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Wednesday, May 5, 2010

05/05/10 Where The Hell Is The Greenwich Time? - SEC Charges Spongetech and Senior Executive And WGCH Owner, Michael Metter in Pump-and-Dump Scheme

Hearst Newspaper Editor David McCumber Was A real Idiot For Firing Greenwich Time Investigative Reporter Teri Buhl, Because She Broke The Michael Metter Story In Greenwich.

Way To Go Charlie!!!!

Fox News Reporter Charlie Gasparino Is Scooping The Greenwich Time, While A Clueless Hearst Newspaper Editor David McCumber Sits In His Stamford Office


SEC Press Release
FOR IMMEDIATE RELEASE
2010-70

Washington, D.C., May 5, 2010 — The Securities and Exchange Commission today charged New York City-based Spongetech Delivery Systems Inc., an affiliate, and five people involved in a massive pump-and-dump scheme that deceived investors into believing they were buying stock in a highly successful company.

The SEC alleges that Spongetech CEO Michael Metter and another senior executive, Steven Moskowitz, hyped fictional customers and grossly exaggerated sales figures through dozens of bogus press releases and fraudulent SEC filings to pump up demand for stock in Spongetech, a company that sells soap-filled sponges. After flooding the market with the false information to fraudulently inflate the stock price, Metter, Moskowitz, and Spongetech dumped approximately 2.5 billion shares by illegally selling them to the public through affiliated entities in unregistered transactions. They spent portions of their illicit profits in highly visible sponsorship deals with professional sports teams to further create the aura that Spongetech was a well-known and prosperous business.

The SEC suspended trading in Spongetech stock on Oct. 5, 2009, due to questions about the accuracy of the company's press releases and SEC filings. In today's enforcement action, Spongetech is accused of obstructing the SEC's investigation by producing phony sales documents in an attempt to legitimize the make-believe customers it hyped to the public. The U.S. Attorney's Office for the Eastern District of New York today announced a parallel criminal action in the matter.

"Spongetech used a menu of manipulative strategies to perpetuate this scheme, including fake sales orders and public statements as well as obstruction of the SEC's investigation," said Robert Khuzami, Director of the SEC's Division of Enforcement. "We will utilize all available means, including referral to criminal authorities, to prosecute those who attempt to thwart our investigations."

Christopher Conte, Associate Director of the SEC's Division of Enforcement, added, "Investors were deceived into believing that Spongetech was a successful business, while Spongetech and its senior executives were illegally dumping shares into the market."

Two of Spongetech's former attorneys — Jack Halperin and Joel Pensley — and stock promoter George Speranza are also charged in the SEC's complaint, which was filed in U.S. District Court for the Eastern District of New York. RM Enterprises International Inc., an affiliate through which Spongetech dumped shares, is also charged.

According to the SEC's complaint, after several years of relatively little business with a single customer comprising the bulk of Spongetech's limited sales, Metter and Moskowitz began to paint a more promising and misleading picture of Spongetech's business. Beginning in approximately April 2007, Spongetech issued dozens of phony press releases touting increasingly larger, yet fictitious, sales orders and revenue. The press releases fraudulently exaggerated the demand for pre-soaped sponges by referencing millions of dollars in sales orders, business, and revenue from five primary customers that purportedly accounted for 99 percent of Spongetech's business, yet none of those customers actually existed.

The SEC's complaint alleges that Metter, Moskowitz, Spongetech, and RM Enterprises used false and baseless attorney opinion letters by Pensley and Halperin to distribute shares of Spongetech to the public. Metter, Moskowitz, and Spongetech also used false and misleading attorney opinion letters — forged in Pensley's name and in the name of a fictitious lawyer, David Bomart — which were transmitted to Spongetech's transfer agents. The SEC further alleges that Speranza created websites and rented unoccupied office space for the fictional customers in an attempt to legitimize them.

The SEC's complaint alleges that Spongetech violated Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B), and 15(d) of the Securities Exchange Act of 1934 and Exchange Act Rules 10b-5, 12b-20, 13a-13, 15d-1, 15d-11, and 15d-13. The complaint alleges that RM Enterprises violated Sections 5(a), 5(c), and 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Exchange Act Rule 10b-5. The SEC alleges Metter and Moskowitz violated Sections 5(a), 5(c), and 17(a) of the Securities Act, Sections 10(b) and 13(b)(5) of the Exchange Act, Exchange Act Rules 10b-5, 13b2-1, 13b2-2 (Moskowitz only), and 15d-14, and Section 304 of the Sarbanes-Oxley Act of 2002, and aided and abetted Spongetech's violations of Sections 13(a), 13(b)(2)(A), 13(b)(2)(B), and 15(d) of the Exchange Act and Exchange Act Rules 12b-20, 13a-13, 15d-1, 15d-11, and 15d-13. The SEC further alleges Speranza violated Section 10(b) of the Exchange Act and Exchange Act Rule 10b-5, and aided and abetted violations of Sections 10(b) of the Exchange Act and Exchange Act Rule 10b-5. The Commission also alleges Pensley and Halperin violated Sections 5(a), 5(c), and 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and Exchange Act Rule 10b-5.

The SEC thanks the U.S. Attorney's Office for the Eastern District of New York, the Federal Bureau of Investigation, the Internal Revenue Service, and the Financial Industry Regulatory Authority for their assistance in this matter. The SEC's investigation is continuing.

# # #

For more information about this enforcement action, contact:

Christopher Conte
Associate Director, SEC Division of Enforcement
(202) 551-4834

UPDATE:

One Hour Latter:

WGCH's Michael Metter's Lawsuit Backfires


Last week, a tiny company called SpongeTech sued both the New York Post and investor Timothy Sykes claiming a short-selling conspiracy, according to HedgeFund.net.

The company -- which makes a soap-filled sponge product -- claimed it was the victim of a short-and-distort scheme, and demanded $43 million.

Well...fast forward to today.

Spongetech's CEO Michael Metter and COO Steve Moskowitz were arrested and charged with conspiracy to commit securities fraud and obstruction of justice.

Dow Jones reports:

In the complaint, prosecutors from the U.S. Attorney's office in Brooklyn
alleged Metter and Moskowitz between January 2007 and May 2010 publicly
reported the company had secured purchase orders or made sales to five
customers that did not exist.

The purported sales accounted for as much as 99% of Spongetech's revenue,
prosecutors said.

Meanwhile, the SEC has lobbed in a "pump and dump" charge as well, which Sykes began talking about back in June of 2009.

The company has been under the spotlight for awhile. Last year, Roddy Boyd at The Big Money published a huge takedown of the company's accounting.

MORE:

If You Want To Know What's Going On In Greenwich
You Have To Read The Out Of Town Newspapers

SpongeTech Execs Who Sued Ex-Hedge Funder Arrested

Hedge Fund Net - Paula Schaap

Michael Metter, 58, of Greenwich, Conn. and Steven Moskowitz, 45, of Flushing, NY the chief executive officer and chief financial officer of SpongeTech were ...

Small-cap stock with big dreams called a fraud

Crain's New York Business - Aaron Elstein

The company is the brainchild of Chief Executive Michael Metter, a former stock broker who was accused of cheating clients out of hundreds of thousands of ...

UPDATE #2

The Bloggers Are All Over This Greenwich News Story

Where Is The Greenwich Time ?????>

Oh, We Forgot.... Boneheaded Hearst Newspaper Editor David McCumber
Fired Greenwich Time Business Reporter Teri Buhl, After Charlie Gasparino
Called Up And Complained About Her.

The Incredible Tale of Spongetech's Fraud

The Big Money (blog) - James Ledbetter

In addition to the flurry of activity near New Haven and Bridgeport to catch the alleged Times Square bomber, this morning, Michael Metter, the CEO of ...

Spongetech Is All Wet

The Big Money - Roddy Boyd


Today, Spongetech's chief executive and president, Michael Metter, and its chief operating officer and chief financial officer, ...

Update #3

Greenwich Time Insiders Say That Hearst Newspaper Editor David McCumber Is Not Going To Assign A Local Reporter To Cover The Arrest Of Greenwich Radio Station Owner Michael Metter.

These Sources Tell Greenmwich Roundup That Michael Metter Has Threaten To Use His The Hundreds Of Stations In His Business Talk Radio Network To Go After The Secretive And Private Hearst Foundation Which Owns The Hearst Corporation, Hearst Newspapers And The Greenwich Time

Here Is What Ex-Greenwich Time Reporter Teri Buhl Posted Today About The Arrest Of WGCH Owner Michael Metter.

Feds Charge SpongeTech CEO with Obstruction of Justice in Pump and Dump Stock Investigation

By Teri Buhl
Looks like our local penny stock scammer is in a world of trouble because it’s not just the SEC who’s charged him for securities fraud today but he’s also facing criminal charges. Michael Metter, Greenwich radio station president and CEO of Spongetech was arrested in his Greenwich home this morning by the FBI and IRS for obstruction of justice. The U.S. Attorney says Metter’s partner Steven Moskowitz was also arrested for conspiring to commit securities fraud and faking at least five customers in an effort to cover-up what the SEC was investigating.

But the executives of SpongeTech, who were already facing a civil class action lawsuit by investors who lost money in their alleged pump and dump scheme, are not the only ones the Feds are targeting. Both the SEC and U.S. Attorney complaint list unnamed ‘others’ as being involved in the illegal stock scam. According to people who have worked with the SEC and the FBI as informers in their case, there is also a continued investigation going on into the marketers and stock promoters of SpongeTech and its related party deals.

It’s a move that hopefully shows the SEC, and their partners at the Department of Justice, are drawing a hard line on not only the companies that try to mislead investors but also the outside stock marketers who knowingly release false press statements that materially affect the price of a stock. When asked what the charges will be against the stock marketers Robert Nardoza of the U.S. Attorney’s Office said, “No Comment”. Sources say one of the stock marketers and corporate communicators being investigated in this scam is Great Neck-based Corporate Evolution. SPNG, the ticker for SpongeTech, is currently promoted on Corporate Evolutions website. When a call was made for comment no one answered the phone at Corporate Evolution’s Long Island office.

The Brooklyn office of the U.S. Attorney complaint states that: “beginning in or about early September 2009, the SEC’s Enforcement Division issued subpoenas to various entities and individuals, including Metter and Moskowitz, as part of its investigation of Spongetech. Since then, Metter and Moskowitz allegedly obstructed the SEC’s investigation by fraudulently attempting to fabricate the existence of the five purported customers by (1) seeking to create Internet websites and virtual offices for the customers, (2) furnishing phony purchase orders purportedly issued by the customers, and (3) producing documents they falsely claimed were proof of payments by the non-existent customers.”

This February I reported, at the Greenwich Time, that Michael Metter made false statements during our interview about current sales activity in SpongeTech. Metter had gone on the record to say that Sponge had just landed a national sales order with Walmart for their kids sponge bath product. A Walmart spokesperson latter confirmed that no national order was in their system but only a regional order was made. The DOJ complaint says SpongeTech executives and others grossly overstated sales orders in public filing from January 2007 to May 2010.

Both the SEC and DOJ filed charges today but only the DOJ has the power to arrest. In past cases like this, the DOJ criminal case is allowed to proceed first with the SEC left sitting on its hands. But according to people involved in the present cases, the SEC could be leading the trial this time. The SpongeTech executives will be faced with defending themselves against Rick Simpson, the SEC’s lead trial counsel. Simpson is best known for his 1980’s IPO scam case against ‘Crazy Eddie’ Antar that earned Eddie jail time.

Metter has continually denied the SEC’s allegations and even threatened journalist (including me) for false reporting on his companies’ alleged investor abuse, via a civil lawsuit filed two weeks ago. News of problems at SpongeTech was first reported by Kaja Whitehouse at the New York Post in the fall of 2009, after she saw famed penny stock investor Tim Sykes question the company’s sale [corrected - Ed]. An in-depth investigative report explaining how Metter set up his stock scam was latter published by Greenwich-based investigative reporter Roddy Boyd for The Big Money. Metter and Moskowitz are being arraigned this afternoon and the U.S. Attorney’s Office boasts that they will aggressively pursue all involved in creating the fraud.

“The defendants in this case — Spongetech’s highest corporate officers — are charged
with executing a bold scheme to portray Spongetech as a company that was performing at a level
far above reality,” stated United States Attorney Lynch. “As detailed in the complaint, the
audacity of their scheme was matched only by their obstructive efforts during the course of the
SEC’s investigation. This Office will use all available resources to protect investors from fraud.”

Teri Buhl now works for Fortune.com . She has written for the New York Post, Trader Monthly, Dealbreaker, Fortune.com, The Atlantic.

Ms. Buhl was the first journalist who has the guts to break the Michael Metter Story In Greenwich. The SpongeTech Story had been ignored in town for months prior to Ms. Buhl's front page Greenwich Time Report.

Hearst Newspaper Editor David McCumber fired Ms. Buhl after a certain Hedge Fund investor and Fox News Reporter Charlie "The Gasbag" Gasparino started calling Hearst Newspaper President Stephen Swartz.

UPDATE #4

The New York City News Papers Are Covering

WGCH Owner MichAel Metter

Would Someone Get Help Hearst Newspaper Editor
David McCumber Get Out Of His Self Induced Coma

New York Mets Owner And Greenwich Resident Fred Wilpon Is Left Holding $400,000 In Bounced Checks From WGCH Owner Michael Metter.

First Fred Wilpon Gets Screwed By Bernie Madoff Then He Gets Screwed By Michael Metter

Overall Fred Wilpon Is Out 2.3 Million In The Greenwich Based Business Talk Radio Network Owner's Penny Stock Fruad.

Spongetech execs Steven Moskowitz, Michael Metter arrested for alleged fraud ..

New York Daily News - John Marzulli

Mr. Krabs might have some competition in the money-grubbing department.

The feds have arrested top executives of a company that makes a SpongeBob SquarePants bath product on fraud charges.

The dirty duo - Spongetech CEO Michael Metter and chief financial officer Steven Moskowitz - allegedly falsified sales figures of soap-filled sponges to polish up the company's financial condition.

They publicly reported in press releases and filings to the Securities and Exchange Commission millions of dollars in fictitious sales going back to January 2007, prosecutors charged.

After the SEC slapped the company with subpoenas last fall, Metter and Moskowitz attempted to fabricate five customers, according to the criminal complaint unsealed in Brooklyn Federal Court.

They allegedly created bogus purchase orders and phony Web sites and virtual offices for the customers - who were about as real as pineapple under the sea.

"The defendants in this case - SpongeTech's highest corporate officers - are charged with executing a bold scheme to portray SpongeTech as a company that was performing at a level far above reality," said Brooklyn U.S. Attorney Loretta Lynch.

Metter, 58, of Greenwich, Conn., and Moskowtiz, 45, of Flushing, Queens, each face up to five years in prison if convicted.

Earlier this year,
the Mets filed a lawsuit against SpongeTech seeking $2.3 million for advertising at Citi Field. The suit claimed SpongeTech bounced $400,000 in checks made out to the team...

Spongetech Execs Accused In Alleged Fraud Scheme

Wall Street Journal - Chad Bray

According to a criminal complaint filed Wednesday, Michael Metter, Spongetech's chief executive and president, and Steven Moskowitz, the New York pre-soaped ...

SpongeTech execs arrested on securities fraud

New York Post - Kaja Whitehouse

SpongeTech CEO Michael Metter, 58, and CFO Steven Moskowitz, 45, are being detained by federal authorities until their arraignment later today. ...
UPDATE #5
This Greenwich News Story Has Went National

Execs at maker of SpongeBob sponges accused of securities fraud

USA Today

Michael Metter, CEO of SpongeTech Delivery Systems, and Steven Moskowitz, its finance chief, were charged by the US Attorney's Office in Brooklyn, ...
UPDATE #6
Does Sponge Tech Sell Soap On A Rope?
Greenwich Resident Michael Metter Gets A 2 Million Dollar Bail
In Order To Stay Out Of Jail.

Spongetech Execs Charged With Forgery Case

Thaindian.com - Meena Kar


Reports claim that Spongetech CEO Michael Metter 58 and chief financial officer Steven Moskowitz 45 were arrested. The bail for them was set at $2million each ...
UPDATE #7
While The Greenwich Time Covers Up
Greenwich Bloggers Start To Cover The Story
Greenwich Time Insiders Say That The Hearst Newspapers Are Ignoring The Arrest Of WGCH Owner Michael Metter, Because He Threatened To Go After The Secretive And Privetly Held Hearst Corporation With His Business Talk Radio Network.


When Greenwich resident Michael Metter, owner of local radio station WGCH, is arrested at sunrise at his home on Tinker Lane and charged with securities fraud, obstruction of justice and tax evasion, you’d think that would be a story of interest to residents. That’s why I wrote about it at 10:48.

But not Greenwich Time. They did, however, manage to free up a reporter to cover a car fire in Old Greenwich. The fire happened at noon – Metter’s demise occurred hours before. Hmm.

So what else is in our local paper? Well, “Golfers wowed by new pro shop”

And, local chef on television. And a report that a 19-year-old punk has been arrested for the arson at Scusie’s place last winter. This last item would indeed be interesting, if only GT had thought to mention that the arsonist was surely a pawn of the Albanian Mafia that has plagued Valbella’s since it opened, torching it twice now, plus hanging the owner by his heels to extract protection money, but I suppose those indelicate details are too much for Greenwich residents to bear. Too bad – could have been a fun story.

UPDATE: Whoa! Alert Pulitzer! This just (6:21) in: Byram pool readied for summer!!!!

Greenwich Diva Has Also Been Covering The Story While Hearst Newspaper Editor David McCumber Has Remained Silent.


Greenwich, Connecticut radio station owner Michael Metter ...
By Claudette Rothman
Greenwich, Connecticut resident and owner of WGCH radio station,
Michael Metter and his business colleague were arrested on Wednesday and charged in an alleged scheme to defraud investors of millions of dollars by falsely overstating ...
Greenwich Diva - http://theoriginalgreenwichdiva.com/

In Fact, Bloggers All Over America Are Covering
The Arrest Of Greenwich Radio Station Owner Michael Metter

Spongetech: Michael Metter, Steven Moskowitz, Jack Halperin, Joel ...
By Michael Fowke
Michael Metter has been charged. He's the chief executive. Steven Moskowitz has been charged. He's a senior executive. Jack Halperin and Joel Pensley have been charged. They were attorneys to the firm. And George Speranza has been ...
Money is the way - http://moneyistheway.blogspot.com/
S.E.C. Charges SpongeTech With Fraud - DealBook Blog - NYTimes.com
By By DEALBOOK
On Wednesday, he and
Michael Metter, the company's chief executive, were arrested by F.B.I. agents. They were charged with conspiracy to commit securities fraud and with obstruction of justice. The S.E.C. filed civil fraud charges ...
DealBook - http://dealbook.blogs.nytimes.com/
The Biggest Penny Stock Pump & Dump Ever? Possibly $250+ Million ...
By Timothy Sykes
The SEC alleges that Spongetech CEO
Michael Metter and another senior executive, Steven Moskowitz, hyped fictional customers and grossly exaggerated sales figures through dozens of bogus press releases and fraudulent SEC filings to pump ...
Timothy Sykes - http://www.timothysykes.com/
New York - Executives Accused in Alleged Stock Fraud Scheme ...
By admin
According to a criminal complaint filed Wednesday,
Michael Metter, Spongetech's chief executive and president, and Steven Moskowitz, the cleaning-products maker's chief operating officer and chief financial officer, were charged with ...
Vos Iz Neias - (Yiddish:What's News?) - http://www.vosizneias.com/
SpongeTech Execs Arrested for Fraud » Right Juris
By Stacy
The CFO Steven Moskowitz and CEO
Michael Metter were baffled and say, quite convincingly, that the charges against them and their company are entirely unfounded. Check out the full story with video below! ...
Right Juris - http://law.rightpundits.com/
Spongetech and Thresher Shareholders Feel the Pain « Sumfolio.com ...
By Simon Monger
Spongetech Delivery Systems, Inc. (SPNG, Free Analysis), formerly a manufacturer of sponge-related products, saw its shares fall more than 80% to $0.0069 per share, after the SEC alleged that Spongetech CEO
Michael Metter and six other ...
Sumfolio.com :: Financial News... - http://sumfolio.com/
Hot Stocks to Watch Today | BP | SPNG | ITMN | CITC | THRR | | Hot ...
By Knowledge is Power
According to a criminal complaint filed Wednesday,
Michael Metter, Spongetech's chief executive and president, and Steven Moskowitz, the New York pre-soaped sponge maker's chief operating officer and chief financial officer, ...
Hot stocks Everyday - http://www.hotstockseveryday.com/
Hot Stock Alerts for May 5: $SYMC, $SPNG, $ITMN, $CBS, $CLMT, $FLS ...
By BeaconEquity.com
Spongetech's CEO
Michael Metter and COO Steve Moskowitz were arrested and charged today in an alleged fraud scheme, reported Dow Jones. (OTC:SPNG), ($SPNG). InterMune Inc. (NASDAQ: ITMN) fell 74.96% to $11.38 after the FDA rejected the ...
Beacon Equity Research - http://www.beaconequity.com/
SpongeBob Bath Toymaker's Officers Accused of Fraud - NewsPlurk
By Typed ROBIN
Spongetech execs Steven Moskowitz,
Michael Metter arrested for alleged fraud. The feds have arrested top executives of a company that makes a SpongeBob SquarePants bath product on fraud charges.... New York Daily News ( 5/5/2010 9:31:20 ...
npusb - http://business.newsplurk.com/
The Incredible Tale of Spongetech's Fraud | The Big Money
By James Ledbetter
In addition to the flurry of activity near New Haven and Bridgeport to catch the alleged Times Square bomber, this morning,
Michael Metter, the CEO of Spongetech, was arrested at his home in Greenwich. It's quite a blow to a company ...
The Big Money - http://www.thebigmoney.com/flags/external_content
BLOG.JMHAMILTONPUBLISHING.COM: "Mr. Metter vigorously denies the ...
By JM Hamilton Blog
Michael Metter, chief executive officer of New York-based SpongeTech Delivery Systems Inc., and Steven Moskowitz, its finance chief, were arrested today and charged by the U.S. Attorney's Office in Brooklyn, New York. ...
BLOG.JMHAMILTONPUBLISHING.COM - http://blog.jmhamiltonpublishing.com/
keeptradingblog | SpongeBob Bath Toymaker's Officers Accused of ...
By AutoNews
May 5 (Bloomberg) — Two top officers of the company that makes the SpongeBob SquarePants soap-filled bath sponges for children were arrested and charged with conspiracy to commit securities fraud.
Michael Metter, chief executive … ...
keeptradingblog - http://keeptradingblog.com/

UPDATE #8

More Than 24 Hours Later

The Greenwich Time Finally Puts
Something Up On Its Website

Greenwich Time Indiders Say That The Greenwich Time And The Hearst Newspapers Are Ignoring The Arrest Of WGCH Owner Michael Metter, Because He Threatened To Go After The Secretive And Privetly Held Hearst Corporation With His Business Talk Radio Network.

Greenwich Time Insiders Have Also Told Greenwich Roundup That Hear
st Newspaper Editor David McCumber Has Received Numerous Complaints As Greenwich Bloggers Have Noted The Locals Rags Refusal To Cover The Fact That The WGCH Owner Sat In Jail Until He Was Able To Post A 2 Million Dollar Bail.

So The Greenwich Time Has Posted A Bloomberg Wire Report, But Is Still Afraid To Have A Local Reporter Cover The The Michael Metter Story.


Here Is The Wire Bloomberg
Wire Report From The Greenwich Time

Greenwich Roundup Readers Read This Yesterday

SpongeTech's Metter charged in pump-and-dump scheme

Published: 12:42 p.m., Thursday, May 6, 2010

By Thom Weidlich

Bloomberg News

Two top officers of the company that makes the SpongeBob SquarePants soap-filled bath sponges for children were arrested and charged with conspiracy to commit securities fraud.

Greenwich resident Michael Metter, chief executive officer of New York-based SpongeTech Delivery SystemsInc., and Steven Moskowitz, its finance chief, were arrested Wednesday and charged by the U.S. Attorney’s Office in Brooklyn, N.Y.

“Between January 2007 and May 2010, the defendants Michael Metter and Steven Moskowitz, along with others, executed a scheme to defraud SpongeTech’s existing and potential investors by publicly reporting false and grossly overstated sales figures,” according to a criminal complaint unsealed Wednesday.

The men also were charged with obstruction of justice and were sued separately by the Securities and Exchange Commission. The shares plunged in over-the-counter trading.

Metter and Moskowitz, of Flushing, N.Y., were scheduled to appear Wednesday in federal court in Brooklyn. Metter, who also is president and part owner of WGCH radio, was arrested at his home in Greenwich.

The company didn’t immediately respond to a voice-mail message seeking comment.

SpongeTech fell as much as 98 percent to less than 1 cent on the news. The shares, which once traded as much as 35 cents, declined 18 percent this year before Wednesday.

SpongeTech reported the fraudulent information in filings with the SEC and in statements, according to the criminal complaint. Metter and Moskowitz are accused of reporting that SpongeTech got purchase orders from or made sales to five customers that didn’t exist.

For the nine months ended in February 2009, the five nonexistent customers constituted about 99 percent of SpongeTech’s revenue, according to the complaint.

Metter and Moskowitz allegedly obstructed an SEC investigation into the company by seeking to fabricate websites and virtual offices for the customers and furnishing phony purchase orders, according to the complaint.

The SEC sued SpongeTech, an affiliate, Metter, Moskowitz, two former SpongeTech lawyers and a stock promoter. SpongeTech, Metter and Moskowitz, after pumping up the stock by releasing false information, dumped about 2.5 billion shares in unregistered transactions, according to the SEC complaint.

The profits were spent on “highly visible sponsorship deals with professional sports teams to further create the aura that SpongeTech was a well-known and prosperous business,” according to an SEC statement.

SpongeTech, whose tagline is “the Smarter Sponge,” also makes products for marine, home, pet and car care, according to its website.

The company markets cleaning and bathing supplies including soap-filled children’s bath sponges shaped like television cartoon characters SpongeBob SquarePants, Dora the Explorer and the Pink Panther.

It also sells sponges pre-loaded with detergents for car, boat and home cleaning.

“SpongeBob SquarePants,” the adventures of a good-natured sea creature who lives in a pineapple on the ocean floor, began airing in 1999 and still runs on Viacom Inc.’s Nickelodeoncable channel.

“SpongeTech Delivery Systems Inc. can make no comment at this time during the SEC investigation,” according to an outgoing message at the company’s investor-relations line.

The criminal conspiracy charge against Metter and Moskowitz brings a maximum prison term of five years.

“The audacity of their scheme was matched only by their obstructive efforts during the course of the SEC’s investigation,” Loretta E. Lynch, who was sworn in as the U.S. attorney in Brooklyn on May 3, said in a statement.

UPDATE # 9
Also, check out the video below!


Update #10
More Conspiracy Rumors About Greenwich Time Editor David McCumber And The Privately Head And Secretive Heart Corporation.

Many Greenwich Residents have contacted Greenwich Roundup to say that its more than a bit curious. its a conspiracy and its outrageous.

Some Greenwich Time readers have noted that even though Ex-Hearst Investigative reporter Teri Bulh has said that her report about Greenwich Radio station owner Michael Metter had nothing to do with her dismissal.

However, many Greenwich residents cant help but think That it played a part.

It was just the beginning of the end.

You just don't come to Greenwich and start rocking the boat unless you are a citizen Journalist with a blog.

my gosh, what could the GT say in their defense? that they are waiting to finishing vetting the months of investigation work the DOJ and SEC put in the case?

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