Jury indicts 9 in $33 million stock scheme
Tuesday, November 25, 2003
BY JEFFREY GOLD
Associated Press
Nine people were indicted by a federal grand jury in Newark in a $33 million securities fraud, accused of bilking investors by creating demand for a penny stock through Internet announcements and purchases designed to look like active trading.
Two Frenchmen who pleaded guilty in a related case were not charged but were named as co- conspirators.
At least three other people in their network have pleaded guilty in such schemes, which involved using what prosecutors called "reverse mergers" to help conceal a company's true owners.
"It's a business combination mechanism that permits a private company to become a public company" without having to go through initial public offering requirements, Assistant U.S. Attorney Mauro Wolfe said.
The three-count indictment, handed up by a federal grand jury in Newark on Nov. 6, was unsealed yesterday.
Federal authorities arrested two of the accused on Sunday: Jean Pierre Collardeau, a French citizen living in New York, and Irving Freiberg of Muttontown, N.Y., and Boca Raton, Fla.
Warrants were issued for seven other defendants, including Collardeau's sister-in-law, Nicole Peignier of Gennevilliers, France; three French citizens who live in St. Martin, the French West Indies, and a Swiss man. Also wanted were Fode Diop, a Senegalese citizen living in Rego Park, N.Y., and Irving Stitsky of Brookville, N.Y.
Each is charged with conspiracy to commit securities fraud, mail fraud and wire fraud; securities fraud; and conspiracy to commit money laundering. Each charge carries at least five years in prison.
The government seeks to seize $33 million from the defendants, as well as several of their homes and bank and brokerage accounts.
Collardeau was held without bail yesterday after appearing in federal court in Newark. Wolfe opposed any bail, asserting the suspect is a flight risk.
Defense lawyer Paul S. Brenner said Collardeau would not flee, saying he has U.S. and French citizenship, and his wife and children are in the United States. Brenner said he had not yet studied the 32-page indictment, so he declined to comment on the charges.
Freiberg was held without bail pending a hearing scheduled tomorrow in federal court in West Palm Beach, Fla.
The indictment said Freiberg controlled Sutton Capital of Great Neck, N.Y., and Boca Raton, Fla. The firm controlled stockgenie.com, which promoted stocks on a Web site of the same name.
Sutton had no listed numbers. An e-mail sent to the stockgenie site seeking comment received no response.
The indictment links the suspects to two Frenchmen, including one who illegally donated to the successful 1996 U.S. senate campaign of Robert Torricelli, who have pleaded guilty in the scheme. Torricelli quit the 2002 race after being admonished by the Senate for taking gifts from another illegal donor.
One of the Frenchmen was Philippe V. Hababou, who pleaded guilty in 2000 to violating campaign finance regulations and money laundering in the stock frauds. He was jailed for 22 months before his plea and was extradited to France.
The other, Marc Rousso, was the guiding force behind a series of what prosecutors called "pump- and-dump" schemes in the mid- 1990s involving tens of millions of dollars of low-priced stocks. |
