fyi INHI Integrated Homes, Inc. THREE SECURITY FRAUDSTERS ENTER GUILTY PLEAS
U.S. Department of Justice
Marcos Daniel Jiménez
United States Attorney for the
Southern District of Florida
99 N.E. 4 Street
Miami, FL 33132
(305) 961-9001
PRESS RELEASE
FOR IMMEDIATE RELEASE
For Information Contact Public Affairs
April 30, 2003 Matthew Dates, Special Counsel for Public Affairs, (305) 961-9285
Marjorie M. Selige, Public Affairs Specialist, (305) 961-9048
THREE SECURITY FRAUDSTERS ENTER GUILTY PLEAS
Marcos Daniel Jiménez, United States Attorney for the Southern District of Florida, and Hector M. Pesquera, Special Agent in Charge of the Federal Bureau of Investigation (FBI), announced today that on April 29, 2003, David Rich, George Doumanis and Thomas Steinbach pleaded guilty to one count of wire, mail and securities fraud conspiracy in connection with a fraudulent kickback scheme to defraud the public shareholders of Integrated Homes, Inc., (INHI). INHI is a Colorado corporation with its principal place of business in Boca Raton, Florida. The defendants entered their guilty pleas before United States District Court Judge Jose E. Martinez. Each of the defendants faces a maximum term of five years' imprisonment, to be followed by a term of supervised release, a fine of up to $250,000 and the imposition of court costs. Sentencing is presently scheduled for August 1, 2003, before Judge Martinez.
The convictions stemmed from a two-year undercover investigation conducted by the FBI, named Operation Bermuda Short, which targeted corrupt practices in the securities industry in South Florida. An agent of the FBI, acting in an undercover capacity, posed as a corrupt securities trader employed by a United States-based representative of a fictitious foreign mutual fund that had a number of investors who had invested millions of dollars. The undercover agent claimed that he worked with two due diligence officers whose job was to research and approve which securities the agent would be allowed to purchase on behalf of the mutual fund's investors. The undercover agent also claimed that a purported manager of the mutual fund was corrupt and had knowledge of the agent's corrupt activities concerning the fund.
The common stock of INHI was publicly traded in the United States on the over-the-counter market with approximately 16 million shares outstanding. INHI was in the business of providing broadband solutions to homes in new construction residential communities. Rich was the chief executive officer and a principal shareholder of INHI. Doumanis was the owner of S.G. Martin, a registered securities broker-dealer with offices located in Westbury, New York, and controlled a large number of shares of INHI. Steinbach was the director and vice president of INHI and controlled a large number of shares of INHI. The fourth defendant originally charged in the indictment, Cris Sagnelli, previously pled guilty to related charges emanating from this case.
Rich, Doumanis and Steinbach admitted that they agreed to pay approximately $4 million in an undisclosed cash payment to the undercover agent and a representative of the mutual fund to induce the mutual fund to buy approximately 2 million shares of INHI stock at $4.00 per share, for a total cost of $8 million, rather than shares of another company's stock. At the time, the prevailing market price of INHI stock was approximately $0.65 a share.
To further the scheme, Rich, Doumanis and Steinbach established an offshore account which was used to facilitate the purchase of INHI stock and to pay the undisclosed kickback to the undercover agent and a representative of the mutual fund.
Doumanis agreed to assist the scheme's goal to artificially manipulate the price of INHI stock by purchasing shares of INHI stock in the open market for the purpose of maintaining the stock price. Doumanis intended to use $800,000 received from the undercover agent to purchase shares of INHI stock in the open market in order to artificially increase and maintain the stock's price.
Rich executed a test transaction involving the mutual fund's purchase of 15,000 shares of INHI stock and an ensuing undisclosed kickback of $10,000 in cash to the representatives of the mutual fund manager to legitimize the overall scheme by causing the INHI stock to be placed on the mutual fund's approved buy list.
Mr. Jiménez commended the investigative efforts of the Federal Bureau of Investigation, as well as the cooperative efforts of the Southeast Regional Office of the United States Securities and Exchange Commission and the National Association of Securities Dealers. The case is being prosecuted by Assistant United States Attorney Christopher J. Clark of the Economic Crimes Section. |
