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LAST WEEK, the law caught up with Michael Metter, a purveyor of kitchen sponges and stinky stocks with a long history of evading angry creditors and clients.
In a criminal complaint, federal prosecutors charged the CEO of Spongetech Delivery Systems Inc., a tiny Manhattan company that was once a big advertiser at such places as Citi Field, Yankee Stadium and Madison Square Garden, with conspiracy to commit fraud and obstruction of justice. The feds allege no fewer than 99% of Spongetech's purported sales were fake and Mr. Metter pocketed millions in illegal gains by pumping his company's stock price. He then sold billions of near-worthless shares to gullible investors. If convicted, the 58-year-old faces up to five years in prison.
Mr. Metter is intimately familiar with courthouses. He has been sued repeatedly over the years, instigated litigation of his own and declared personal bankruptcy. Last Wednesday, however, marked the first time he entered one as a defendant in a criminal case. Dressed in a blue blazer, open-collared shirt and rumpled khakis, he quietly responded, "Yes, sir" and "Yes, Your Honor" as a federal magistrate asked if he understood his rights. The judge granted his request that he be allowed to travel to Lancaster, Pa., this weekend to attend his son's college graduation.
Charges "vigorously" denied
FOR PEOPLE WHO have been fleeced by Mr. Metter over the years, the comeuppance has been a long time coming. "He's a mini-Medoff," says Duane Townsend, a 76-year-old oncologist in Utah who lost $450,000 from buying toxic stocks at a brokerage firm Mr. Metter presided over in the mid-1990s.
The criminal charges are just the latest and most...