****OT****
Some may be interested in reading this news article. For those who don't want to read it, please don't. Does this have any effect on some of those posting on the MRPS thread? More than likely it doesn't, but just remember that the SEC in the future is going to be more vigilant in monitoring threads. Those who are pumping up a stock might need to be watchful. This was not meant for you, dowen, I just clicked on the last post. LOL
Arrest Made in Internet Stock Hoax
By EDWARD WYATT
25-year-old computer engineer employed by Pairgain Technologies Inc. was arrested Thursday in North Carolina and charged with securities fraud in connection with the posting of a fake announcement on the Internet last week about a takeover of the company.
The swift tracing of the suspected origin of the Internet posting, which sent Pairgain's stock up more than 30 percent in heavy trading before the false takeover report was debunked, demonstrates once again how difficult it is to venture into cyberspace without leaving footprints.
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Related Article
FBI Arrests Man Charged With Posting Fake News Report
(April 15, 1999)
Fake Internet News Account Sends a Stock Price Soaring
(April 8, 1999)
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Gary Dale Hoke, who has worked at Pairgain's engineering development operation in Raleigh, N.C., since January 1997, was arrested at his home in Raleigh on Thursday morning on federal securities-fraud charges.
After an appearance before a federal magistrate in North Carolina, he was released on a $50,000 unsecured bond. He agreed to appear at a future date in court in Los Angeles, where the charges were filed against him late Wednesday. Pairgain, a telecommunications equipment maker, is based in Tustin, Calif., southeast of Los Angeles in Orange County.
Samuel Currin, an attorney representing Hoke, declined to comment on the veracity of the charges. "Obviously these are very serious allegations, and we're going to look very carefully at them," Currin said. Hoke could not be reached. Securities fraud carries a maximum penalty of 10 years in prison and a $1 million fine.
According to the federal complaint, Hoke used an account at Angelfire, a service that allows people to create their own pages on the World Wide Web, to post a fake news article on April 7 reporting that Pairgain had agreed to be taken over by ECI Telecom Ltd., an Israeli company.
After posting the fake article, which was designed to look like a page from the Web site of Bloomberg News, Hoke placed a message on an investment bulletin board operated by Yahoo alerting other investors to the "news" and providing an electronic link to the Angelfire site.
The complaint does not specifically contend that Hoke traded in Pairgain stock on April 7, when the false article caused the company's shares to soar as high as $11.125, up from $8.50 the previous day. The shares closed that day at $9.375, up 10 percent.
According to an affidavit filed in U.S. District Court in Los Angeles by Craig Shackleford, a special agent of the FBI, Hoke has used online brokerage accounts at ETrade and Ameritrade to buy and sell stocks, trading in Pairgain shares as recently as January.
The Angelfire and Yahoo accounts used by Hoke employed fake identities, according to the affidavit. But investigators were able to trace Hoke's activities via the Internet protocol addresses of the computers used to create and post the Angelfire and Yahoo messages, investigators said.
Every computer linked to the Internet can be identified through a unique code known as an Internet protocol address, which can be used to trace the origin of a message or connection.
Investigators said Hoke used computers at Pairgain, at his home and at Accipiter Inc., a Raleigh, N.C., company where Hoke also worked, to gain access to the Angelfire and Yahoo accounts and post the Internet messages.
Charles McBrayer, Pairgain's chief financial officer, said in an interview that Hoke was "a midlevel engineer" in the Raleigh facility, which employs about 70 people and is Pairgain's largest operation outside Tustin. He has been suspended without pay, McBrayer said.
As a midlevel engineer, Hoke would have had "a modest amount" of Pairgain stock options, McBrayer said. But he said he was not aware whether Hoke had exercised any options.
"To our knowledge, he is the only one involved" in the fraud, McBrayer said. Christopher Painter, an assistant U.S. attorney in Los Angeles, said federal officials were still investigating the incident.
The case demonstrates that some Internet sites are subject to abuse by people posing under false identities, in part because the sites do little to police who is setting up accounts. The Angelfire account used by Hoke, for example, was set up under the name "News Headlines," an unlikely name for an individual. An e-mail account set up with Hotmail, a free e-mail provider, used the same name.
The message posted on the Yahoo bulletin board supposedly came from Stacey Lawson of Knoxville, Tenn., who in signing up for the Yahoo account claimed to be a 32-year-old information technology manager who liked tennis, dancing and water sports. In fact, the complaint said, that, too, was Hoke |
