An Offer You Can't Refuse
Sovereign Equity Management manipulated the prices of at least four stocks traded on the NASDAQ. Notwithstanding the fact that only one name appeared on the corporate records, other individuals, one who was barred for life from the Securities Industry by the National Association of Securities Dealers, as well as a "captain" or "capo" in the Cosa Nostra also had a hidden interest and exercised control over the operations.
They approached corporations who were having financial difficulties with offers to help them obtain financing through the sale of stock. In exchange for providing interim financing they were provided with discounted stock in these corporations which they then sold to the public
They then manipulated the market through brokers who "pumped" up the price of the shares in order to make the most money while they "dumped" the stock upon the public. They would issue fake press releases regarding the financial condition and prospective business of the corporations as well as provide brokers with "juice" payments, or payments over and above the lawful commission, in order to sell the stock.
After "dumping" or selling their discounted shares at artificially inflated prices, they would "short" the stock, then have the brokers stop supporting its price. The investing public lost all or the majority of their money in these securities as the price plummeted.
"The mob never saw a market it didn't want to control," said Lewis Schiliro, head of the FBI's New York office.
In one $10 million scam, led by two associates of the Colombo crime family and one from the Bor Russian crime group, the reputed mobsters infiltrated the now-closed New York branches of Global Strategies Inc., Amerivet Dymally Securities and First National Equity Corp. They paid kickbacks to brokers as an incentive to call investors and pitch dubious startup companies, including one that claimed to be developing golf courses in the South.
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