NEW YORK, Dec. 13 -- Four businessmen associated with Spectrum Brand Corp. and Spectrum Homeland Security Solutions Inc. were accused Tuesday of exploiting fears about bioterrorism and inflating stock prices by marketing a handheld gadget their company claimed could kill anthrax, according to an Associated Press (AP) story.
The AP reported Wednesday that Michael J. Burns, president of Spectrum Brand Corp., and Saverio Galasso were arrested Tuesday on charges of conspiracy to commit securities fraud.
According to the article, "Two federal complaints unsealed Tuesday allege the plot was hatched by Galasso and David Hutter while the two men were out on bail awaiting sentencing in an unrelated racketeering case. Along with Burns and the fourth defendant, Charles Dilluvio, they took over Spectrum on Oct. 26 by buying a controlling share of its stock, authorities said."
According to the AP, "The new owners formed a subsidiary, Spectrum Homeland Security Solutions Inc., and began plugging an anti-anthrax product called the DeGERMinator on the Internet. The company claimed in early November that the ultraviolet light device could 'wipe out surface germs in less than five seconds, including anthrax,' but federal investigators said the DeGERMinator had not been tested or proven to kill deadly anthrax spores.
"The defendants also allegedly sought to drive up stock prices by buying and selling shares themselves, making it appear that they were widely traded. The value reached nearly $15 per share early last month before the men dumped their stock, court papers said. The stock closed at 23 cents Tuesday," said the AP.