Securities Fraud Indictments
1. U.S. v. Daniel Bender and Bruce A. Biddick, Case No.
02-20538-CR-GRAHAM
On June 20, 2002, a federal grand jury returned an Indictment
charging Daniel Bender and Bruce A. Biddick with one count of wire, mail
and securities fraud conspiracy, in violation of 18 U.S.C. § 371, five
counts of wire fraud, in violation of 18 U.S.C. §§ 1343 and 1346, one count
of mail fraud, in violation of 18 U.S.C. §§ 1341 and 1346, and one count of
securities fraud, in violation of 15 U.S.C. § 78j(b) and 17 C.F.R. §
240.10b-5. Bender was the President, Chief Executive Officer and a
Director of Digital Concepts International, Inc. ("DCII"), the common stock
of which was publicly traded on the over-the-counter market. Biddick was
an owner, registered principal and a securities broker at Centex
Securities, Inc., a securities broker-dealer registered with the SEC and
the NASD. The Indictment charges that the defendants conspired to pay a $2
million undisclosed kickback to the FBI UCA and others in return for their
inducing the Fund to pay $5 million for the purchase from DCII of 1 million
shares of its stock at an above-market price. Biddick was to receive
$400,000 for his role in arranging the sale. The defendants agreed to
conceal the $2 million undisclosed kickback payment by wiring it to an
offshore bank account. If convicted, the maximum, statutory term of
imprisonment is 5 years for conspiracy to commit wire/mail/securities
fraud, wire fraud, and mail fraud, respectively, and 10 years for
securities fraud.
2. U.S. v. Douglas Rasberry, a/k/a/ "Doug Rasberry," Michael
Vlahovic and Lawrence W. Gallo, Case No. 02-20637-CR-MOORE
On July 30, 2002, a federal grand jury returned an Indictment
charging Douglas Rasberry, Michael Vlahovic, and Lawrence W. Gallo with one
count of wire, mail and securities fraud conspiracy, in violation of 18
U.S.C. § 371, and Rasberry and Vlahovic with five counts of wire fraud, in
violation of 18 U.S.C. §§ 1343 and 1346, one count of mail fraud, in
violation of 18 U.S.C. §§ 1341 and 1346, one count of securities fraud, in
violation of 15 U.S.C. § 78j(b) and 17 C.F.R. § 240.10b-5, and one count of
money laundering, in violation of 18 U.S.C. § 1956(a)(2)(A). Rasberry and
Vlahovic owned, through offshore corporate nominees, a significant amount
of the common stock of Uncommon Media Group, Inc. ("UMDA"), which was
publicly traded on the over-the- counter market. Gallo was the Chairman,
Chief Executive Officer and a Director of UMDA. The Indictment charges
that Rasberry and Vlahovic conspired to sell to the Fund between $8,000,000
and $10,000,000 of their UMDA stock at an above-market price and, in
return, would pay an undisclosed kickback of 45% of the stock sale proceeds
they received to the FBI UCA and others. Gallo is alleged to have agreed
to participate in the illegal stock-purchase-kickback scheme in return for
receiving a portion of the UMDA stock sale proceeds for corporate purposes
and for his own personal benefit. If convicted, the maximum, statutory
term of imprisonment is 5 years for conspiracy to commit
wire/mail/securities fraud, wire fraud, and mail fraud, respectively, 10
years for securities fraud, and 20 years for money laundering.
3. U.S. v. Melvin L. Levine, a/k/a/ "Mel Levine," Robert W.
Wilder, a/k/a "Bob Wilder," and Michael T. Reiter, Case No.
02-20672-CR-JORDAN
On August 8, 2002, a federal grand jury returned an Indictment
charging Melvin L. Levine, Robert W. Wilder and Michael T. Reiter with one
count of wire, mail and securities fraud conspiracy, in violation of 18
U.S.C. § 371, four counts of wire fraud, in violation of 18 U.S.C. §§ 1343
and 1346, two counts of mail fraud, in violation of 18 U.S.C. §§ 1341 and
1346, and three counts of securities fraud, in violation of 15 U.S.C. §
78j(b) and 17 C.F.R. § 240.10b-5. Wilder was the Chief Executive Officer
and a Director of COI Solutions, Inc. ("COSL"), the common stock of which
was publicly traded on the over-the-counter market. Levine and Reiter were
stock promoters. The Indictment charges that the defendants conspired to
pay approximately $11 million in undisclosed kickbacks to the FBI UCA and
others in return for their inducing the Fund to pay approximately $16
million for the purchase of approximately 1,400,000 shares of overpriced
COSL stock. Levine was to receive $2.4 million and Wilder $500,000 for
their roles in the scheme. The sale was to be facilitated through
Hermitage House Investment Company, Ltd., an offshore entity controlled by
Levine. The Indictment alleges that Reiter participated in the conspiracy
by agreeing, among other things, to help recruit securities brokers who
would artificially increase the market price of COSL stock by recommending
and selling shares to their unsuspecting customers in exchange for
undisclosed payoffs. If convicted, the maximum, statutory term of
imprisonment is 5 years for conspiracy to commit wire/mail/securities
fraud, wire fraud, and mail fraud, respectively, and 10 years for
securities fraud.
4. U.S. v. David Rich, George Doumanis, Thomas Steinbach and Cris
Sagnelli, Case No. 02-20452-CR-GRAHAM
On May 21, 2002, a federal grand jury returned an Indictment charging
David Rich, George Doumanis, Thomas Steinbach and Cris Sagnelli with one
count of wire, mail and securities fraud conspiracy, in violation of 18
U.S.C. § 371, one count of wire fraud, in violation of 18 U.S.C. §§ 1343
and 1346, one count of mail fraud, in violation of 18 U.S.C. §§ 1341 and
1346, and one count of securities fraud, in violation of 15 U.S.C. § 78j(b)
and 17 C.F.R. § 240.10b-5. Rich and Steinbach were officers and
shareholders of Integrated Homes, Inc. ("INHI"), the common stock of which
was publicly traded on the over-the-counter market. Doumanis was the owner
of S.G. Martin, a registered securities broker-dealer, and controlled a
significant amount of INHI stock. Sagnelli was employed as a stock
promoter. The Indictment charges that Rich, Doumanis, and Steinbach agreed
to pay approximately $4 million in an undisclosed kickback to Sagnelli, the
FBI UCA and others in return for their inducing the Fund to buy 2 million
shares of INHI overpriced stock for a total of $8 million. If convicted,
the maximum, statutory term of imprisonment is 5 years for conspiracy to
commit wire/mail/securities fraud, wire fraud, and mail fraud,
respectively, and 10 years for securities fraud.
5. U.S. v. Daniel Charboneau, Michael Puorro, Marshall Klein and
Cris Sagnelli, Case No. 02-20453-CR-MOORE
On May 21, 2002, a federal grand jury returned an Indictment charging
Daniel Charboneau, Michael Puorro, Marshall Klein, and Cris Sagnelli with
one count of wire, mail and securities fraud conspiracy, in violation of 18
U.S.C. § 371, six counts of wire fraud, in violation of 18 U.S.C. §§ 1343
and 1346, three counts of mail fraud, in violation of 18 U.S.C. §§ 1341 and
1346, and one count of securities fraud in violation of 15 U.S.C. § 78j(b)
and 17 C.F.R. § 240.10b-5. Charboneau was the Chairman, Chief Executive
Officer, and a principal shareholder of FoneCash, Inc. (FCSH), the common
stock of which was publicly traded on the over-the-counter market. Puorro
and Klein were securities brokers employed by National Securities
Corporation and Centex Securities, Inc., registered securities
broker-dealers, respectively. Sagnelli was employed as a stock promoter.
The Indictment charges that Charboneau agreed to pay a $2 million
undisclosed cash bribe or kickback to Sagnelli, the FBI UCA and others in
return for their inducing the Fund to buy 4 million restricted shares of
FCSH stock for a total of $8 million. The Indictment further alleges that
Charboneau agreed to provide the FBI UCA with 1 million shares of FCSH
stock to be used by Puorro and Klein and others to artificially increase
the market price of FCSH stock. If convicted, the maximum, statutory term
of imprisonment is 5 years for conspiracy to commit wire/mail/securities
fraud, wire fraud, and mail fraud, respectively, and 10 years for
securities fraud.
6. U.S. v. Bruce Bertman, Ray Hutchison, Jerry Poole, Charles
Arnold, a/k/a "Chuck," and Cris Sagnelli, Case No.
02-20454-CR-GRAHAM
On May 21, 2002, a federal grand jury returned an Indictment charging
Bruce Bertman, Ray Hutchison, Jerry Poole, Charles Arnold and Cris Sagnelli
with one count of wire, mail and securities fraud conspiracy, in violation
of 18 U.S.C. § 371, thirteen counts of wire fraud, in violation of 18
U.S.C. §§ 1343 and 1346, one count of mail fraud, in violation of 18 U.S.C.
§§ 1341 and 1346, and one count of securities fraud, in violation of 15
U.S.C. § 78j(b) and 17 C.F.R. § 240.10b-5. Bertman was the Chief Executive
Officer and a principal shareholder of A1 International, Inc. ("AWON"), the
common stock of which was publicly traded on the over-the-counter market.
Defendants Hutchison, Poole and Arnold were stock promoters and controlling
shareholders of AWON. Sagnelli was employed as a stock promoter.
According to the Indictment, Bertman, Hutchison, Poole and Arnold agreed to
pay an approximately $2.5 million undisclosed kickback to the FBI UCA and
others to induce the Fund to buy approximately 4 million shares of
overpriced AWON stock for a total of $8 million. The Indictment charges
that Sagnelli and Poole were to receive a portion of the undisclosed
kickback payment for their role in the stock transaction. If convicted,
the maximum, statutory term of imprisonment is 5 years for conspiracy to
commit wire/mail/securities fraud, wire fraud, and mail fraud,
respectively, and 10 years for securities fraud.
7. U.S. v. Greg Balk and Cris Sagnelli, Case No.
02-60164-CR-DIMITROULEAS
On August 8, 2002, a federal grand jury returned a two-count
Indictment charging Greg Balk and Cris Sagnelli with conspiracy to commit
securities fraud, in violation of 18 U.S.C. § 371, and with securities
fraud, in violation of 15 U.S.C. § 78j(b) and 17 C.F.R. § 240.10b-5. Balk
was the President of Balk & Co., a Florida corporation, and controlled a
large number of shares of SeaEscape Entertainment, Inc. ("SEPI"), a
publicly-traded corporation. Sagnelli was a stock promoter. The Indictment
charges that Balk and Sagnelli conspired to pay undisclosed kickbacks of
approximately $3.2 million to the FBI UCA and others in return for their
inducing the Fund to purchase approximately $8 million of overpriced SEPI
stock. As part of the scheme, Balk caused false documentation to be
prepared to conceal the illegal payments, bribed two purported due
diligence officers of the Fund, and used a shell corporation for the
fraudulent stock-purchase-kickback scheme. If convicted, the maximum,
statutory term of imprisonment is 5 years for conspiracy to commit
securities fraud and 10 years for securities fraud.
8. U.S. v. Jeffrey Senger, Case No. 02-80093-CR-HURLEY
On May 21, 2002, a federal grand jury returned an Indictment charging
Jeffrey Senger with two counts of wire, mail, and securities fraud
conspiracy, in violation of 18 U.S.C. § 371, twenty-two counts of
securities fraud, in violation of 15 U.S.C. § 78j(b) and 17 C.F.R. §
240.10b-5, and four counts of money laundering, in violation of 18 U.S.C.
§§ 1956(a)(1)(A)(i) and 1957. Senger was a manager and securities broker
at Baxter, Banks & Smith, Ltd., a securities broker-dealer. Senger was
charged in connection with two separate wire, mail, and securities fraud
conspiracies. The first conspiracy involved a stock "pump and dump" scheme
that resulted in investor losses of about $3 million. The charges with
respect to this conspiracy stem from a historical investigation into
fraudulent activities that came to the attention of law enforcement after
the activities had been committed by the defendant and others. Senger is
alleged to have induced brokers at Baxter, Banks to sell the stock of
Lifekeepers International, Inc. ("LIFR"), a publicly traded company, to
their clients by making secret payments to the brokers and paying
undisclosed commissions. Contemporaneously with these sales, Senger is
alleged to have sold his own personal holdings of LIFR stock.
The second conspiracy, which stemmed from the undercover operation,
involved Senger's participation in the sale of stock to the Fund. The
Indictment alleges that Senger had acquired significant amounts of stock of
Piccard Medical Corp. ("PMCZ") and International Stores ("ISTR"), two
companies the common stock of which was publicly traded in the United
States. As part of the scheme, the Fund would pay approximately $8 million
for an agreed amount of overpriced PMCZ and ISTR stock, respectively.
Based on the overpayment, the FBI UCA and others would receive 50% of each
$8 million stock purchase as an undisclosed kickback. If convicted, the
maximum, statutory term of imprisonment is 5 years for each conspiracy to
commit securities/mail/wire fraud, wire fraud, and mail fraud,
respectively, 10 years for securities fraud, and 20 years for money
laundering.
9. U.S. v. Blair Valentine, Case No. 02-80115-CR-HURLEY
On July 16, 2002, a federal grand jury returned an Indictment
charging Blair Valentine with one count of conspiracy to commit passport
fraud, in violation of 18 U.S.C. § 371, and two counts of furnishing false
and altered passports, in violation of 18 U.S.C. § 1543. Valentine was
charged in connection with furnishing two false and altered passports to
the FBI UCA and others. The false passports were to be used to facilitate
the laundering of securities fraud proceeds. If convicted, the maximum,
statutory term of imprisonment is 5 years for conspiracy to commit passpost
fraud and 15 years for each passport fraud count.
10. U.S. v. Howard E. Kerbel, Barry Berman, Dennis Epstein, Kenneth
B. Liebscher, Melvin L. Levine, a/k/a "Mel Levine," and Vincent
Barone, a/k/a "Vince Barone," Case No. 02-20547-CR-HUCK
On June 25, 2002, a federal grand jury returned an Indictment
charging Howard Kerbel, Barry Berman, Dennis Epstein, Kenneth B. Liebscher,
Melvine L. Levine and Vincent Barone with one count of wire, mail, and
securities fraud conspiracy, in violation of 18 U.S.C. § 371, and,
variously, with ten counts of wire fraud, in violation of 18 U.S.C. §§ 1343
and 1346, one count of mail fraud, in violation of 18 U.S.C. §§ 1341 and
1346, three counts of securities fraud, in violation of 15 U.S.C. § 78j(b)
and 17 C.F.R. § 240.10b-5, and one count of money laundering, in violation
of 18 U.S.C. § 1956(a)(2)(A). Kerbel, Berman, Epstein, and Liebscher were
founders and/or officers of ThermoElastic Technologies, Inc. ("TMRO"), the
common stock of which was publicly traded in the United States on the
over-the-counter market. Kerbel, Berman, Epstein, and Liebscher controlled
a significant amount of TMRO stock. Levine was a stock promoter. Barone
was a New York-based securities broker licensed by the NASD. The
Indictment alleges that Kerbel, Berman, Epstein and Liebscher agreed to pay
a $1.2 million undisclosed kickback to Levine, the FBI UCA and others in
return for their inducing the Fund to pay $4 million for the purchase of 20
million shares of TMRO stock. In addition, the Indictment alleges that the
defendants conspired to recruit, through Levine and Barone, two sets of
securities brokers to assist in artificially inflating the market price of
TMRO stock. Barone was to receive $400,000 for his assistance in
manipulating the price of TMRO stock. If convicted, the maximum, statutory
term of imprisonment is 5 years for conspiracy to commit
wire/mail/securities fraud, wire fraud, and mail fraud, respectively, 10
years for securities fraud, and 20 years for money laundering.
11. U.S. v. Mark Weirtzema, Gordon Novak, Charles Cini, a/k/a
"Chuck Cini," and Melvin L. Levine, a/k/a "Mel Levine," Case
No. 02-20636-CR-UNGARO- BENAGES
On July 30, 2002, a federal grand jury returned an Indictment
charging Mark Weirtzema, Gordon Novak, Charles Cini, and Melvin L. Levine
with one count of wire and securities fraud conspiracy, in violation of 18
U.S.C. § 371, six counts of wire fraud, in violation of 18 U.S.C. §§ 1343
and 1346, and three counts of securities fraud, in violation of 15 U.S.C. §
78j(b) and 17 C.F.R. § 240.10b-5. Weirtzema and Novak were officers and
shareholders of Rhino Ecosystems, Inc. ("RHNC"), the common stock of which
was publicly traded on the over-the-counter market. Cini was an officer
and, through nominees, the controlling shareholder of RHNC. Levine was a
stock promoter for RHNC. The Indictment alleges that the defendants
conspired to pay a $6 million undisclosed kickback to the FBI UCA and
others in return for their inducing the Fund to pay $8.6 million for the
purchase of 650,000 shares of RHNC stock. The defendants agreed to effect
the sale through Hermitage House Investment Company, Ltd., a Nevis, West
Indies corporation controlled by Levine. In addition, the Indictment
alleges that the defendants conspired to recruit, with the assistance of
the FBI UCA and others, securities brokers to help artificially inflate the
market price of RHNC stock. If convicted, the maximum, statutory term of
imprisonment is 5 years for conspiracy to commit wire/securities fraud,
wire fraud, and mail fraud, respectively, and 10 years for securities
fraud. |
