UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16621 / July 6, 2000
SEC v. REFAEL SHAOULIAN, U.S. District Court for the Central District
of California, Civ. Action No. 00-04614 (CBM) (C. D. Cal. May 3, 2000) as
amended (July 6, 2000)
The Securities and Exchange Commission announced that on May 3, 2000,
the U.S. District Court for the Central District of California issued a
temporary restraining order against 24 year-old Refael Shaoulian
("Shaoulian") barring him from violations of the antifraud provisions of
the federal securities laws. The Court, also on May 3rd, issued
an asset freeze against Shaoulin and his father, Samuel Shaoulian.
In its original complaint filed on May 3rd ("Original
Complaint"), the Commission alleged that Shaoulian used the Internet to
manipulate the price of a thinly traded stock by spreading false
information to various Internet message boards, allowing him to reap more
than $172,000 in trading profits. The Original Complaint, also named
Shaoulian's father, Samuel Shaoulian, as a relief defendant based on his
receipt of ill-gotten gains from the manipulation. Based upon evidence of
additional manipulations by Shaoulian, on July 6, 2000, the Commission
filed an amended Complaint ("Amended Complaint") charging that from April
1999 through July 1999, Shaoulian engaged in virtually identical Internet
pump and dump schemes involving four additional stocks. With these four
additional stock manipulations charged against Shaoulian, the Commission
is seeking more than $388,000 in disgorgement from Shaoulian, his father
and brother, as well as civil penalties against Shaoulian. The Amended
Complaint also names Shaoulian's brother, Rabin Shaoulian of Beverly
Hills, as a relief defendant because he received some of the ill-gotten
gains from the manipulations.
According to the Commission's Original Complaint, in January 2000,
Shaoulian manipulated the common stock price of Universal Standard
Healthcare, Inc. ("Universal"), a stock traded through the NASD's OTC
Bulletin Board system, by posting numerous false messages on Internet
message boards. The Complaint alleges that Shaoulian, a 24 year-old
Beverly Hills resident and UCLA graduate, obtained more than $172,000 in
profits from his Internet pump and dump manipulation of Universal stock.
Shaoulian did so by first buying a large block of Universal shares between
January 24 and 26, 2000. According to the Complaint, during the weekend of
January 29th and 30th, Shaoulian posted hundreds of
messages, under multiple pseudonyms, to Internet financial message boards
using publicly available computers located on the UCLA campus. These
messages falsely stated that Universal was about to be purchased by
another company and that Universal was profitable. In fact, Universal had
ceased all operations in August 1999, when it filed for Chapter 7
bankruptcy protection. Universal's stock price closed at $0.03 per share
on January 21, 2000, and peaked at $1.50 per share within the opening hour
of trading on January 31st, before declining precipitously. On
January 31 and February 1, 2000, Shaoulian sold all his Universal shares
for a $172,690 profit. After Shaoulian's Internet message campaign ended,
Universal's price plummeted. Based on this conduct, the Commission in its
Complaint sought a temporary restraining order and a preliminary and
permanent injunction barring Shaoulian from future violations of the
antifraud provisions of the federal securities laws, disgorgement of
ill-gotten gains, and civil monetary penalties. On May 11th,
the Court, with Shaoulian's consent, entered a preliminary injunction
against him and continued the asset freeze.
The Amended Complaint alleges that Shaoulian manipulated the stock of:
iChargeit, Inc., Worldtradeshow.com, Inc., Casino Pirata.com Ltd. and
E*TwoMedia.com, Inc. Each of these stocks traded on the OTC Bulletin Board
at the time of these manipulations. In each instance, the Commission
alleges that Shaoulian purchased a substantial block of shares in these
companies, posted hundreds of false messages about each company to various
Internet message boards using publicly available computers at the campuses
of UCLA and the University of Southern California and then sold his own
shares into the buying surge prompted by the false Internet messages. In
each instance, Shaoulian obtained substantial profits.
In a related action, the Commission today announced civil charges
against two other individuals who, it alleged, participated in the
manipulations of iChargit, Worldtradeshow.com, Casino Parata.com,
E*TwoMedia.com and other issuers. See, SEC v. Aziz Golshani, et al., Civ.
Action No. 99-13139 (CBM)(AJWx)(C.D. Cal.) Lit. Rel 16620 (July 6,
2000).
The Commission thanks the NASD for its assistance in this matter.
http://www.sec.gov/litigation/litreleases/lr16621.htm
