REIFLER to serve some real prison time after this conviction. Chris Clark, the assistant U.S. attorney who prosecuted REIFLER, said on Tuesday that he believed sentencing guidelines would call for him to be sentenced to 63 to 78 months in prison, but that in light of his long record the government would ask the judge to raise that to 90 to 105 months — that is, up to eight years and nine months.
Rafkin, who has represented REIFLER over the years in many of his brushes with the law, said he would dispute the prosecutor's assertion that investors lost more than $7 million and would seek a much lower penalty. |
