Emulex hoax suspect bond set at $100,000

A judge sets a bond of $100,000 for Mark Simeon Jakob, accused of issuing a phony press release that sent shares of the networking equipment company tumbling last week.

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A federal judge has set a bond of $100,000 for Mark Simeon Jakob, the suspect apprehended yesterday by federal law enforcement authorities for allegedly releasing a fake news announcement that sent shares of technology company Emulex reeling more than 50 percent last Friday.

The U.S. attorneys' office had requested that Jakob be detained, but the judge disagreed and set the bond, with a psychiatric evaluation as a condition of release.

Matthew McLaughlin, a spokesman for the FBI in Los Angeles, said the suspect has not been released, pending the psychiatric evaluation. Unconfirmed reports this morning indicated that Jakob had been released on bail.

"The bond was set last night, but the judge ordered (the suspect) to undergo psychiatric evaluation before he could be released," said Thom Mrozek, a spokesman for the U.S. attorneys' office.

Since the arrest of the 23-year-old El Segundo, Calif., resident, several class-action lawsuits by see story: Emulex hoaxEmulex investors who took a beating in the incident have begun pouring in against Bloomberg News, one of the first news services to distribute an article based on the false announcement, and against Internet Wire, the service over whose network the sham news was circulated.

This morning, in the most recent case, the law firm of Schatz & Nobel filed a lawsuit in U.S. District Court for the Southern District of New York on behalf of investors who were duped into taking action on the false news. The firm also named Internet Wire and Bloomberg News as the defendents. The complaint alleges that both services violated the Securities Exchange Act of 1934 by "recklessly disseminating materially false and misleading information" about Emulex.

A Bloomberg spokeswoman said the company does not comment on ongoing litigation. A representative for Internet Wire could not be reached for comment.

Jakob, a student at El Camino Community College, stands accused of wire fraud, acting with intent to defraud, participating in a scheme to defraud, and securities fraud. He worked at Internet Wire until Aug. 18.

According to U.S. Attorney Alejandro Mayorkas, Jakob sent an email from the library at El Camino Community College to Internet Wire with a phony Emulex press release that "reflected familiarity with the procedures used" by the service.

Authorities are seeking civil penalties as well as criminal securities fraud charges. They allege that Jakob made nearly $250,000 from short sales he made in conjunction with the press release posting.

The fake announcement indicated Emulex would restate its earnings--revising its profits lower--and said the company's chief executive would resign. The company, which is based in Costa Mesa, Calif., and makes networking technology, lost about $2.5 billion in value last Friday before the hoax was discovered.

After Emulex said the information was false, the FBI moved to track the alleged perpetrator.