U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16926 / March 8, 2001
SEC v. Lloyd E. Wollmershauser a/k/a The PennyStockMan, Civ. No. 101CV530 (N.D. Ohio, Eastern Div.);
On March 7, 2001, the Commission filed a Complaint in federal court, Northern District of Ohio, Eastern Division, against Lloyd E. Wollmershauser, also known as the "PennyStockMan," of Cleveland, Ohio, for engaging in an Internet pump-and-dump scheme. The Complaint alleges that Wollmershauser obtained over two million shares of Thermotek International, Inc. ("TTKI"), a penny stock company that on June 28, 2000 began trading for the first time in the over-the-counter market, and then disseminated false information about the company, causing the price of the stock to rise. Wollmershauser then sold TTKI stock at a profit before the price of the stock plummeted.
According to the Complaint, Wollmershauser, the proprietor of an Internet web site and newsletter service called PennyStockMan, touted TTKI to PennyStockMan subscribers in his newsletters, on his web site, and in personal e-mails, and made numerous false statements including that he had inside information allowing him to project TTKI's price; that the price of TTKI stock would likely rise to $20 by the end of the first day of trading; that he believed TTKI was a good investment based upon his independent research; that mutual funds were interested in TTKI; and that he did not intend to sell his shares in the short term. The Commission alleged that Wollmershauser, at the time of these false statements, intended to sell his TTKI stock during any price increase caused by his recommendation.
The Commission alleges that when PennyStockMan subscribers demonstrated an interest in acquiring TTKI stock based on Wollmershauser's recommendation, Wollmershauser advised them to place limit buy orders at a specific price. The Commission further alleges that Wollmershauser's false statements, coupled with his advice to place limit buy orders, caused PennyStockMan subscribers to buy TTKI stock on June 28 and June 29, 2000 which, in turn, caused the price of TTKI stock to rise. The Commission also alleges that Wollmershauser placed limit sell orders at the same time he knew that PennyStockMan subscribers had placed limit buy orders. Finally, the Commission alleges that Wollmershauser sold shares of TTKI stock on June 28 and June 29, 2000 for proceeds of $436,660 before the price and volume of TTKI stock plummeted.
Without admitting or denying the allegations in the Complaint, Wollmershauser consented to the entry of an Order that (i) enjoins him from violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940; (ii) orders him to pay disgorgement of $436,660; and (iii) waives disgorgement in excess of $205,000 and does not impose a civil penalty based on Wollmershauser's sworn statements demonstrating his inability to pay.
In a related administrative proceeding, the Commission ordered TTKI and its president, Harold D. Massner, to cease and desist from committing or causing any violation and any future violation of Sections 5(a) and 5(c) of the Securities Act of 1933. See Release No. 33-7962 (March 6, 2001).