Gregory Halpern knows how to hype. Shares of his publicly held company, Circle Group Holdings, quadrupled in price early last year amid reports that its new fat substitute, Z-Trim, was being tested by Nestlé. As the stock spurted from $2 to $8.50, Halpern’s 35% stake in the company he founded rose to $90 million. He put out 56 press releases last year.

Then the bloggers attacked. A supposed crusading journalist launched an online campaign long on invective and wobbly on facts, posting articles on his Web log (blog) calling Halpern “deceitful,”"unethical,”"incredibly stupid” and “a pathological liar” who had misled investors. The author claimed to be Nick Tracy, a London writer who started his one-man “watchdog” Web site, our-street.com, to expose corporate fraud.He put out press releases saying he had filed complaints against Circle with the Securities & Exchange Commission.

Halpern was an easy target. He is a cocky former judo champion who posts photos of himself online with the famous (including Steve Forbes, editor-in-chief of this magazine). His company is a weird amalgam of fat substitute, anthrax detectors and online mattress sales. Soon he was fielding calls from alarmed investors and assuring them he hadn’t been questioned by the SEC. Eerily similar allegations began popping up in anonymous posts on Yahoo, but Yahoo refused Halpern’s demand to identify the attackers. “The lawyer for Yahoo basically told me, ‘Ha-ha-ha, you’re screwed,’” Halpern says. Meanwhile, his tormentor sent letters about Halpern to Nestlé, the American Stock Exchange, the Food & Drug Administration, the Federal Trade Commission and the Brookhaven National Laboratory (involved in Circle’s anthrax deal).

But it turns out that scribe Nick Tracy of London was, in fact, a former stockbroker in Oregon named Timothy Miles–and Miles himself faces SEC charges that he took part in a pump-and-dumpstock scheme in 2000. He was tried in June and awaits a verdict. No matter:Circle Group stock fell below a dollar in a year of combat with Miles and the anonymous bashers on Yahoo (and after Nestlé dropped Z-Trim). Halpern’s stake is down $75 million, and he blames Miles and his acolytes; he has sued for defamation. “Some of these bloggers have just one goal, and that is to do damage. It’s evil,” he says.