This should put an end to SpongeTech’s suit against Teri Buhl

UPDATE: Metter has been arrested, along with the lawyers he used to issue his phony documents, and an international manhunt is underway for the PR firm that collaborated with him. Perhaps they should look in Dubai?

SEC charges WGCH’s Michael Metter with penny stock pump and dump scam. This was, I believe, the story that got Teri fired from Greenwich Time.[Teri Buhl has written that this isn't so - of course, since she still doesn't know why she was fired, I choose to believe she was fired for offending someone and Metter, the fat bully, is as good a candidate as any].  Here at FWIW we’ve encouraged Teri to write what she likes and I hope we’ll have her report on this soon. In the meantime, here’s to you, Greenwich Time.

Washington D.C., May 5th 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.

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–>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.

7 Comments

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7 responses to “This should put an end to SpongeTech’s suit against Teri Buhl

  1. The Word

    Another bad day for Greenwich’s own Jeff Wilpon and his hapless Mets, who were owed beaucoup bucks by Metter for advertising at the hideous CitiField.

    First the name sponsor of lil Wilpon’s ballpark becomes a ward of the state, then Jeff turns out to be best buds with the Madoff sons, and now his largest creditor is a fraud.

    What’s that saying again about water finding its level?

  2. Cos Cobber

    I just skimmed through the actual filing. Looks like an easy case to prosecute, not much gray to it.

    Too bad the SPNG stock trolls can’t post comments to the SEC site. It would be fun to read their rabid responses of denial. Surely they would all come from that Speranza character.

  3. Walt

    Weasel Boy -
    I haven’t seen you this happy since you found out you could actually get paid for driving people around and selling them some dirt.
    The only question that remains, my friend, is: Does Ms McBeal consider you sponge worthy?
    Your Pal,
    Walt

  4. Teri Buhl

    I was actually never told by my Hearst editors that I was fired over anything I reported on Metter or SpongeTech. Metter has filed a small claims suit against Greenwich Time over publishing his address and photos which Hearst is vigorously defending. I think any reports on Metter having anything to do with my firing were just rumors started by Metter and friends.
    Today is one of those days that makes you proud to be journalist and I actually would like to thank Jim Zebora, my Greenwich Time business editor, for standing by my reporting in this story.

  5. Mr. 85 Broad St.

    Here’s some nice irony for you – Metter was a presenter at Greenwich High’s Ethics Day last month. A case study on what not to do perhaps?

  6. Peter Marks

    I bought 60,000 shares of SPNG on Sept. 14, 2009 at .14 and I have now lost about $7,800++. This was within the period of time that the SEC stated the scamming took place. I will hold onto my shares and wait and see if I will get paid off from the assets that have been frozen. I suspect the houses of those who are being charged will eventually be ordered to be sold by the judge as the houses are being put up as collateral for bail of those being charged. Once the court proceedings are finished and all are convicted the assets will hopefully include the houses and other assets of all those being charged, including two attorneys, I expect the assets will be distributed to the claimants such as myself who were defrauded by the officers of Spongetech. This will be a waiting game as the SEC isn’t noted for resolving cases quickly. I would appreciate any comments others may have regarding this as I am sure I am not the only person who lost money buying SPNG.

    • Peter the trouble is, there are usually so many victims, and so little money recovered, that you probably shouldn’t count on getting back more than ten cents on your dollar, if you’re lucky.