Stock Picker Charged With Website Scam
The website hawks “mega bonus buys,” but it isn’t peddling laundry detergent or paper towels.
Instead, www.thestockster.com offers write-ups of obscure shares that trade for pennies. The Securities and Exchange Commission on Tuesday charged the Beverly Hills man who runs the site with securities fraud in an alleged pump-and-dump scheme.
The SEC said that Nicholas A. Czuczko, 34, bought shares of little-known companies, talked them up on his website and then secretly sold them after “unsuspecting” investors piled in, boosting the stocks’ prices.
Since mid-December, Czuczko has made more than $2.7 million touting shares of companies, including one that he manages, Epic Media Inc. of Los Angeles, according to the SEC.
The agency wants Czuczko to disgorge ill-gotten gains and also seeks to enjoin him from further violations of securities laws.
Czuczko’s attorney declined to comment.
Czuczko’s father, 59-year-old Nicholas Czuczko of Los Angeles, and 34-year-old John Yeung, Epic Media’s chief operating officer, both made money trading stocks the younger Czuczko recommended, according to the SEC, although neither was charged in the suit.
The agency alleged that Czuczko spent $1.15 million to advertise Thestockster.com on mainstream websites such as Yahoo and TheStreet.com.
Czuczko’s site, launched in December, claimed to be run by an “independent research company” that “publishes unbiased research,” according to the SEC.
“Contrary to this assertion, Czuczko’s recommendations were biased in favor of stocks in which he held an interest and planned to profit from undisclosed near-term sales,” the agency said.
The home page for Czuczko’s site says, “We help investors win at investing on the merits of radically original thinking and an unbeatable track record of picking stocks with huge potential.” It has a picture of traders gleefully pumping their fists in the air.
Referring to companies such as Microsoft Corp. and Google Inc., the site claimed that “we’ve brought you MSFT, GOOG, SIRI, CMGI, JDSU and others you’ve made a killing on,” the SEC said in its complaint.
In reality, the agency said, “at no point did Czuczko recommend the purchase” of those shares.
Although a disclaimer on the site said the operator “may” trade stocks it recommended, Czuczko didn’t reveal that he bought stocks shortly before recommending them and sold soon after, the SEC said.
“The Stockster site provided no warning to investors that the publisher of the website ... actually intended -- and actually made it a regular practice -- to sell the stocks that were recommended on the site,” the SEC said.
Czuczko’s Epic Media is a developmental-stage company that plans to publish lifestyle magazines and produce TV shows, but had no revenue in the fiscal year ended Nov. 30, according to the SEC.
