Charges filed in "junk fax" scheme
Seattle Times technology reporter
The Securities & Exchange Commission has charged the chairman and former chief executive of Seattle video-game company Infinium Labs for his alleged role in a "junk fax" scheme to promote the company's stock.
The SEC says Timothy Roberts, 36, of Longboat Key, Fla., authorized the fax promotion and made a profit of $422,500 by selling his shares during a period of increased trading volume.
"Mr. Roberts denies the allegations in their entirety," said Roberts' attorney, Michael Ference, of Sichenzia, Ross, Friedman and Ference of New York.
The SEC complaint, filed Tuesday in U.S. District Court for the Middle District of Florida, alleges that Roberts hired a Texas resident named Michael Pickens to send thousands of potential investors a fax. The fax made it appear as if Infinium Labs were on the verge of launching its flagship product, a video-game system called "Phantom."
"The faxes made it sound like it was about to launch this product when the company was nowhere near selling the product," said Robert Tashjian, SEC staff attorney who handled the investigation.
The SEC already has charged Pickens for his role in a related scheme involving manipulation of stocks in Infinium and other companies. Pickens is under criminal indictment by the U.S. Attorney for the Southern District of New York.
The charges against Roberts are personal and clear Infinium Labs of wrongdoing.
"We made the determination that Roberts was the wrongdoer," said the SEC's Tashjian. "He was personally responsible for hiring Pickens. He was personally on notice and he personally profited. He was the one we were looking for here."
Roberts served as chief executive and acting chief financial officer until he resigned in August. Since then, the company, which is listed on the Over-the-Counter bulletin board, has struggled to release its Phantom Game service and lost industry veteran Kevin Bachus, who resigned as CEO, president and acting chief financial officer in November. Currently, Greg Koler is CEO.
In the claim against Roberts, the SEC said he agreed to have Pickens, son of Texas oilman T. Boone Pickens, promote Infinium's stock in November 2004. For about four months, the SEC alleges, Pickens sent faxes containing false statements about "the timing of Infinium Labs' planned launch of the Phantom, the prospects for the value of its stock and the company's management."
The SEC estimates that Roberts paid Pickens about $200,000 in cash and gave him 4 million shares of Roberts' own stock.
The SEC is asking the judge to prohibit Roberts from violating securities laws; pay back all the profits he made from stock sales; impose a fine; bar him from being an officer or director of a public company; and bar him from participating in any future penny stock offerings.
Tricia Duryee: 206-464-3283 or email@example.com
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