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CPA Pleads Guilty to Internet Stock Fraud

March 13, 1997|From Bloomberg News

A Los Angeles accountant pleaded guilty Wednesday to conspiring to create false financial reports for three companies in a case that investigators said is part of a broad probe of possible Internet stock touting.

Merle S. Finkel, a licensed certified public accountant, pleaded guilty in federal court in Las Vegas to one count of conspiracy to commit securities fraud and bank fraud.

The Justice Department accused him of conspiring with Las Vegas stock promoters and a Las Vegas businesswoman to inflate the assets of EMS Products International Corp., Combined Companies International Corp. and Twenty First Century Health Inc.

In a separate action Wednesday, the Securities and Exchange Commission also charged Finkel with preparing false financial statements for technology firm Systems of Excellence Inc. and other companies. Finkel, without admitting or denying the allegations, settled these charges by agreeing not to commit future violations, Assistant U.S. Atty. Chris Bruno said.

"The criminal investigation is now centering on those persons who recruited and compensated Mr. Finkel for falsifying the key financial statements," Bruno said.

An attorney for Finkel did not respond to a request for comment. Finkel, who faces a maximum five-year prison sentence, was accused of falsifying company reports between 1992 and 1995.

The agency said Systems of Excellence and at least eight other public companies provided stock to publisher SGA Goldstar Research Inc. in exchange for a promise of favorable coverage in an electronic Internet newsletter called SGA Goldstar Whisper Stocks.

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