NASD Charges Park Capital, Its Owners, 10 Others With Manipulation, Fraud In Sale Of Unregistered Stock
Washington, D.C. – NASD today announced that it has charged Park Capital Securities – a now-defunct New York City-based broker-dealer – its two owners, two of its traders and eight salesmen in connection with fraudulent sales of over $3.5 million of Cordia Corporation stock to Park’s customers. Park Capital’s NASD registration was cancelled earlier this year for failure to pay its annual registration fees, arbitration fees and other regulatory charges.
NASD’s Complaint alleges that from April 2002 through February 2003, Park Capital, owners Anthony Orlando and Philip Orlando, and traders Craig Dixson and Ara Proudian manipulated Cordia Corporation’s share price by placing small buy orders into the market to bid up the stock’s price and by placing matched buy and sell orders in the market. Park and its parent company, Park Capital Financial Group, profited from the price manipulation by selling unregistered shares of Cordia directly to Park’s customers at the artificially inflated prices. Park also profited from illegal kickbacks – by receiving undisclosed compensation disguised as loans from Cordia insiders, affiliates and favored customers.
Park Capital employed two groups of salesmen – called the Orlando Group and the Johnson Group – to carry out the fraudulent sales campaign. Each selling group shared customer accounts and employed classic, boiler-room techniques to induce customers to purchase Cordia and to dissuade them from selling Cordia. Junior group members typically served as account-openers, soliciting new accounts by recommending the purchase of a relatively safe, non-volatile stock. Following the initial customer purchase, other members of the group contacted the customer and, using high-pressure sales tactics, misrepresentations and baseless predictions, persuaded the customer to sell the recently acquired stock and replace it with the purchase of Cordia, a speculative penny stock. On numerous occasions, assets in customer accounts were liquidated and Cordia shares were purchased without authorization.
At the time the fraudulent scheme was underway, Cordia was in the insurance claim recovery business – tracking overpayments by insurance companies and recovering them from recipients. However, Cordia was losing money, and later changed its line of business to buying telephone service from phone service providers and reselling it to retail customers.
Park Capital brokers in both the Orlando and Johnson Groups were charged with participating in the fraudulent scheme. Orlando Group members charged were its leader, Anthony Orlando (CRD No. 2497838), David Sanducci (CRD No. 2370405), Brian Featherstone (CRD No. 3064465) and Phillip Blackwell (CRD No. 4318779). Johnson Group members charged were its leader Anthony J. Johnson (CRD No. 2511827), Jason Wilde (CRD No. 2787538), Gary J. Ferrera (CRD No. 2496815), Stephen M. Magee (CRD No. 2469731) and Blake Shanaphy (CRD No. 3002887).
NASD’s Complaint also alleges that Anthony Orlando, Philip Orlando (CRD No. 2839212), Ara Proudian (CRD No. 2488729) and Craig Dixson (CRD No. 3064467) engaged in an illegal distribution of unregistered Cordia shares to Park’s customers.
David Sanducci and Anthony Johnson were also charged with providing false and misleading sworn testimony to NASD investigators.
Under NASD rules, a firm or individual named in a complaint can file a response and request a hearing before an NASD disciplinary panel. Possible remedies include a fine, censure, suspension, or bar from the securities industry, disgorgement of gains associated with the violations, and payment of restitution.
Investors can obtain more information about, and the disciplinary record of, any NASD-registered broker or brokerage firm by using NASD's BrokerCheck. NASD makes BrokerCheck available at no charge to the public. In 2003, members of the public used this service to conduct more than 2.8 million searches for existing brokers or firms and requested almost 180,000 reports in cases where disclosable information existed on a broker or firm. Investors can link directly to BrokerCheck at www.nasdbrokercheck.com. Investors can also access this service by calling 1-800-289-9999.
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