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S.E.C. Accuses Man of Internet Fraud

Source: The New York Times
By Dow Jones
Date: May 13, 2003

vspace="0" Regulators filed fraud charges today against a 20-year-old Kentucky man who reportedly took money from would-be investors by creating a Web site for a fictitious federal agency. The lawsuit by the Securities and Exchange Commission, filed in Federal District Court in Tennessee, charged K. C. Smith with raising $102,554 through bogus Web sites and about nine million unsolicited e-mail messages. Mr. Smith used the S.E.C. seal to convince investors the scheme was legitimate, according to the suit.
Mr. Smith of Oak Grove, Ky., did not admit to nor deny the accusations, but agreed to a settlement requiring him to return $107,510 of gains and interest, and barring him from future violations. Regulators said that from May 2002 to February 2003, Mr. Smith ran a Web site for Kryer Financial, a bogus investment company offering double-digit monthly returns said to be insured by the "United States Deposit Insurance Corporation," another entity he invented.

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