Meet the SEC
I know I promised I wouldn't mention Infinium Labs again until they announced bankruptcy, but DQ reader Dwight Deur sent me a link to this SEC document and it's too good not to mention:Washington, D.C., May 16, 2006 — The Securities and Exchange Commission today charged the former Chief Executive Officer of Seattle-based video game developer Infinium Labs, Inc., for his role in a fraudulent “junk fax” scheme to promote the company’s stock. The Commission alleges that Timothy M. Roberts, 36, of Longboat Key, Fla., authorized the fax promotion and reaped more than $400,000 by unloading his Infinium Labs shares in the ensuing run-up in trading volume.
According to the Commission’s complaint, filed in the United States District Court for the Middle District of Florida, Roberts hired a stock promoter in November 2004 to send faxes to tens of thousands of potential investors across the country. The faxes made it appear as if Infinium Labs were on the verge of launching its flagship product, a home videogame system called the “Phantom.” In fact, at the time of the fax campaign, Infinium Labs lacked the financial resources to overcome the significant technological and manufacturing hurdles preventing it from marketing the game system to consumers. The faxes also included baseless stock price targets, predicting that Infinium Labs’ stock price would rise as much as 3,000% in the coming weeks, and falsely claimed that the company was headed by a developer of the Microsoft X-Box.
The Commission alleges that, over the four months of the fax campaign, Roberts took advantage of the increased trading volume in Infinium Labs stock to sell approximately $422,500 of his personal stock holdings. Many of Roberts’s stock sales went unreported to the public. The Commission’s complaint also alleges that Roberts paid the promoter with four million shares of his own Infinium Labs stock in violation of the registration provisions of the federal securities laws.
That's about as open and shut as it gets.
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