|S.E.C. Accuses Saudi Financier and Executive of Stock Fraud|
By BLOOMBERG NEWS
Published: April 14, 2006
A Saudi Arabian financier and a former executive of a defunct California telemarketing company were sued yesterday by federal regulators over claims that they orchestrated a $130 million stock loan and manipulation scheme.
The suit was filed by the Securities and Exchange Commission against Adnan Khashoggi, the Saudi financier, and Ramy El-Batrawi, who was chief executive of GenesisIntermedia, a telemarketing company formerly based in Van Nuys, Calif. Mr. Khashoggi and Mr. El-Batrawi owned 85 percent of GenesisIntermedia.
According to the lawsuit, filed in United States District Court in Los Angeles, the two men lent 15 million GenesisIntermedia shares to Deutsche Bank Securities while artificially inflating the stock price.
"El-Batrawi, Khashoggi and others also drove up the price of the stock by engaging in large numbers of buys and sells," the S.E.C. said in the suit. "The buys and sells were often done in small lots of 100 to 500 shares, amplifying the false appearance of general investor interest."
A California jury acquitted a financial commentator, Courtney D. Smith, last year of charges he failed to disclose payments he received from GenesisIntermedia to promote the company's stock.
Lawyers for Mr. El-Batrawi and Mr. Khashoggi could not be immediately located for comment. An S.E.C. lawyer, Kara Brockmeyer, said the agency had not determined who their lawyers were. Mr. El- Batrawi has no listed telephone number in Los Angeles, and Mr. Khashoggi's whereabouts is not known, according to the complaint.
Trading in GenesisIntermedia was halted in September 2001 after the shares fell 65 percent. The wreckage caused the failure of the intermediary brokers that handled the loans to Deutsche Bank Securities and saddled the Securities Investor Protection Corporation with a $42 million payout.
Mr. Khashoggi is best known as an arms broker in the Iran-Contra scandal of the mid-1980's, when he served as middleman for illegal sales of weapons to Iran.