Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Biotech / Medical : Electro-Optical Systems Corp. (EOSC) -- Ignore unavailable to you. Want to Upgrade?

To: Ed Boudinot who wrote (217)	5/24/1999 9:48:00 AM
From: JOSEPH MATTIVI	Read Replies (1) \| Respond to of 242

I agree

To: Ed Boudinot who wrote (217)	6/1/1999 8:36:00 AM
From: Arcane Lore	Respond to of 242

Ed, Joseph: Thank you for the kind words. An article from today's NY Times provides some additional information about the Hecht matter: S.E.C. Is Making Lawyers Walk in Clients' Shoes By DIANA B. HENRIQUES NEW YORK -- Two lawyers who have nimbly defended prosperous Wall Street professionals stood before judges with lawyers of their own in recent weeks. The cases, though different in magnitude, highlight the power that defense lawyers wield in securities-law prosecutions -- and the limits of the Securities and Exchange Commission's patience with those who may use that power improperly. ... The less noticed of the two recent cases involved Charles J. Hecht, another high-profile New York lawyer. Hecht, a partner in Hecht & Steckman, has represented a number of SEC defendants over the years, but perhaps his most colorful long-running client was Fred Mazzeo, who in the early 1980s operated a prolific New York penny-stock brokerage house called the Creative Securities Corp. In July 1985, Mazzeo's firm failed as he tried to prop up the prices of some of the stocks that it had underwritten. In the aftermath, Hecht helped Mazzeo file a securities-fraud lawsuit that accused Alan Abelson, the longtime editor of Barron's magazine, of conspiring with short-sellers to destroy his business. In 1988, that lawsuit was dismissed by the court as baseless. This time around, Hecht's client was another securities lawyer, William N. Levy of Voorhees, N.J. Levy is one of more than a half-dozen defendants who were accused by the SEC in March 1998 of manipulating the stock of Electro-Optical Systems Corp., which said it was developing an electronic fingerprint-based security and identification system. The company's shares had been widely promoted on the Internet, and the SEC charged that Levy and the other defendants garnered more than $12 million in illegal profits from thousands of investors. Levy denied any wrongdoing, but the commission nevertheless obtained a court order freezing his assets. In the sometimes hectic negotiations to have that freeze lifted last spring, Hecht agreed that his client would provide regulators with a complete accounting of his financial affairs. That was when the trouble began. In a complaint to the court last fall, the SEC accused Hecht of receiving legal fees from his client while the assets were supposed to be frozen. More seriously, the SEC said that Hecht had allowed his client to submit an incomplete and misleading accounting. It asked Federal Judge Denise L. Cote in Manhattan to hold Hecht in contempt of court. Suddenly, Levy's lawyer needed a lawyer of his own. At a hearing on the contempt motion in December, a staff lawyer for the SEC explained why the agency was moving so forcefully against Hecht. "We don't have vast resources, say like the IRS does or the Justice Department, to investigate things," said Dan Hurson. "We have to be able to rely on accountings ordered by the court that are fair and accurate and complete and not misleading in any respect." Jeffrey Hoffman, representing Hecht, explained that his client had simply overlooked the fact that Levy was the source of the legal fees he collected, having expected that those fees would be paid by one of Levy's relatives. As for the questionable accounting, Hoffman insisted it was a misunderstanding that arose in the confusion of the negotiations. Robert Blackburn, at the SEC's New York regional office, disputes that explanation. "This is not a case about the crush of business," he said in a recent interview. "It is a case about honesty and respect for the court and other lawyers." Despite the obvious rancor in the case, a settlement was reached this spring that called for the commission to withdraw its contempt motion, in exchange for which Hecht was to turn over more than $150,000 that he had received from Levy. He also paid more than $20,000 to compensate the commission for its expenses. The settlement required him to apologize to the court -- which he did, in a carefully worded statement read to Judge Cote at a hearing on March 14. Insisting that he had never intended to disobey court orders, he apologized for not having been more diligent and attentive and promised to be more careful in the future. The judge said that Levy's financial statement was "false in terms of its language" and "was also intended to be misleading." While she allowed the SEC to withdraw its contempt motion, Judge Cote also told Hecht, "I believe you fell down in this case. You did not stay alert to your obligations to the court, to the law or to your license." As for Levy, the SEC's case against him and his co-defendants has been deferred while a criminal investigation continues, Blackburn said. nytimes.com