A soggy defense by sponge company - New York Post
Last Updated: 4:08 AM, May 7, 2010
Posted: 12:36 AM, May 7, 2010
Even as federal prosecutors were closing in on the top officers of SpongeTech Delivery Systems for allegedly hindering a Securities and Exchange Commission investigation into their business dealings, the company's executives were talking up plans to issue press releases claiming they were cooperating with the Wall Street watchdog.
According to a document obtained by The Post, SpongeTech executives as recently as last week passed out a lengthy report titled "Risk Assessment" that seeks to place blame for the sponge maker's money woes on a stock manipulation scheme perpetrated by others.
It also suggests steps to regain investors' confidence, including plans to "invite the SEC to examine all aspects of SpongeTech's securities; issue a press release."
In another, the company recommended it "Issue a press release announcing SpongeTech's commitment to supporting SEC actions to investigate naked short selling."
Wednesday, SpongeTech CEO Michael Metter and CFO Steven Moskowitz were arrested on charges of conspiracy to commit fraud and obstruction of justice. The SEC also smacked them with civil charges alleging they falsified sales and made up customers in an effort to illegally pump the stock. Both men were released on bail.
The report suggests efforts to point fingers at others continued until just recently. In addition to voluminous bios of several businessmen and former partners, the report lists employees and board members as potential suspects behind the company's struggles.
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