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Peter Paul, a co-founder of online entertainment company Stan Lee Media, was indicted on charges of stock manipulation Tuesday by the U.S. Attorney’s Office in New York. The indictment comes six months after Stan Lee Media reported in a government filing that Paul had been fired and that the company was the subject of an informal investigation by the Securities and Exchange Commission. That investigation was prompted by the rapid decline last fall of Stan Lee Media’s stock, a precipitous plunge that ultimately led the stock to be delisted from the Nasdaq and forced the company to file for bankruptcy protection in February. The U.S. Attorney’s office is seeking extradition for Paul, who is believed to be living in Brazil, according to the indictment. Three others were indicted along with Paul, the indictment stated, including former Stan Lee Media Executive VP Stephen M. Gordon; stock promoter Charles Kusche of Darien, Conn.; and Jeffrey Pittsburg, a Wall Street analyst and owner of investment firm Pittsburg International. All four are charged with securities fraud and conspiracy to commit securities fraud. Their alleged crimes are believed to have cost Stan Lee Media investors more than $25 million, according to the indictment. The alleged stock manipulation scheme, the indictment states, involved Kusche and Pittsburg fronting for trades in Stan Lee Media stock by Paul and Gordon, who as executives of the company, were restricted from making such trades for themselves. Paul and Gordon borrowed sums of money from Merrill Lynch using the stock as collateral, effectively defrauding Merrill Lynch in the process. The sums of money were used to pay off Kusch and Pittsburg to perform fraudulent trades.Gordon’s brother, Jonathan, worked at Merrill Lynch at the time. Jonathan Gordon’s employment at Merrill was terminated in January because he lost money on margin trading, according to filings with the National Association of Securities Dealers. Stan Lee Media reported in a government filing in January that it had terminated both Paul and Stephen Gordon. Gordon was arrested Tuesday morning in a Los Angeles suburb. This isn’t the first time that Paul has tangled with federal prosecutors. In the late 1970s in Miami, he was indicted on charges ofwire fraud in a plot to defraud the Cuban government and served three years in a federal penitentiary. Paul relocated to Los Angeles in the late 1980s and set up businesses for celebrities such as Jimmy Stewart, Fabio and Buzz Aldrin. The latter later sued Paul and his company,>Excelsior Productions, for using his likeness to sell commemorative coins. In 1996, Paul went into business with Stan Lee to create a multimedia company around Paul’s future comic creations. Through his connection to Lee, creator of Spiderman, The Incredible Hulk and The X-Men, Paul helped organize a Brentwood, Calif., fund-raiser for the Clintons last August. After a Washington Post story revealed Paul’s prior criminal record, Hillary Clinton’s office denied having any knowledge of Paul’s checkered past before the fund-raiser took place. Stan Lee Media is still struggling through bankruptcy proceedings, and it faces a potential class action by shareholders. In April, venture capital firm Interfase Capital of Austin, Texas, gave the company $500,000 to maintain operations while it restructures and tries to pull out of bankruptcy. Under the terms of the financing, which is classified as “debtor-in-possession,” Interfase has the automatic right to an equity amount equal to the funding it already provided. (The deal also allows SLM to tap Interfase for more money if the initial $500,000 runs out.) Ken Williams, CEO of Stan Lee Media, would not comment on Tuesday’s charges, referring to the company’s SEC filing in January, in which the firings and SEC investigation were reported. Related Articles from The Industry Standard: Sit Tight, Eat Cheese Slices Trust Us, We’re Analysts Keeping Wall Street Clean Copyright � 2001 The Industry Standard

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