________________________________________________________________________ HealthTech CEO iss "shocked" by allegations ____________________________________________________________________________ Copyright ) 1997 Nando.net Copyright ) 1997 Reuters LOS ANGELES (November 26, 1997 6:47 p.m. EST http://www.nando.net) - The chief executive officer of HealthTech International Inc. said Wednesday he was "shocked" by allegations he and the company's stock were involved in an alleged stock manipulation scheme involving mob figures. CEO Gordon Hall told Reuters he was released Tuesday on his own recognizance after being arrested in Arizona on charges of racketeering and securities fraud. "I had no idea of their (mob) involvement whatsoever in small-cap stocks or the stock market," Hall said. "I'm as shocked as anyone else." Bruce Ohr, an assistant U.S. attorney in New York, said Hall and 18 other men charged with duping investors in an alleged scheme spanning seven states would be arraigned in New York federal court next week. Defendants charged with racketeering face up to 40 years in prison, if convicted. Authorities said the Bonanno and Genovese crime families allegedly bribed brokers at Meyers Pollock Robbins Inc., a Wall Street firm, to tout the stock of HealthTech to the public. The indictment said the two crime families made a pact with Hall to artificially inflate his firm's stock, allowing them to make millions of dollars in profits. Thirteen of the defendants were arrested and arraigned in Manhattan. The others were arrested in Arizona, including Hall, Florida and Texas. Hall and a former company executive were released on their own recognizance. "I'm not involved in any extortion or such. All we did was hire N.A. Promotional Services and Equity Consulting Group and paid them in the stock and options, which is a totally conventional way for small-cap companies to pay for promotional services or public relations," Hall said. The indictment says Eugene Lombardo, one of the defendants in the case, was president of N.A. Promotional Services. It alleges that Lombardo was an associate of Frank Lino, an alleged captain in the Bonanno family, who made an agreement with Hall to inflate the stock. Hall said he had met with certain individuals of N.A., but said the agreement ended last May. "We clearly didn't do any business since May 1997 because the agreement was expired," Hall said. The 97-page indictment includes charges of racketeering, securities and wire fraud, extortion and bank fraud, according to prosecutors who estimated the defendants profited in excess of $1.3 million and caused investors to lose at least $3 million. Mary Jo White, the U.S. attorney in New York, told a news conference Tuesday the charges stem from a yearlong investigation by White's office, the FBI, the Securities and Exchange Commission, the National Association of Securities Dealers-Regulations and the New York Police Department. White said alleged crime figures used "threats, extortion and violence as part of the scheme to manipulate stock." One of the alleged extortions was a threat to knife members of Hall's family if he did not increase payments to them, White said. Hall declined to comment Wednesday when asked about the alleged threats to his life. Trading in shares of HealthTech was suspended by the SEC on Nov. 17, pending a probe into the adequacy and accuracy of the company's public information regarding acquisitions. The SEC disclosed Tuesday that it had sued HealthTech, alleging that HealthTech had overstated its assets by as much as 80 percent in financial reports dating back to March 1996. Hall said Wednesday that that case had been settled and that HealthTech had agreed to restate financial statements for 1995, 1996 and the first three quarters of 1997 and to correct any materially false and misleading information publicly available. Hall said the company does not currently have a public relations firm and the board is currently reviewing and analyzing all its options.
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