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Univ. of Toledo College of Law

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Thursday, September 6, 2007

SEC Settles Pump and Dump Scheme

The SEC announced a settled civil action against two Arizona-based scammers alleging their participation in an elaborate market manipulation scheme that involved unlawfully taking public seven microcap companies, inflating their share prices, and dumping millions of shares into the public market. The defendants, Mesa, Ariz.-based recidivist Michael Saquella (a.k.a., Michael Paloma), 47, and Scottsdale, Ariz.-based trader Lawrence Kaplan, 63, agreed to be permanently enjoined, barred from future penny stock deals, and to disgorge nearly $3 million in ill-gotten gains.  In a related criminal action, the U.S. Department of Justice announced today that Paloma and Kaplan have pleaded guilty in federal court in Alexandria, Virginia for their participation in stock manipulation schemes. On August 20, 2007, Paloma pleaded guilty to a criminal information charging him with one count of conspiracy to commit securities fraud and one count of electronic mail fraud. On July 25, 2007, Kaplan pleaded guilty to a criminal information charging him with one count of conspiracy to commit securities fraud. Each of these charges carries a maximum sentence of five years in prison. The written plea agreements and supporting documentation for both defendants were unsealed yesterday.

The Commission's complaint alleges that, over the past four years, Paloma repeatedly passed himself off to principals of private, cash-strapped companies as a legitimate financier, persuading company principals to issue to Paloma-affiliated entities large controlling blocks of stock. Paloma then obtained bogus opinions of counsel that permitted transfer agents to issue share certificates to his entities free of legends restricting resale. The Commission further alleges that, once his entities acquired the "free-trading" shares, Paloma then coordinated manipulative public trading — carried out, in part, by Kaplan — which artificially inflated the value of each issuer's stock. With the appearance of an active trading market established, Paloma coordinated the dissemination of millions of false and/or misleading blast fax and spam e-mails touting the companies' shares. Ultimately, Paloma and Kaplan dumped stock of the microcap issuers into the public market at the artificially inflated prices, realizing profits of $2,155,000 and $677,000, respectively.  After Paloma and Kaplan liquidated their holdings of each company's stock, they ceased trading and the market for the shares collapsed.

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Michael Paloma/Saquella is far worse a person than this or any other press release can possibly describe. Without the slightest inclination of remorse, he will lie, cheat and steal from/to anyone, including his own family, just so long as he stands to benefit. He manipulated millions of dollars from thousands of others, caused jobs losses, businesses closures, and forced individuals and their families into poverty and misery. How could someone do such horrible things? In his delusions of grandeur, Mr. Paloma/Saquella bought a personal jet, second and third houses, multiple cars, trucks, motorcycles, multiple mistresses, (with a family at home) made patheticaly distasteful and talentless movies and music cds, bought billboard ads in several major cities that which exhibited his face (and sometimes one of his many mistresses) as so he could advertise his so-called (self proclaimed) entertainment success, and those were just the basics. All the while, he knew he was harming others, yet that was not in the slightest bit, any concern of his. It is strongly advised that no person should ever consider conducting any sort of business with this man.

Posted by: Anonymous | Sep 9, 2007 4:48:33 PM

Michael Paloma/Saquella is far worse a person than this blog or any other press release can possibly describe. Without the slightest inclination of remorse, he will lie, cheat and steal from/to anyone, including his own family, just so long as he stands to benefit. He manipulated millions of dollars from thousands of others, caused jobs losses, businesses closures, and forced individuals and their families into poverty and misery. How could someone do such horrible things? In his delusions of grandeur, Mr. Paloma/Saquella bought a personal jet, second and third houses, multiple cars, trucks, motorcycles, multiple mistresses, (with a family at home) made patheticaly distasteful and talentless movies and music cds, bought billboard ads in several major cities that which exhibited his face (and sometimes one of his many mistresses) as so he could advertise his so-called (self proclaimed) entertainment success, and those were just the basics. All the while, he knew he was harming others, yet that was not in the slightest bit, any concern of his. It is strongly advised that no person should ever consider conducting any sort of business with this man.

Posted by: Anonymous | Sep 9, 2007 4:50:13 PM

Michael Paloma/Saquella is far worse a person than this blog or any other press release can possibly describe. Without the slightest inclination of remorse, he will lie, cheat and steal from/to anyone, including his own family, just so long as he stands to benefit. He manipulated millions of dollars from thousands of others, caused jobs losses, businesses closures, and forced individuals and their families into poverty and misery. How could someone do such horrible things? In his delusions of grandeur, Mr. Paloma/Saquella bought a personal jet, second and third houses, multiple cars, trucks, motorcycles, multiple mistresses, (with a family at home) made patheticaly distasteful and talentless movies and music cds, bought billboard ads in several major cities that which exhibited his face (and sometimes one of his many mistresses) as so he could advertise his so-called (self proclaimed) entertainment success, and those were just the basics. All the while, he knew he was harming others, yet that was not in the slightest bit, any concern of his. It is strongly advised that no person should ever consider conducting any sort of business with this man.

Posted by: Anonymous | Sep 9, 2007 4:51:30 PM

This is not just about Paloma. One of the companies mentioned in the criminal complaint now operates under the name of Big Screen Entertainment Group (OTC: BSEG), continuing Paloma's legacy through fraudulent press releases, false claims to properties they don't own, using Paloma's attorney Michael Aaron Gardiner, the same transfer company (Colonial Transfer) mentioned by the SEC as being corrupt and even Paloma's webmaster Jonathan Dimock. OTC: BSEG is another one of Paloma's scams, the show goes on even without him. Buyer, beware!

Posted by: Wanda | Oct 19, 2007 11:17:47 AM

I agree with the sentiments of the first writer. I worked for Paloma for a few years. In that time, I found him to be unfaithful to his family, as well as disloyal to friends and business relations. He probably should have been slapped with a sexual harrassment lawsuit...or two. He lied non-stop. In fact, he lied so much that it is my opinion that he believed his own lies. Sadly, much of this comes down to insecurity. He always tried to make himself look like a good guy by taking extravagant trips with his employees or giving them holiday bonuses. He would seem like a nice guy until he went ballistic on you, hit on you or fired you. A ctazy man with a sad life. Don't trust him.

Posted by: anonymous | Nov 17, 2007 2:05:45 AM

Arizona Recidivist Michael Paloma Sentenced to 10 Years in Federal Prison for Multimillion Dollar Stock Scams Involving Prominent Organized Crime Figures

In an incredible case of art imitating life, after playing the part of a mobster who stole millions in the recently released, award-winning feature film “Forget About It”, Michael Paloma pleaded guilty to multimillion dollar stock fraud in a scheme involving members of the Bonanno crime family, was sentenced to 10 years in federal prison and ordered to pay $7.8 million dollars in restitution.

March 24, 2008, Beverly Hills, CA - On March 14, 2008 federal Judge Leonie Brinkema in the U.S. Eastern District of Virginia sentenced Arizona recidivist Michael Paloma aka Michael Ralph Saquella aka Michael Blake (Case Number 1:07 CR305-001) to ten years imprisonment. Paloma was ordered to pay $7.8 million dollars dollars in restitution. According to the filings by the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC), Paloma and his co-conspirators, including prominent mobsters, bilked as many as 25,000 penny stock investors of up to $50 million dollars.

This story has it all: an Elvis impersonator who claimed to be a Samurai competing in Jiu-Jitsu matches, attempted to avoid incarceration by claiming that he was “seeing dead people”, recorded his own Blues album, was involved with the mob, stole millions in elaborate stock schemes and ended up in prison. In a shocking twist to an already elaborate plot, Paloma was also an actor who played the part of a mobster that stole millions and ended up in prison.

One of the 15 companies victimized by Paloma, Beverly Hills Film Studios, produced an award-winning feature film “Forget About It”, starring Burt Reynolds, Raquel Welch, Charles Durning, Robert Loggia, Phyllis Diller and Richard Grieco. Michael Paloma insisted on co-starring in the film by fraudulently representing to the film executives that production funds were to come from Paloma’s “private investment group”. Unbeknownst to the company’s former President, BJ Davis, in reality the funds came from Paloma’s unlawful exploitation of the company’s own stock. Paloma subjected filmmakers and company management to threats and extortion by the members of the Bonanno crime family, with which Paloma is openly affiliated. Salvatore “Bill” Bonanno and his nephew, Anthony Tarantola, participated in Paloma’s penny stock schemes, brazenly harassed and threatened managers of victim companies in order to prevent them from cooperating with authorities. Former President of Beverly Hills Film Studios, BJ Davis, contacted the FBI and the Securities and Exchange Commission (SEC) and arranged meetings with both agencies - eventually discovering that Paloma was a recidivist, having been previously charged by the SEC for stock fraud.

The FBI and the SEC officially enlisted BJ’s help with their investigation, started to obtain information from managers of defrauded companies and wiretapped Paloma’s telephones, obtaining a wealth of information, since Paloma and his confederates were in the midst of another stock fraud scheme, 10 years in the making. The government’s filings state: “The defendant, Michael Saquella, defrauded over 24,000 investors and numerous companies of millions of dollars (over $20,000,000 in total for the conspiracy) largely so that he could finance his lavish lifestyle and his vanity film projects starring himself in a leading role. Caught on a “wire tap,” the defendant’s deceptive methods laid bare the pervasive nature of his greed and deceitful ways, as well as his utter contempt for the many victims he left in his wake.”

Outrageously, Department of Homeland Security Agents, formerly employed by the Immigration and Customs Enforcement (ICE), Jeffrey Deal and Herbert Kaufer, informed the mobsters of the fact that BJ Davis was providing information to authorities. Kaufer and Deal have also interfered with the investigation and prosecution of Paloma and his cohorts, as they were planning to utilize them in malicious prosecutions against BJ Davis and his wife Julia Davis (government whistleblower). Additional information can be obtained on the website for the Citizens Committee for Constitutional Protection,

http://departmentofhomelandsecurityexposed.com/thestory.php

Vanity and greed formed a combustible mixture throughout Paloma’s illustrious career. The government’s filings state that he “led traders, promoters, marketers, spammers, and others in the repeated fleecing of investors and small business owners.” Michael Paloma, Anthony Tarantola and Salvatore “Bill” Bonanno repeatedly demonstrated their open involvement with organized crime. The group announced the following titles for their imaginary production slate: “Mafia Files”, “Sal and His Pals”, “Track 'em and Whack 'em”, “I Don’t Wanna Work”.

In spite of the overwhelming evidence of Paloma's, Bonanno's and Tarantola's criminal actions that caused irreparable damage to numerous companies and their projects, federal Judge A. Howard Matz (Alvin Howard Matz) dismissed civil cases against them, even though these defendants were properly served and were in default by failing to respond to the lawsuits against them. Matz exclaimed that BJ Davis' alllegations of criminal actions by Paloma, Bonanno and Tarantola were "only his opinions". Judge Matz was infamously involved in the Hillarygate scandal and made false statements to the jury in that case, which is being referred to in the media as a “mother of all cover-ups.” Judge Matz' corruption is currently at issue in several pending complaints of judicial misconduct.

The government’s charging papers state that Paloma and his co-conspirators “realized in excess of $26,651,070 million between November 2003 and May 2006 in artificial trading profits as a result of the pumping and dumping the shares of the Issuer’s stock...”. Paloma pleaded guilty and admitted that his actions, as recounted in the government’s filings, “were in all respects intentional and deliberate, reflecting an intention to do something the law forbids.” On March 14, 2008 Judge Brinkema sentenced Michael Paloma to 10 years in federal prison. Pursuant to his plea deal, Paloma waived all rights to appeal his conviction or the sentence on any ground whatsoever.

After a long legal struggle with Paloma and his cohorts, which included numerous threats and extortion, Davis and current management of the company formerly known as Beverly Hills Film Studios, were able to bring the film back to its rightful owners, company shareholders. Paloma intended to fleece the investors and the company even further by attempting to gain control of "Forget About It." In yet another parallel to the film, he was unsuccessful in getting away with the loot. Pursuant to his guilty plea, Paloma agreed to “forfeit all interests in any asset that the defendant owns or over which the defendant exercises control, directly or indirectly, as well as any property that is traceable to, derived from, fungible with, or a substitute for a property that constitutes the proceeds of his offenses.”

Kimberley Kates, one of the producers of the film stated, "This entire behind the scenes situation with Paloma has been quite surreal. What he put us all through, particularly the shareholders of the company, was beyond reprehensible. I am pleased justice has been served in this matter. Finally, the film and company can flourish without further interference from this miscreant."

The company and the film are now enjoying much success -- a sequel and television show are in the works, in addition to what is sure to be a revealing tell-all documentary.

For additional information, visit:

http://www.pennystocksexposed.com/pse_053.htm

http://departmentofhomelandsecurityexposed.com/thestory.php

Posted by: Ami Gould | Mar 24, 2008 5:58:55 PM

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