SpongeTech, corporate sponsor of Bucs and Rays, charged with securities fraud
"SpongeTech Delivery Systems, Inc., America's Cleaning Company, announced today a new strategic partnership with one of Major League Baseball's fastest growing teams, the 2008 American League Champion Tampa Bay Rays. Under this sponsorship, SpongeTech will leverage a number of high profile marketing assets provided by the Tampa Bay Rays to generate awareness of SpongeTech's world class cleaning supplies and products."
Well problems began to hit SpongeTech not long after that. Here's a Venture blog postingfrom October 2009. It reported that SpongeTech, a New York maker of pre-soaped cleaning sponges and already a Pewter Partner sponsor of the Tampa Bay Buccaneers, was under investigation by the Securities and Exchange Commission for possible securities law violations.
Things are escalating. Today's New York Timesreports that SpongeTech chief financial officer Steven Y. Moskowitz on Tuesday had insisted in an interview in his office that suspicions about his company were completely unfounded. The company, best known last year for its strategy of advertising at sports stadiums around the country, was being investigated by the S.E.C. for no good reason, as far as he was concerned.
Come Wednesday, Moskowitz and SpongeTech CEO Michael Metter were arrested by FBI agents and charged with conspiracy to commit securities fraud and with obstruction of justice. The SEC also filed civil fraud charges involving a "pump and dump" scheme against them and the company.
The SEC cited the firm's "highly visible sponsorship deals with professional sports teams," which it said were made "to further create the aura that SpongeTech was a well-known and prosperous business." Here is the SEC complaint.
Bail was set at $2 million each for Metter, 58, of Greenwich, Conn., and Moskowitz, 45, of Flushing, N.Y., at a hearing before a U.S. magistrate judge in federal court.
-- Robert Trigaux, Times Business Columnist