And When You're Not...

On December 13, 2006, a U.S. District Court in California entered judgment against Dieter Raabe, one of the principal players in a “pump and dump” scheme that used the Internet to entice investors.  Raabe, Raabe, and his cohorts, James E. Franklin and Samuel Wolanyk, were named in an SEC action filed almost four years ago, on January 14, 2002.  

According to the SEC’s complaint, Franklin set up a “financial advice” website, called "Red Hot Stocks," where he touted stocks that he had acquired privately – through private placements or as consulting fees.  Then, after misleading “profiles” about the companies were published on “Red Hot Stocks,” and share prices increased, Franklin dumped his holdings.  The SEC charged that Wolanyk authored and distributed the profiles, while Raabe issued trading instructions for the stocks in a Canadian brokerage account.  The SEC also claimed that Raabe and Franklin engaged in illegal sales of unregistered securities.

In December 2005, a jury enjoined Franklin and Wolanyk from future violations of the securities laws and ordered them to pay $770,000 and $50,000 respectively. 

Now, Raabe has been ordered to pay civil penalties totaling $831,310 and, like his co-defendants, has been enjoined from future securities law violations.

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 Hartley Bernstein, Debra Cherney