Two Indicted in $3 Million Stock Fraud
West Palm Beach – A federal grand jury in West Palm Beach has charged two Palm Beach Gardens securities brokers with operating a “pump and dump” stock manipulation scheme. Monty R. Myler, 34, of Palm Beach Gardens, and Matthew J. Benedetto, 27, of Jupiter, were indicted on Friday. They are accused of conspiring to artificially inflate the price of Lifekeepers International, Inc. (LIFR) stock and unlawfully receive financial benefits for their own personal LIFR shares. The Florida Department of Banking and Finance (DBF) says the scheme defrauded investors of over $3 million.
Myler, a former branch manager and broker of the North Palm Beach branch of Baxter, Banks & Smith, Ltd. (BBS), was charged with securities fraud, wire fraud, and money laundering. According to examiners at DBF’s Southeast Florida Regional Office in West Palm Beach, Myler and other co-conspirators misrepresented the financial and operational status of the company, and induced brokers to recommend the stock to clients by unlawfully paying undisclosed commissions as high as 20 percent. In addition, brokers were allegedly discouraged from allowing their customers to sell the LIFR stock until the conspirators were able to “dump” most of their own shares into the market.
Benedetto, an ex-broker of BBS, was charged with conspiracy in the LIFR scheme for allegedly misrepresenting the merits of LIFR and failing to disclose his extraordinary commissions. This “pump and dump” scheme, involving numerous brokers and managers in several locations, was first uncovered through a series of BBS branch examinations conducted by DBF. The department’s initial action, on April 28, 2000, permanently revoked BBS’s securities registration; banned its chief executive officer, Francis “Marty” McDermott, from being an officer, director, or control person of a broker dealer within Florida; and prohibited McDermott from having any ownership or control of any dealer, investment advisor, or branch office.
“The Department will continue to take action to fight this ‘boiler room’ type activity by those whose only goal is to fraudulently enrich themselves,” said Brenda Liberti, regional director of DBF’s West Palm Beach office. “Such conduct is a threat to investors and to the healthy economic climate of Florida.”
Both the Federal Bureau of Investigation and the Internal Revenue Service have investigated criminal activities associated with the department’s findings. The investigation is continuing. DBF, directed by Comptroller Bob Milligan, licenses and regulates the investment industry in Florida. |
