UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17673A / August 13, 2002
SEC Files Civil Lawsuit in $15 Million "Pump and Dump" Stock Fraud Case
Securities and Exchange Commission v. Environmental Solutions Worldwide, Inc. et al., Cause No. 1:02-CV-1575 JDD (D.C.)
The Securities and Exchange Commission announced today that on August 7, 2002, it filed a complaint against Environmental Solutions Worldwide, Inc. (ESWW), of Telford, Pennsylvania, formerly of Markham, Ontario, Canada, and related persons, alleging that they perpetrated a massive stock fraud in the Nasdaq Over-The-Counter securities market. The complaint alleges that the defendants issued ESWW stock to various insiders through a sham private offering, and then "pumped" the market with a fraudulent promotional campaign designed to artificially prime the market for ESWW stock. The promotional campaign had the intended effect: the price of ESWW stock soared by about 250%, from $2 to $7 per share. Concurrently, two of the defendants, Teodisio V. Pangia, of Kleinburg, Ontario and New York City, and Satbal Singh a/k/a Spal Singh, of Toronto, Ontario, sold approximately $15 million of ESWW stock into the unsuspecting market.
The other defendants in the case are:
Specifically, the Commission's complaint alleges that from October 1998 through June 2000, Pangia, Smith, and Singh orchestrated a pump-and-dump scheme using fraudulent press releases, millions of spam e-mails, and a paid analyst report to prime the market for ESWW stock. The promotional documents falsely claimed that ESWW had developed a revolutionary catalytic converter that, unlike any other catalytic converter, dramatically reduced toxic emissions, including nitrous oxide, a greenhouse gas believed to be a cause of global warming. These claims were false and contrary to ESWW's own test results. The promotional documents, including supposedly independent analyst reports, which Pangia paid Mark Bergman to publish, also contained unrealistic and unsupported share price projections for ESWW stock ranging from $15 to $125 per share. The complaint additionally alleges that Oliver served as an officer and director in name only, and that he, in fact, was merely a nominee for Smith, and that Odner repeated the false information about ESWW's test results in statements to the investing public.
The complaint also alleges that Pangia, Smith, Singh, and Foo orchestrated a sham private offering in which millions of unregistered ESWW shares were issued to themselves or nominees. These shares were dumped into the inflated market from the fraudulent promotional campaign described above. Pangia and Singh realized approximately $15 million from these stock sales.
The Commission's complaint alleges that based on the conduct set forth above, the defendants violated the following provisions of the federal securities laws:
The complaint seeks injunctions against all the defendants, officer and director bars against Pangia, Smith, Oliver, and Singh, disgorgement of ill-gotten gains plus pre-judgment interest from Pangia, Jalon, Gata, Altea, Singh, Bergman, and Access 1, and civil penalties against Pangia, Jalon, Gata, Altea, Smith, Oliver, Singh, Zoya, Bergman, Access 1, Odner, and Foo.
Simultaneous with the filing of the complaint, the Commission filed settlement documents with the Court as to defendant Foo in which he agreed, on a neither admit nor deny basis, to the entry of an order of permanent injunction against future violations of the securities registration provisions found in Sections 5(a) and 5(c) of the Securities Act. Foo also agreed to pay a $50,000 civil penalty.