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SEC spins web over Web
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May 12, 1999: 2:34 p.m. ET
Commission launches third crackdown, alleges fraud in 14 Net securities offers
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NEW YORK (CNNfn) - The Securities and Exchange Commission launched its third sweep of Internet fraud Wednesday, bringing 14 enforcement actions against 26 companies and individuals.
The SEC's crackdown targeted bogus Internet securities sales. The agency alleged the parties charged in the actions all made "outrageous or baseless promises to investors" via the Internet, sometimes guaranteeing returns of 100 percent a year.
The actions culminate surveillance that the SEC's "cyberforce" started in November, a spokesman said. "We were noticing more and more of these offering frauds, so the director [of enforcement, Richard Walker] told the cyberforce to go out and find as many of those frauds as they could," Duncan King, the spokesman, said. These 14 cases are the culmination of their best leads, King added.
For instance, the SEC alleged in SEC v. David Abramson that Abramson promised an annual return of 2,600 percent for 10 years for an investment in Brightstar, a company that purportedly extracted gold from magnetite concentrate. The SEC characterized Abramson's promise of returns as "an outright lie" and said he raised $50,000 selling "phony interests." In another fraud case, one person invested $250,000, the SEC said.
The SEC also filed two emergency actions, SEC vs. Forex and SEC vs. Lazarus Long, in February and April respectively. Those cases would have been part of the sweep but the commission stepped in early in an attempt to minimize investor losses.
Last October, the SEC brought 23 actions against 44 stock promoters in its first such crackdown. In February, it turned its attention to fraudulent "spamming" and online newsletters, with four cases against 13 parties.
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