Want to make $5.5-million in just two months? Valrico stock promoter Robert M. Esposito accomplished this unlikely goal several years ago when he helped a tiny New Jersey company go public and hired a Tampa buddy to publicize its stock.
The only problem, federal securities regulators say, is that the pair had to break the law to do it.
According to a lawsuit filed Monday in Tampa federal court, Esposito, 47, was the "ringleader" of a scheme to illegally pump up the stock price of Anscott Industries Inc. of Wayne, N.J. Esposito's attorney denied the allegations.
The Securities and Exchange Commission's complaint claims Esposito arranged to take the specialty-chemical company public by having it acquire a publicly traded shell called
He then hired a frequent partner on such deals, Tampa stock promoter Gregory A. King, to drum up interest in Anscott by exaggerating and fabricating its accomplishments in a series of faxed stock reports, regulators said. Among the claims: that an Anscott fabric-protection product called XPel could repel AIDS, SARS and other infectious diseases, and that the company's strategic partners included defense contractor Raytheon and the Los Alamos National Laboratory.
Esposito, who received 4-million shares of Anscott stock as payment, allegedly made $5.5--million during the first two months of trading by selling just 40 percent of his stake at inflated prices. King, 55, received $400,000 for his services, the SEC alleged. "There's few places where you'll find more pump-and-dumps than in Florida," Robert Kaplan, an assistant SEC director for enforcement, said in an interview.
Anscott filed for Chapter 11 bankruptcy protection in August. It reported no revenue in 2006 and 2007.
Tampa lawyer Burt Wiand, who represents Esposito, said his client denies any wrongdoing and will contest the allegations. "This stuff about (being) a 'ringleader' is just gratuitous fluff," the Fowler White attorney added.
King, who was named as a co-defendant, could not be reached late Monday for comment. The SEC's complaint also names Anscott CEO Jack R. Belluscio, a resident of Saddle River, N.J., as a co-defendant.
According to public records, Esposito was arrested in 1996 for selling cocaine and was subsequently convicted on two counts. He currently is listed as president of Barrington Financial Inc., a Brandon company whose services include stock promotions.
"The mainstream media tends to focus primarily on the largest corporations listed on major stock exchanges," says its Web site, BarringtonFin.com. "Barrington understands how to get the word out" about smaller companies.
Times researcher Caryn Baird contributed to this report. Scott Barancik can be reached at [email protected] or (727) 893-8751.