Copyright 2010 States News Service States News Service
March 11, 2010 Thursday
LENGTH: 884 words
HEADLINE: SECURITIES BROKER PLEADS GUILTY TO ISSUING FALSE PRESS RELEASES TO INFLATE STOCK PRICES
BYLINE: States News Service
DATELINE: SAN FRANCISCO, CA
The following information was released by the San Francisco Division of the Federal Bureau of Investigation:
Lambros D. Ballas pleaded guilty in federal court in San Francisco yesterday to one count of securities fraud, United States Attorney Joseph P. Russoniello announced.
In pleading guilty, Ballas, 34, of Long Island, N.Y., admitted that over a three-day period from Sept. 29, 2009, to Oct. 2, 2009, he fraudulently issued press releases concerning three companies: Discovery Labs; IMAX; and Local.com. Ballas admitted that he issued the press releases with the intent to defraud; specifically, to temporarily and artificially inflate these companies stock. At the time, Ballas was a licensed securities broker who had worked in the industry for several years.
Discovery Laboratories, Inc., is a biotech company whose common stock is listed on NASDAQ. On Sept. 29, 2009, Discovery Labs was expected to meet with the FDA concerning their drug Surfaxin for the treatment of respiratory diseases in premature infants. At the close of the market on Sept. 29, Discoverys stock was trading at $1.11 per share.
According to the plea agreement, on Sept. 29, 2009, at about 7:15 p.m. (all times, unless noted otherwise are Eastern Daylight Time), Ballas sent a press release to an online press distribution service. The press release falsely purported to be from Discovery Labs and falsely asserted that the FDA had approved Surfaxin. According to the plea agreement, Ballas followed up this false press release by posting a messages on a Yahoo! Message board for Discovery Labs and by issuing another false press release. On Sept. 30, 2009, Discovery Labs stock price opened at $1.63 a share, a 46 percent increase over its closing value on Sept. 29, 2009.
IMAX Corporation is an entertainment technology company that specializes in immersion motion picture technologies, such as the IMAX theater systems. IMAXs stock is listed on NASDAQ. According to the plea agreement, at about 5:43 a.m. on Sept. 30, 2009, Ballas sent a press release to an online press distribution service falsely purporting to be from an Associated Press reporter and falsely asserting that the Disney Company had purchased IMAX. Ballas followed up this false press release with several messages on a Yahoo! Message board for IMAX and two more false press releases.
Local.com owns and operates an internet search site for local businesses. Its stock is listed on NASDAQ. According to the plea agreement, on Oct. 1, 2009, at about 3:49 p.m., Ballas bought 5,000 shares of Local.com at $5.33 per share. Local.com closed on Oct. 1, 2009, at $5.39 a share. According to the plea agreement, at about 4:15 p.m. that day, after the market closed, Ballas sent a press release to an online press distribution service falsely purporting to be from a public relations firm and falsely stating that Microsoft had acquired Local.com. He followed up the press release by posting several messages on a Yahoo! Message board for Local.com and issuing another false press release.
By approximately 7:24 p.m. that evening, Local.com was trading at $9.65 a share, a 79 percent increase from its closing price of $5.39 a share. At approximately 9:30 p.m., Local.com issued a statement announcing that a false press release had been issued and that it was neither purchased by Microsoft nor in purchase discussions with Microsoft. By the start of trading at 9:30 a.m. the next day, Local.coms share price was about $5.12 a share. According to the plea agreement, on Oct. 2, 2009, Ballas sent a press release to another Internet press distribution service. his press release falsely stated that Google bought Local.com. Between Oct. 2 and Oct. 9, 2009, Ballas sold his 5000 shares of Local.com and made a profit of approximately $1,507.
Ballas was charged in a one count Information with securities fraud in violation of 18 U.S.C. 1348, and he pled guilty to that count. Ballas is out on bail pending sentencing, which is scheduled for July 14, 2010, before U.S. District Court Judge Maxine M. Chesney in San Francisco. The maximum statutory penalty for securities fraud is 25 years and a fine of $250,000, plus restitution if appropriate. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. 3553.
Jonathan Schmidt is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Ponly Tu. The prosecution is the result of an investigation by the FBI.
Please note, an indictment contains only allegations against an individual and, as with all defendants, Mr. Ballas must be presumed innocent unless and until proven guilty.
Case #: CR 10-0005 MMC
A copy of this press release may be found on the U.S. Attorney’s Office’s website at www.usdoj.gov/usao/can.
Electronic court filings and further procedural and docket information are available at https://ecf.cand.uscourts.gov/cgi-bin/login.pl.
Judges’ calendars with schedules for upcoming court hearings can be viewed on the court’s website at www.cand.uscourts.gov.
All press inquiries to the U.S. Attorney’s Office should be directed to Jack Gillund at (415) 436-6599 or by e-mail at Jack.Gillund@usdoj.gov
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