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SEC Files Suit Against Anscott Industries

Ian P. Murphy |

TAMPA, Fla. — The Securities & Exchange Commission (SEC) has filed suit against chemical manufacturer Anscott Industries, charging a major shareholder and two others in connection with a fraudulent “pump-and-dump” scheme that artificially inflated the company’s stock prices. Filed in the Tampa, Fla., U.S. District Court, SEC’s civil injunction names Robert M. Esposito, Gregory A. King, Jack Belluscio Jr. and Anscott Industries Inc. as defendants in the case. According to SEC, penny-stock promoter Esposito engineered a reverse merger between Liquidix Inc., a publicly traded shell corporation, and Anscott in April 2003.
Keeping the Anscott name, the company then issued 4 million shares of stock to Esposito as payment for his work in the merger and future promotion, SEC alleges, with the blessing of CEO Belluscio. Belluscio then filed a fraudulent S-8 registration statement with SEC, the suit alleges, allowing Esposito to sell his shares.
Esposito then paid King, another penny-stock promoter, $400,000 to “prepare and disseminate materially false and misleading” spam faxes to promote Anscott stock, SEC says. Entitled Wall Street Bulletin, these “tout” sheets were made to look like independent market-analysis newsletters and recommended Anscott as a “strong buy.”
The tout sheets were prepared by King and reviewed by Belluscio, SEC alleges, and contained “materially false and misleading representations about Anscott’s products, business affiliations and projected revenues.” Among the claims cited was that Anscott XPel fabric-protection product can repel infectious agents such as SARS and AIDS. Furthermore, the tout sheets did not divulge the relationship between Esposito, King and Anscott, SEC charges.
A spam fax campaign broadcast the tout sheets from May 2003 to July 2003, pushing the price of Anscott stock from $1.40 per share to a high of $4.59. SEC alleges that Esposito sold more than 1.6 million shares during that time, realizing more than $5.5 million in profits.
If found guilty, the defendants will be subject to a permanent injunction and civil penalties, and be required to repay profits realized from the scheme. In addition, Esposito and King will be barred from engaging in penny stock trading, and Belluscio will be barred from service as an officer or director of a public company. A separate administrative proceeding will determine whether to suspend or revoke the registration of all Anscott securities.
Wayne, N.J.-based Anscott Industries is the parent of Caled Chemical, the marketer of Gen-X, DryWash and Impress drycleaning solvents, as well as the  manufacturer of many drycleaning and wetcleaning additives. The company filed for Chapter 11 bankruptcy protection in August 2007 and has reported no revenues since 2005.
 

About the author

Ian P. Murphy

American Drycleaner

Ian P. Murphy is a freelance writer based in Chicago, and was the editor of American Drycleaner from 1999 to 2011.

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