Aziz Golshani, et al.

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 16620 / July 6, 2000

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SEC v. Aziz Golshani, et al., Civ. Action No. 99-13139 (CBM)(AJWx) (C.D. Cal.)

SEC Files New and Expanded Charges Against Two Defendants in
NEI Webworld Internet Stock Manipulation Case;
Both Plead Guilty to Criminal Charges

The Securities and Exchange Commission today filed an amended complaint against two Southern California residents previously charged in the NEI Webworld Internet stock manipulation case, detailing new and expanded civil fraud charges for manipulating the prices of other thinly-traded stocks by spreading false information on Internet message boards. The SEC charges that defendants Arash Aziz-Golshani, 23, of Beverly Hills, and Hootan Melamed, 24, of Pomona, carried out an Internet fraud scheme relating to the securities of several issuers, in addition to the securities of NEI Webworld, Inc., the subject of the SEC's original complaint filed in December 1999. In related criminal proceedings, the United States Attorney's Office for the Central District of California announced today that Aziz-Golshani and Melamed have pled guilty to charges based on the same conduct alleged in the SEC's original complaint.

The SEC's new charges are detailed in an amended complaint filed today in the United States District Court for the Central District of California in the case captioned SEC v. Aziz-Golshani, et al., Case No. 99-13139 CBM (AJWx). The original complaint charged Aziz-Golshani, Melamed, and a third defendant, Allen Derzakharian, with stock price manipulation in violation of federal securities laws. The charges were based on their dissemination of fraudulent statements on the Internet in November 1999 that NEI Webworld, Inc. would be acquired by another company, and trading to profit from that false information. Since the original complaint was filed, the SEC learned of new evidence showing that Aziz-Golshani and Melamed engaged in similar fraudulent conduct with respect to the securities of eleven other issuers during the time period April 1999 to October 1999. The amended complaint continues to charge a third defendant, Allen Derzakharian, with federal securities fraud relating to the securities of NEI Webworld, Inc.

In particular, the Commission's amended complaint alleges the following:

  • With regard to each issuer, as with the NEI Webworld fraud, Aziz-Golshani and Melamed (a) purchased shares of the issuer at low prices; (b) disseminated materially false and misleading messages about the issuer on Internet message boards in an effort to manipulate the price of the issuer's securities; (c) caused the trading volume and price of the securities to increase; and (d) in most cases sold their shares at a profit.

  • The defendants attempted to conceal their illegal activity by using phony screen names, by providing false identifying information to Internet service providers, and by posting the fraudulent information from computer terminals accessible to the general public, including computers located at the University of California at Los Angeles.

  • Aziz-Golshani engaged in this conduct with respect to eleven issuers: JustWebit.com, iChargeit, Inc., WorldTradeShow.com, Inc., E*twoMedia.com, Inc., Encounter.com, Inc., Classified Online.com, Virtual Games, Inc., Foodvision.com, Inc., YouTicket.com, Inc., Fashionmall.com, Inc., and Casino Pirata.com LTD. Melamed engaged in the fraudulent conduct with respect to JustWebit.com and Foodvision.com, Inc.

  • As a result of his trading in these issuers Aziz-Golshani made illicit profits of approximately $321,000, in addition to the $152,742 in illicit profits from his trading in NEI Webworld, Inc., for a total of $473,742. Melamed made illicit profits of approximately $1,928 in addition to the $211,250 in illicit profits held in a joint account with Derzakharian from his trading in NEI Webworld, Inc.

The Commission seeks permanent injunctions barring defendants from future violations of the antifraud provisions of the federal securities laws, disgorgement of ill-gotten gains, and civil money penalties. A preliminary injunction and asset freeze against the three defendants remains in effect.

In the criminal action, Aziz-Golshani pled guilty to each charge in a two count felony indictment charging him with securities fraud and conspiracy to commit securities fraud. Melamed pled guilty to a felony count of conspiracy to commit securities fraud. In a related action, the Commission today announced civil charges against another individual who, it alleged, participated in the manipulations of iChargit, Worldtradeshow.com, Casino Parata.com, E*TwoMedia.com and other issuers. See, SEC v. Shaoulian, Civ. Action No. 00-04614 (CBM)(C.D. Cal.) Lit. Rel.16621 (July 6, 2000).