Two more class action stockholder lawsuits have been filed against troubled online ad operation Hitsgalore.com, one by the Los Angeles law firm of Stull, Stull & Brody and one by the Bala Cynwyd, PA law firm of Schiffrin & Barroway LLP.
The complaints name as defendants Hitsgalore and its CEO and president, and allege that the company knew and failed to disclose that its founder, Dorian Reed, along with two other individuals, had been ordered to pay over $600,000 to 100 customers for “false claims made by Internet Business Broadcasting, a failed online advertising company they worked for.”
The Rancho Cucamonga, CA-based company’s stock has tanked since the news broke last week. The OTC stock closed Tuesday at 4 19/32. It had traded at more than $20 before Reed resigned last week.
The earlier class action stockholder suit was filed by the Los Angeles firm of Weiss & Yourman.
Meanwhile, Bloomberg News, which broke the story, reported that the company “has an investor relations official who cheated clients as a stockbroker, state documents show.”
The news service said that Frank Pinizzotto, 38, handles investor relations for the Internet advertising company from Florida. In 1995, he was the target of a complaint by the state’s Division of Securities and Investment Banking which found that as a broker for Lew Lieberbaum & Co. in 1991, he defrauded customers by selling them shares “at prices which were neither fair nor reasonable,” Bloomberg said.
He was also found to have made unsuitable recommendations and illegally sold unregistered securities, according to the Florida administrative complaint.
In 1992, Pinizzotto was suspended for five days by the National Association of Securities Dealers after being accused of telling a customer he would make money in a stock because the president of the company would move its shares higher, Bloomberg said.
Pinizzotto quit as a stockbroker in 1992 after working for seven different firms over nine years. Asked why he left the stock brokerage industry, he was quoted as saying: “I have my reasons.”
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