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:

  • Jalon Investments, Ltd., Gata Investments, Ltd., and Altea Investments, Ltd., three Guernsey companies controlled by Pangia.

  • Zoya Financial Company, Ltd., a promotional firm controlled by Singh.

  • Adam Michael Oliver of Otterville, Ontario, ESWW's former sole officer and director.

  • Michael W. Smith, a Canadian attorney residing in London, Ontario.

  • Bengt Odner, of the United Kingdom, ESWW's current chairman.

  • Michael Bergman, of Jersey City, New Jersey, and his promotional firm, Access 1 Financial, Inc., which hyped ESWW stock.

  • Eugene Foo, of Toronto, Ontario, who helped facilitate the sham private offering.

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:

  • ESWW violated Sections 5(a) and 5(c) of the Securities Act of 1933 ("Securities Act") and Sections 10(b), 13(a), 13(b)(2)(a), and 13(b)(5) of the Securities Exchange Act of 1934 ("Exchange Act") and Rules 10b-5, 12b-20, 13a-1, and 13b2-1 thereunder.

  • Pangia violated Sections 5(a), 5(c), and 17(a) of the Securities Act and Sections 10(b), 13(d), and 16(a) of the Exchange Act and Rules 10b-5, 13d-1, and 16a-3 thereunder, and aided and abetted violations of Section 13(a) of Exchange Act and Rules 12b-20 and 13a-1 thereunder.

  • Jalon Investments, Ltd., Gata Investments, Ltd., and Altea Investments, Ltd. 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 thereunder.

  • Satbal Singh 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 thereunder.

  • Zoya Financial Corporation, Ltd. violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.

  • Michael W. Smith violated Sections 5(a) and 5(c) of the Securities Act and Sections 10(b) and 13(b)(5) of the Exchange Act and Rule 10b-5 thereunder, and aided and abetted violations of Sections 13(a) and 13(b)(2)(A) of the Exchange Act and Rules 12b-20, 13a-1, and 13b2-1 thereunder.

  • Adam Michael Oliver violated Sections 5(a) and 5(c) of the Securities Act and Sections 10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5 and 13b2-2 thereunder, and aided and abetted violations of Section 13(a) of the Exchange Act and Rules 12b-20 and 13a-1 thereunder.

  • Mark Bergman and Access 1 Financial, Inc. violated Section 17(b) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.

  • Bengt Odner violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.

  • Eugene Foo violated Sections 5(a) and 5(c) of the Securities Act.

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.

*  SEC Complaint in this matter.