Nothing better than a good investment

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http://query.nytimes.com/gst/fullpage.html?res=9C05E0DB1F3AF930A1575AC0A9659C8B63&sec=&spon=&pagewanted=all

Couple Withdraw Guilty Pleas to a Biohazard Stock Scheme

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By RONALD SMOTHERS
Published: September 23, 2003

In the end, a Flanders, N.J., couple did not plead guilty today to a scheme to profit from the nation's fears of bioterrorism by marketing an improbable device said to be a biohazard neutralizer.

Instead, a routine proceeding in Federal District Court turned into a daylong series of events rivaling the melodramatic twists of a midday soap opera and the intense emotions and suspense of any jury trial.

There were tear-filled delays; there was what appeared to be an epileptic seizure by one defendant that brought emergency medical technicians to the courtroom; there was a sudden questioning by the couple of the very wording of their previously agreed-to plea arrangement.

Finally, after several animated and whispered conferences among lawyers and prosecutors and yet another delay, the couple -- Stewart R. Kaiser and his wife, Nancy Vitolo -- fired their lawyers late this afternoon and withdrew their guilty pleas.

Their new lawyer vowed to defend them vigorously against what he termed the federal government's stupidity in destroying a company that could have helped homeland security and then trying to cover it up with prosecutions.

The prosecutor, Assistant United States Attorney Russel Jacobson, told the judge that his office would ''file formal charges within the immediate future'' against the couple in an effort to have them back in court.

After the hearing, the couple stood with their arms around each other in the hallway outside the courtroom. Mr. Kaiser, 37, looked grim and determined. Ms. Vitolo, 40, appeared still shaken from bouts of crying in court and what appeared to be an epileptic seizure during the hearing in which she fell to the floor clutching her husband and shouting to him, ''Don't let me swallow my tongue.''

Emergency medical technicians who arrived to find a calmer Ms. Vitolo nevertheless offered to take her to a hospital -- an offer that she declined, allowing the hearing to resume for a time.

Any future charges will revolve around the device that the company, R-Tec Technologies, claimed in a Sept. 24, 2001, news release was a biohazard neutralizer. Ms. Vitolo was a part owner and major stockholder of the company, and Mr. Kaiser was a consultant and inventor.

Its stock was trading for 46 cents a share over the counter when the company claimed in the release that its Chemical and Biological Alarm and Neutralization Defense, or C-Band, was patented and the ''first mechanically operated device designed to protect civilians in everyday life from biological and chemical terrorism attacks.''

It invited interested parties and investors to contact Mr. Kaiser, a heating and ventilation technician with a high school education, who is quoted in the release as saying, ''There is no greater travesty as to have the technology to save lives and not use it.''

The company's stock soared to $2.40 a share within four days of the news release, but an investigation by the Securities and Exchange Commission led to a November 2001 cease and desist agreement in which the company admitted several wrong or misleading statements about the C-Band device.

Most notable among the misleading actions and statements was a demonstration device shown to visiting securities agency investigators that was nothing more than a brightly painted yellow two-drawer file cabinet with a red strobing light and siren attached to the top.

''The device had no operational value or potential,'' said Michael Drewniak, a spokesman for the United States attorney for New Jersey, Christopher J. Christie. ''It was clearly a fraud.''

Mr. Drewniak said the Kaisers profited from the rise in the stock of the company. Ms. Vitolo, a former secretary for a heating and ventilation company, is listed in securities filings as vice president of R-Tec and holder of 972,000 shares, or 28.8 percent, of its common stock.

Roger Fidler, the Glen Rock lawyer who agreed to represent the couple after they fired their other lawyers, derided the direction of the government's investigation of Mr. Kaiser and Ms. Vitolo.

''These are people who wouldn't know how to conduct a securities fraud if you put a gun to their heads,'' he said. ''They are not Andrew Fastow,'' he added, referring to the former chief financial officer of Enron.

Mr. Fidler said that Mr. Kaiser had indeed developed something that was helpful to homeland security and the detection of biohazards and insisted that the bright yellow file cabinet device was meant only to be a representation of what the real C-Band would look like once a prototype was developed.

But before R-Tec could get to that point, he said, government investigators seized the company's records, plans and documents and essentially put them out of business.

''Now they are going to bring a case against Ma and Pa Kettle because they don't want to admit that they might have stopped a device that could have been helpful,'' he said.
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http://finance.yahoo.com/q?s=GAGO.PK