SEC v. TOBIN SMITH and

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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

SECURITIES AND EXCHANGE COMMISSION,
Los Angeles Regional Office, 444 South Flower
Street, Suite 900, Los Angeles, CA  90071,

Plaintiff,

                                                                                                   Case                                                                                                   No.:
v.

TOBIN SMITH and
NBT GROUP, INC. (FORMERLY CHANGEWAVE,
INC. DBA NBT COMMUNICATIONS),

Defendants.

COMPLAINT
 Plaintiff Securities and Exchange Commission (“SEC”) alleges:
SUMMARY
1. This case involves a fraudulent touting scheme.  In 2012, Defendant Tobin S.
Smith, on behalf of his company, Defendant NBT Group, Inc. (“NBT”), entered into two
separate agreements to provide “investor awareness” marketing services promoting IceWEB,
Inc. (“IWEB”), a penny-stock company.  The Defendants entered into these agreements as part
of a scheme involving the now-deceased CEO of IWEB and a broker to inflate the price of
IWEB stock.  Under the terms of the agreements, Smith’s company, NBT, was to receive a total
of $330,000 in cash, as well as IWEB stock, for promoting IWEB.  Although the Defendants did
not receive the full amount contemplated by the agreements, they did receive $165,900 and
1,217,105 shares of restricted IWEB stock in exchange for preparing and disseminating emails,
online blogs, articles, and other media touting IWEB, with the goal of increasing IWEB’s trading
volume and share price.  The agreements also provided that NBT could earn over $250,000 in

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additional compensation if the marketing campaigns succeeded in obtaining a sustained increase
in share price (“incentive fees”).  The Defendants failed to fully and adequately disclose their
compensation or the promised incentive fees for promoting IWEB; they also made additional
material misrepresentations and omissions regarding IWEB, including unsupported financial
projections, and false representations that Smith was immediately purchasing IWEB stock, that
IWEB was an acquisition target, and that Facebook was a customer of IWEB.
2. By engaging in this conduct, the Defendants violated the antifraud provisions of
Sections 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. § 78j(b),
and Rule 10b-5 thereunder, 17 C.F.R. § 240.10b-5, and the antitouting provisions of Section
17(b) of the Securities Act of 1933 (the “Securities Act”), 15 U.S.C. § 77q(b).
3. The SEC seeks a permanent injunction prohibiting future violations, penny stock
bars, and disgorgement of ill-gotten gains together with prejudgment interest against both
Defendants, and a civil penalty against Defendant Smith.
JURISDICTION AND VENUE
4. This Court has jurisdiction over this action pursuant to Sections 20(b), 20(d)(1)
and 22(a) of the Securities Act, 15 U.S.C. §§ 77t(b), 77t(d)(1) & 77v(a), and Sections 21(d)(1),
21(d)(3)(A), 21(e) and 27(a) of the Exchange Act, 15 U.S.C. §§ 78u(d)(1), 78u(d)(3)(A), 78u(e)
& 78aa(a).  Defendants have, directly or indirectly, made use of the means or instrumentalities of
interstate commerce, of the mails, or of the facilities of a national securities exchange in
connection with the transactions, acts, practices and courses of business alleged in this
Complaint.
5. Venue is proper in this district pursuant to Section 22(a) of the Securities Act, 15
U.S.C. § 77v(a), and Section 27 of the Exchange Act, 15 U.S.C. § 78aa(a), because the

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Defendants transact business in this district and certain of the transactions, practices, and courses
of business constituting violations of the federal securities laws occurred within this district.
THE DEFENDANTS
6. Tobin S. Smith (“Smith”) resides in North Bethesda, Maryland.  Smith is the
chief executive officer of Defendant NBT Group, Inc.  Smith was a Fox News contributor from
June 2000 until June 19, 2013, including on the “Bulls and Bears” television show on Fox News
Channel.  At all times relevant to this action, Smith described himself on the NBT website as a
“contributor and market analyst for Fox News and more recently Fox Business Network.”  Fox
News terminated its contract with Smith in 2013 on the grounds that Smith violated network
policy when he received compensation to promote the stock of a different company.
7. NBT Group Inc. (formerly ChangeWave, Inc., dba NBT Communications)
(“NBT”) is a Maryland corporation with its principal place of business in Rockville, Maryland.
NBT is “in the business of [publishing] sponsored investment research” on behalf of public
companies and producing “direct marketing” material that “mak[es] the investment case” for the
companies.  Typically, the issuer itself retains NBT to write the research reports.  NBT is
controlled and managed by Defendant Smith, its founder, chief executive officer, chief
investment officer and chief research officer.  The only other officer and/or employee of the
company during the relevant period was Smith’s wife.
THE ISSUER
8. IceWEB, Inc. (“IWEB”) is a Delaware corporation.  It manufactures and
markets data storage products, custom built appliances and cloud based software and services.
IWEB’s common stock is registered with the SEC pursuant to Section 12(g) of the Exchange
Act, 15 U.S.C. § 78l(g), and trades on the OTC Bulletin Board.  During the relevant period,

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IWEB’s principle place of business was Sterling, Virginia.  On January 5, 2015, IWEB changed
its name to UnifiedOnline, Inc.; it is presently headquartered in Fairfax, Virginia.
9. During the relevant period, IWEB’s stock price ranged from approximately five to
seventeen cents per share, rendering it a “penny stock” within the meaning of Section
3(a)(51)(A) of the Exchange Act, 15 U.S.C. § 78c(a)(51)(A), and Rule 3a51-1 thereunder, 17
C.F.R. § 240.3a51-1.
THE BROKER
10. George Johnson (“Johnson”) was a registered representative (stock broker) at a
brokerage firm registered with the Financial Industry Regulatory Authority (“FINRA”).  FINRA
is a self-regulatory organization registered with the SEC pursuant to the Exchange Act as a
registered securities association.
11. On April 8, 2015, FINRA’s Department of Enforcement charged Johnson in a
FINRA Disciplinary Proceeding with violations of the antifraud provisions of Section 10(b) of
the Exchange Act and Rule 10b-5, as well as various FINRA rules, for manipulating the volume
and price of IWEB stock during the period of May 15, 2012 through May 24, 2012.  Department
of Enforcement v. George Johnson, Disciplinary Proceeding No. 2013035533701.  On February
18, 2016, FINRA issued an Order Accepting Offer of Settlement pursuant to which Johnson,
without admitting or denying FINRA’s allegations, was barred from associating with any FINRA
member in any and all capacities.
THE DEFENDANTS’ FRAUDULENT TOUTING OF ICEWEB STOCK
A. The May 2012 Promotional Campaign
12. On or about May 9, 2012, Johnson, who personally owned approximately
1,520,000 shares of IWEB, and whose customers owned an additional 9,377,681 shares of

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IWEB, emailed Smith and suggested that Smith get together with IWEB’s then CEO.
13. Smith understood from his initial communications with Johnson that Johnson
owned “a ton” of IWEB stock.  Additionally, from a subsequent May 10, 2012 email from
Johnson stating “I was just a little early,” Smith understood that Johnson’s investors were under
water, that the stock was not trading, and that the stock price was below what Johnson’s clients
paid for it.
14. On or about May 15 or 16, 2012, Smith visited IWEB’s offices and interviewed
its then-CEO, as Johnson had suggested.
15. On or about May 22, 2012, the Defendants entered into a Professional Services
Agreement with a consulting group retained by IWEB.  The agreement reflected the terms
negotiated by Smith with IWEB’s CEO , and obligated the Defendants to provide services
promoting IWEB.  .
16. Specifically, pursuant to the agreement, NBT was to perform promotional
services for IWEB, including: (1) an NBT Equities Research initial report and updates; (2)
advertisements sent to email subscriber lists; and (3) social media blogging.
17. In exchange:
a. the consulting group was to pay NBT $50,000 for the production and
distribution of the IWEB dedicated email advertorial campaign for the
period from May 22 through May 25, 2012; and
b. the consulting group or IWEB was to pay NBT incentive fees of:
i. 10% of the expected PIPE transaction proceeds for IWEB stock
following the May 22-25 investor marketing campaign; and
ii. 10% of the expected $0.17 or higher warrant conversion proceeds

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into IWEB common shares following the May 22-25 investor
marketing campaign.
18. In fact, any fees paid by the consulting group were first going to be paid by IWEB
to the consulting group, which meant that IWEB was paying the fees.
19. In none of the promotional materials that the Defendants created and issued
regarding IWEB from May 21 to May 25, 2012, did the Defendants disclose that IWEB had
agreed NBT would be paid incentive fees if the price of IWEB stock increased to a certain level
following the May 21-25 marketing campaign.
20. Smith understood that IWEB contracted with him through the consulting group
because IWEB wanted to increase its number of shareholders, to increase its trading volume, and
to “uplist” from trading on the over-the-counter (OTC) market to the NASDAQ.  Smith also
understood that IWEB had $2 million in outstanding $0.17 warrants that could be converted by
the warrant holders to IWEB stock once the stock price increased sufficiently (to about $0.20 per
share).  Exercise of the warrants would result in IWEB receiving the $2 million from warrant
holders purchasing IWEB stock.
21. Smith knowingly participated in a fraudulent scheme with IWEB’s then CEO and
Johnson whereby he touted IWEB to cause its price to increase sufficiently for warrant holders to
exercise their warrants, providing increased cash to IWEB and commissions to Johnson.  In
furtherance of the fraudulent scheme, from May 16-18, 2012, Smith engaged in the following
email exchange with Johnson:
Smith: “. . . What is the day you need it to peak to convert the warrants at .17?. . .
Thursday [May 24] is best for you to convert warrants. . . $2 million
right?”

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Johnson: “Yep. . . . let’s go my friend.”
Smith:   “Thursday it is. . .”
Johnson (on May 18):  “Are you confident on this one my friend?”
Smith: “110% confident. . . we added a $100 million trading group to the mix. . .
you WILL be where u want to be.”
22. On May 18, 2012, the Defendants received two payments totaling $44,500.  These
payments constituted partial payment for the anticipated email campaign to be conducted on
behalf of IWEB.
23. On May 21, 2012, the Defendants initiated the campaign regarding IWEB by
posting on NBT’s website a report authored by Smith entitled “By Dumb LUCK I Just
Discovered the PERFECT Tech Stock. . . In My Backyard!”  [Emphasis original.]  Among other
representations, the report states that “NBT is initiating coverage” of IWEB, promising that “We
will complete an in-depth report on the company. . . but here is the condensed version of our
equities research report in progress.”  The report sets forth an “initial target [price] of $2.25 or
10X projected 2013 sales of $45 million in their low cost/high efficiency unified data storage
systems,” a “more than 10X upside from the current price per share of .15.”  An “About the
Author” description at the end of the report includes Smith’s picture and states that he is a
“Contributor and Anchor Fox News Channel and Fox Business Network,” in addition to stating
his positions at NBT.
24. Smith emailed a virtually identical version of the May 21 report to NBT
subscribers on May 22, 2012.
25. Smith made the purported projections regarding IWEB’s potential sales based on
the assumption that IWEB would be acquired, and based upon the price at which other larger

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technology companies with a data storage component were acquired.
26. Based on Smith’s discussion with IWEB’s CEO earlier in May 2012, Smith knew
that there was no evidence that anyone had contacted IWEB about acquiring IWEB.  Moreover,
although there had been a number of acquisitions of technology companies in the previous
twelve months, the acquired companies had far greater revenue than IWEB.
27. Additionally, the other technology companies Smith looked at when making
projections regarding IWEB were very large compared to IWEB, and their financials were not
comparable to IWEB.  Moreover, IWEB’s actual 2011 and year-to-date-2012 sales were less
than 10% of the $45 million in purported 2013 “projected” sales.  Specifically, IWEB’s 2011
sales were $2,678,000 and its sales for the first six months of 2012 were $1,892,000.  Nor did the
Defendants’ report disclose or discuss that IWEB’s independent auditor had included a “going
concern” qualification in each of its annual audit reports for IWEB beginning with IWEB’s 2009
fiscal year.
28. Also on May 21, 2012, Smith emailed Johnson regarding the “Final Version” of
the IWEB report to be sent to NBT subscribers, saying:
Out to 300k [subscribers] tomorrow...500k Wed...1.5 million Thursday...
We got 3.5 million shares [purchased] today with a water pistol. .
The bazookas come out starting tomorrow...
You close your PIPE [stock offering] deal for them at .17 on Thursday?
Stock will be at .20 or more on Thursday...
Bet you steak at Gibsons...
29. In fact, the volume of IWEB shares traded did increase from 817,800 on Friday,
May 18 to 3,419,900 on Monday, May 21, the day Smith posted the initial report regarding

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IWEB on NBT’s website.  Despite Defendants’ efforts, however, the price of IWEB stock was
unchanged during this period.
30. The Defendants did not disclose on NBT’s website or in its emails to subscribers
the material fact that the purpose of the IWEB touts was to increase the trading volume and price
of IWEB stock to a sufficient level ($0.20 per share) to induce warrant holders to convert their
outstanding IWEB warrants to IWEB stock.
31. On May 22, 2012, Smith placed a post he authored on NBT’s website headlined
“IWEB Adds Microsoft Functionality Even the BIG Storage Giants Don’t Have.”  That post
concludes:  “We LOVE the scrappy underdog’s [sic] here at NBT...GREAT buy under 25 cents.
I am buying my shares today and will hold them basically until IWEB is bought out by one of
the big guys who are TIRED of getting their lunch eaten by scrappy IWEB!”  [Emphasis
original.]  As in the case of the May 21 report, at the end of the post, the “About the Author”
description includes a picture of Smith and a statement that he is a “Contributor and Anchor for
the Fox News Channel and Fox Business Network.”
32. On May 23 and May 24, 2012, Smith caused NBT to send to several hundred
thousand subscribers an advertisement for IWEB “From The Desk Of Tobin Smith” which he
wrote, headlined “Leading Tech Stock Analyst Tobin Smith Announces ‘Strong Buy’
Recommendation for this off-the-radar company he is calling the ‘Perfect Tech Stock.’”
33. This advertisement contained material misrepresentations and misleading
statements concerning IWEB, including that:
● Smith discovered IWEB “by sheer dumb luck,” and suggesting that Smith learned
about IWEB from “a tech geek golf buddy of mine,” when, in fact, Johnson had
introduced Smith to IWEB’s then-CEO and had suggested that Smith tout IWEB

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stock so that Johnson and his clients, and IWEB, could benefit from increases in
price and volume of the stock.
● “My Discovery of IceWeb, Inc. Was a Fluke – But I’ll TAKE The Profits!” when,
in fact, Smith did not own IWEB shares himself.
● Smith found IWEB when he was “searching for a solution to my OWN
company’s rapidly growing cloud data storage problem.”  In fact, not only did
Smith “find” IWEB as a result of Johnson contacting him, but Smith did not use
IWEB for NBT data storage, instead using a provider that had cheaper up-front
costs.
● In response to the question: “Who provides the cheapest storage box and more
important the lowest cost/highest performance solution to all these public (and
private enterprise) data storage centers [Amazon cloud drive, Dropbox, Evernote,
iCloud, Microsoft SkyDrive, Google Drive, and SugarSync]?  To all the FREE
cloud data storage companies?  To Facebook?” the advertisement shows a
checkbox next to IWEB’s name, followed by “BINGO!”  In fact, Smith had no
knowledge whether any of these entities were IWEB customers when he
disseminated the advertisement.  Nor did Smith ask IWEB’s CEO whether any of
these entities were IWEB customers before disseminating the advertisement.
34. Smith also stated in the advertisement that “I just discovered the perfect tech play
I will own forever,” representing that he owned IWEB stock, as he had represented in the May
22 post.  In fact, Smith did not buy any IWEB shares on May 22 or May 23, and did not later
clarify the May 22 post or the May 23 and May 24 advertisement by disclosing that he had not
bought IWEB shares.

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35. The May 23rd and May 24th advertisement also contained highly misleading
projections by Smith, who stated that “I can easily make the case for:”
●          a          “10X Return -- $200 million valuation is a cakewalk considering what has
been already paid for its competitors with not NEARLY as valuable solution,”
when in fact Smith had no basis for believing IWEB would be acquired;
●          a          “20X Return -- $400 million valuation is much closer to my end-game take
out valuations”;
●          a          “50X Return -- $Billion valuation IS a bit out there a bit but I guarantee the
tech giant who buys IceWeb will FEEL like they got a $billion company.”
[Emphasis original.]
36. Smith followed up these projections with the statement that: “In short:  I cannot
say it LOUD enough or STRONG ENOUGH: you SHOULD be buying shares of IceWeb
(IWEB) NOW Under The .25-.30 per share valuation!”  [Emphasis original.]
37. Smith made these projections notwithstanding that he knew of no company that
was contemplating purchasing IWEB.
38. Each of the advertisements and posts contained a disclaimer at the end, in most
cases printed in very fine print.  The disclaimer stated, in part, that IWEB’s consultant, “a 3rd
party, has paid $50,000 for issuer sponsored research and investor marketing,” and that NBT had
“not determined if the statements and opinions of the advertiser are accurate, correct or truthful.”
With regard to the posts purporting to be research reports or reports in progress by NBT’s own
staff, the disclaimers do not, however, explain which statements in the reports are in fact by the
“advertiser.”  Nor do the disclaimers explain the relationship between IWEB’s consultant and its
client, IWEB, and that IWEB was ultimately paying for the reports and advertisements.  Finally,

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the disclaimers do not disclose that IWEB, through its consultant, had agreed NBT would be
paid incentive fees if the price of IWEB stock increased to a certain level following the May 21-
25 marketing campaign.
39. On Friday, May 25, 2012, IWEB’s CEO died unexpectedly.  The price of IWEB’s
stock fell from $0.18 per share to $0.12 per share at the close of trading that day.  On May 29,
2012, the next trading day, Smith posted on NBT’s website a post he wrote entitled: “IceWEB
Update: Out of Tragedy Comes Resolve to Finish the Mission.”
40. In that post, Smith noted that on the previous Friday IWEB’s shares had
“plummeted” from $0.17 to $0.12 “in just a few minutes on a huge volume spike,” but that this
presented “an opportunity to acquire shares here at a superb entry price,” and that “I did this
morning and strongly recommend you do to[o].”  In fact, Smith still had not bought any IWEB
shares.
B. The July 2012 Through January 2013 Promotional Campaign
41. On July 16, 2012, when IWEB’s stock price had declined to $0.08 per share,
Smith drafted and executed on behalf of NBT, a second agreement directly with IWEB entitled
“Professional Services Agreement.”
42. Under that agreement, NBT agreed to promote IWEB during the period from July
16, 2012 through January 15, 2013 in exchange for maximum payments  by IWEB totaling
$530,000, consisting of $140,000 in cash, $140,000 in stock and $250,000 from exercise of
outstanding warrants.  The portion of the fee derived from exercise of outstanding warrants was
an incentive fee in that the stock price had to increase sufficiently to induce exercise of the
warrants.
43. Also on July 16, 2012, IWEB paid the Defendants the agreed upon $50,000 initial

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cash payment by wire transfer to NBT’s bank account.
44. As part of the new marketing campaign for IWEB, on July 18, 2012, Smith
caused to be posted on NBT’s website a blog regarding IWEB.  In addition to including a picture
and identifying himself at the end of the blog as Founder and Editor-in-Chief for
NBTEquitiesResearch.com, Smith identified himself as “Contributor and Anchor for the Fox
News Channel and Fox Business Network 2000-2013.”
45. As part of the new marketing campaign for IWEB, on July 25, 2012, Smith
caused to be posted on NBT’s website a post regarding IWEB which made the same misleading
projections as to IWEB’s likely performance as the May 23rd and May 24th advertisement.
46. On July 30, 2012, IWEB transferred 842,105 IWEB shares to NBT in partial
payment for NBT’s services.
47. On August 15, 2012, IWEB wired $30,000 to NBT in partial payment for the
Defendants’ services promoting IWEB.
48. On August 22, 2012, Smith caused to be posted on NBT’s website a report
entitled “Here is What You Probably WON’T Hear On Today’s IWEB Noon EST Shareholder
Call.”  As in the case of the July 18 post, Smith included a picture and identified himself at the
end of the post as “Contributor and Anchor for the Fox News Channel and Fox Business
Network 2000-2013.”
49. As with other posts, Smith included a disclaimer at the end of the July 18, and
July 25, and August 22, 2012 posts.  Like the disclaimers on the posts in the May campaign, the
disclaimer stated that the IWEB consultant, “a 3rd party, has paid $50,000 for issuer sponsored
research and investor marketing.”  In fact, NBT’s second agreement was directly with IWEB,
and IWEB had agreed to pay significantly more than $50,000, including agreeing to grant Smith

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IWEB shares and pay an incentive fee depending on the amount of warrants exercised.  The
disclaimers were accordingly materially misleading.
50. On August 22, 2012, Smith caused to be posted on NBT’s website and circulated
to its subscribers a second report regarding IWEB which included a “Rating” of “Strong Buy.”
The post again included his picture and identified him at the end of the post as “Contributor and
Anchor for the Fox News Channel and Fox Business Network 2000-2013.”
51. This post included a differently worded disclaimer that represented, among other
things, that NBT “or its affiliates have received $80,000 in compensation and 800,000 shares of
restricted stock from the company or companies mentioned in this report or agents acting on
their behalf.”  This disclaimer failed to disclose that the $80,000 was received only for the
second investor marketing campaign, that NBT had also received $44,500 in payments for the
May 2012 campaign it conducted, and that NBT would receive additional cash and stock
bringing its total compensation to $280,000 pursuant to its most recent agreement with IWEB, as
well as being entitled to up to $250,000 in incentive fees if the stock price increased sufficiently
for warrants to be exercised.  The Defendants’ failure to include these facts rendered the
disclaimer materially false and misleading.
52. On August 29, 2012, IWEB wired another $30,000 to NBT in partial payment for
the Defendants’ services promoting IWEB.
53. On September 12, 2012, NBT received another 375,000 in restricted IWEB shares
in partial payment for the services NBT had agreed to provide.
54. On December 18, 2013, and March 11, 2014, a third party which had purchased
from IWEB its $60,000 debt to NBT, wire transferred $6,000 and $5,400 respectively, to NBT.
55. The Defendants thus received a total of $165,900 in cash and 1,217,105 restricted

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IWEB shares in exchange for their participation in the scheme to manipulate IWEB stock
through their false and misleading touts.
FIRST CLAIM FOR RELIEF
Fraud In Connection With The Purchase Or Sale Of Securities
Violations of Section 10(b) of the Exchange Act and Rule 10b-5 Thereunder
(Against All Defendants)

56. The SEC realleges and incorporates by reference paragraphs 1 through 55 above.
57. The Defendants, by engaging in the conduct described above, directly or
indirectly, in connection with the purchase or sale of a security, by the use of means or
instrumentalities of interstate commerce, of the mails, or of the facilities of a national securities
exchange, with scienter:
(a) employed devices, schemes, or artifices to defraud;
(b) made untrue statements of a material fact or omitted to state a material fact
necessary in order to make the statements made, in the light of the circumstances
under which they were made, not misleading; or
(c) engaged in acts, practices, or courses of business which operated or would operate
as a fraud or deceit upon other persons.
58. By engaging in the conduct described above, the Defendants violated, and unless
restrained and enjoined will continue to violate, Section 10(b) of the Exchange Act, 15 U.S.C. §
78j(b), and Rule 10b-5 thereunder, 17 C.F.R. § 240.10b-5.
SECOND CLAIM FOR RELIEF
Nondisclosure of Compensation for Touting Stock
Section 17(b) of the Securities Act
(Against All Defendants)

59. The SEC realleges and incorporates by reference paragraphs 1 through 55 above.
60. The Defendants, by engaging in the conduct described above, by the use of means

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or instruments of transportation or communication in interstate commerce or by the use of the
mails, published, gave publicity to, or circulated notices, circulars, advertisements, newspapers,
articles, letters, investment services, or communications which, though not purporting to offer a
security for sale, described such security for a consideration received or to be received, directly
or indirectly, from an issuer, underwriter, or dealer, without fully disclosing the receipt, whether
past or prospective, of such consideration and the amount thereof.
61. By engaging in the conduct described above, the Defendants violated, and unless
restrained and enjoined will continue to violate, Section 17(b) of the Securities Act, 15 U.S.C. §
77q(b).
PRAYER FOR RELIEF
 WHEREFORE, the SEC respectfully requests that the Court:
I.
Issue findings of fact and conclusions of law that the Defendants committed the alleged
violations.
II.
 Issue a judgment, in a form consistent with Fed. R. Civ. P. 65(d), permanently enjoining
Defendants Smith, NBT and their officers, agents, servants, employees and attorneys, and those
persons in active concert or participation with any of them, who receive actual notice of the
judgment by personal service or otherwise, from violating Section 10(b) of the Exchange Act, 15
U.S.C. § 78j(b), and Rule 10b-5(b) thereunder, 17 C.F.R. § 240.10b-5(b); and Section 17(b) of
the Securities Act, 15 U.S.C. § 77q(b).

III.
Order Defendants Smith and NBT to disgorge all ill-gotten gains from their illegal

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conduct, together with prejudgment interest.
IV.
 Order Defendant Smith to pay a civil penalty under Section 20(d) of the Securities Act,
15 U.S.C. § 77t(d), and Section 21(d)(3) of the Exchange Act, 15 U.S.C. § 78u(d)(3).
V.
 Enter an order pursuant to Section 20(g) of the Securities Act, 15 U.S.C. § 77t(g), and
Section 21(d)(6) of the Exchange Act, 15 U.S.C. § 78u(d)(6), prohibiting Defendants Smith and
NBT from participating in any offering of penny stock.
VI.
 Retain jurisdiction of this action in accordance with the principles of equity and the
Federal Rules of Civil Procedure in order to implement and carry out the terms of all orders and
decrees that may be entered, or to entertain any suitable application or motion for additional
relief within the jurisdiction of this Court.
VII.
 Grant such other and further relief as this Court may determine to be just and necessary.
DATED:  March 29, 2016   /s/Karen Matteson
                                                                        KAREN                                                                        MATTESON
 [email protected]
 D. C. Bar No. 362541
 Cal. Bar No. 102103
                                                                        YOLANDA                                                                        OCHOA
 [email protected]
 Cal. Bar No. 267993
 Attorneys for Plaintiff
 Securities and Exchange Commission
 Los Angeles Regional Office
 444 South Flower Street, Suite 900
 Los Angeles, CA  90071
 (323) 965-3998 (Telephone)
 (213) 443-1904 (Facsimile)

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UNITED STATES DISTRICT COURT 
FOR THE DISTRICT OF COLUMBIA 

 
  
SECURITIES AND EXCHANGE COMMISSION,  
Los Angeles Regional Office, 444 South Flower 
Street, Suite 900, Los Angeles, CA  90071, 

 

 
Plaintiff, 

 

 Case No.: 
v.  

  
TOBIN SMITH and 
NBT GROUP, INC. (FORMERLY CHANGEWAVE, 
INC. DBA NBT COMMUNICATIONS), 

 

  
Defendants.  

  
 

COMPLAINT 

 Plaintiff Securities and Exchange Commission (“SEC”) alleges: 

SUMMARY 

1. This case involves a fraudulent touting scheme.  In 2012, Defendant Tobin S. 

Smith, on behalf of his company, Defendant NBT Group, Inc. (“NBT”), entered into two 

separate agreements to provide “investor awareness” marketing services promoting IceWEB, 

Inc. (“IWEB”), a penny-stock company.  The Defendants entered into these agreements as part 

of a scheme involving the now-deceased CEO of IWEB and a broker to inflate the price of 

IWEB stock.  Under the terms of the agreements, Smith’s company, NBT, was to receive a total 

of $330,000 in cash, as well as IWEB stock, for promoting IWEB.  Although the Defendants did 

not receive the full amount contemplated by the agreements, they did receive $165,900 and 

1,217,105 shares of restricted IWEB stock in exchange for preparing and disseminating emails, 

online blogs, articles, and other media touting IWEB, with the goal of increasing IWEB’s trading 

volume and share price.  The agreements also provided that NBT could earn over $250,000 in 

Case 1:16-cv-00587   Document 1   Filed 03/29/16   Page 1 of 17



 
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additional compensation if the marketing campaigns succeeded in obtaining a sustained increase 

in share price (“incentive fees”).  The Defendants failed to fully and adequately disclose their 

compensation or the promised incentive fees for promoting IWEB; they also made additional 

material misrepresentations and omissions regarding IWEB, including unsupported financial 

projections, and false representations that Smith was immediately purchasing IWEB stock, that 

IWEB was an acquisition target, and that Facebook was a customer of IWEB. 

2. By engaging in this conduct, the Defendants violated the antifraud provisions of 

Sections 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. § 78j(b), 

and Rule 10b-5 thereunder, 17 C.F.R. § 240.10b-5, and the antitouting provisions of Section 

17(b) of the Securities Act of 1933 (the “Securities Act”), 15 U.S.C. § 77q(b). 

3. The SEC seeks a permanent injunction prohibiting future violations, penny stock 

bars, and disgorgement of ill-gotten gains together with prejudgment interest against both 

Defendants, and a civil penalty against Defendant Smith. 

JURISDICTION AND VENUE 

4. This Court has jurisdiction over this action pursuant to Sections 20(b), 20(d)(1) 

and 22(a) of the Securities Act, 15 U.S.C. §§ 77t(b), 77t(d)(1) & 77v(a), and Sections 21(d)(1), 

21(d)(3)(A), 21(e) and 27(a) of the Exchange Act, 15 U.S.C. §§ 78u(d)(1), 78u(d)(3)(A), 78u(e) 

& 78aa(a).  Defendants have, directly or indirectly, made use of the means or instrumentalities of 

interstate commerce, of the mails, or of the facilities of a national securities exchange in 

connection with the transactions, acts, practices and courses of business alleged in this 

Complaint. 

5. Venue is proper in this district pursuant to Section 22(a) of the Securities Act, 15 

U.S.C. § 77v(a), and Section 27 of the Exchange Act, 15 U.S.C. § 78aa(a), because the 

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Defendants transact business in this district and certain of the transactions, practices, and courses 

of business constituting violations of the federal securities laws occurred within this district. 

THE DEFENDANTS 

6. Tobin S. Smith (“Smith”) resides in North Bethesda, Maryland.  Smith is the 

chief executive officer of Defendant NBT Group, Inc.  Smith was a Fox News contributor from 

June 2000 until June 19, 2013, including on the “Bulls and Bears” television show on Fox News 

Channel.  At all times relevant to this action, Smith described himself on the NBT website as a 

“contributor and market analyst for Fox News and more recently Fox Business Network.”  Fox 

News terminated its contract with Smith in 2013 on the grounds that Smith violated network 

policy when he received compensation to promote the stock of a different company. 

7. NBT Group Inc. (formerly ChangeWave, Inc., dba NBT Communications) 

(“NBT”) is a Maryland corporation with its principal place of business in Rockville, Maryland.  

NBT is “in the business of [publishing] sponsored investment research” on behalf of public 

companies and producing “direct marketing” material that “mak[es] the investment case” for the 

companies.  Typically, the issuer itself retains NBT to write the research reports.  NBT is 

controlled and managed by Defendant Smith, its founder, chief executive officer, chief 

investment officer and chief research officer.  The only other officer and/or employee of the 

company during the relevant period was Smith’s wife. 

THE ISSUER 

8. IceWEB, Inc. (“IWEB”) is a Delaware corporation.  It manufactures and 

markets data storage products, custom built appliances and cloud based software and services.  

IWEB’s common stock is registered with the SEC pursuant to Section 12(g) of the Exchange 

Act, 15 U.S.C. § 78l(g), and trades on the OTC Bulletin Board.  During the relevant period, 

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IWEB’s principle place of business was Sterling, Virginia.  On January 5, 2015, IWEB changed 

its name to UnifiedOnline, Inc.; it is presently headquartered in Fairfax, Virginia.   

9. During the relevant period, IWEB’s stock price ranged from approximately five to 

seventeen cents per share, rendering it a “penny stock” within the meaning of Section 

3(a)(51)(A) of the Exchange Act, 15 U.S.C. § 78c(a)(51)(A), and Rule 3a51-1 thereunder, 17 

C.F.R. § 240.3a51-1.  

THE BROKER 

10. George Johnson (“Johnson”) was a registered representative (stock broker) at a 

brokerage firm registered with the Financial Industry Regulatory Authority (“FINRA”).  FINRA 

is a self-regulatory organization registered with the SEC pursuant to the Exchange Act as a 

registered securities association.   

11. On April 8, 2015, FINRA’s Department of Enforcement charged Johnson in a 

FINRA Disciplinary Proceeding with violations of the antifraud provisions of Section 10(b) of 

the Exchange Act and Rule 10b-5, as well as various FINRA rules, for manipulating the volume 

and price of IWEB stock during the period of May 15, 2012 through May 24, 2012.  Department 

of Enforcement v. George Johnson, Disciplinary Proceeding No. 2013035533701.  On February 

18, 2016, FINRA issued an Order Accepting Offer of Settlement pursuant to which Johnson, 

without admitting or denying FINRA’s allegations, was barred from associating with any FINRA 

member in any and all capacities. 

THE DEFENDANTS’ FRAUDULENT TOUTING OF ICEWEB STOCK 

A. The May 2012 Promotional Campaign 

12. On or about May 9, 2012, Johnson, who personally owned approximately 

1,520,000 shares of IWEB, and whose customers owned an additional 9,377,681 shares of 

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IWEB, emailed Smith and suggested that Smith get together with IWEB’s then CEO.   

13. Smith understood from his initial communications with Johnson that Johnson 

owned “a ton” of IWEB stock.  Additionally, from a subsequent May 10, 2012 email from 

Johnson stating “I was just a little early,” Smith understood that Johnson’s investors were under 

water, that the stock was not trading, and that the stock price was below what Johnson’s clients 

paid for it. 

14. On or about May 15 or 16, 2012, Smith visited IWEB’s offices and interviewed 

its then-CEO, as Johnson had suggested. 

15. On or about May 22, 2012, the Defendants entered into a Professional Services 

Agreement with a consulting group retained by IWEB.  The agreement reflected the terms 

negotiated by Smith with IWEB’s CEO , and obligated the Defendants to provide services 

promoting IWEB.  .   

16. Specifically, pursuant to the agreement, NBT was to perform promotional 

services for IWEB, including: (1) an NBT Equities Research initial report and updates; (2) 

advertisements sent to email subscriber lists; and (3) social media blogging. 

17. In exchange: 

a. the consulting group was to pay NBT $50,000 for the production and 

distribution of the IWEB dedicated email advertorial campaign for the 

period from May 22 through May 25, 2012; and 

b. the consulting group or IWEB was to pay NBT incentive fees of: 

i. 10% of the expected PIPE transaction proceeds for IWEB stock 

following the May 22-25 investor marketing campaign; and 

ii. 10% of the expected $0.17 or higher warrant conversion proceeds 

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into IWEB common shares following the May 22-25 investor 

marketing campaign. 

18. In fact, any fees paid by the consulting group were first going to be paid by IWEB 

to the consulting group, which meant that IWEB was paying the fees. 

19. In none of the promotional materials that the Defendants created and issued 

regarding IWEB from May 21 to May 25, 2012, did the Defendants disclose that IWEB had 

agreed NBT would be paid incentive fees if the price of IWEB stock increased to a certain level 

following the May 21-25 marketing campaign. 

20. Smith understood that IWEB contracted with him through the consulting group 

because IWEB wanted to increase its number of shareholders, to increase its trading volume, and 

to “uplist” from trading on the over-the-counter (OTC) market to the NASDAQ.  Smith also 

understood that IWEB had $2 million in outstanding $0.17 warrants that could be converted by 

the warrant holders to IWEB stock once the stock price increased sufficiently (to about $0.20 per 

share).  Exercise of the warrants would result in IWEB receiving the $2 million from warrant 

holders purchasing IWEB stock. 

21. Smith knowingly participated in a fraudulent scheme with IWEB’s then CEO and 

Johnson whereby he touted IWEB to cause its price to increase sufficiently for warrant holders to 

exercise their warrants, providing increased cash to IWEB and commissions to Johnson.  In 

furtherance of the fraudulent scheme, from May 16-18, 2012, Smith engaged in the following 

email exchange with Johnson: 

Smith: “. . . What is the day you need it to peak to convert the warrants at .17?. . . 

Thursday [May 24] is best for you to convert warrants. . . $2 million 

right?” 

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Johnson: “Yep. . . . let’s go my friend.” 

Smith:  “Thursday it is. . .” 

Johnson (on May 18):  “Are you confident on this one my friend?” 

Smith: “110% confident. . . we added a $100 million trading group to the mix. . .  

you WILL be where u want to be.” 

22. On May 18, 2012, the Defendants received two payments totaling $44,500.  These 

payments constituted partial payment for the anticipated email campaign to be conducted on 

behalf of IWEB.  

23. On May 21, 2012, the Defendants initiated the campaign regarding IWEB by 

posting on NBT’s website a report authored by Smith entitled “By Dumb LUCK I Just 

Discovered the PERFECT Tech Stock. . . In My Backyard!”  [Emphasis original.]  Among other 

representations, the report states that “NBT is initiating coverage” of IWEB, promising that “We 

will complete an in-depth report on the company. . . but here is the condensed version of our 

equities research report in progress.”  The report sets forth an “initial target [price] of $2.25 or 

10X projected 2013 sales of $45 million in their low cost/high efficiency unified data storage 

systems,” a “more than 10X upside from the current price per share of .15.”  An “About the 

Author” description at the end of the report includes Smith’s picture and states that he is a 

“Contributor and Anchor Fox News Channel and Fox Business Network,” in addition to stating 

his positions at NBT.   

24. Smith emailed a virtually identical version of the May 21 report to NBT 

subscribers on May 22, 2012. 

25. Smith made the purported projections regarding IWEB’s potential sales based on 

the assumption that IWEB would be acquired, and based upon the price at which other larger 

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technology companies with a data storage component were acquired.  

26. Based on Smith’s discussion with IWEB’s CEO earlier in May 2012, Smith knew 

that there was no evidence that anyone had contacted IWEB about acquiring IWEB.  Moreover, 

although there had been a number of acquisitions of technology companies in the previous 

twelve months, the acquired companies had far greater revenue than IWEB. 

27. Additionally, the other technology companies Smith looked at when making 

projections regarding IWEB were very large compared to IWEB, and their financials were not 

comparable to IWEB.  Moreover, IWEB’s actual 2011 and year-to-date-2012 sales were less 

than 10% of the $45 million in purported 2013 “projected” sales.  Specifically, IWEB’s 2011 

sales were $2,678,000 and its sales for the first six months of 2012 were $1,892,000.  Nor did the 

Defendants’ report disclose or discuss that IWEB’s independent auditor had included a “going 

concern” qualification in each of its annual audit reports for IWEB beginning with IWEB’s 2009 

fiscal year. 

28. Also on May 21, 2012, Smith emailed Johnson regarding the “Final Version” of 

the IWEB report to be sent to NBT subscribers, saying: 

Out to 300k [subscribers] tomorrow…500k Wed…1.5 million Thursday… 

We got 3.5 million shares [purchased] today with a water pistol. .  

The bazookas come out starting tomorrow… 

You close your PIPE [stock offering] deal for them at .17 on Thursday? 

Stock will be at .20 or more on Thursday… 

Bet you steak at Gibsons… 

29. In fact, the volume of IWEB shares traded did increase from 817,800 on Friday, 

May 18 to 3,419,900 on Monday, May 21, the day Smith posted the initial report regarding 

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IWEB on NBT’s website.  Despite Defendants’ efforts, however, the price of IWEB stock was 

unchanged during this period.  

30. The Defendants did not disclose on NBT’s website or in its emails to subscribers 

the material fact that the purpose of the IWEB touts was to increase the trading volume and price 

of IWEB stock to a sufficient level ($0.20 per share) to induce warrant holders to convert their 

outstanding IWEB warrants to IWEB stock. 

31. On May 22, 2012, Smith placed a post he authored on NBT’s website headlined 

“IWEB Adds Microsoft Functionality Even the BIG Storage Giants Don’t Have.”  That post 

concludes:  “We LOVE the scrappy underdog’s [sic] here at NBT…GREAT buy under 25 cents.  

I am buying my shares today and will hold them basically until IWEB is bought out by one of 

the big guys who are TIRED of getting their lunch eaten by scrappy IWEB!”  [Emphasis 

original.]  As in the case of the May 21 report, at the end of the post, the “About the Author” 

description includes a picture of Smith and a statement that he is a “Contributor and Anchor for 

the Fox News Channel and Fox Business Network.” 

32. On May 23 and May 24, 2012, Smith caused NBT to send to several hundred 

thousand subscribers an advertisement for IWEB “From The Desk Of Tobin Smith” which he 

wrote, headlined “Leading Tech Stock Analyst Tobin Smith Announces ‘Strong Buy’ 

Recommendation for this off-the-radar company he is calling the ‘Perfect Tech Stock.’” 

33. This advertisement contained material misrepresentations and misleading 

statements concerning IWEB, including that: 

● Smith discovered IWEB “by sheer dumb luck,” and suggesting that Smith learned 

about IWEB from “a tech geek golf buddy of mine,” when, in fact, Johnson had 

introduced Smith to IWEB’s then-CEO and had suggested that Smith tout IWEB 

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stock so that Johnson and his clients, and IWEB, could benefit from increases in 

price and volume of the stock. 

● “My Discovery of IceWeb, Inc. Was a Fluke – But I’ll TAKE The Profits!” when, 

in fact, Smith did not own IWEB shares himself.  

● Smith found IWEB when he was “searching for a solution to my OWN 

company’s rapidly growing cloud data storage problem.”  In fact, not only did 

Smith “find” IWEB as a result of Johnson contacting him, but Smith did not use 

IWEB for NBT data storage, instead using a provider that had cheaper up-front 

costs. 

● In response to the question: “Who provides the cheapest storage box and more 

important the lowest cost/highest performance solution to all these public (and 

private enterprise) data storage centers [Amazon cloud drive, Dropbox, Evernote, 

iCloud, Microsoft SkyDrive, Google Drive, and SugarSync]?  To all the FREE 

cloud data storage companies?  To Facebook?” the advertisement shows a 

checkbox next to IWEB’s name, followed by “BINGO!”  In fact, Smith had no 

knowledge whether any of these entities were IWEB customers when he 

disseminated the advertisement.  Nor did Smith ask IWEB’s CEO whether any of 

these entities were IWEB customers before disseminating the advertisement. 

34. Smith also stated in the advertisement that “I just discovered the perfect tech play 

I will own forever,” representing that he owned IWEB stock, as he had represented in the May 

22 post.  In fact, Smith did not buy any IWEB shares on May 22 or May 23, and did not later 

clarify the May 22 post or the May 23 and May 24 advertisement by disclosing that he had not 

bought IWEB shares. 

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35. The May 23rd and May 24th advertisement also contained highly misleading 

projections by Smith, who stated that “I can easily make the case for:”  

● a “10X Return -- $200 million valuation is a cakewalk considering what has 

been already paid for its competitors with not NEARLY as valuable solution,” 

when in fact Smith had no basis for believing IWEB would be acquired; 

● a “20X Return -- $400 million valuation is much closer to my end-game take 

out valuations”; 

● a “50X Return -- $Billion valuation IS a bit out there a bit but I guarantee the 

tech giant who buys IceWeb will FEEL like they got a $billion company.” 

[Emphasis original.]   

36. Smith followed up these projections with the statement that: “In short:  I cannot 

say it LOUD enough or STRONG ENOUGH: you SHOULD be buying shares of IceWeb 

(IWEB) NOW Under The .25-.30 per share valuation!”  [Emphasis original.] 

37. Smith made these projections notwithstanding that he knew of no company that 

was contemplating purchasing IWEB. 

38. Each of the advertisements and posts contained a disclaimer at the end, in most 

cases printed in very fine print.  The disclaimer stated, in part, that IWEB’s consultant, “a 3rd 

party, has paid $50,000 for issuer sponsored research and investor marketing,” and that NBT had 

“not determined if the statements and opinions of the advertiser are accurate, correct or truthful.”  

With regard to the posts purporting to be research reports or reports in progress by NBT’s own 

staff, the disclaimers do not, however, explain which statements in the reports are in fact by the 

“advertiser.”  Nor do the disclaimers explain the relationship between IWEB’s consultant and its 

client, IWEB, and that IWEB was ultimately paying for the reports and advertisements.  Finally, 

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the disclaimers do not disclose that IWEB, through its consultant, had agreed NBT would be 

paid incentive fees if the price of IWEB stock increased to a certain level following the May 21-

25 marketing campaign. 

39. On Friday, May 25, 2012, IWEB’s CEO died unexpectedly.  The price of IWEB’s 

stock fell from $0.18 per share to $0.12 per share at the close of trading that day.  On May 29, 

2012, the next trading day, Smith posted on NBT’s website a post he wrote entitled: “IceWEB 

Update: Out of Tragedy Comes Resolve to Finish the Mission.”   

40. In that post, Smith noted that on the previous Friday IWEB’s shares had 

“plummeted” from $0.17 to $0.12 “in just a few minutes on a huge volume spike,” but that this 

presented “an opportunity to acquire shares here at a superb entry price,” and that “I did this 

morning and strongly recommend you do to[o].”  In fact, Smith still had not bought any IWEB 

shares. 

B. The July 2012 Through January 2013 Promotional Campaign 

41. On July 16, 2012, when IWEB’s stock price had declined to $0.08 per share, 

Smith drafted and executed on behalf of NBT, a second agreement directly with IWEB entitled 

“Professional Services Agreement.” 

42. Under that agreement, NBT agreed to promote IWEB during the period from July 

16, 2012 through January 15, 2013 in exchange for maximum payments  by IWEB totaling  

$530,000, consisting of $140,000 in cash, $140,000 in stock and $250,000 from exercise of 

outstanding warrants.  The portion of the fee derived from exercise of outstanding warrants was 

an incentive fee in that the stock price had to increase sufficiently to induce exercise of the 

warrants. 

43. Also on July 16, 2012, IWEB paid the Defendants the agreed upon $50,000 initial 

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cash payment by wire transfer to NBT’s bank account. 

44. As part of the new marketing campaign for IWEB, on July 18, 2012, Smith 

caused to be posted on NBT’s website a blog regarding IWEB.  In addition to including a picture 

and identifying himself at the end of the blog as Founder and Editor-in-Chief for 

NBTEquitiesResearch.com, Smith identified himself as “Contributor and Anchor for the Fox 

News Channel and Fox Business Network 2000-2013.” 

45. As part of the new marketing campaign for IWEB, on July 25, 2012, Smith 

caused to be posted on NBT’s website a post regarding IWEB which made the same misleading 

projections as to IWEB’s likely performance as the May 23rd and May 24th advertisement. 

46. On July 30, 2012, IWEB transferred 842,105 IWEB shares to NBT in partial 

payment for NBT’s services.  

47. On August 15, 2012, IWEB wired $30,000 to NBT in partial payment for the 

Defendants’ services promoting IWEB. 

48. On August 22, 2012, Smith caused to be posted on NBT’s website a report 

entitled “Here is What You Probably WON’T Hear On Today’s IWEB Noon EST Shareholder 

Call.”  As in the case of the July 18 post, Smith included a picture and identified himself at the 

end of the post as “Contributor and Anchor for the Fox News Channel and Fox Business 

Network 2000-2013.” 

49. As with other posts, Smith included a disclaimer at the end of the July 18, and 

July 25, and August 22, 2012 posts.  Like the disclaimers on the posts in the May campaign, the 

disclaimer stated that the IWEB consultant, “a 3rd party, has paid $50,000 for issuer sponsored 

research and investor marketing.”  In fact, NBT’s second agreement was directly with IWEB, 

and IWEB had agreed to pay significantly more than $50,000, including agreeing to grant Smith 

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IWEB shares and pay an incentive fee depending on the amount of warrants exercised.  The 

disclaimers were accordingly materially misleading. 

50. On August 22, 2012, Smith caused to be posted on NBT’s website and circulated 

to its subscribers a second report regarding IWEB which included a “Rating” of “Strong Buy.”  

The post again included his picture and identified him at the end of the post as “Contributor and 

Anchor for the Fox News Channel and Fox Business Network 2000-2013.”   

51. This post included a differently worded disclaimer that represented, among other 

things, that NBT “or its affiliates have received $80,000 in compensation and 800,000 shares of 

restricted stock from the company or companies mentioned in this report or agents acting on 

their behalf.”  This disclaimer failed to disclose that the $80,000 was received only for the 

second investor marketing campaign, that NBT had also received $44,500 in payments for the 

May 2012 campaign it conducted, and that NBT would receive additional cash and stock 

bringing its total compensation to $280,000 pursuant to its most recent agreement with IWEB, as 

well as being entitled to up to $250,000 in incentive fees if the stock price increased sufficiently 

for warrants to be exercised.  The Defendants’ failure to include these facts rendered the 

disclaimer materially false and misleading. 

52. On August 29, 2012, IWEB wired another $30,000 to NBT in partial payment for 

the Defendants’ services promoting IWEB. 

53. On September 12, 2012, NBT received another 375,000 in restricted IWEB shares 

in partial payment for the services NBT had agreed to provide. 

54. On December 18, 2013, and March 11, 2014, a third party which had purchased 

from IWEB its $60,000 debt to NBT, wire transferred $6,000 and $5,400 respectively, to NBT. 

55. The Defendants thus received a total of $165,900 in cash and 1,217,105 restricted 

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IWEB shares in exchange for their participation in the scheme to manipulate IWEB stock 

through their false and misleading touts. 

FIRST CLAIM FOR RELIEF 
Fraud In Connection With The Purchase Or Sale Of Securities 

Violations of Section 10(b) of the Exchange Act and Rule 10b-5 Thereunder 
(Against All Defendants) 

 
56. The SEC realleges and incorporates by reference paragraphs 1 through 55 above. 

57. The Defendants, by engaging in the conduct described above, directly or 

indirectly, in connection with the purchase or sale of a security, by the use of means or 

instrumentalities of interstate commerce, of the mails, or of the facilities of a national securities 

exchange, with scienter: 

(a) employed devices, schemes, or artifices to defraud; 

(b) made untrue statements of a material fact or omitted to state a material fact 

necessary in order to make the statements made, in the light of the circumstances 

under which they were made, not misleading; or 

(c) engaged in acts, practices, or courses of business which operated or would operate 

as a fraud or deceit upon other persons. 

58. By engaging in the conduct described above, the Defendants violated, and unless 

restrained and enjoined will continue to violate, Section 10(b) of the Exchange Act, 15 U.S.C. § 

78j(b), and Rule 10b-5 thereunder, 17 C.F.R. § 240.10b-5. 

SECOND CLAIM FOR RELIEF 
Nondisclosure of Compensation for Touting Stock 

Section 17(b) of the Securities Act 
(Against All Defendants) 

 
59. The SEC realleges and incorporates by reference paragraphs 1 through 55 above. 

60. The Defendants, by engaging in the conduct described above, by the use of means 

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or instruments of transportation or communication in interstate commerce or by the use of the 

mails, published, gave publicity to, or circulated notices, circulars, advertisements, newspapers, 

articles, letters, investment services, or communications which, though not purporting to offer a 

security for sale, described such security for a consideration received or to be received, directly 

or indirectly, from an issuer, underwriter, or dealer, without fully disclosing the receipt, whether 

past or prospective, of such consideration and the amount thereof. 

61. By engaging in the conduct described above, the Defendants violated, and unless 

restrained and enjoined will continue to violate, Section 17(b) of the Securities Act, 15 U.S.C. § 

77q(b). 

PRAYER FOR RELIEF 

 WHEREFORE, the SEC respectfully requests that the Court: 

I. 

Issue findings of fact and conclusions of law that the Defendants committed the alleged 

violations. 

II. 

 Issue a judgment, in a form consistent with Fed. R. Civ. P. 65(d), permanently enjoining 

Defendants Smith, NBT and their officers, agents, servants, employees and attorneys, and those 

persons in active concert or participation with any of them, who receive actual notice of the 

judgment by personal service or otherwise, from violating Section 10(b) of the Exchange Act, 15 

U.S.C. § 78j(b), and Rule 10b-5(b) thereunder, 17 C.F.R. § 240.10b-5(b); and Section 17(b) of 

the Securities Act, 15 U.S.C. § 77q(b).  

III. 

Order Defendants Smith and NBT to disgorge all ill-gotten gains from their illegal 

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conduct, together with prejudgment interest. 

IV. 

 Order Defendant Smith to pay a civil penalty under Section 20(d) of the Securities Act, 

15 U.S.C. § 77t(d), and Section 21(d)(3) of the Exchange Act, 15 U.S.C. § 78u(d)(3). 

V. 

 Enter an order pursuant to Section 20(g) of the Securities Act, 15 U.S.C. § 77t(g), and 

Section 21(d)(6) of the Exchange Act, 15 U.S.C. § 78u(d)(6), prohibiting Defendants Smith and 

NBT from participating in any offering of penny stock. 

VI. 

 Retain jurisdiction of this action in accordance with the principles of equity and the 

Federal Rules of Civil Procedure in order to implement and carry out the terms of all orders and 

decrees that may be entered, or to entertain any suitable application or motion for additional 

relief within the jurisdiction of this Court. 

VII. 

 Grant such other and further relief as this Court may determine to be just and necessary. 

DATED:  March 29, 2016   /s/Karen Matteson 
 KAREN MATTESON 
 [email protected] 
 D. C. Bar No. 362541 
 Cal. Bar No. 102103 
 YOLANDA OCHOA 
 [email protected] 
 Cal. Bar No. 267993 
 Attorneys for Plaintiff 
 Securities and Exchange Commission 
 Los Angeles Regional Office 
 444 South Flower Street, Suite 900 
 Los Angeles, CA  90071 
 (323) 965-3998 (Telephone) 
 (213) 443-1904 (Facsimile) 

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