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pebbly-woman

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 system.

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 Court.

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, 2001.

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 Fraud Charges
Against Capozzolo and Market Traders

SEC Complaint

Temporary Restraining Order


Link 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.

http://www.sec.gov/litigation/litreleases/lr16993.htm


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