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Day-Trader Arrested for Bogus Lucent News 05:53 p.m Mar 30, 2000 Eastern

By Gail Appleson, Law Correspondent

NEW YORK (Reuters) - A securities day-trader who allegedly posted a bogus press release on the Internet last week that led to a drop in the price of Lucent Technologies Inc.'s (LU.N) shares was arrested on Thursday and charged with securities fraud, the U.S. attorney's office said.

Fred Moldofsky, 43, was to be presented in federal court in Houston, Texas, on the charges that were filed in Manhattan federal court, prosecutors said. If convicted he faces a possible maximum sentence of 10 years in prison and a fine of $1 million.

The Securities and Exchange Commission also filed a related civil suit against Moldofsky in Manhattan federal court.

The complaint said that Moldofsky posted the fraudulent press release, which stated that Lucent Technologies expected an earnings shortfall, on a Yahoo! Inc. message board last Wednesday night.

The day after the posting, Lucent's stock price fell by as much as 3.6 percent, representing a reduction of more than $7.1 billion in its market capitalization, prosecutors said.

Lucent quickly assured investors it expected to meet expectations for second-quarter earnings, dismissing rumors that had been fueled by the fake press release.

Moldofsky, who describes himself on an Internet Web site as a ``full-time online stock investor,'' allegedly traded 6,000 shares of Lucent stock the day he issued the bogus press release.

The complaint alleged that Moldofsky identified himself with the screen name ``hot-like-wasabe'' and sent a message captioned ``LUCENT RELEASES EARNINGS WARNING! DAMN!'' Attached to the message was the fake press release that was modeled after a legitimate release issued by Lucent on Jan. 6 in which the company issued an earnings warning with respect to the first quarter of its fiscal year 2000.

In an apparent effort to bolster belief in the legitimacy of the press release, Moldofsky also posted numerous messages on the Lucent bulletin board. These messages included ``links'' that allowed readers to access the fraudulent press release. The messages were captioned with phrases like ``LUCENT WARNS!'' WE'RE ALL DOOMED TOMORROW!''

The SEC suit said that between the evening of March 22 and the next morning, Moldofsky reposted that press release 20 times using another name ``Floydian-us,'' which was designed to resemble a screen name used by a frequent commentator on the Lucent message board who had expressed a positive view of Lucent stock.

Law enforcement officers were able to identify Moldofsky, who lives in Houston, by collecting evidence from Yahoo, America Online (AOL.N) and Moldofsky's Internet service provider.

For the second quarter, Lucent has said it expects top-line growth of about 12 percent to 15 percent more than last year's level of $8.78 billion and bottom-line growth of approximately 25 percent to 35 percent more than the 17 cents per share the company earned in the second quarter of fiscal 1999.

Lucent missed Wall Street's first-quarter forecasts as the company failed to keep up with customers' demand for new optical networking products. The shortfall marked a departure from Lucent's once unbeaten streak of beating Wall Street's profit expectations every quarter since it was spun off from AT&T Corp. (T.N) in 1996.

-- Just (me@work.com), March 31, 2000

Answers

What a stupid-jerk-idiot-numbskull-lamebrain..(trying to keep this civil).. thing to do.

LOL.. he was probably going to short the shares.. OH.. what greed can do.

-- (me@home.com), March 31, 2000.

What a dumbshit. He could have pulled it off if he hadn't been so stupid and left tracks all over the place.

-- Hawk (flyin@high.again), March 31, 2000.

HH,

I'm sure you pull it...regularly!

-- Mr. Sane (hhh@home.com), April 01, 2000.