SEC: Nevadans hit by cyber-investment scheme

Kevin Ferguson

Thursday, March 1, 2001 | 11:35 a.m.

An Internet business incorporated in Nevada is alleged to have perpetrated a fraudulent cyber-investment scheme targeting thousands of investors throughout the country, the Securities and Exchange Commission alleged in a lawsuit filed Wednesday in U.S. District Court.

The lawsuit filed in Las Vegas says Internet Solutions For Business Inc., a publicly traded company, issued false and misleading press releases about the company's business relationships with prominent international companies and also falsified its stock value and stock price predictions.

Spencer Barasch, an SEC associate director, said at least 50 Nevada residents are shareholders in the company and therefore could be considered victims.

"We are seeking an injunction from the court for (ISFB) to not commit securities fraud and to pay a penalty, which could be as much as $110,000 per violation," Barasch said.

ISFB, which has a website at www.IS4B.net, represented itself through a series of press release sent nationally as a sophisticated and successful Internet business with cutting edge products and profitable business relationships with prominent international companies like Sears and mobile phone giant Ericsson, the SEC alleged.

"Through our investigation we talked to a lot of sources and feel confident that that information is false," Barasch said.

ISFB founder and president Lawrence Shaw, 32, who is also named as a defendant in the suit, could not be reached for comment by phone at the firm's listed Las Vegas office or at the international headquarters in England.

ISFB was incorporated in Nevada in September 1997 at 2949 E. Desert Inn Rd., Suite 1, state records show.

The Secretary of State's website lists the company as being in default, which means ISFB has failed to file a list of its corporate officers with the state for 2001. Nevada requires its incorporated businesses to update such information on an annual basis.

ISFB is considered to be a "penny stock" that is publicly traded on the over-the-counter bulletin board exchange under the symbol ISFB. Its stock traded today at 11 cents, up from its 52-week low of 1 cent and down from its 52-week high of $7.38.

The company compensated a stock analyst with 12,500 ISFB shares to issue favorable reports in press releases, Barasch said.

The company's stock rose 52 percent during a six-month period in 1999 while these "false" press releases were being issued -- a period when the company was in dire financial condition, Barasch said.

The SEC has also filed a cease and desist lawsuit against the stock analyst, which is a lesser sanction than the order filed against ISFB, Barasch said.