January 08, 2010

Uta von Eckartsberg

Contribution Statement (May 1, 2009 through January 31, 2010)

During this performance period I have primarily been focused on one expedited investigation (In the
Matter of Spongetech Delivery Systems Inc., HO-11156-A). I have worked extremely hard on this
relatively high-profile matter involving a sophisticated pump-and-dump scheme implicating a complex
network of interrelated individuals and entities. I have demonstrated the utmost dedication to this case.
In my determination to be fast, furious, and effective in shutting down what I viewed from the outset as
an egregious fraud, I voluntarily worked through most holidays, most scheduled 5-4-9 days off, weekends
and nights. My exemplary dedication and effort efficiently and effectively uncovered compelling
evidence of potential violations of the antifraud, registration and reporting requirements of the federal
securities laws.

Since May 1, I opened a MUI, conducted numerous voluntary interviews, obtained materials from related
transfer agents, drafted a FO memo, obtained a FO, obtained a trading suspension, issued multiple
subpoenas, prepared for and took the testimony of the issuer’s CEO, CFO, Director and two attorneys for
the issuer and the attorney for the transfer agent. All of this occurred while I simultaneously fielded and
triaged hundreds of investor complaints and inquiries in addition to multiple referrals from multiple
internal and external sources and agencies. All testimony was taken on an expedited basis within a six
week period. The testimony I took provided the primary evidentiary support for our decision to Wells the
issuer, a related entity, its CEO, CFO and two attorneys for the issuer for various violations of the
antifraud, registration, and reporting provisions of the federal securities laws. Further, I have taken the
lead in drafting a complex Action Memo and have obtained supervisory approval of the theories of
liability that I have developed over the course of this investigation. We expect to file an Enforcement
Action within the next several weeks. A detailed summary of my accomplishments as related to this
matter (and others) follows:

●Lead (and sole) attorney on this matter until late September 2009 (conducted the preliminary
investigation alone with the guidance and oversight of my Assistant Director);
●Quick (and accurate) assessment of this matter as potentially implicating an egregious, ongoing fraud
requiring much attention and prompt recognition that a significant time lapse had occurred between a
2008 FINRA referral (and numerous initial complaints regarding this issuer) and its eventual assignment
to me. Thus, with percipient foresight and good judgment I drafted a chronology of events leading to the
ultimate assignment to me in order to ensure that the Division would not be caught off guard should there
be questions arise about the timing of our investigation. Ultimately, such timing-related questions were
raised by the press and in various complaints made directly to the Commission and thanks to my initiative
and foresight we were prepared and able to respond;
●Similarly, I immediately investigated external tips that attorney-authored complaints had been sent to
our Director alleging that issuer and its principals forged attorney opinion letters in connection with re-
sales of Spongetech shares. These complaints went astray and, when I was unable to verify their existence
internally, I demonstrated initiative and dogged persistence by tracking them down via independent
research. I then followed up each complainant and obtained statements and documents from them each
on a voluntary basis. I recognized from outset, that the Division might also be subject to criticism for
failing to timely follow-up on the attorney-authored complaints and, thus took the initiative to draft a real-
time chronology of what I learned and how I learned it. As a result we were prepared and able to respond
when such criticism was in fact ultimately alleged against us;
●By September 2009, I had developed the primary theories of liability as relating to the issuer, its
principals, and certain attorneys for the issuer all of which have thus far been borne out by the evidence
adduced to date and all of which are reflected in our current draft action memo;
 January 08, 2010
Uta von Eckartsberg

●Two days after the issuance of the FO, I issued detailed subpoenas to the issuer, its officers and
directors, attorneys for the issuer, and an attorney for a transfer agent. During the same time frame, I
received and efficiently reviewed and triaged additional referrals and reports of potential malfeasance by
issuer and its principals. I also received and processed access requests from the AUSA for the EDNY;
●After the case was staffed, we obtained a trading suspension on October 5 based upon the evidence I had
gleaned during the course of my independent investigation;
●In October and November, I took testimony and even while conducting back-to-back sessions, my
preparation for testimony was in each case thorough, detailed and most importantly – productive. The
testimony I elicited through skilful, lengthy, and thorough questioning provided primary evidentiary
support for anticipated enforcement action. For instance, my extensive preparation for the testimony of
one of the original attorney complainants resulted in attorney’s material, on-record admissions providing
support for ultimate decision to pursue enforcement action against him;
●Lead drafter of draft Action Memo; also took the initiative to draft (of my own volition) alternative draft
memo setting forth my theories of liability against attorneys for the issuer for non-routine theories relating
to Section 5 and fraud violations. As a result, I obtained supervisory approval to proceed against the
defendants on the theories articulated in my alternative memo;
●Wellsed the issuer, a related entity, its CEO, CFO, an associated stock promoter and two attorneys for
the issuer for violations of the antifraud, registration and reporting requirements. The issuer, related
entity, and its principals offered to settle the matter almost entirely on our terms within a few days of the
Wells notices;
●Exemplary team player and consistently demonstrate leadership ability with respect to those members of
the Spongetech team that look to me for leadership. With respect to those individuals, I make a
conscious, ongoing effort to openly acknowledge and show appreciation for their commitment and
dedication. In return, those individuals have gone the extra mile in devoting their time and efforts to this
matter; many of them working well beyond their required duty hours.

Other Cases and Contributions:

●Astropower: Filed follow-on AP based on entry of injunction in related enforcement action (In the Matter of
Thomas Stiner, CPA, Rel. No. 34-60331 (July 17, 2009));
●Universal: Assisted winding up of FCPA case which will be filed this quarter as a settled, injunctive proceeding
(while primary efforts focused on Spongetech this period, historically I led the books and records piece of this
investigation and took all testimony; and such testimony of company executives provided a primary basis for
anticipated Section 30A charge against the issuer);
●Heritage: Assisted AUSA in her trial prep relating to an earlier criminal referral of Ed Johnson (securities fraud
recidivist); on October 29, 2009, Johnson and his wife were convicted on all counts of a 14 count indictment (both
found guilty by federal jury of one count of conspiracy to commit mail and wire fraud, 10 counts of mail and wire
fraud and one count of engaging in an illegal monetary transaction. Johnson was also convicted individually of one
additional mail and wire fraud count);
●BryCar: Tracked down recalcitrant Receiver and forced him to wind up Receivership by leading a teleconference
call (with Collections Unit attorney) during which I advised in no uncertain terms that this conduct was unacceptable
and that we were prepared to seek court action if necessary. Accordingly, we have since received full accounting
(absent one outstanding issue which should be resolved this month) and are satisfied that the delay is not a result of
malfeasance;
●Clearnet: Assisted Collections Unit in defeating defendants’ spurious claim that they did not have the income to
satisfy the final judgment entered against them in insider trading case;
●Miscellaneous: Finalized closing memos and performed related work on two matters; completed initial inquiry
into investor complaint; volunteered with the homeless in support of SEC’s commitment to pro bono service;
mentor interns and make ongoing effort to make their work on my matters a true learning experience;
●Activities: Member: Division’s Post-Wells Process Focus Group; Member: Division’s “Case Closing” working
group; Staff Coordinator: Special Assistant U.S. Attorney Detail Program (EDVA).
January 08, 2010
Uta von Eckartsberg