Ex-trader indicted in penny stock case
By Matt O'Connor
Tribune Staff Reporter
Published April 9, 2005
A former securities trader who is awaiting sentencing for obstructing justice was indicted with 10 others on charges that they manipulated the prices of penny stocks and then dumped the shares for at least $3.5 million in profits, authorities said Friday.
The indictment, made public Friday, alleged that a New York University student falsely touted the stocks in thousands of spam e-mail messages, helping generate artificial demand for the stocks and inflate their trading volume and price.
In a 2002 lawsuit the Securities and Exchange Commission called the scheme's alleged ringleader, Frank J. Custable Jr., "a recidivist violator of the securities laws."
Last June Custable, 41, of Bartlett, pleaded guilty in federal court to obstructing justice for lying about his assets in an earlier SEC lawsuit in an attempt to avoid paying a $60,000 penalty. Custable faces up to 2 years in prison when he is sentenced on May 4.
As a result of yet another SEC lawsuit, securities regulators in Illinois permanently prohibited Custable in 1994 from selling securities in the state.
In addition to Custable, Friday's 23-count indictment charged two companies he controlled, an employee, a securities lawyer and executives at four other companies--Pacel Corp., a computer software development firm based in Manassas, Va.; Wasatch Pharmaceutical Inc. of Murray, Utah; Premier Axium ASP Inc. and ShareCom Inc., a seller of weather radios based in suburban Palatine.
The company executives distributed millions of shares of their stock to associates of Custable in return for sham loans from him, authorities said.
The executives falsely represented to the SEC that the unregistered stock was issued in payment for consulting services to the companies, the charges alleged.
Custable allegedly arranged for Jesse Boskoff, 24, then a New York University student from Great Neck, N.Y., to disseminate financial newsletters via the Internet that falsely touted the publicly traded stocks of the small companies.
Also charged were Sara Wetzel, 28, Custable's associate from Glenview; attorney Robert Luce, 58, of Deer Park; David Calkins, 61, Pacel's president; Gary Heesch, 69, Wasatch's president; David Giles, 59, Wasatch's chief financial officer; Christine Favara, 35, Premier Axium's chief executive; and Bradley Nordling, 46, ShareCom's president, who resides in Palatine.
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Mo'connor@tribune.com |
