Ex-Broker Tosto, Convicted in 1994, Admits Guilt in Second Scam
New York, Oct. 18 (Bloomberg) -- Former broker Peter Tosto, who cooperated with the government in 1998 by testifying against two accomplices in a $1.6 million securities fraud, pleaded guilty today to his role in a second scam -- defrauding investors in three penny stocks.
Tosto, who is also known as Peter Lybrand, admitted today that he gained control of three publicly traded shell companies - - Polus Inc., Citron Inc. and Electronic Transfer Associates Inc. -- then used offshore companies he controlled to secretly buy and sell stock in them.
Tosto also said he committed perjury when he testified against Thomas Browne and Gerald McNeil in the 1998 fraud case. The two men were convicted of helping Tosto bribe brokers to sell shares in San Diego Bancorp Inc., a penny stock. Lawyers for the two have asked that their convictions be reversed.
``I lied under oath,'' Tosto told U.S. District Judge Denny Chin.
Prosecutors said Tosto pocketed approximately $6.4 million in his latest scheme. Under federal sentencing guidelines, he faces up to 87 months in prison when he is sentenced in January.
Tosto -- who had homes in New York, Sarasota, Florida, and Madison, Georgia -- admitted that he and his colleagues secretly bought blocks of stock, then transferred the shares to offshore companies he controlled so that it appeared as if investors were bullish on the stocks.
At the same time, he arranged for friends, brokers, and even his hairdresser to buy shares in the companies, as he issued bogus press releases hyping them, prosecutors said. Tosto sold his holdings as the share prices climbed.
The conspiracy lasted for two years, including the period when Tosto took the stand in federal court against Browne and McNeil.
Oct/18/2000 18:22 ET
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