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.
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,
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.