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SEC moves against stock fraud

Securities and Exchange Commission officials have made a second nationwide sweep against small-company stock fraud.

SEC enforcement director Richard Walker announced enforcement actions Tuesday against 82 people and companies in 24 cases of alleged stock fraud that bilked investors of millions of dollars.

The first sweep, in October, cracked down on investment fraud on the Internet by people promoting small-company stocks without disclosing they are paid to do so.

This time, only four of the 24 cases involved the Internet, which allegedly was used to disseminate false information about companies to lure investors to their stocks.

The people and companies targeted in the new sweep raked in some $12.5-million in illegal gains, the SEC said.

The current sweep includes a gamut of small-stock fraud cases, such as stock-price manipulation schemes, sales of unregistered stocks and "boiler room" frauds in which brokers make high-pressure, unsolicited phone calls to people to sell stocks.

Among the cases are a California airline whose planes never took off, husband and wife officers of a company who allegedly stole $900,000 in stock proceeds for vacations in Hawaii and Europe, and a Bolivian mining company accused of buying mineral properties in a sham transaction.

Two Tampa Bay area residents were accused of distributing unregistered stock in PSA Inc., a Los Angeles company the SEC says was the center of a stock manipulation scheme last year. The stock climbed from 50 cents to $5 in less than two weeks, then plunged to pennies a share. Jackson L. Morris, a Tampa lawyer, and Mark E. Gould, a Clearwater businessman, acquired the stock by helping with the merger that made PSA a public company.

"We thought we were involved in a legitimate business deal," Morris said. He said he sold 50,000 shares for about $16,000. Gould, who could not be reached for comment, sold 100,000 shares. The SEC did not accuse Morris and Gould of fraud, but said several other PSA shareholders illegally pumped up the price of the stock so they could sell their holdings for more than $1-million.

The SEC's actions against the 82 people and companies included seeking civil injunctions, barring individuals from the securities industry and imposing sanctions against accountants and attorneys who participated. No fines were imposed. Some of the cases have been settled.

_ Times staff writer Helen Huntley contributed to this report.