To: Charles L. Solomont, Esq., Bin who wrote (12534 ) 12/13/1998 4:20:00 AM From: PartyTime Read Replies (3) | Respond to of 19331
This bears repeating: V. THE DEFENDANTS' USE OF THE INTERNET TO DEFAME THE ZWEBNERS AND MANIPULATE STOCKS The Internet 18. The “Internet” is a global array of computer networks accessible all over the world. 19. Use of the Internet as a conduit of information has exploded as more and more people have signed up as Internet users. There are now many millions of Internet users worldwide. The Internet has become a social and commercial force of immense importance, where information can be immediately posted and relayed throughout the commercial world. 20. Throughout the Internet, there are dozens of “stock talk” bulletin boards, news groups, and chat rooms. Included among these is the “Silicon Investor,” the Web address of which is http: www.techstocks.com/investor/main. 21. Individuals have posted hundreds of thousands of messages to these bulletin boards. There are more than three so-called threads or posts regarding DCI on Silicon Investor bulletin boards. These threads are accessed by the home name “DCTC.” These posts are read by people around the globe. Silicon Investor, whose bulletin boards include one or more for DCI, receives between 2.5 and 4 million hits per day on its site. 22. People who post on bulletin boards (once they register with Silicon Investor) are not required to disclose their real identities or whether the information they are disseminating is accurate. They may thus hide behind a shield of anonymity believing they can fabricate and intimidate with no risk of repercussions. The Defendants' Scheme to Defame the Zwebners and Manipulate Stock Prices 23. Using their aliases, “bgtit”, “Spider Valdez”, and “Rico Staris,” defendants Dumont, Doe I and Doe II, acting in concert with other Doe defendants attempting to manipulate the stock of DCI, posted false and defamatory information about the Zwebners on Silicon Investor Internet chat lines. 24. The defendants went so far as to create a new chat line called “No Bash for Legacy” for the specific purpose of ridiculing the plaintiff, Michael Zwebner and his brother, Charles Zwebner, and the public company of which the Zwebners are directors and officers. 25. The defendants deliberately copied and posted defamatory and false information regarding Michael Zwebner and his brother Charles on an Internet interactive board established for public discussion about another company, Airstar Technologies, Inc. (“ASTG”), knowing full well that the Zwebners were attempting to acquire this company. The defendants' dissemination of false and defamatory information misled ASTG directors and shareholders and caused the Zwebners to abandon the proposed acquisition. 26. The defendants either knew the statements they posted on the Silicon Investor chat lines regarding the Zwebners to be false or otherwise made them with reckless disregard as to the truth of the information and with the intent to harm the Zwebners and influence the prices of publicly traded stocks. 27. For many months the management of DCI has been attempting to secure institutional investors and/or a purchaser of the Company. For some time, DCI has thus been the subject of merger and acquisition rumors. 28. In order to maximize the value of the Company and hence the amount potential suitors would pay for DCI, the current management and insider shareholders of DCI have been trying to make the Company appear to be financially healthy and to have the potential for high profits. 29. For most of the past six months, the Company and its stock have not performed well. 30. On information and belief, the defendants, acting in concert with DCI insiders, have been attempting to divert attention away from the Company's poor performance by blaming fictitious outside forces for causing indicia of poor corporate performance, such as, among other things, depressed stock prices. 31. To this end, the defendants have been disseminating lies over the Internet, falsely accusing the Zwebners of, among other things, short selling DCI stock and otherwise manipulating DCI stock prices. 32. In truth, it is defendants, and those DCI insiders acting in concert with them, that are manipulating DCI stock prices by employing falsehood and deceit in an effort to deceive investors into believing that the Zwebners and others are to blame for the stock's poor performance. The defendants have sought to deceive investors and potential suitors into believing that the Company is not performing as poorly as corporate indicators suggest, but that rather the Zwebners are somehow distorting the true financial picture of the Company through purported sales of “invalid stock” and manipulation of stock prices. Irrespective of the defendants' motive and purpose in disseminating this information, these remarks that the defendants have widely and maliciously published over the Internet are absolutely false and defamatory. 33. The Zwebners have repeatedly notified defendants through the Internet and otherwise that the information they are disseminating is false. Defendants nevertheless persist in smearing the Zwebners' names and reputations, for their own commercial purposes, through the publication of malicious falsehoods and innuendo over the Internet. Lies Perpetrated by Defendant Dean Dumont a/k/a “bgtit” 34. On August 3, 1998, defendant Dumont intentionally made false statements regarding the sale of DCI stock by Michael Zwebner and his brother, Charles. Using the alias “bgtit”, Dumont posted on the Silicon Investor that the Zwebners had “illegally sold” their shares and that “ball is already rolling” on “an investigation by the NASD in the S.E.C.” These statements were false. No shares of DCI stock had been sold illegally by the Zwebners and there has never been any governmental “investigation” of the sale of DCI stock by either Michael or Charles Zwebner. 35. Later that same day, using the alias “bgtit”, defendant Dumont again posted that the Zwebners were selling DCI stock illegally, falsely stating that the Zwebners “were committing a few illegal acts and fraud is just one of them.” This statement is false. The Zwebners' sale of DCI securities was not illegal. They committed no fraud or other wrongdoing. 36. A few days later, on August 6, 1998, defendant Dumont posted a message falsely accusing Charles Zwebner of previously denying that he and other former Cardcall shareholders had ever sold any of their DCI stock and insinuating that Mr. Zwebner's purported efforts to conceal his sale of DCI stock evidenced some impropriety in the sale. Using the alias “bgtit”, defendant Dumont claimed that “Mr. Zwebner stated in his last post that [Cardcall share]holders weren't selling [DCI] shares.” This statement was false. In fact, neither Charles nor Michael Zwebner has ever posted a message on the Internet claiming that the former shareholders of Cardcall were not selling any shares of their DCI stock. Indeed, Charles Zwebner had made official filings with the SEC which are publicly disclosed, so declaring his sales of shares. 37. Most recently, defendant Dumont, continuing to use the alias “bgtit”, disseminated false information purporting that Michael Zwebner has violated the law by not making required Securities Exchange Commission (“SEC”) filings. On December 6, 1998, for example, defendant Dumont falsely posted on the Internet a message accusing Mr. Zwebner of having said he was “up to date in all filings and [yet did] not hav[e] them done.” That day Mr. Dumont also again falsely insinuated in an Internet message that Mr. Zwebner had not made required filings: “Is there something in LGCY you are failing to disclose. Like not filing an 8K for the assumption of the Board of Directors. The 8K for the $10 million deal for the real estate . . . S.E.C. and the NASD frown upon those tactics.” In that same posting, Mr. Dumont proceeded to frame additional false statements within questions: “How did you and yours manage to gain control of a public company without [sic] shareholder consent? Why is there NO FILINGS MR. ZWEBNER, what are hiding? . . . You have not filed any of the appropriate paperwork.” 38. Two days later, on December 5, 1998, “bgtit” continued his onslaught of fabrication: “Mr. Zwebner in his own words, and several other times . . . has stated that he is up to date on his filings, yet there are no filings.” 39. All of these statements are false. Michael Zwebner has made all of the regulatory filings required of him. False Statements Made By Defendant John Doe I a/k/a “Spider Valdez” 40. On October 19, 1998, defendant John Doe I, in concert with “defendant John Doe II, using the aliases “Spider Valdez” and “Rico Staris,” posted a message on a Silicon Investor chat line falsely accusing the Zwebners of having “shorted invalid stock” and having financed [LGCY, the public company for which Michael Zwebner currently serves as chairman] in a questionable manner.” 41. Two days later, on October 20, 1998, so-called “Spider Valdez” elaborated that his fabrication as to the Zwebners' “selling invalid stock short” was in reference to stock they owned in DCI. The defendant referred to the “short position at [DCI] that is backed by invalid stock and zwebner brothers.” These statements are all false. Neither Michael nor Charles Zwebner have ever sold invalid stock short. 42. On October 24, 1998 defendant Doe I a/k/a “Spider Valdez” falsely informed the Internet world that the plaintiff was in trouble with the SEC and the FBI in connection with their “deeds” concerning DCI stock: “i look at [DCI] squeeze and deeds of Zwebners. sec and fbi have matters in hand.” 43. In truth, there has been absolutely no investigation by the FBI or SEC concerning actions of the Zwebners related to DCI stock.