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Judge Orders Return of Profit in Stock Case

May 21, 2003

A Times staff writer — A 26-year-old Los Angeles man and two of his relatives have been ordered to pay more than $530,000 in disgorged profits, interest and penalties in a "pump and dump" stock case that dates back to the heady days of the 1990s market bubble.

The judgment, handed down this month by a U.S. district court judge in Los Angeles, orders Refael Shaoulian, his father Samuel and his brother Rabin to repay $411,111 in ill-gotten profits and $114,297 in pre-judgment interest. Refael Shaoulian also was ordered to pay a $10,000 civil fine.

According to the Securities and Exchange Commission, while attending UCLA in the late 1990s, Refael Shaoulian reaped profit by manipulating the stock prices of small companies. Working with others, he would buy shares in the companies, boost the share prices by posting false, upbeat messages on Internet bulletin boards and in chat rooms, and then sell the stocks at a profit. He later transferred some of the profits to his father and brother, the SEC said.

Refael Shaoulian subsequently consented to a permanent injunction barring him from future violations of the applicable securities laws, the SEC said.

The Shaoulians aren't contesting the amount of profit to be returned, their attorney, David Bortman of Beverly Hills, said Tuesday. But he said they dispute having to pay the pre-judgment interest, noting that it was assessed against an account that was voluntarily frozen for nearly three years.

"It was our position that they shouldn't be penalized by having to pay this money when they were cooperating and doing everything the SEC asked them to do," Bortman said.

Bortman hasn't decided whether to appeal.

A Times staff writer

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