An investment analyst whose positive reports helped raise the stock of now-defunct GenesisIntermedia Inc. between late 1999 and mid-2001 was arrested today on charges he failed to disclose that he received $100,000 in cash and 72,000 shares of stock from the company.
Courtney Smith, president of investment management firm Courtney Smith & Co., appeared on television news programs on CNN, CNBC and Bloomberg Television to promote the Van Nuys-based public company as a “very hot speculative pick” with a business that was “exploding in revenues,” according to the U.S. Attorney’s Office, Central District of California. In the first five months of 2001, just before the company shut down, the stock rose to a 52-week high of $15 per share, up from $6 per share at the start of the year.
GenesisIntermedia was a marketing and Internet company that sold products such as the “Ab Twister” and the “Men are from Mars, Women are from Venus” series. The company made significant investments in Centerlinq, a network of computer kiosks that offered coupons and directories at malls.
By September 2001, the company’s net loss for the first nine months of the year reached $119 million, compared to $33.5 million in the year-earlier period. Nasdaq halted trading of the company’s stock on Sept. 25, 2001 and it ceased operating on Nov. 20, 2003.
Smith was indicted Feb. 3 on allegations he promoted GenesisIntermedia after secretly routing cash and shares, worth $1.2 million at the time, through his girlfriend’s vitamin-importing company. He is charged with one count of conspiring with a high-ranking official of GenesisIntermedia to violate securities laws and eight counts of violating securities laws by failing to disclose the payments. He faces a maximum 45 years in federal prison. The investigation was brought in conjunction with the Federal Bureau of Investigation and the U.S. Securities & Exchange Commission.
In 2003, a New Jersey man pleaded guilty to conspiring to commit securities fraud and wire fraud by manipulating the stock price of GenesisIntermedia. Kenneth D’Angelo had collected more than $130 million in loans backed by the company’s stock.
