Litigation Release No. 21070 / June 5, 2009

Securities and Exchange Commission v. Wall Street Communications, Inc. et al., (U.S. District Court for the Middle District of Florida, Civil Action No. 8:09-CV-1046-T-30-T6W filed June 5, 2009)

The Securities and Exchange Commission today filed a complaint in the United States District Court for the Middle District of Florida charging Wall Street Communications, Inc., its principal, Howard Scala, and two other individuals, Ross E. Barall and Donald R. McKelvey with securities fraud in connection with a series of stock manipulation schemes and a fraudulent, unregistered distribution of stock.

The Commission's complaint alleges that from at least January through December 2004, Wall Street and Scala acquired large blocks of stock in thinly-traded microcap companies. Wall Street acquired the stock for little or no consideration, based on agreements to find buyers for the shares in exchange for a portion of the sales proceeds. According to the complaint, Wall Street and Scala then created a market for these shares either by causing the release of spam emails touting the stocks or by coordinating manipulative trading with brokerage accounts controlled by Barall. The Commission alleges that after creating an artificially inflated market for the stock, Wall Street and Scala dumped the shares on unsuspecting investors, reaping tens of thousands of dollars in profits each time.

The complaint further alleges that from 2003 through at least July 2004, Wall Street and Scala engaged in another scheme in which they illegally acquired 8.6 million shares of Telco-Technology, Inc. pursuant to Form S-8 registration statements, purportedly in exchange for consulting services. According to the complaint, in fact, Wall Street did not perform any services for which Telco was permitted to issue the S-8 stock to Wall Street. The complaint alleges that almost immediately after obtaining the Telco shares, Wall Street and Scala sold them in a fraudulent unregistered distribution and funneled half of the proceeds to a company controlled by Telco's president, Donald R. McKelvey.

The Commission's complaint charges that: (a) Wall Street and Scala violated Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 ("Securities Act") and Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5, and that they aided and abetted McKelvey's violations of Section 10(b) of the Exchange Act and Rule 10b-5; (b) Barall violated Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5; and (c) McKelvey violated Sections 5(a), 5(c), and 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5. In its complaint, the Commission seeks permanent injunctions, an accounting, disgorgement plus prejudgment interest, civil penalties, penny stock bars, and an officer and director bar against McKelvey.