Securities and Exchange Commission
Litigation Release No. 17985 / February 19, 2003
Securities and Exchange Commission v. Samuel Aaron Meltzer Civil Action No. CV 03 770 (Judge Denis R. Hurley) (E.D.N.Y.)
On February 18, 2003, the Securities and Exchange Commission ("SEC") filed civil charges in federal district court in Brooklyn, New York, against Samuel Aaron Meltzer ("Meltzer"), a professional Internet "spammer," alleging that Meltzer used the Internet to commit securities fraud. In return for compensation from stock promoters and issuers, Meltzer sent millions of unsolicited emails and created numerous websites to promote various penny stocks. In order to conceal his identity - and to avoid the detection of web hosts seeking to stop Internet spam - Meltzer operated under at least thirty different assumed Internet identities.
The SEC's Complaint alleges that Meltzer's spam and websites made false and misleading representations about the stock he helped to promote. First, Meltzer falsely stated that his recommendations represented his own investment opinions based on his review of the issuer's public filings and his interviews with the issuer's management. In fact, Meltzer did not review the issuers' filings, did not interview their management, and simply republished recommendations and representations that he received from the promoters who had hired him. Second, in his emails and websites, Meltzer knowingly or recklessly made false and misleading representations concerning the issuers' current business and projections of future performance that had no reasonable basis in fact. Between 1998 and 2001, Meltzer touted the stocks of at least twelve issuers and received at nearly $160,000 in stock and cash as ill-gotten gains as a result of his fraudulent conduct.
The complaint charges Meltzer with violations of the antifraud provisions of the federal securities laws, Section 17(a) of the Securities Act of 1933 ("Securities Act"), Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act"), and Rule 10b-5 thereunder.