is this the arricle you were mentioning?
Mob Families Were `Muscle' for Stock Fraud, US Says
Brooklyn, New York, March 2 (Bloomberg) -- Three New York Mafia families provided the ``muscle' for a penny stock scheme that defrauded investors of up to $60 million, federal prosecutors charged today. Authorities say owners and employees of two Manhattan brokerages, White Rock Partners & Co. and State Street Capital Markets Corp., ran a three-year scheme that artificially boosted the share price of four small companies, including Bala Cynwyd, Pennsylvania-based Country World Casinos Inc.
Prosecutors said members of the Bonanno, Genovese, and Colombo organized crime families stopped an extortion attempt aimed at one of the brokerages. The case ``could be entitled `Goodfellas' meets `Boiler Room,' ' New York City Police Commissioner Howard Safir said at a press conference today, referring to Martin Scorsese's 1990 film on mob life and a current movie that depicts a corrupt stock brokerage.
``The defendants availed themselves of the muscle offered by the Cosa Nostra,' U.S. Attorney Loretta Lynch said.
Authorities said the case underscores how organized crime, pushed out of traditional industries such as carting and construction, is moving into more lucrative businesses.
Follow the Money ``The mob goes where the money is,' Lewis Schiliro, assistant director in charge of the Federal Bureau of Investigation in New York, said. The scheme was ``such a cash cow that the Cosa Nostra people made $100,000 in one day,' he said.
In a related action, NASD Regulation Inc., the regulatory arm of the National Association of Securities Dealers, filed administrative charges against 11 former brokers of now-defunct State Street Capital, including several who are charged in the criminal case. The brokers are alleged to have engaged in trades without customer approval and failed to execute customer orders.
In the criminal case, federal authorities said they believe unidentified Russian organized crime figures helped participants in the scheme launder their ill-gotten gains through overseas accounts.
In all, 19 defendants were charged in the case, including 10 brokers, the nephew of imprisoned former Colombo family boss Carmine Persico, and a brother-in-law of mob informant Salvatore ``Sammy the Bull' Gravano, whose testimony against his former boss John Gotti, sent the leader of the Gambino crime family to prison.
Gravano was arrested last month on charges he financed an Arizona drug ring operated by a white supremacist gang. The defendants in the stock scheme face up to 20 years in prison. Prosecutors said the defendants inflated the share prices of three companies in addition to Country World Casinos, which was purportedly seeking to develop a casino in Black Hawk, Colorado. The other firms were Moorestown, New Jersey-based Holly Products Inc., New York-based Cable & Co. Worldwide Inc., and U.S. Bridge of New York Inc.
Secret Control According to prosecutors, defendants John Doukas, Walter Durchalter, and three unindicted coconspirators used White Rock and State Street Partners to secretly acquire stock in the four companies. Brokers with the two firms and other brokerages, including J.W. Barclay & Co. Inc. and D.H. Blair & Co. Inc., then artificially inflated share prices by deceiving investors, prosecutors said.
For three years, the defendants sold their shares at inflated prices and relied on another defendant, Aleks Paul, to launder the money through several off-shore accounts, authorities said. According to prosecutors, mobsters, including a captain in the Bonanno crime family, intervened when the president of U.S. Bridge, himself an alleged Gambino member, tried to extort the brokerage houses.
When brokers tried to leave White Rock or State Street, mobsters demanded payoffs from the businesses that sought to hire them, prosecutors allege. Authorities say the mob enforcers were paid off in cash and securities.
Mar/02/2000 17:31
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