Broker, 2 others named in computer scheme
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BY SUSAN HARRIGAN
STAFF WRITER
April 22, 2005
A former brokerage executive and two purported business associates have been charged with orchestrating a "pump and dump" stock manipulation scheme that cheated investors out of $16.8 million.
John Marciano, formerly chairman and chief executive of Westbury-based Royce Investment Group Inc., is free on bond of $1.5 million after his arrest last December on securities fraud and money-laundering charges.
His attorney, David Smith, said Marciano "will vigorously defend against these old and baseless charges and very much looks forward to his day in court."
According to a federal grand jury indictment, Marciano and others secretly gained control of large numbers of shares of Xybernaut, a Fairfax, Va., maker of wearable computers, that Royce brought public in 1996. Brokers at Royce and Kensington Wells, a now-defunct Mineola brokerage, then used deceptive high-pressure sales tactics to sell the stock to investors at artificially high prices, the indictment said.
According to the indictment, handed down last July by a grand jury in the Eastern District of New York and unsealed in December, Marciano, an Old Brookville resident, and others used bank and brokerage accounts in the names of "front corporations" to hide their purchases of Xybernaut securities, and then paid "excessive, undisclosed commissions" to brokers at Royce and Kensington Wells to fraudulently sell the securities to unsuspecting customers.
Robert Oosterwyk, a former Cayman Islands resident who allegedly helped open the secret bank and brokerage accounts, also was arrested in December and released on $1.5 billion bond.
A third person named in the indictment as having helped with the scheme, Jacob Agam, lives outside the United States and has not been arrested.
Don Buchwald, who represents Oosterwyk, said that "the fact he [Oosterwyk] has not violated the law will be established at his trial." Ira Sorkin, Agam's attorney, said that "we think the facts are inaccurate, and the charges are not supportable." No trial date has been set.
Royce sold its assets in July 1999 to Investec Ernst, a specialist-banking group in Manhattan.
Investec declined to comment yesterday on the indictments. An official at Xybernaut also declined to comment.
If convicted, Marciano, Oosterwyk and Agam could face up to 30 years in prison and fines that could be twice the losses allegedly inflicted on investors. Kensington Wells closed in 1997 amid government allegations that it cheated investors, and a number of its principals and employees are in prison for stock manipulation. |
