Emulex Hoax Suspect Faces Grand Jury Decision Today

The 23-year-old former community college student accused of sabotaging Emulex Corp.’s stock last month with a phony press release should learn today whether a federal grand jury will indict him, law enforcement authorities said.

The U.S. attorney’s office in Los Angeles is leading the criminal prosecution of Mark Jakob, who was charged Aug. 31 in a federal complaint with one count of securities fraud and one count of wire fraud.

The Securities and Exchange Commission is pursuing a civil lawsuit against Jakob to recover the profits he made on trades of Emulex, a Costa Mesa maker of high-speed data storage products. The agency also is seeking unspecified fines.

Federal law enforcement authorities wouldn’t speculate on what the grand jury will do. Jakob waived his right on Sept. 18 to a preliminary hearing on the charges. A federal judge has frozen about $400,000 in bank and brokerage accounts held in Jakob’s name. He is free on $100,000 bond.

Jakob, who lives in El Segundo, allegedly submitted a bogus Emulex press release to Internet Wire Inc., an online news-release service, containing what appeared to be bad news on Emulex.

The fake release was transmitted by Internet Wire and then picked up by several major news organizations, leading investors to slash $2.45 billion from Emulex’s market value before trading was halted.

Jakob, a former employee of Internet Wire, allegedly used his inside knowledge of its operations to pull off the scheme.