|Federal prosecutors say Wichitan used Web to bamboozle investors|
Wichita Business Journal - November 1, 2002by Ken Arnold
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A Wichita man is accused of using the Internet to fraudulently pump up the value of penny stocks.
On Oct. 23, the U.S. Attorney's office in Wichita announced a grand jury indictment alleging that Edward B. Williamson III, a Wichita native and former owner of Fifth Avenue Communications Inc., committed wire fraud using the Internet.
The criminal indictment alleges that Williamson conspired to sell penny stocks in low capitalized companies, including a company called AutoAuction.com, by placing false information about the companies on the Fifth Avenue Web site. The indictment further claims that Williamson also was the president of AutoAuction.com.
Williamson could not be reached for comment. He is scheduled to be arraigned in U.S. District Court Nov. 13. Bond is set at $50,000, according to the indictment. If convicted, Williamson faces a maximum of five years in federal prison without parole.
'Pump and Dump'
The indictment alleges that from May 1999 through August 2000, Williamson promoted the sale of stocks in AutoAuction.com, a company that purportedly operated car auctions through an Internet Web site and other locations, on the Fifth Avenue Web site. The indictment also claims that Williamson executed a scheme to defraud potential buyers by posting false information on the Fifth Avenue site that AutoAuction .com was selling 1,000 cars per month.
Kena Rice, spokesperson for the U.S. Attorney's Office, declined to comment on the case. Assistant U.S. Attorney Debra Barnett, who will prosecute the case, also declined requests to comment.
This is not the first time Williamson has been investigated by federal authorities.
According to court documents in a civil lawsuit filed against Williamson Nov. 8, 2000 by the U.S. Securities and Exchange Commission, Williamson sold $1.3 million of unregistered securities to more than 1,000 investors nationwide through a scheme involving Fifth Avenue and other companies Williamson owned or had a controlling interest in. Those companies included Net World Marketing Inc., which claimed to be an Internet shopping mall that was run by Williamson's wife, Georganna, and that shared offices with Fifth Avenue at 400 N. Woodlawn, and AutoAuction.com.
The lawsuit contended that Williamson made false claims about those companies through news releases and postings on the Fifth Avenue Web site to inflate the sale price of their stock and profited from selling his shares in the companies.
"The SEC refers to that as 'Pump and Dump,'" says Jeffrey Carmichael of Morris Laing Evans Brock & Kennedy who represented the SEC in the lawsuit. "We found there were no assets to the companies."