Pinellas resident admits to fraud
He also implicates others in the $10M scheme to manipulate stock prices.
By TIMES WIRES
Published October 17, 2006
NEWARK, N.J. - A St. Pete Beach man who worked as an independent auditor and later as a promoter for a now-failed telecommunications company on Monday admitted that he helped manipulate the stock price of the company in a scheme that cost investors about $10-million, prosecutors said.
In pleading guilty to fraud charges, Joseph F. Morgan implicated several others who were charged with him last year concerning stock prices for TeleServices Internet Group Inc., Assistant U.S. Attorney R. Stephen Stigall said.
Prosecutors have said that some of the others were accused in a similar fraud at Phoenix Information Systems Inc. and Skylynx Communications Inc., which also cost investors about $10-million.
The companies all were based in the Tampa Bay area and were penny stocks, generally trading for well under $1, until the schemes drove the prices to several dollars, Stigall said.
"It's a manipulation scheme in which promoters and brokers would manipulate the price upward by telling people what a great thing it was, but not telling investors that the insiders owned most of the shares and would make millions," Stigall said.
Hundreds of people are thought to have lost money on the stocks, he said.
Phoenix Information Systems spent millions of investor dollars in plans to create a low-cost travel reservation system. It touted a deal to provide a reservation system for China Southern Airlines.
Among the top investors a decade ago: international finance tycoon George Soros, who agreed to pump $10-million into Phoenix in 1994 and bid to buy the company out of bankruptcy court four years later.
TeleServices Internet Group, a spinoff of Phoenix, answered toll-free calls for several tourist destinations, including the St. Petersburg/Clearwater Area Convention and Visitors Bureau.
Morgan, 51, formerly lived in New Jersey. He pleaded guilty to two counts of stock fraud conspiracy, each carrying a maximum sentence of five years in prison, and two counts of money laundering conspiracy, each carrying a maximum sentence of 20 years in prison.
Each count also carries maximum fines of $250,000, or twice the loss to victims.
Morgan has agreed to forfeit about $3.5-million worth of property and assets, prosecutors said.
He is to be sentenced Feb. 2.
At his plea hearing in Camden, Morgan said the scheme ran from December 1996 to October 2005.
According to prosecutors, Morgan said he conspired with Robert P. Gordon, 56, of St. Petersburg, the major shareholder of TeleServices Internet Group and its chief executive, chief financial officer, chairman, and director, as well as the founder and chairman of Phoenix, and others.
Gordon and three others have pleaded not guilty and face trial in February.