Harris Freedman and Sharon Will, who have been vice presidents of Hemispherx Biopharma Inc. (AMEX: HEB) (Price: $7.75) since 1994, and a former Hemispherx board member, Stephen J. Drescher, have been associated with three of the companies named in a press release announcing the October 2, 1998 New York State Attorney General stock-manipulation indictment. Hemispherx was one of the named companies. Mr. Freedman, Ms. Will, and Mr. Drescher, along with Hemispherx’s underwriters, are as a group connected to a number of other companies associated with fraudulent activities.
Mr. Freedman and Ms. Will, either directly or indirectly, controlled substantial amounts of Netsmart Technologies, Inc. (NASDAQ: NTST) and Big City Bagels, Inc. (NASDAQ: BIGC) stock before their respective 1996 initial public offerings. Monroe Parker Securities, Inc., one of the indictment’s named defendants, underwrote the Big City Bagels and Netsmart IPOs. Mr. Drescher was a board member of Big City Bagels and was Monroe Parker’s Director of Corporate Finance at the time it took those companies public. Both Netsmart and Big City Bagels were named in the stock-manipulation release.
Mr. Freedman and Mr. Drescher have also both been corporate officers and shareholders of MusicSource USA Inc. (OTC: MUSS), which was delisted by NASDAQ in April 1995 and last traded on April 30, 1999 at 4 cents. Mr. Drescher served as MusicSource’s president from February 1994 until November 1996. Mr. Freedman had been a vice president at MusicSource from October 1992 until January 1994. According to a September 1996 report in the Palm Beach Post, five stockbrokers pleaded guilty to accepting bribes from a stock promoter in exchange for persuading clients to buy stocks in several companies, including MusicSource. In September 1998, according to a report in the Orange County Register, the U.S. Attorney’s Office charged ten additional brokers with accepting bribes to sell stocks including MusicSource.
Monroe Parker, Biltmore Securities, Inc., and Stratton Oakmont, Inc. underwrote Hemispherx’s IPO. In December 1997, Monroe Parker was the subject of an NASD complaint, and its SEC registration was terminated in April 1998. At the time of the 1995 HEB IPO, two principals of Biltmore were serving consecutive one-year suspensions as partial settlement of an SEC complaint that Biltmore had engaged in fraudulent sales practices. Stratton Oakmont was in December 1996 expelled from the NASD. In September 1998, Stratton’s former chairman, Jordan Belfort, was indicted and charged with conspiracy, fraud, money laundering and obstruction. Mr. Belfort personally held 170,000 pre-public shares of HEB. The Belfort Family Trust owned an additional 80,000 pre-public HEB shares. HEB began as simply another Stratton-created stock fraud, and has since used this funding merely to increase the sophistication and gravity of its fraudulent activities.
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