Robert M. Esposito, Gregory A. King, Jack R. Belluscio and Anscott Industries, Inc.

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 21449 /March 11, 2010

SEC v. Robert M. Esposito, Gregory A. King, Jack R. Belluscio and Anscott Industries, Inc., C.A. No. 08:00494 T26 (M.D. Fla.) (RAL)

Judgments Entered Against Two Penny Stock Promoters in Fraudulent Touting Case

The Securities and Exchange Commission announced today that on March 10, 2010, the Honorable Richard A. Lazzara, United States District Judge for Middle District of Florida, entered judgments against two stock promoters, Robert M. Esposito and Gregory A. King, in SEC v. Esposito, et al., No. 08 CV 494 T26 (M.D. Fla.), a fraudulent touting case the Commission filed on March 17, 2008. See Lit. Rel. No. 20499.

In its complaint, the Commission charged that Esposito, King, and others participated in fraudulent touting scheme of the stock of Anscott Industries, Inc. The complaint alleged that in April 2003, Esposito, a penny stock promoter, orchestrated a reverse merger between Anscott (then a private company) and Liquidix, Inc., a public shell company which, after the merger, changed its name to Anscott. According to the complaint, Esposito received from the company 4 million shares of Anscott stock as compensation for arranging the reverse merger and for future stock promotion work. The complaint further alleges that a fraudulent Form S-8 registration statement was filed with the Commission for the 4 million shares of Anscott issued to Esposito, which improperly enabled Esposito to sell these shares to the public during the fraudulent touting scheme.

As alleged in the complaint, after the reverse merger and the issuance of shares to Esposito, Esposito paid King, another penny stock promoter with whom Esposito had worked previously, to prepare and disseminate materially false and misleading tout sheets promoting Anscott stock. The Commission alleged that these tout sheets -- crafted to appear like independent investment newsletters and entitled the Wall Street Bulletin -- recommended Anscott as a "strong buy," and were disseminated to the public through fax spamming from late May 2003 through July 2003.

According to the complaint, these tout sheets, which King prepared, contained materially false and misleading representations about Anscott's products, business affiliations, and projected revenues. The complaint further alleged that these tout sheets failed to disclose, among other information, that Esposito, who was paid by the company to promote Anscott stock, was paying King to prepare and disseminate these "newsletters," and that Esposito was selling his Anscott stock during the touting scheme contrary to the Wall Street Bulletin's "strong buy" recommendation and price targets.

During the touting campaign, the price of Anscott's stock rose from around $1.40 a share in mid-May 2003, to a high of $4.59 a share on July 11, 2003. The complaint alleged that Esposito sold shares of Anscott both during and after the touting campaign, realizing over $6.5 million in illicit profits.

Esposito consented to the entry of a judgment that (a) permanently enjoins him from future violations of Sections 17(a), 5(a) and 5(c) of the Securities Act of 1933, Sections 10(b) and 13(d) of the Securities Exchange Act of 1934 and Exchange Act Rules 10b-5, 13d-1 and 13d-2; and (b) permanently bars him from participating in any future penny stock offerings. King consented to the entry of a judgment that (a) permanently enjoins him from future violations of Sections 17(b) of the Securities Act, Section 10(b) of the Exchange Act and Exchange Act Rule 10b-5; and (b) permanently bars him from participating in any future penny stock offerings. The judgments further provide that, upon motion by the Commission, the Court later will determine issues relating to disgorgement and civil penalties.

The Court previously entered final judgment against the other defendants in this case, Anscott and its CEO, Jack R. Belluscio, on October 27, 2008, which (1) permanently enjoined Anscott and Belluscio from future violations of Securities Act Sections 5(a) and 5(c) and Exchange Act Section 10(b); (2) permanently barred Belluscio from acting as an officer or director of a public company; (3) ordered Belluscio to pay a civil penalty of $240,000; and (4) ordered Anscott to pay a civil penalty of $1,200,000. In a related administrative proceeding, on May 7, 2008, the Commission issued an Order revoking the registration of Anscott securities pursuant to Exchange Act Section 12(j). See In the Matter of Anscott Industries, Inc., Release No. 34-57791.