State halts sale of Internet tech investments

Two cease and desist orders have been issued by Missouri Secretary of State Rebecca Cook and Securities Commissioner Douglas F. Wilburn against three companies and seven of their promoters for offering unregistered securities to Missouri residents. In both cases, Missourians were contacted by telephone by several solicitors who offered incredible returns with low risks on Internet technology-related investments, according to a release from the Secretary of State's Office.

The first order named VentureLink Affiliate Partners; VentureLink Capital Corporation; VentureLink's president, Michael S. Beeler; and two salespersons, Peter Rosas and Bruce Robb, all of Denver, Colo.

The Missouri Securities Division's investigation into VentureLink revealed that Rosas made an unsolicited telephone call to a Missouri resident in January of 1999 offering to sell a partnership interest in VentureLink. Rosas maintained that the VentureLink partnership would in turn purchase a franchise in an "electronic business solutions" company. Rosas also claimed that the Missourian could receive a return of $17,000 per year on an investment of $25,000.

Over the next several days, the Missouri resident and her spouse received several more unsolicited calls from Rosas and Robb. During one of these calls, Rosas promised a return of "half a million in residual income" within five years on a $25,000 investment. Robb said the VentureLink investment was a "passive situation" and the risks were "probably a two or a three" on a scale of one to 10.

Named in the second order were StarNet Technologies Inc.; StarNet's director, Daniel Colechio Sr.; and several promoters, Valerie Drexler, Neil Pincus and Charles Horvath, all based in Fort Lauderdale, Fla.

The investigation into StarNet revealed that in March of 1999, Drexler made an unsolicited telephone call to a Missouri resident offering to sell stock in StarNet. Drexler told the Missourian that StarNet was being offered in the pre-IPO stage and could have potential returns of 75 percent to 125 percent within the first 12 months.

Later that same month, Pincus contacted the Missouri resident's spouse and said StarNet was an advanced Internet communication system and implied that the StarNet offering was registered with the U.S. Securities and Exchange Commission.

A couple of weeks later, Horvath telephoned and said, among other things, "I make people a ton of money" and "We are doing the same thing that Bill Gates did with Microsoft. The only difference is that we're not calling you from a garage. We are calling you from an office." Horvath also said the potential returns on the investment far outweighed the risks.

In both cases, the division's investigations found that the promoters vastly understated the risks involved with these speculative technology investments, and neither the investments nor the salespersons were properly registered with the state of Missouri.

"These types of telephone solicitors use a variety of tactics to get you to invest, and they're not above badgering you into an investment you don't want," Cook said. She recommended that consumers:

Hang up on aggressive cold-callers.

Beware of anyone promising a "once-in-a-lifetime" opportunity of "guaranteed" returns.

Demand information in writing.

Don't be pressured into buying anything, especially an unknown "microcap" stock.

Report abusive cold-callers to your state securities regulator.

Before investing, call your state securities regulator to check out the investment and the person or firm selling it.

Investors who suspect they have been defrauded should contact the Missouri Investor Hotline at 800-721-7996.