Stamp Probe Pounds Escala

By TSC Staff
5/9/2006 11:57 AM EDT

Escala Group (ESCL:Nasdaq - commentary - research - Cramer's Take) said Spanish judicial authorities are collecting documents at its offices in Madrid, causing operations there to be suspended.

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The New York-based collectibles house said the Spanish authorities are also collecting documents from its majority shareholder, Alfinsa of Madrid. Dow Jones earlier Tuesday reported a raid on Alfinsa's offices, sending Escala shares down 53%. Dow Jones said the raid on Alfinsa was "part of a probe into an alleged stamp investment fraud that could affect about 200,000 small investors," according to police.

Escala said Tuesday that the raids come "as part of what appears to be an investigation into the stamps-collectibles sector." The company said Alfinsa board members including Carlos de Figueiredo, an Afinsa representative on Escala's board, also are being questioned.

Escala said Spanish authorities haven't advised the firm of the nature of the investigation.

Shares fell $16.88 to $15.12.

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