Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Advanced Engine Technologies (AENG) -- Ignore unavailable to you. Want to Upgrade?

To: Harry J. Finn who wrote (1025)	6/29/1998 11:29:00 AM
From: Sir Auric Goldfinger	Read Replies (1) \| Respond to of 3383

Today's lesson for newbies, Sham press releases and scumbag marketeers: "Some 20 months after Barron's exposed a stock scam involving an over-the-counter company called Novatek International, the Securities and Exchange Commission has brought fraud charges against the company (now called Medical Diagnostic Products) and its two controlling shareholders, William Trainor and Vincent D. Celentano. The shenanigans of Trainor and Celentano ("False Positives," October 14, 1996) led the National Association of Securities Dealers to halt trading in Novatek. The company then filed for protection under the federal bankruptcy code, and has all but ceased to exist thereafter, other than as an object of investigation and litigation. The SEC investigation proved time-consuming. "We felt that we could take our time and build a strong case against Trainor and Celentano and other defendants because the trading halt meant that the public couldn't be further defrauded," Todd L. Cranford, a senior counsel at the SEC says. "It proved to be an extremely difficult probe that involved coordinating our efforts with authorities all over South America." Indeed, those merry pranksters Trainor and Celentano led Novatek shareholders and later investigators on an elaborate chase involving sham transactions and phony press releases. So effective was their campaign that, investigators say, from January to October 1996 they were able to drive up the market capitalization of Novatek from around $15 million to over $150 million. The company never made any money in its short corporate history as, first, a construction materials company, and later, after Trainor and Celentano got involved, a supposed marketer of diagnostic test kits for dread diseases like HIV and cholera. The press releases, recounted in the 27-page SEC complaint, seem as laughable today as they did to Barron's two years ago. In one, Novatek claimed to have reached an agreement with a Brazilian government entity to ship HIV blood-testing kits that would produce "revenues exceeding $35 million in the first year and expanding thereafter." A month later, the name of the Argentine province Mendoza with which Novatek had purportedly reached another big medical kit contract was misspelled in the release. In all, according to the SEC, Novatek claimed some $400 million in contracts. The contracts were all fraudulent and no kits were ever shipped. In the complaint, the SEC claims that Trainor, Celentano and their families had access to more than $25 million as a result of the Novatek scheme, before the NASD and SEC cut off the spigot with the trading halt. The Trainor family proved particularly piggy at the trough. The SEC says it traced more than $4.5 million from a Novatek entity in $1.2 million chunks to Trainor daughters Diane and Karen Losordo and son Daniel. Trainor's wife Geraldine, known for her flaming red hair, got around $475,000, according to the SEC complaint, as did Celentano's wife, Mary. All were also named defendants in the SEC action. Among other things, the agency wants the Trainors and Celentanos to disgorge all their ill-gotten gains in the Novatek affair, along with seeking various injunctive relief. Given the number of statute violations alleged in the complaint, the additional civil penalties could be high -- if, that is, the government can find the funds of Trainor and Celentano, which have reportedly moved offshore." Notice the similarities? Now, "Haaaaareeee" as the girls in the New York City prison used to yell at the passersby, for today's lesson report back on the obvious similarities of AENG and Novatek.