The United States Attorney's Office for the Northern District of California announced today that F. Thomas Eck, III was sentenced on June 22, 2004, to 70 months imprisonment, followed by three years of supervised release for his involvement in a stock manipulation scheme, in violation of 15 U.S.C. §§ 78j(b) and 78 ff and 18 U.S.C. § 2.  The sentence was handed down by U.S. District Court Judge Vaughn R. Walker following Eck's plea on December 16, 2003. 

Mr. Eck, 59, of Petaluma, was indicted by a federal grand jury on August 30, 2001.  He, along with Zahra R. Gilak, was charged in an 82 count indictment with stock manipulation and money laundering in connection with a scheme that netted more than $15.4 million in profits.  According to the indictment, between February 1999 and January 2001, Mr. Eck, Ms. Gilak and others devised a scheme to earn large amounts of money for themselves by capitalizing on the market demand for Internet stocks.  Specifically, Mr. Eck, Ms. Gilak and others orchestrated a series of  "pump and dump" schemes involving the stocks of three publicly traded companies.  The companies were M&A West, Inc. ("MAWI"), a San Bruno company that purported to be an "Internet incubator" that helped other Internet startup companies establish and develop their businesses, and two MAWI subsidiaries: VirtualLender.com ("VLDC"), a purported online mortgage broker, and Digital Bridge, Inc. ("DGBI"), which purported to be in the business of website development.  The shares of MAWI, VLDC and DGBI (collectively, the "Companies") were traded on the Over the Counter Bulletin Board stock market, a national securities market that specializes in "micro-cap" companies. 

The indictment alleged that at the outset of each "pump and dump" manipulation, Mr. Eck, Ms. Gilak and others had control over more than 80 percent of the outstanding shares of the Companies, which they concealed through the use of offshore and other brokerage accounts in the names of corporate nominees.  Mr. Eck, an attorney who was disbarred from the California and Nevada bars following a 1999 federal wire fraud conviction, was responsible for dividing control of the shares among the participants in the scheme.

After generating investor demand, Mr. Eck, Ms. Gilak and others began to "dump" their shares, by having nominees sell stock through various brokerage firms.  Mr. Eck, Ms. Gilak and others generated a total of more than $15.4 million in profits from their stock sales. 

The indictment alleged that, as Mr. Eck, Ms. Gilak and others sold their shares, they funneled sale  proceeds back to themselves through a series of wire transfers.  Mr. Eck and Ms. Gilak used millions of dollars in scheme proceeds to purchase, among other things, real estate in Sonoma and Marin Counties, expensive jewelry, and other items.

Judge Walker sentenced the defendant to 70 months imprisonment and three years of supervised release.  As part of the sentence, Judge Walker ordered Mr. Eck to submit to asset forfeiture in the amount of $15.4 million.  Mr. Eck was also required to pay a $100 special assessment.

The case is the result of a nine-month investigation by Special Agents of the Federal Bureau of Investigation (FBI).   The U.S. Attorney's Office and the FBI acknowledge the assistance of the National Association of Securities Dealers Regulation group ("NASDR") in the investigation, which also was done in coordination with the San Francisco Office of the United States Securities and Exchange Commission.  Anne-Christine Massullo is the Assistant U.S. Attorney who prosecuted the case.