US Corporate Law – Two Stockbrokers Plead Guilty To Manipulating Stock of Smart Online –
LEV L. DASSIN, the Acting United States Attorney for
the Southern District of New York, announced today that stock
brokers ALAIN LUSTIG and RUBEN SERRANO pleaded guilty in
Manhattan federal court to securities fraud charges arising from
a scheme to manipulate the stock of Smart Online. LUSTIG pleaded
guilty today before United States Magistrate Judge GABRIEL W.
GORENSTEIN, and SERRANO pleaded guilty on May 19, 2009, before
United States District Judge DENNY CHIN.

According to the superseding Indictment filed in
Manhattan federal court and statements made at the defendants’
plea proceedings:

Smart Online develops and markets Internet-delivered
software and data resources to operate small businesses. It
began trading on Over-The-Counter Bulletin Board under the symbol
SOLN in April 2005. From May 2005 through July 2007, SERRANO and
LUSTIG accepted secret cash payments, typically one dollar per
share, in order to induce their customers to purchase Smart
Online stock. The customers were unaware of the payments. The
effect of this trading was to create a false sense of genuine
market interest in Smart Online stock.

LUSTIG, 39, and SERRANO, 56, each pleaded guilty to
Count One of the superseding Indictment, charging conspiracy to
commit securities, wire fraud, and commercial bribery, and Count
Two, charging securities fraud. The conspiracy charge carries a
maximum sentence of 5 years in prison and a maximum fine of the
greater of $250,000, or twice the gross gain or loss from the
offense. The securities fraud charge carries a maximum sentence
of 20 years in prison and a maximum fine of $5 million, or twice
the gross gain or loss from the offense. LUSTIG and SERRANO are
scheduled to be sentenced by Judge CHIN on August 19, 2009, at 2
The remaining defendants charged in the superseding
Indictment–DENNIS MICHAEL NOURI, Smart Online’s CEO; his brother,
REZA ERIC NOURI, a Smart Online employee; and ANTHONY MARTIN, a
broker–are scheduled for trial on June 15, 2009. As to those
defendants, the charges in the superseding Indictment are merely
allegations and they remain innocent unless and until proven
Mr. DASSIN praised the investigative work of the
Federal Bureau of Investigation and thanked the United States
Securities and Exchange Commission for its assistance.

Assistant United States Attorneys REED M. BRODSKY and
JESSICA A. ROTH are in charge of the prosecution.

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