TECHNOLOGY : Man Gets Probation, Fine in PairGain Fraud : Securities: Judge decides against prison for former employee, saying posting of phony Internet news report was an aberration.

A former PairGain Technologies Inc. employee who drove up the company’s stock by posting a phony news report on the Internet was sentenced Monday to five months of home detention and five years’ probation.

Gary Dale Hoke, 26, also was ordered to pay $93,000 in restitution to investors who purchased PairGain stock and sold at a loss after the telecommunications equipment company denied the bogus report that it was about to be purchased by an Israeli company.

Hoke, who did not profit from the hoax, pleaded guilty to two counts of securities fraud. He was originally charged with five counts and faced a maximum sentence of 10 years in prison and up to $1 million in fines per count.

In a separate settlement with the Securities and Exchange Commission, Hoke admitted disseminating fraudulent information and agreed to comply with federal anti-fraud regulations in the future.

In his sentence, U.S. District Judge Terry Hatter dismissed prosecutors’ recommendation of 12 to 13 months in prison, saying he was convinced Hoke’s decision to post the fraudulent story was an aberration in an otherwise honorable life.

The fake story was made to look as though it had been posted on a Bloomberg News Service Web site. Hoke told Hatter he posted the story to counter chat room messages that disparaged Tustin-based PairGain and the value of its stock. He said he believed the messages were posted by traders who hoped to profit by driving down the price of the company’s shares.

“It’s my goal to pay off the restitution as quickly as possible. I want to redeem myself,” Hoke said.

Hoke, who was employed by PairGain as a computer hardware engineer in Raleigh, N.C., when he posted the story, now works for a Raleigh software firm.

The April 7 hoax pushed up PairGain stock more than 30%, from $8.50 to as high as $11.25. Trading on the stock that day amounted to 13.7 million shares, about seven times its average trading volume. The price of the stock fell back to $9.38 when the company issued a statement denying such a deal was in the works. On Monday, shares of PairGain closed down 69 cents at $10.25 on Nasdaq.

Bloomberg, parent company of the news service, has filed a related lawsuit against Hoke in federal court in New York City.