|.10-07-04 -- Bockler, Stuart -- Indictment -- News Release|
New Jersey Internet Stock Promoter Indicted for Failing to Disclose Compensation from Global Datatel, Inc.
NEWARK - A New Jersey Internet stock promoter was indicted today for failing to disclose his compensation while touting Global Datatel, Inc. to the investing public, contrary to federal securities laws, U.S. Attorney Christopher J. Christie announced.
The Indictment charges that Stuart Bockler, 52, of Marlboro Township, controlled and operated three companies and a website engaged in the business of corporate public relations activities: International Market Advisors, Inc. (IMA), International Market Call Inc., Imcadvisors, Inc., and www.imcadvisors.com.
According to the Indictment, in early January 1999, Bockler and IMA executed a consulting agreement with Global, wherein Bockler agreed to write and disseminate Global investment reports that detailed Global's products, management results, prospects, trading history, and projected results and stock performance. The agreement was for a one-year period.
Under the Consulting Agreement, in consideration of Bockler's public relations activities, Global agreed to pay IMA and Bockler: 25,000 "free trading" shares of Global stock; warrants to purchase 150,000 free trading shares of Global stock at a price of $5.50 per share; and a bonus of an additional 25,000 free trading shares, if Global's stock price reached $15 for ten trading days during the one-year period of the consulting agreement.
In Oct. 13, 1999, Bockler disseminated a Global investment report to the investing public promoting Global. Bockler posted the investment report to the IMA website and sent approximately 30,000 emails to recipients directing them to IMA's website to view the report. The investment report contained, among other things, a "Strong Buy" recommendation, and Global stock price projections of $60-$75 for the long term and a price projection of $30-$45 for the short term. The investment report failed to disclose Bockler's compensation and it further failed to disclose that Bockler had received profits of approximately $175,000 from the sale of 18,750 free trading Global shares he had received from Global in January and February 1999.
Bockler is expected to be arraigned on the one-count Indictment within the next two weeks before U.S. District Judge Joseph A. Greenaway, according to Assistant U.S. Attorney Mauro M. Wolfe. Bockler was not arrested by federal authorities.
The Indictment further charges that Bockler disseminated the October 13 report knowing that he had received and sold 18,750 free trading shares of Global stock, earning approximately $175,000 in profits, and had received 200,000 restricted shares, as renegotiated compensation.
On Oct. 13, 1999, based on a closing price of $6.50, the 200,000 restricted shares were worth approximately $1.5 million, a fact which Bockler also intentionally failed to disclose.
According to the Indictment, under federal securities laws, pursuant to Section 17(b) of the Securities Act of 1933, a stock promoter who publishes information about a public company, though not purporting to offer a security for sale, is required to disclose the existence and amount of any consideration he received or expected to receive in connection with that promotion. This provision was commonly referred to as the "Anti-Touting" provision.
This Indictment is related to a guilty plea entered earlier this year.
In April, Allen Barry Witz, 63, a Beverly Hills, Calif. attorney, pleaded guilty before Judge Greenaway to conspiracy to commit securities fraud in connection with Global Datatel, Inc., a Florida-based company that he and others fraudulently touted as a fast-growing, profitable venture, along with its Latin American subsidiary, eHola.com Online Service Network.
The Information to which Witz pleaded guilty in April 2004 identified, by initials only, two New Jersey men - J.L, of Clifton and S.B. of Marlboro - who allegedly conspired in the pump-and-dump scheme. Two other co-conspirators are identified as R.B. of Boca Raton, Fla., the chief executive officer of Global Datatel, and M.H., a Colombian citizen residing in Davie, Fla., who was president of eHola.com. All four were unindicted co-conspirators.
Witz admitted that he and his co-conspirators used false and misleading press releases and interviews, investor "road shows" and a stock-picking website, www.imcadvisors.com, to tout Global Datatel and eHola.com to raise and maintain the stock price of Global, which was traded on the Over-the-Counter Bulletin Board, under the symbol GDIS. The stock-picking website was controlled by S.B., according to the Witz Information.
In today's Indictment, Bockler was not charged with knowing that the Global investment reports he disseminated were false and misleading.
The investigation surrounding Global Datatel and others associated with it continues.
On the one count of undisclosed compensation, Bockler faces a maximum penalty of five years in prison and a $250,000 fine or twice the gross proceeds of the fraud or twice the loss to any victims.
Under U.S. Sentencing Guidelines, the judge to whom this case is assigned would, upon conviction, determine an actual sentence based upon a formula that takes into account the severity and characteristics of the offense, and the defendant's criminal history, if any. Parole, however, has been abolished in the federal system. Under Sentencing Guidelines, defendants who are given custodial terms must serve nearly all that time.
Christie credited Special Agents of the FBI, under the direction of Special Agent in Charge Joseph Billy, Jr., in Newark; Postal Inspectors with the U.S. Postal Inspection Service, under the direction of Postal Inspector in Charge Martin D. Phanco; and Special Agents of the Internal Revenue Service Criminal Investigation section, under the direction of Special Agent in Charge Patricia J. Haynes.
Christie also thanked the Securities and Exchange Commission, Southeast Regional Office, headed by Regional Director David Nelson, for its considerable work in the case.