Jonathan
G. Lebed was not shy about telling people that he found
his suburban New Jersey hometown a singularly
uninteresting place.
"Is Cedar Grove a boring place to live?" he
wrote in a letter to the editor published in January by
the weekly Cedar Grove Observer. "To the younger
generation of this town, the answer is most certainly
`yes.' "
To help pass the time, Jonathan, like many
15-year-olds, frequented World Wrestling Federation
matches at the Meadowlands, went bowling, cheered the
Mets and booed the Yankees.
Unlike most 15-year-olds, he also used the Internet
to manipulate the stock market, racking up almost
$273,000 in illegal gains, the authorities charged.
Federal officials said his scheme, known as pump and
dump in the argot of the trade, involved buying obscure
penny stocks, hyping them in a barrage of false E-mail
messages to various Web bulletin boards that made the
choices seem hot and then selling as soon as the price
rose.
Jonathan, a junior at Cedar Grove High School in Essex
County, became the first minor ever sued by the
Securities and Exchange Commission. On Wednesday he
settled with the agency, not acknowledging any
wrongdoing but repaying a total of $285,000, including
interest.
"He's kept his cool and his composure throughout
the day — it didn't faze him too much," Tom
McCarthy, a classmate since kindergarten, said after
school yesterday.
Jonathan is known around the high school as a quiet,
intelligent boy who stuck out a bit because he carried a
black leather briefcase. He told other students that he
traded stocks and encouraged them to join him, but he
never revealed the extent of his profits, they said.
"Obviously he's very smart," said Anthony
Callie, 16, a fellow junior. "He's not like the
most popular kid in school. He's a funny kid. He walks
around with a briefcase all the time. But he's still
cool."
The first hints that Jonathan might be more than an
ordinary investor came several years ago, when he and
two eighth-grade classmates at Memorial Middle School
finished fourth among thousands of United States and
Canadian teams competing in a student stock tournament.
Jonathan said at the time that he would get up at 5
a.m. daily to watch CNBC for stock tips. His team —
named Triple Threat after a favorite professional
wrestling team — took an imaginary $10,000 in the
contest and turned it into anywhere from $24,000 to more
than $100,000, depending on which version you hear.
"I personally am in awe of them, and I think
they did a wonderful job," Judith Nappi, the middle
school principal, was quoted as saying at the time. Ms.
Nappi, now principal of the high school, would not
discuss Jonathan yesterday.
The investor himself also avoided reporters after
school yesterday. But a day earlier he told the press
gathered outside his house that he was an easygoing guy
who first got hooked on the market at age 11 by watching
the stock ticker on television.
His interest grew as he did. In 1997 he used his own
name to join Silicon Investor, a Web site offering stock
quotes. He posted messages in the site's financial chat
room, and by earlier this year he had started an
Internet firm with a classmate.
On Silicon Investor, Jonathan said he had a company
named Lebed Inc., that his job title was the Great One
and that the firm was in Greenwich, Conn. Under the line
Favorite Stocks he wrote, "You'll have to pay for
this information."
Yesterday there was heavy traffic on the site,
resurrecting old messages from Jonathan. One user
recalled that Jonathan had once claimed to own a house
in Greenwich and another said that he had suddenly
vanished from the chat room after praising stock in the
World Wrestling Federation that apparently did not do so
well.
"That Jonathan Lebed dude disappeared
also," noted a message from Jan. 17, 2000, adding,
"I hope he's `wrestling' in prison now also."
In another message hinting at what lay ahead,
Jonathan praised someone who was apparently pushing
stocks on unsuspecting traders. "Wow, you just gave
away your secret to success," Jonathan wrote.
"You have the inexperienced jabronies who lurk,
jump in while you already own tons of shares. Brilliant
strategy, sir."
One of his pet peeves in Cedar Grove was the lack of
high-speed Internet access, so he argued at town council
meetings for an upgrade in the cable television system
to provide that.
Paula Brown, a reporter for The Cedar Grove Observer
who covered the meetings, remembered that the blond
teen-ager's witty, articulate remarks sparked laughter.
"One time he said he would be as old as Joe Moroney
before the cable TV was upgraded," Ms. Brown said,
noting he was referring to a local character believed to
be in his 70's. "He's a sort of gadfly in
training."
Another time he complained to the council that
something should be done about the many wild turkeys
allowed to saunter onto roads, stopping traffic. Ms.
Brown recalls his saying, "Personally I don't care
if they get squashed like bugs."
And although he was making thousands of dollars on
his trades, he appeared to be fiscally conservative.
Long after he had stopped his trading last February, he
wrote a letter to the paper last month arguing against
paying the volunteer fire and ambulance crews up to
$1,150 per year, calling it "a complete waste of
taxpayers' money."
A few months ago, Jonathan and another classmate,
Jared C. Glugeth, 16, decided that stock trading was not
enough, and that they needed a piece of the Internet
action themselves. So they started two Web businesses
— PRHost.com and eprolutions.com — designed to help
others develop and advertise their own Web sites.
He said the sites were making money but declined to
say how much. On their sites, the two mimicked the
language of adult companies. When they folded one
business into another, for example, they posted a notice
saying, "Jared Glugeth and Jonathan Lebed of
Promotion Solutions, LLC, are proud to announce the
acquisition of PRHost.com." (Jared says that his
mother did much of the banking work involved.)
The Web site lists a host of other advice and
services, all of which Jared insisted were legitimate.
They vary from learning how to take a company public to
how to avoid paying property taxes to how to win at
casino gambling.
"I would say he is not a bad kid at all; he did
not want to do anything mean to anybody," Jared
said, adding that he hoped his partner's notoriety would
help build their business.
Indeed, the fact that disseminating false information
about stocks is illegal seemed to be lost in the hoopla,
especially at the high school.
"A lot of people were impressed with it,"
said Alessandra Vitale, 16, a junior. "If a
15-year-old kid can make $273,000, anything is
possible."
Jonathan's father, Gregory Lebed, returned from his
job as a railroad supervisor yesterday afternoon,
pulling his Mercedes sport utility vehicle into the
driveway of their two-story house. He and his wife,
Constance, have one other child, a daughter, 12.
Jonathan traded in stocks through accounts set up in
his father's name. At first Mr. Lebed ignored the
cluster of reporters out front, but then one asked
whether he would ground Jonathan.
Mr. Lebed turned on the walkway and gave a short
answer. "I'm proud of my son," he said.
