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To: Cameron who wrote (20970)	4/15/1999 2:45:00 PM
From: buffet	Respond to of 37507

**semi-OT*** PairGain Employee Is Arrested On Fraud Charge in Stock Case An INTERACTIVE JOURNAL News Roundup An employee of PairGain Technologies Inc. was arrested Thursday in North Carolina on federal charges of fabricating a news-service report and posting it on the Web, driving up the company's stock. The FBI arrested Gary Dale Hoke, 25, at his Raleigh, N.C., home on charges of securities fraud for allegedly disseminating false information about the company, whose stock is publicly traded, the U.S. attorney's office in Los Angeles said. Mr. Hoke was arraigned in North Carolina, ordered to report to California at an unspecified date and released on $50,000 bond, said Assistant U.S. Attorney Christopher Painter. The prosecutor described Mr. Hoke as a middle-level employee. Securities fraud is punishable by up to 10 years in federal prison and a $1 million fine. The PairGain hoax prompted substantial media and Wall Street attention last week, when it was discovered that someone had posted a bogus message on Yahoo! Inc.'s finance message board about a supposed buyout of the Tustin, Calif., maker of communications gear. Officials from PairGain and Web portal Lycos Inc. said last week that they were contacted last Thursday by U.S. Securities and Exchange Commission officials, a day after the scam that briefly sent PairGain's stock soaring 32%. In the hoax, Lycos's Angelfire Web-page service was used to post a Web page that copied the Web-page design of Bloomberg News for a news article that said PairGain would be acquired by an Israeli company, ECI Telecom, for $1.35 billion, or about twice its market value at the time. News of the fake buyout was spread via Internet message boards, causing the stock to rise, and wasn't exposed as a fraud for several hours. As soon as Lycos was informed of the fraud, the company removed the suspect Web page and secured whatever information it had about the person who posted it. Mr. Hoke was accused of creating the false report in a federal complaint filed late Wednesday in federal court and unsealed Thursday. The complaint charges that investors who paid the inflated price for PairGain were defrauded. The government complaint doesn't specifically allege that Mr. Hoke traded in PairGain stock on April 7, but an affidavit said Mr. Hoke has a history of using online-trading companies to purchase and sell securities, and he traded PairGain stock as recently as January. The complaint names one victim of the hoax, a Santa Ana, Calif., investor who purchased 1,500 shares of PairGain stock after learning of the report. According to prosecutors, Mr. Hoke also allegedly posted a bogus e-mail message about PairGain under the subject line "Buyout News" on a financial-news message board operated by Yahoo. The message contained a link to the bogus Bloomberg site. This week, Bloomberg LP filed a lawsuit over the hoax in U.S. District Court in New York City. The lawsuit identified the defendants only as John Does and sought unspecified damages.