FROM WALL STREET JOURNAL 21 SEPT 1998
Stock promoter Sotnikow pleads guilty to fraud in Systems of
Excellence Case
"A New York promoter pleaded guilty on Friday to securities fraud charges and agreed to settle a civil suit stemming from her role in marketing shares of the now defunct Systems of Excellence.
Michelle Sotnikow,33 years old,is the sixth person to plead guilty in the continuing probe of Systems of Excellence,a video-conferencing company based in McLean,Va. and Coral Gables,Fl.
While orthers in the case drew prison sentences,a U.S. district judge sentenced Ms. Sotnikow to 3 years of probation aaand barred her from the securities industry in exchange for her guilty plea. Ms.Sotnikow also settled with the Securities and Exchange Commission without admitting or denying allegations that she manipulated the market for Systems of Excellence stock.
Under the sttlement,Ms. Slotnikow agreed to be barred from participating in any penny-stock offering and to disgorge profits she received from the sale of Systems of Excellence stock,estimated at nearly $475ooo. Regulators estimate she will only be able to pay about $110,000.,in cash,however.
Ms.Slotnikow regrets the error she made,and she looks forward to rebuilding her life,said Michael S. Cohen,an attorney for Ms. Slotnikow. He added that the judge's mild sentence was fair based upon the circumstances of the case'
Systems of Excellence,which traded over the counter under the SEXI symbol,was a classic pump and dump scheme with a high tech twist,being the first to boost itself with glowing articles on the Internet.
At iots height,on line hype,pushed Systems of Excellence stock to $5 per share,resulting in a market capitalization of nearly $250 million for a company that was nearly wothless,according to regulators.
This has been described as the poster child of microcap fraud,said Kenneth Lench , a branch chief with the SEC's enforcement division in Washington,D.C.
According to regulators, System of Excellence insiders pumped the stock price up by circulating press releases,promiasing lucrative,
pending contracts,and provided stock to an internet publisher in exchange for his promotion.
People thought they were getting impartial investment advice,but the company was paying the publisher,and he didn't disclose that,according to SEC attorney Erik Werner.
Ms. Slotnikow's role was fairly minor. The SEC alledged that in exchange for 600,000 shares of stock in the company,she introduced its the Chairman and Chief Executive Officer,Charles Huttoe,to New York Stockbrokers.
Huttoe would basically bribe the brokers to push the stock,and was the first to plead guilty in the case. Mr. Werner. Mr. Huttoe was sentenced to a four year prison term in 1997 on charges of fraud and money laundering.
Merle Finkel,former auditor for Systems of Excellence;Barclay Davis,a Las Vegas penny-stock promoter,and Theodore Melcher,a Tennessee publisher who touted the stock over the Internet in exchange for shares,previously pleaded guilty in connection with the case.
Sheldon Kraft,a former stock broker and partnet of Ms.Slotnikow,also has pleaded guilty. Regulators allege Mr. Kraft and Ms. Slotnikow formed International Communications to promote stocks in exchange for receiving shares in the issues.
As a result of Ms. Slotnikow's introductions,the SEC said,Mr. Huttoe struck deals with two firms,Wall Street Management Group aand J.S. Securities. Jeffrey Szur,and his mother,Elaine Szur,were recently convicted in New York,on unrelated charges,according to SEC attorneys. Wall Street Management Group hasn't breen charged in connection with the Systems of Excellence case.
I AM SURE THIS SAGA WILL CONTINUE
|
