SpongeTech CEO Arrested For Fraud A Week After Suing Short-Seller

Spongetech Babes

Photo: ESPN

Last week, a tiny company called SpongeTech sued both the New York Post and investor Timothy Sykes claiming a short-selling conspiracy, according to HedgeFund.net.The company — which makes a soap-filled sponge product — claimed it was the victim of a short-and-distort scheme, and demanded $43 million.

Well…fast forward to today.

Spongetech’s CEO Michael Metter and COO Steve Moskowitz were arrested and charged with conspiracy to commit securities fraud and obstruction of justice.

Dow Jones reports:

In the complaint, prosecutors from the U.S. Attorney’s office in Brooklyn
alleged Metter and Moskowitz between January 2007 and May 2010 publicly
reported the company had secured purchase orders or made sales to five
customers that did not exist.

The purported sales accounted for as much as 99% of Spongetech’s revenue,
prosecutors said.

Meanwhile, the SEC has lobbed in a “pump and dump” charge as well, which Sykes began talking about back in June of 2009.

The company has been under the spotlight for a while. Last year, Roddy Boyd at The Big Money published a huge takedown of the company’s accounting.

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