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To: dennis1 who wrote (25792)	4/18/1999 8:40:00 AM
From: The Swordsman	Respond to of 44908

Just as an aside... Nice to know there are methods in place to make people with hidden agendas be held accountable. Sword.Com wired.com Arrest Made in PairGain Rumor Reuters 4:25 p.m. 15.Apr.99.PDT A North Carolina man was charged Thursday with fabricating a wire-service news story that sent a company stock soaring in what prosecutors said was the first stock manipulation scheme using the Internet. Gary Dale Hoke, 25, an employee of PairGain Technologies, was arrested at his apartment in Raleigh and charged with securities fraud in connection with the posting, which claimed that PairGain was the target of a corporate takeover. He appeared briefly before a magistrate in Raleigh and was released on US$50,000 bond after promising to appear in Los Angeles Federal Court, where the charges were filed. The bogus news story on 7 April, which appeared on a Web site that purported to belong to Bloomberg News, sent PairGain stock soaring 31 percent before crashing back to earth when the hoax was revealed. "This is the first case in which an individual has abused the power of new technology to spread false news to millions of investors at lightning speed," said US Attorney Alejandro Mayorkas. "This office will not tolerate such abuse and is committed to prosecuting this type of securities fraud as well as other crimes that victimize investors." Thom Mrozek, a spokesman for the US Attorney's Office in Los Angeles, said Hoke is accused of creating a false Bloomberg report that said PairGain -- a Tustin, California, maker of high-speed access phone products -- was going to be taken over by an Israeli company for $1.35 billion. The report came amid rumors that PairGain would be acquired by another company, and investors who paid an inflated price for PairGain stock were defrauded when the price sank back to its pre-hoax levels, Mrozek said. The seesawing of PairGain stock highlighted the perils that investors face when getting tips from the Internet and chat shops, where postings go largely unregulated and rumors spread like wildfire. Shares of PairGain started the day in the Nasdaq stock market at $8.50 and traded as high as $11.13 before falling back and closing at $11.69, off $1.31 on the day. Nearly 13.7 million shares changed hands, a heavy day of trading for the company's stock. Hoke wasn't accused of trading PairGain stock on 7 April, the day of the phony report, but Mrozek said he had bought and sold securities online in the past. Hoke had traded PairGain stock as recently as January, Mrozek said. Though Hoke attempted to hide his identity when posting the fake news story, Mrozek said, *FBI agents were able to track him down using Internet Protocol addresses that were recorded when he accessed certain Web page services.* A spokeswoman at PairGain headquarters in Los Angeles said the company would have no comment on the arrest. Hoke wasn't immediately reachable. Copyright© 1999 Reuters Limited. Related Wired Links: Bloomberg Sues Over Bogus Site 13.Apr.99 *SEC Warns Web Stock Traders* 26.Feb.99 Fraud Charges for Net Tipsters 28.Oct.98 *SEC Sets Up Net Fraud Unit* 28.Jul.98 Man Arrested on Net Stock Fraud Charges 9.Apr.98 Net Stock Fraud No. 2 on Scam List 30.Mar.98