Man Gets 44 Months For Emulex Hoax

By: Gary Gentile, AP Business Writer (AP) Nearly a year after sending the stock of a high-tech firm plummeting by issuing a phony press release via the Internet, 23-year-old Mark Jakob was sentenced to 44 months in prison.

Jakob admitted in December that he issued a fake press release in August 2000 that sent the stock of the high-tech firm Emulex Corp. tumbling -- costing investors nearly $110 million.

Jakob told U.S. District Judge Dickran Tevrizian he had read letters from investors who lost millions because of his actions. "It was not until I saw what some of these investors went through that I realized what I really did cause.

"I'll try to do everything possible in the future to pay back these investors I made lose money," he added.

Tevrizian said Jakob "stole more than Jesse James. This is a big time heist."

Jakob was ordered to surrender to start his sentence on Sept. 5.

On Aug. 24, 2000, Jakob faced a potential loss of $97,000 from trades he made in Emulex's stock and a demand from an online brokerage that he deposit $20,000 in his account.

To cover his losses, Jakob crafted a phony press release stating that the chief executive of Emulex Corp. had quit and the company was restating its quarterly earnings from a profit to a loss, he admitted Friday.

Jakob was able to send the release through Internet Wire, a Los Angeles company that distributes corporate announcements to news organizations and on its Web site. Jakob had worked for Internet Wire for more than a year and had left on good terms the previous week.

Jakob sold 3,000 shares of Emulex stock short. A short sale involves selling borrowed shares of a stock in anticipation that the price will decline. But instead the shares rose in value.

Within minutes of the release becoming public on Aug. 25, Emulex's share price plunged until trading was halted on the Nasdaq. At least one media outlet reported the false release as news. Jakob covered his short position and bought additional shares which he later sold. Emulex's stock recovered most of its value by the end of the day.

The government charged that Jakob made more than $241,000 from his trades.