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This Stock Whiz Kid Stays in the Picture


Of all the bull market's icons, few captured the public's imagination more than Jonathan G. Lebed. The high school junior from Cedar Grove, N.J., seemed to embody an Internet-driven market that had spun wildly out of control. Lebed was 15 in September, 2000, when the Securities & Exchange Commission accused him of running a pump-and-dump scheme using Internet message boards. Almost before the ink was dry on the cease-and-desist order (in which he neither admitted nor denied wrongdoing), Lebed had become a media darling -- an adolescent version of the analyst delinquency that had begun to garner headlines.

Well, Jonathan Lebed is back. The young man who was a one-kid stock-fraud army in the view of the SEC -- which accused him of netting $272,000 by buying stocks and hyping them on the Net -- is again pushing stocks. But this time, there's a crucial difference. Lebed insists that while he is indeed promoting microcap stocks on his Web site, in e-mail spams, and on message boards, he no longer takes positions in them unless they are clearly disclosed. Pumping without dumping, in other words. Which is not to say that he is even the slightest bit bothered by all that SEC fuss. Says Lebed: "I never thought there was anything wrong with what I did."

That's debatable -- but not his ability to turn his little-league infamy into the beginnings of a career. Since graduating from high school last year, he has established a stock promotion Web site, lebed.biz, and an investor-relations firm, Lebed & Lara LLC, that is steadily acquiring a clientele of small companies. (The "Lara" is a slightly older high school buddy, who signed the requisite legal papers before Lebed turned 18.) The Web site, started in February, is doing well. Lebed says it has more than 100 clients who pay $200 a year or $50 for a trial month.

Lebed's ventures are running so smoothly that he has time for a political career. He is running for township council in Cedar Grove, which has a nonpartisan election on May 13. If he wins he will likely be the only New Jersey politician with spiked hair and skin piercings -- and a movie deal. Screenplay completed, star TBA. "I believe in moving forward and stepping on to bigger and bigger things," he says.

Modesty is not one of Lebed's more obvious virtues. But he has a downright Puritan work ethic. He reports for work every day to Lebed & Lara's offices, which are provided by a client, mPhase Technologies Inc. (XDSL), as partial compensation for investor-relations work. mPhase's chief executive, who hired Lebed, was said to be out of the country and unreachable. Its chief financial officer, Martin Smiley, says he doesn't know what Lebed does for mPhase: "He runs an investor-relations firm, and basically that's about what I know about Jon."

Lebed views a possible college career as unnecessary for his future advancement. And he may have a point: How many recent college grads own public-relations firms? And how many are superb stockpickers? Or at least, so says lebed.biz. "Jonathan Lebed is very excited about many of the picks he has made so far in February and March," his site proclaimed the other day. "He has discovered several unknown undervalued stocks that he believes have the potential to triple within the next 6 to 12 months."

Most, but not all, of the stocks promoted on lebed.biz are microcaps that sometimes move when hyped -- a tendency that drew the SEC's wrath in 2000. Microcaps are also the specialty of Lebed & Lara, and its clients are frequently pumped in lebed.biz's e-mailed alerts. In one recent missive, Lebed told his subscribers that "Monday I am doing an interview in NYC with BusinessWeek, which will be appearing in the magazine very shortly. I am going to be discussing [a microcap client of Lebed & Lara] in the article which I believe will take off to over $1 in the upcoming months." It went on to disclose Lebed & Lara's compensation -- "$5,000 cash and a $10,200 home automation system."

Lebed, who says that he consulted several securities lawyers before starting the site, says he saw nothing wrong with the e-mail reference -- even though it implies that a microcap stock might be mentioned in a forthcoming issue of BusinessWeek. "It's not a public statement -- it's just to my members," says Lebed. "I like to keep them up to date on any kind of news story that I'm in." But a public post in the Lycos Finance message boards, purportedly written by a satisfied customer of lebed.biz, sings the praises of the Web site and its stocks, and says Lebed would "be in BusinessWeek soon." Lebed says the post was actually written by one of several high school friends whom he pays to publicize his site.

Well, Lebed certainly is honest -- a trait valued in the corporate world. And as his various ventures gather steam, he is raising his public profile. He is giving interviews again, after a long period of Garbo-like reclusiveness that followed the initial publicity, which included a prominent role in a Michael Lewis book. (It is described on lebed.biz, none too accurately, as the "book that was written about Jonathan Lebed.") He is already old enough to have regrets: He turned down an invitation from Talk magazine editor Tina Brown to attend a 2001 conference of "innovators and navigators" in Santa Barbara, Calif. But there will be other conferences, other opportunities. "It depends on what I want to concentrate on -- business or politics," says Lebed. "Most likely, it will be business. I want to build a giant billion-dollar corporation, or if politics interests me more, I want to become a senator or something one day."

Perhaps SEC chairman would be an even better goal. After all, if it weren't for the feds, he would be just another teenager with a computer and modem. By Gary Weiss in New York


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