Junk faxer's customer
who testified against Braver in bogus racketeering "SLAPP" suit
gets hit on two fronts
May, 2001 - A year after testifying
on behalf of junk faxer Steven Burke d/b/a Network Marketing News at a
preliminary injunction hearing, Arcangelo Capozzolo found himself on the
losing end of two legal actions.
Court rules in favor
of Braver and
against Capozzolo in Junk Fax Case
Robert Braver, a Norman, Oklahoma
consumer who has brought over 40 lawsuits against junk fax senders since
1998, filed suit against Arcangelo Capozzolo and his company, Market Traders,
LLC after Capozzolo faxed several ads to Braver offering to sell "distributorships"
for a stock picking service. Capozzolo had purchased lists of fax numbers
from Steven Burke d/b/a Network Marketing News.
Burke, located near Toronto, Ontario,
offers fax broadcasting; fax, mail, and telemarketing lists, fax-on-demand
and telephone answering services as well as a newsletter, primarily to
those involved in"Multi Level Marketing"
and related schemes of dubious character, including outright pyramid schemes.
Braver and Burke's paths crossed
when Braver was tracking down the anonymous sender of a fax promoting
a pyramid scheme. The sender was not identified, and the only way to respond
to the advertiser was to retrieve a faxed document from a fax-on-demand
Receipients of the fax were instructed
to dial a telephone number, where they were further instructed to enter
their fax number followed by a document number. The additional information
would then be faxed.
After retrieving the document and
tracking the sender to an unregistered business name at a post office
box in Florida, Braver forwarded the materials to the Florida Attorney
General and forgot about it. However, within a day or two, Braver began
receiving dozens of faxes for a variety of get rich quick schemes.
As it turnes out, Burke had gleaned
the fax numbers logged from fax on demand inquiries - without any disclosure
or request for express permission - to put on his broadcast fax list as
well as lists he sold to others. Capozzolo bought such a list, including
Braver's fax number.
Capozzolo then hired a fax blaster
(who, incidentally, had previously lost a junk fax case to Braver and
was issued a citation by the FCC) to send his faxes. When Capozzolo made
it clear that he would not stop junk faxing, Braver filed suit.
After securing settlements with
several of Burke's clients who promised to stop sending unsolicited faxed
ads and filing suit against Capozzolo and one other, Burke filed a groundless
civil Racketeering (RICO) lawsuit against Braver and his employer.
On May 3, 2000, a hearing was held
on Burke's motion for a Preliminary Injunction in an attempt to keep Braver
from tracking down and contacting Burke's (mostly anonymous) clients,
pursuing his TCPA cases in state court, and publishing information about
Burke on his web site.
Burke flew Capozzolo in to testify
that the information on Braver's web site, as well as the lawsuit Braver
filed against him, would tend to diminish the warm fuzzy feeling for Mr.
Burke, from whom he bought the fax list that included Braver's fax number).
Not only was Burke wholly unsuccessful
in obtaining an injunction against Braver, but it was the transcript
of the hearing that made up the bulk of Braver's Motion for Summary
Judgment against Capozzolo and Market Traders in Cleveland County District
Braver's motion for partial summary
judgment as to the minimum statutory damages of $500 for each of four
junk faxes, Mr. Capozzolo's personal liability, and for injunctive relief
was sustained by District Judge William C. Hetherington Jr. on May 7,
Additionally, a hearing has been
set for July 16, 2001 on Braver's motion for sanctions against Capozzolo
and Market Traders for failing to answer certain discovery requests in
spite of being ordered by the court to do so.
The only remaining issue - increasing
the $2,000 in damages up to three times for willful and knowing violations
- will be decided in a non-jury trial.
SEC Files Civil
Against Capozzolo and Market Traders
to official copy on SEC website
SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 16993 \ May 9, 2001
SECURITIES AND EXCHANGE COMMISSION V. MARKET TRADERS LLC AND ARCANGELO
CAPOZZOLO, C.A. No. 01-CV-10788 (DPW)
SEC CHARGES OPERATOR OF STOCK-PICKING WEBSITE WITH SECURITIES FRAUD
The Securities and Exchange Commission ("Commission") today
announced the filing and settlement of civil fraud charges against Arcangelo
Capozzolo ("Capozzolo"), the operator of an Internet website
that provides stock recommendations, and Capozzolo's company, Market Traders
LLC ("Market Traders"). The Commission alleges that Capozzolo,
a resident of Williamsville, New York, and Market Traders violated the
antifraud provisions of the federal securities laws by making false and
misleading statements on Market Traders' website and in bulk email messages
to potential subscribers. Capozzolo and Market Traders have agreed, without
admitting or denying the Commission's allegations, to the entry of a permanent
injunction and to the imposition of a civil penalty against Market Traders.
The Commission's complaint alleges that Capozzolo and Market Traders
operate an Internet website that provides stock picks for short-term traders
in return for a subscription fee. During the period from October 1999
to at least May 2000, Market Traders and Capozzolo claimed that Market
Traders' proprietary trading system had, over a ten year period, compiled
a 90% accuracy rate in predicting a rise in a stock's price and had made
millions of dollars. According to the complaint, however, Market Traders'
system has not been in existence for ten years and has not made millions
of dollars. Moreover, Market Traders' claim of 90% accuracy in predicting
the rise in a stock's price was based on hypothetical "paper trades."
The complaint also alleges that Market Traders falsely claimed that it
purchased the stocks it recommended and that its system could track institutional
investors' stock purchases when, in fact, it never made any actual trades
and could not track institutional investors' stock purchases.
The complaint further alleges that Capozzolo and Market Traders falsely
claimed that Market Traders' head trader, John C. Kuja ("Kuja"),
was up 832% with no losses. According to the complaint, these purported
results were based on miscalculated, hypothetical trades, and only included
a portion of Kuja's stock picks.
The complaint alleges that Capozzolo's and Market Traders' conduct violated
Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder.
Without admitting or denying the Commission's charges, Capozzolo and Market
Traders consented to the entry of a final judgment permanently enjoining
them from future violations of those provisions and imposing a civil monetary
penalty against Market Traders in the amount of $25,000.