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.