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By Chad Bray
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--The top executives of Spongetech Delivery Systems Inc. (SPNG) were arrested and charged Wednesday in an alleged scheme to defraud investors by reporting falsely and grossly overstated sales figures.
According to a criminal complaint filed Wednesday, Michael Metter, Spongetech's chief executive, and Steven Moskowitz, the cleaning-products maker's chief operating officer, were charged with conspiracy to commit securities fraud and obstruction of justice.
Metter, 58 years old, of Greenwich, Conn., and Moskowitz, 45, of Flushing, N.Y., are expected to appear before a U.S. magistrate judge in federal court in Brooklyn later Wednesday.
In the complaint, prosecutors from the U.S. Attorney's office in Brooklyn alleged Metter and Moskowitz between January 2007 and May 2010 publicly reported the company had secured purchase orders or made sales to five customers that did not exist.
The purported sales accounted for as much as 99% of Spongetech's revenue, prosecutors said.
During that time frame, the men allegedly filed multiple false reports with the U.S. Securities and Exchange Commission and issued numerous press releases touting the false sales figures, typically via the Internet, prosecutors said in the complaint.
Since the SEC issued subpoenas in September as part of a formal probe of Spongetech, Metter and Moskowitz allegedly have tried to fabricate the existence of the five purported customers, according to the complaint.
They allegedly sought to create Web sites and virtual offices for the companies, have furnished investigators with phony purchase orders and produced "questionable documentation" purportedly constituting proof of payments by the customers, prosecutors said in the complaint.
-By Chad Bray, Dow Jones Newswires; 212-227-2017; chad.bray@dowjones.com
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--The top executives of Spongetech Delivery Systems Inc. (SPNG) were arrested and charged Wednesday in an alleged scheme to defraud investors by reporting falsely and grossly overstated sales figures.
According to a criminal complaint filed Wednesday, Michael Metter, Spongetech's chief executive, and Steven Moskowitz, the cleaning-products maker's chief operating officer, were charged with conspiracy to commit securities fraud and obstruction of justice.
Metter, 58 years old, of Greenwich, Conn., and Moskowitz, 45, of Flushing, N.Y., are expected to appear before a U.S. magistrate judge in federal court in Brooklyn later Wednesday.
In the complaint, prosecutors from the U.S. Attorney's office in Brooklyn alleged Metter and Moskowitz between January 2007 and May 2010 publicly reported the company had secured purchase orders or made sales to five customers that did not exist.
The purported sales accounted for as much as 99% of Spongetech's revenue, prosecutors said.
During that time frame, the men allegedly filed multiple false reports with the U.S. Securities and Exchange Commission and issued numerous press releases touting the false sales figures, typically via the Internet, prosecutors said in the complaint.
Since the SEC issued subpoenas in September as part of a formal probe of Spongetech, Metter and Moskowitz allegedly have tried to fabricate the existence of the five purported customers, according to the complaint.
They allegedly sought to create Web sites and virtual offices for the companies, have furnished investigators with phony purchase orders and produced "questionable documentation" purportedly constituting proof of payments by the customers, prosecutors said in the complaint.
-By Chad Bray, Dow Jones Newswires; 212-227-2017; chad.bray@dowjones.com
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