Richard Karp was so sure that Carl Icahn would rescue WCI Communities from bankruptcy that he kept betting his own money on it, buying stock even as its price continued to tumble in 2007 and 2008. When that rescue didn't happen, the U.S. Securities and Exchange Commission says the Fort Myers, Fla. man committed fraud to recoup some of his losses.

On Thursday, May 21 the agency charged the 65-year-old director of marketing for a small Fort Myers, Fla. restaurant chain with sending out a phony press release over the weekend of July 19 and 20 of 2008 saying WCI had a buyout offer.

After several local television stations and a newspaper published the false press release, the company's stock price rose and Karp sold some of his stock, netting $29,000 from the sales before WCI issued a statement saying the press release was false and that it had no impending buyers.

The charges against Karp were filed in the U.S. District Court Middle District of Florida's Fort Myers division. The SEC is asking the court to order Karp to pay back his "ill-gotten gains" plus interest and to impose a financial penalty as well.

Karp, reached by telephone at his home on Friday, May 22, said it's true he lost a significant amount of money when WCI's stock price crashed in 2007 and 2008, however his losses did not inspire him to send the false press release. He did, he said, send out a press release via computer-aided fax that weekend about a children's cancer fund-raiser sponsored by his employer.

"The accusations are totally false and I will defend this to the end," he wrote in an e-mail sent after the telephone call. "They are trying to say that the press release I sent out for Helping Kids with Cancer was actually a WCI press release. They are trying to connect media phone numbers I faxed and trying to connect it to the WCI press release."

While the SEC cites the profitable stock sales Karp made before the market opened for trading the Monday morning after the press release as evidence of his guilt, Karp says he bought more stock after that day and that the SEC hasn't mentioned the $32,000 he lost the year before through investments in the company.

What Karp doesn't deny is his belief at the time that Icahn's involvement in WCI would lead to its rescue. "I couldn't believe that man was not going to buy that company," Karp said during the telephone call. "I kept believing in him."

The billionaire investor bought 14% of WCI's stock in early 2007 and made a tender offer to buy all the company's outstanding shares in May of that year for $22 a share, a slight premium at the time. He rescinded his offer within a month and the stock's price continued to dive. WCI filed for Chapter 11 bankruptcy protection. Icahn has since written off the entire value of his investment in WCI. The company's stock has fallen so low that it is now trades on the Pink Sheets. It was going for five cents a share at noon on Friday.

Here's a time-line and details of Karp's WCI stock-buying activity offered in the court documents filed against him.

* Throughout late 2007 and early 2008, after Icahn invested in the company, Karp bought and sold large amounts of WCI's common stock. Between July 30, 2007 and Feb. 8, 2008, he entered more than 400 purchase and sale orders, executing on 204.

* He routinely used all the cash in his brokerage account to trade in the stock. Between July of 2007 and July 2008 it consisted of 90% of its trading activity.

* In that year the share price dropped from $10 a share to about $1.25 a share.

* During that period, buyout rumors were common. The company issued a press release in June of 2008 saying it was looking at "restructuring proposals."

* Shortly thereafter, on July 2 of 2008, Karp bet everything in his portfolio on the company, buying 42,000 shares of the company at an average price of $1.30 for $54,700, making it 100% of his portfolio.

* Twelve days after that large purchase the company announced it was no longer looking for a buyer. After that news Karp tried to sell his shares for $1.65 a share and then $2 a share. Neither order was filled.

* On July 16 a local newspaper reported that the company might not be able to pay off the $125 million in debt it had due on Aug. 5, and analysts raised concerns about its liquidity.

* The Saturday after, July 19, the SEC accuses Karp of making "a desperate attempt to reverse the slide of the company's stock by sending the bogus press release saying a sale agreement had been reached, between 5 p.m. and 8:14 p.m, to the local newspaper and the local ABC, NBC, and CBS television affiliates. The release said the deal was worth $5.25 a share, potentially $220 million and was formatted similar to other WCI press releases.

* The television stations and local newspaper published the news on their web sites and the television stations broadcast it in their evening news reports.

* He is also accused of sending about 35 more faxes to other national media outlets.

* Even as he was faxing the releases, the SEC claims Karp was entering into orders to sell 42,000 shares at various prices just under the purported buy-out price and over the closing price the Friday before. He made several orders that evening at various prices, cancelling them all.

* When pre-market trading opened on Monday morning, the SEC claims he entered into as series of orders attempting to gauge how much he could get for the stock, cancelling them minutes later

* Between 8:47 and 9:05 a.m Monday morning, Karp sold all his shares, the majority at $2 a share, netting the $29,000 profit.

* At 10:39 a.m. that morning WCI issued a press release saying it did not send out the earlier one about an impending sale and calling it false.

* The stock closed at $1.39 a share that Monday, just two cents higher than it had closed on Friday. But the effect of the press release was clear. In pre-market trading it had climbed to $2.65 a share, a 93% increase. Its trading volume that day was more than three million shares, five times its volume the Friday before and seven times its average volume that month.