Important to read. I wish i read about this dog CWRC
before i bought in today. I wondered why was coming
down like a rock.
Mob Families Were `Muscle' for Stock Fraud, US Says
Brooklyn, New York, March 2 (Bloomberg) -- Three New
YorkMafia 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
For more stories from Bloomberg News, click here.
(C) Copyright 2000 Bloomberg L.P.
The information herein was obtained from sources which
Bloomberg L.P. and its suppliers believe
reliable, but they do not guarantee its accuracy. Neither the
information, nor any opinion
expressed, constitutes a solicitation of the purchase or sale of
any securities or commodities.(C)
Copyright 2000 Bloomberg L.P. BLOOMBERG, Bloomberg
News, Bloomberg Financial Markets,
Bloomberg Television, Bloomberg News Radio are
trademarks, tradenames and service marks of
Bloomberg L.P.
(Voluntary Disclosure: Position- No Position) |
