finra

FINRA

 

For Release:
Contact:
Thrusday, October 10, 1996
Associate Director, Media Relations
NASD Regulation, Inc.
Reid Walker - (202) 728-8243
U.S. Attorney's Office:
Marvin Smilon, Public Information Officer - (212) 791-1937
FBI:
Joseph Valiquette - (212) 384-2715
SEC:
Henry Klehm, III - (212) 748-8178

Criminal and Public Administrative and Cease-and-Desist Proceedings Announced Against 45 in Connection with Kickback Schemes

Mary Jo White, the United States Attorney for the Southern District of New York, and James K. Kallstrom, the Assistant Director in Charge of the New York Office of the Federal Bureau of Investigation, announced that 45 defendants were charged variously with conspiracy, securities fraud, and criminal contempt following extensive investigations into illegal payments made to securities brokers in connection with sales of over-the- counter and NASDAQ stocks to customers. The arrests announced today are the result of a series of investigations, including an extensive undercover investigation conducted by the FBI, working in cooperation with the United States Securities and Exchange Commission, NASD Regulation, Inc., and the United States Attorneys Office for the Southern District of New York.

 

Carmen J. Lawrence, Regional Director of the Northeast Regional Office of the United States Securities and Exchange Commission, announced that as a result of these investigations, the Commission instituted 22 administrative proceedings against 29 of the individuals charged today. The Commission's actions charge these individuals with securities fraud based on the same conduct underlying the criminal complaints, and seek, among other things, cease-and-desist orders, bars on promoting penny stocks, and disgorgement. The Commission's investigation is continuing.

 

NASD Regulation President Mary L. Schapiro announced that three complaints were filed today charging ten registered representatives with fraud in connection with this investigation.

 

According to James K. Kallstrom, "Investors generally recognize that there are inherent risks in the securities markets. Today's arrests are a warning to market manipulators who create additional, unfair risks. They themselves face the considerable risk of arrest and criminal prosecution. This case illustrates the seriousness with which the FBI views this illegal conduct and the lengths to which we will go to combat it."

 

Mary Jo White stated that, "Today's arrests should send a clear and unambiguous message to unscrupulous stock promoters, stock brokers, an officers of publicly traded companies. The 'gloves are off' in the fight to protect this nation's financial markets. Criminal and regulatory authorities can--and will--work in close coordination to investigate and prosecute securities law violations to the full extent of the law, and we will be successful."

 

With respect to the criminal contempt charges filed today, Ms. White added, "This office will not tolerate those who flout federal court injunctions imposed following successful enforcement actions by the Commission."

 

William McLucas, the Commission's Director of Enforcement stated, "Today's arrest of 45 stock promoters, brokers, and others is the culmination of a concerted effort by the U.S. Attorney's Office, the FBI, NASD Regulation, and the SEC to deal with the criminals who have gravitated to our capital markets. Billions of dollars change hands in our markets every day. They change hands on the honor of a broker's word and the trust that is placed not only in the broker, but also in the integrity of our market systems. The people who were arrested today have abused that trust. The consequences for abusing that trust must be severe."

 

Mary L. Schapiro said that, "This is an important case, not only for its magnitude and depth, but because it demonstrates the effectiveness of complete cooperation between federal agencies and market regulators working together to help safeguard investor interests. NASD Regulation plans to work in cooperation with the FBI, the Commission, and the Department of Justice to ensure that investigations emanating from the evidence obtained today are vigorously pursued."

 

According to the 19 separate criminal complaints unsealed today, undercover Special Agents of the FBI, operating a small brokerage firm in Manhattan, posed as unscrupulous brokers who managed millions of dollars on behalf of supposed "high net worth individuals," and were willing to accept payoffs to sell over- the-counter bulletin board and NASDAQ stocks to their customers. The payments were generally made by and through stock promoters who, working often with officers of the companies whose stocks were being touted, paid the brokers as much as 40% of the value of the stock being sold to the brokers' customers. Included among those charged today were stock promoters, company officials, and current or former stock brokers.

 

The arrests today followed an extensive investigation that was the product of close coordination between the FBI, the Commission, NASD Regulation, and the U.S. Attorney's Office for the Southern District of New York. NASD Regulation offices in both New York and Washington D.C. were actively involved on a daily basis in helping in the undercover operation. Both the Commission and the NASD were consulted throughout the investigation and asked to provide industry expertise, and to minimize the effect of the undercover investigation on the operation of the securities markets. No public customers were involved in the transactions effected by the undercover investigation, and all stock purchased during the course of the investigation is being held as evidence.

 

The charges in a criminal complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
The following individuals were charged in complaints unsealed today.

 

Roland Acevedo, 48, of New York, New York, is charged with conspiracy to commit securities fraud. The Commission commenced administrative proceedings against Acevedo.

 

Alfred P. Avasso, 57, of Suffern, New York, is charged with conspiracy to commit securities fraud. The Commission commenced administrative proceedings against Avasso.

 

George Badger, 66, of Salt Lake City, Utah, is charged with conspiracy to commit securities fraud and criminal contempt.

 

Steve Bingaman, 40, of New York, New York, is charged with conspiracy to commit securities fraud. The Commission commenced administrative proceedings against Bingaman.

 

Ira Blackey, 46, of Williamsville, New York, is charged with conspiracy to commit securities fraud. The Commission commenced administrative proceedings against Blackey.

 

Thomas J. Browne, 31, of Forest Hills, New York, is charged with conspiracy to commit securities fraud. NASD-Regulation initiated disciplinary proceedings against Browne.

 

Daryl Buerge, age unknown, of Canada, is charged with conspiracy to commit securities fraud.

 

Richard Cedrone, 33, of Del Ray Beach, Florida, is charged with securities fraud. The Commission commenced administrative proceedings against Cedrone.

 

Cary Cimino, 36, of New York, New York, is charged with securities fraud. The Commission commenced administrative proceedings against Cimino.

 

Dale Eyman, 56, of Phoenix, Arizona, is charge with conspiracy to commit securities fraud.

 

John Fasano, 37, of Happauge, New York, is charge with conspiracy to commit securities fraud.

 

Bartholomew Haring, 30, of Brooklyn, New York, is charged with conspiracy to commit securities fraud. NASD-Regulation initiated disciplinary proceedings against Haring.

 

Theodore Heitzman, 49, of Carlsbad, California, is charged with securities fraud. The Commission commenced administrative proceedings against Heitzman.

 

Gary Hrycyk, 30, of New York, New York, is charged with conspiracy to commit securities fraud. NASD-Regulation initiated disciplinary proceedings against Hrycyk.

 

Richard Langley, Jr., 33, of Los Angeles, California, is charged with conspiracy to commit securities fraud. The Commission commenced administrative proceedings against Langley.

 

Michael Lapp, 38, of Coral Springs, Florida, is charged with conspiracy to commit securities fraud. The Commission commenced administrative proceedings against Lapp.

 

Gerald Larder, 45, of Englewood, Colorado, is charged with conspiracy to commit securities fraud. The Commission commenced administrative proceedings against Larder.

 

Norman Lescht, 38, of East Brunswick, New Jersey, is charged with securities fraud. The Commission commenced administrative proceedings, and NASD-Regulation initiated disciplinary proceedings, against Lescht.

 

Miron Leshem, 32, of Boca Raton, Florida, is charged with [what]. The Commission commenced administrative proceedings against Leshem.

 

William Lucas, 63, of West Hempstead, New York, is charged with conspiracy to commit securities fraud. The Commission commenced administrative proceedings against LUCAS.

 

Richard Mallion, 31, of Sunrise, Florida, is charged with conspiracy to commit securities fraud, securities fraud, and criminal contempt. The Commission commenced administrative proceedings against Mallion.

 

James Manas, 44, of Belle Harbor, New York, is charged with conspiracy to commit securities fraud.

 

Gamal Ashraf Marwan, 29, of Los Angeles, California, is charged with securities fraud. The Commission commenced administrative proceedings against Marwan.

 

Gerald Cash Mcneil, age unknown, of North Bergen, New Jersey, is charge with conspiracy to commit securities fraud. NASD-Regulation commenced administrative proceedings against Mcneil.

 

Gary Mitchell, 28, of Denver, Colorado, is charged with conspiracy to commit securities fraud. The Commission commenced administrative proceedings against Gary Mitchell.

 

Robert Mitchell, 28, of Denver, Colorado, is charged with conspiracy to commit securities fraud. The Commission commenced administrative proceedings against Robert Mitchell.

 

Gregory John Mouen, 37, of New York, New York, is charged with conspiracy to commit securities fraud. NASD-Regulation initiated disciplinary proceedings against Mouen.

 

Timothy Murray, age and address unknown, is charged with conspiracy to commit securities fraud.

 

Edward Padnos, 59, of Highland Park, Illinois, is charged with conspiracy to commit securities fraud. The Commission commenced administrative proceedings against Padnos.

 

George Panagiotou, 25, of Lodi, New Jersey, is charged with conspiracy to commit securities fraud. The Commission previously commenced administrative proceedings against Panagiotou.

 

Joseph Pignatiello, 50, of Coral Springs, Florida, is charged with conspiracy to commit securities fraud.

 

Jeff Pokross, 39, of New Jersey, is charged with conspiracy to commit securities fraud. The Commission commenced administrative proceedings against Pokross.

 

Alexander Ruge, age unknown, of Canada, is charged with conspiracy to commit securities fraud. The Commission commenced administrative proceedings against Ruge.

 

Blake Marshall Russ, age unknown, of Boca Raton, Florida, is charged with conspiracy to commit securities fraud. NASD- Regulation initiated disciplinary proceedings against Russ.

 

Mark Anthony Savage, age unknown, of Brooklyn, New York, is charged with conspiracy to commit securities fraud. NASD- Regulation initiated disciplinary proceedings against Savage. The Commission previously commenced administrative proceedings against Savage.

 

Robert Schulman, 50, of Armonk, New York, is charged with conspiracy to commit securities fraud. The Commission commenced administrative proceedings against Schulman.

 

Andrew Scudiero, 35, of New York, New York, is charged with securities fraud. The Commission commenced administrative proceedings

against Scudiero.

 

Sy Siegel, 71, of Los Angeles, California, is charged with securities fraud. The Commission commenced administrative proceedings against Siegel.

 

Bertram Slutsky, 56, of Newton, New Jersey, is charged with conspiracy to commit securities fraud and securities fraud. The Commission commenced administrative proceedings against SLUTSKY.

 

Jeffry Szur, 30, of Bayhead, New Jersey, is charged with conspiracy to commit securities fraud and securities fraud. The Commission commenced administrative proceedings, and NASD-Regulation initiated disciplinary proceedings against Szur.

 

Jeff Trenk, 44, of New Hyde Park, New York, is charged with securities fraud. The Commission commenced administrative proceedings against Trenk.

 

Dean Christopher Verrigni, age unknown, of Wappinger Falls, New York, is charged with conspiracy to commit securities fraud. NASD-Regulation initiated disciplinary proceedings against Verrigni. The Commission previously instituted administrative proceedings against Verrigni.

 

Trung Vugia, 29, of Stamford, Connecticut, is charged with conspiracy to commit securities fraud.

 

Edward Williamson, 49, of Witchita, Kansas, is charged with securities fraud. The Commission commenced administrative proceedings against Williamson.

 

Allen Wolfson, 50, Salt Lake City, Utah, is charged with conspiracy to commit securities fraud. The Commission commenced administrative proceedings against Wolfson.

 

The Commission also brought administrative proceedings against John Chapman, of Salt Lake City, Utah.

 

Assistant United States Attorneys Katherine M. Choo (212) 791-1152 and Bruce G. Ohr (212) 791-1045 are in charge of the prosecution.