Michael Metter’s Spongetech Partner Makes Plea Deal with Feds

It looks like Michael Metter’s Spongetech partner is fessing up to the Brooklyn Dept. of Justice. Last week Steven Moskowitz plead guilty to a criminal charge of securities fraud. Aaron Elstein, of Crain’s New York, first reported the news on Friday. It’s unclear what monetary fines or jail time Moskowitz is facing. Robert Nardoza, DOJ spokesman, told me this morning the case has been sealed and they wouldn’t comment further.

Metter and Moskowitz were both charged by the DOJ last May for, amoung other things, obstruction of justice because the feds say they made up fake customers while the SEC was investigating the accuracies of their public statements about the revenue and sales of Spongetech. People familiar with the investigation say Moskowitz was able to get out of the obstruction of justice charge, which faced a five year jail term, in return for a plea deal. Given the lack of transparency from the DOJ and no documents filed in PACER yet we’ll have to wait and see how much Moskowitz gave up on Metter.

At the time of Metter’s arrest last May his lawyer vigorously denied all charges touting they look forward to their day in court to clear the penny stock CEO’s name. Metter has since gotten rid of his lawyers at Greenberg Traurig and hired Maranda Fritz at Hinshaw & Culbertson. I left a voice mail for Fritz asking what Metter had to say about his partners’ guilty plea but his legal team did not return a call for comment. Moskowitz lawyer, Michael Bachner, did call me back but said he just can’t talk about the case right now.

The feds getting a guilty plea out of Moskowitz is significant because it eases the burden of proof for the SEC. But now the securities regulator still needs to prove how much money Metter and Moskowitz defrauded investors in order to recoup the millions they alledgedly siphoned off shareholders . People involved in the SEC’s case confirmed for me there has been no settlement with Moskowitz yet but I expect one to follow soon. Still finding the millions these two scored could be another challenge. Federal Court documents show the SEC is asking $52 million in disgorgement fines plus $2.5 million in interest from Metter and Moskowitz’s shell company, RM Enterprises, which allegedly funneled money out of Spongetech for the benefit of Metter and Moskowitz.

Metter, who is also CEO and a founding shareholder in BusinessTalkRadio.net (which owns the local Greenwich, CT radio station), is still reaping a bi-weekly salary of $9,375.92. The SEC was able to get the court to put restrictions on how he can spend that money and he’s not allowed to use the revenue or assets of the radio business anymore to benefit himself or Spongetech which filed bankruptcy. Metter’s right hand man in the radio biz, Jeff Weber, is in control of signing all legal documents for the business now.

Greenwich Time reported last month the Greenwich Station, WGCH, is up for sale and Weber hopes to get a $1.25 million for it. You see according to court documents filed by the SEC in June, Metter and Moskowtiz used the radio biz to hide funds from Spongetech. The SEC has attached $5 million of a $6 million loan between the radio biz and RM Enterprise / 5M Marketing along with Metter’s Greenwich home and his yacht called The Phoenix. (The SEC says RM and 5M are both shell companies related to Spongetech) At first I thought Metter was trying to sell the station to pay his high-priced legal defense but it looks more like it’s a move to pay off some of the upcoming SEC fines.

In February 2010, I wrote a front page story at Greenwich Time explaining how Metter could be forced to give up or sale his FCC radio license if he was charged for a penny stock scam. At the time Metter threw a fit that his local paper, which he advertises in for WGCH, would even think of printing the story. When he called for comment the night before we went to print he threaten to call the local Hearst publisher, Michelle McAbee, and uses his influence to get the story pulled. It ran any way the next day. At the time Jeff Weber, Metter’s BusinessTalkRadio.net V.P., had commented he knew nothing about the investigation into Metter’s Spongetech business and it had nothing to do with the radio station. What’s odd about that comment is Federal court documents now show in June 2009 BusinessTalkRadio.net (the parent llc is Blue Star Media Group) had received a $6 million loan from a SpongeTech affiliate company. So either Metter kept Weber in the dark or he wasn’t telling me the truth.

Correction 8-30-2011: The SEC has attached the $5 million they believe Metter funneled through BussinessTalkRadio.net from SpongeTech illegal profits to Metter’s personal assets. There is not a $5 million lein on the radio station. The radio station assets were frozen by the local Greenwich banks it had an account with because Metter was the account signatoree but some of those fund were unfrozen to pay salaries and basic bills.

You can buy a single copy of my full story on the SEC accusing Spongetech of using a PIPE deal with BTR to hide funds at The PIPEs Report: http://pipes.dealflow.com/reports/article.cfm?id=xgsthxktydiaesc

Editors Note: Aaron Elstein has done a good job digging into Metter’s past stockbroker fraud charges. He’s even scored a video of Metter making a hard sell to the poor Spongetech penny stock investors. Elstein deserves a shout out for staying on the SpongeTech case while our local paper, Greenwich Time, is ignoring one of the biggest stock scams by a well know player in the Greenwich community.

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Comments

  1. ONE COUNT? Moskowitz was charged with 11 counts and was probably guilty of all of them. He lies to the SEC under oath but gets off on perjury? He operates a totally fraudulent pump-and-dump scheme and only gets convicted on one charge? What a disgrace; hope he at least gets the maximum sentence.

  2. This is absolutely amazing. Anyone that had any business with Spongetech or anyone that worked at Spongetech knows full well that Moskowitz was behind every little piece of this scam.

  3. Teri Buhl says:

    Ben and Olly – we have yet to see the terms of the plea deal so maybe the DOJ will add on a few more counts to the securities fraud charge if Moskowitz doesn’t explain where all the money is or serve Metter up for his role in the fraud. I was most surprised the obstruction of justice charge didn’t hold given the amount of evidence they had. The DOJ even got another guilty plea by the man Steven hired to make up fake customer websites.

    • Teri, I find it hard to believe that the DOJ would let Moskowitz practically walk away from this scam with only one year in prison.
      What could Moskowitz possibly tell them about Metter that they don’t already have or know about?!?

  4. The Spongetech (SPNG) fraud was the biggest fraud in the history of microcap stocks – $175-$300 million. Some thoughts:

    1. Moskowitz was only the COO/CFO, Metter was the CHIEF EXECUTIVE OFFICER.

    2. Moskowitz must be spilling the full set of beans on not only Metter, but a whole bunch of others that assisted in this massive fraud and the laundering of tens of millions of dollars.

    3. Being convicted of one count of fraud would still lead to a 20-30 year prison sentence in this day and age, particularly in the New York area.

    regards,

    the_worm06

  5. jeff knapp says:

    Metter used a series of is “friends” in Greenwich to bring in some Greenwich money. Myself, I lost 380,000. dollars. Fuck Micheal Metter swarmy chew bag. Hope he rots in a cell with a big horny gay man.He is a pathetic piece of bald fat crap.He has caused me great pain and alot of others from the Greenwich community.

  6. Here is a situation where the fraudster received almost 13 years in prison for ONE COUNT of conspiracy to commit mail and wire fraud in a fraud that was 10 times smaller than the size of SPNG’s:

    http://www.sec.gov/litigation/admin/2010/34-61874.pdf

    2. On December 4, 2009 Barker pled guilty to one count of conspiracy to commit mail and wire fraud in violation of Title 18 U.S.C. § 1349 before the United States District Court of the Southern District of Florida, in United States v. Jimmy L. Barker, 09-20836-CR-PCH. On March 2, 2010, the District Court entered an Amended Judgment in the criminal case against Barker. The District Court sentenced Barker to 152 months in prison and three years of supervised release, and ordered him to make restitution in the amount of $19,596,029.21.

  7. So is Greenwich Time now a pr machine for Metter and Jeff Weber. If I am reading the timeline correct Neil should have figured out the SEC has attached assets of the radio station. If the SEC filed their papers in June and Neil Vigdor wrote about the station being up for sale in July this seems like an important peice of the story. One that could have easily been reserached and is available to the public. Neil’s been doing a decent job covering the players in Greenwich for a while now. He should know to fact check anything Jeff Weber tells him.

    I don’t see how they get $1.25 million for that radio biz. They’ll get lucky if someone offers $50k and assumes the liabilities.

  8. In the criminal system when you plead guilty and make a deal with the system, you only plead guilty to ONE count of whatever charge the deal called for. That does not mean Moskowitz got off……just means he made a deal and will get what he deserves, which is not looking good for Metter. I dont think Weber has anything to do with anything….just happens to be the 2nd in command for BTR. Not fair to associate Weber with the other scumbags

    • Teri Buhl says:

      Chris it sounds like you are friends with Jeff Weber – what first hand information do you have that makes you think he didn’t know Metter and Moskowitz used biztalkradio to hide money from the SpongeTech fraud. The radio business got a $6 million loan in 2009 – do you have information that shows Metter didn’t explain where that loan came from? During that year the greenwich station was laying people off and cutting cost so what did they do with money? If Weber wasn’t questioning this then it reads like he wasn’t doing his job and executing his fudicuary duty to the other investors in the station. Metter is not the majority shareholder.

      • Teri,

        It is well documented that most of the money, about $5 million, was used to pay off a loan made to the radio station.

        regards,

        the_worm06

        • Teri Buhl says:

          the worm – I reported that the $5mn was used to pay off a loan to a SpongeTech affiliate company. They just moved money around from Spongetech to biztalk radio. That’s why the SEC attached it and wants it back.

  9. Teri

    I’d like for you to also dive deeply into the massive shorting that this stock has endured as well. Why is this stock STILL enduring constant bashing 24/7 on scumbag sites like Yahoo and InvestorsHub?

    Metter and Moskowitz are Grade A scumbags no doubt. They will pay. But there is another criminal here as well that I’d like for you to investigate.

    • Would it surprise anyone if Moskowitz was the one Naked Short Selling Sponge stock. It sure as hell would not surprise me!

    • the_worm06 says:

      barty11,

      ah, yes, blame the massive SPNG fraud on the EVIL NAKED SHORTS FROM MARS….

      so what if over 90% of the $31 million in sales reported in the SEC filings for the 9 month period ending Feb 2009 came from 5 customers that never existed.

      so what if Moskowitz and Metter issued 2.3 billion unregistered shares to their associates and their private criminal entity, RME, then removed the restrictive legends on the stock certificates with the use of forged opinion letters and opinion letters authored by an attorney that never existed – then sold all of these shares into the market….

      just blame the massive frauds on the EVIL NAKED SHORTS FROM MARS…

  10. it’s now nov 22 11 any fresh reports.
    why isn’t this case being reported to the public by the msm.
    i lost thousands and would like more reporting on the burial of these sharks and their families.
    they should own nothing now and should be pushing a cart with thier kids in it.

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