U.S. Securities and Exchange Commission

Litigation Release No. 20663 / July 30, 2008

FEDERAL JUDGE PERMANENTLY ENJOINS THREE DEFENDANTS AND THREE PENNY STOCK ISSUERS IN PUMP AND DUMP PRICE MANIPULATION SCHEME

SECURITIES AND EXCHANGE COMMISSION v. STEPHEN LUSKCO, GREGORY NEU, JUSTIN MEDLIN, EMERGING HOLDINGS, INC., MASSCLICK, INC., and CHINA SCORE, INC., Case No. SACV 07-2783 DDP (AGRx) (C.D. Cal.)

The Securities and Exchange Commission (“Commission”) announced that on July 16, 2008, the Honorable Dean D. Pregerson, United States District Judge for the Central District of California, entered final judgments against defendants Stephen Luscko, age 40, formerly of Sarasota, Florida; Gregory Neu, age 32, formerly of Miami, Florida; Justin Medlin, age 27, formerly of San Diego, and China Score, Inc., a Las Vegas based business. The judgments permanently enjoin defendants Neu, Luscko, and China Score from committing future violations of the securities registration provisions of the federal securities laws, and the judgments as to Luscko, Neu, and Medlin enjoin them from committing future violations of the securities antifraud provisions of the federal securities laws. The judgments also bar Luscko, Neu, and Medlin from participating in any penny stock offering, and enjoin Luscko and Neu from conducting unregistered securities offerings. Luscko, Neu, Medlin, and China Score each consented to the entry of the judgment against them without admitting or denying any of the allegations in the Commission’s complaint.

Additionally, the Court entered final judgments against defendants Emerging Holdings, Inc. and Massclick, Inc., permanently enjoining both companies from committing future violations of the securities registration provisions of the federal securities laws. On October 26, 2007, the Clerk of the Court entered the defaults of both Emerging Holdings and Massclick upon their failure to answer or otherwise respond to the Commission’s complaint. Finally, the Court dismissed relief defendant Marc Primo Pulisci from the Commission’s action. The final judgments entered by the Court effectively concluded the litigation in this matter.

The Commission’s complaint, filed on April 27, 2007, alleged that, between March and August 2004, the defendants artificially inflated the stock price and trading volume of certain companies whose stock traded on the over-the-counter market. The complaint alleged that defendants Luscko and Neu formed four companies, including defendants Emerging Holdings, Massclick and China Score, as well as another entity that is now defunct, and then recruited friends and business associates to act as company officers. According to the complaint, Luscko and Neu arranged for these companies to transfer millions of shares of stock to their own or their friends’ brokerage accounts in a series of sham transactions designed to bypass Commission regulations that required the shares to be restricted from being resold into the open market. The complaint also alleged that Luscko and Neu drafted false and misleading spam e-mails that were edited by defendant Medlin. Further, the complaint alleged that Medlin embarked on a weekend spam e-mail campaign, bombarding the investing public with millions of spam e-mails that generated significant investor interest and resulted in rapid increases in the companies’ stock price and volume. The Commission further alleged that, having “pumped” up the companies’ stock prices, Luscko and Neu then, directly or through their friends, “dumped” their shares into the open market, and the companies’ stock prices declined rapidly thereafter. As a result of trades made in these four stocks, Luscko, Neu, and Medlin netted $6.5 million.

The Court permanently enjoined Luscko, Neu, Emerging Holdings, Massclick, and China Score from violating the securities registration provisions of Sections 5(a) and 5(c) of the Securities Act of 1933. Luscko, Neu, and Medlin were also enjoined from violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Finally, Medlin was enjoined from violating the anti-touting provisions of Section 17(b) of the Securities Act.

In a related criminal action, the U.S. Department of Justice and the U.S. Attorney for the Eastern District of Virginia previously filed charges against Luscko, Neu, and Medlin, all of whom pled guilty to conspiring to commit securities fraud and e-mail fraud. Neu was sentenced to five years’ imprisonment and three years’ supervised release. Luscko was sentenced to five years’ imprisonment and two years’ supervised release. Medlin was sentenced to six years’ imprisonment and three years’ supervised release. The criminal authorities have seized approximately $3,700,000 from bank accounts associated with Luscko, Neu, and Medlin.

For more information, see Litigation Release No. 20097 (April 30, 2007).

http://www.sec.gov/litigation/litreleases/2008/lr20663.htm