Regulators filed criminal and civil charges yesterday against a financial commentator who was paid more than $1 million in cash and stock...
WASHINGTON — Regulators filed criminal and civil charges yesterday against a financial commentator who was paid more than $1 million in cash and stock to hype shares of a marketing company during appearances on CNBC, CNN and Bloomberg TV.
The commentator, Courtney Smith, helped “artificially inflate” GenesisIntermedia’s stock after the company went public in 1999, the Securities and Exchange Commission (SEC) alleged in a civil lawsuit filed yesterday.
Federal prosecutors said Smith, 53, was arrested in his Manhattan apartment following a nine-count indictment returned by a federal grand jury in Los Angeles last week.
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Authorities claim he was secretly paid about $95,000 in cash and received about $1 million of GenesisIntermedia’s shares.
Regulators said Smith concealed the payments by diverting them to his girlfriend, who ran a small vitamin-exporting company.
The SEC is seeking a court order that would fine Smith and force him to return all his allegedly ill-gotten gains, with interest. If convicted on the nine-count criminal indictment, he could face up to 45 years in federal prison.
George Newhouse Jr., a Los Angeles attorney representing Smith, said his client is seeking to be released on bail.
“He’s surprised by the charges, and he expects to be fully vindicated,” Newhouse said. “There’s no question that he ‘touted’ the stock of GenesisIntermedia, but he did so because he believed in the stock — I don’t think that’s a crime.”
Based in Van Nuys, Calif., GenesisIntermedia was best known for infomercials marketing products such as the “Ab Twister” and “Men are from Mars, Women are from Venus” relationship products.
Kenneth D’Angelo, 62, of Edison, N.J., pleaded guilty in 2003 to participating in a scheme to pump GenesisIntermedia’s stock by manipulative trading of millions of dollars worth of stock.
The company’s collapse caused three brokerage firms to go bankrupt and led to the largest bailout in the history of the Securities Investor Protection Corp.
GenesisIntermedia’s biggest lender and shareholder was Adnan Khashoggi, a Saudi Arabian millionaire known for his role in the Reagan administration’s arms sales to Iran.