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U.S. SECURITIES AND EXCHANGE COMMISSION
Securities Act of 1933
Release No. 7357 / October 10, 1996
Securities Exchange Act of 1934
Release No. 37807 / October 10, 1996
Administrative Proceeding File Numbers 3-9141 - 3-9162
CRIMINAL AND PUBLIC ADMINISTRATIVE AND CEASE-AND-DESIST
PROCEEDINGS ANNOUNCED AGAINST 45 IN CONNECTION
WITH KICKBACK SCHEMES
MARY JO WHITE, the United States Attorney for the Southern
District of New York, and JAMES K. KALLSTROM, the Assistant
Director in Charge of the New York Office of the Federal Bureau
of Investigation, announced that 45 defendants were charged
variously with conspiracy, securities fraud, and criminal
contempt following extensive investigations into illegal payments
made to securities brokers in connection with sales of over-the-
counter and NASDAQ stocks to customers. The arrests announced
today are the result of a series of investigations, including an
extensive undercover investigation conducted by the FBI, working
in cooperation with the United States Securities and Exchange
Commission, NASD Regulation, Inc., and the United States
Attorneys Office for the Southern District of New York.
CARMEN J. LAWRENCE, Regional Director of the Northeast
Regional Office of the United States Securities and Exchange
Commission, announced that as a result of these investigations,
the Commission instituted 22 administrative proceedings against
29 of the individuals charged today. The Commission's actions
charge these individuals with securities fraud based on the same
conduct underlying the criminal complaints, and seek, among other
things, cease-and-desist orders, bars on promoting penny stocks,
and disgorgement. The Commission's investigation is continuing.
NASD Regulation President Mary L. Schapiro announced that
three complaints were filed today charging ten registered
representatives with fraud in connection with this investigation.
According to JAMES K. KALLSTROM, "Investors generally
recognize that there are inherent risks in the securities
markets. Today's arrests are a warning to market manipulators
who create additional, unfair risks. They themselves face the
considerable risk of arrest and criminal prosecution. This case
illustrates the seriousness with which the FBI views this illegal
conduct and the lengths to which we will go to combat it."
MARY JO WHITE stated that, "Today's arrests should send a
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clear and unambiguous message to unscrupulous stock promoters,
stock brokers, an officers of publicly traded companies. The
'gloves are off' in the fight to protect this nation's financial
markets. Criminal and regulatory authorities can -- and will --
work in close coordination to investigate and prosecute
securities law violations to the full extent of the law, and we
will be successful."
With respect to the criminal contempt charges filed today,
Ms. WHITE added, "This office will not tolerate those who flout
federal court injunctions imposed following successful
enforcement actions by the Commission."
WILLIAM McLUCAS, the Commission's Director of Enforcement
stated, "Today's arrest of 45 stock promoters, brokers, and
others is the culmination of a concerted effort by the U.S.
Attorney's Office, the FBI, NASD Regulation, and the SEC to deal
with the criminals who have gravitated to our capital markets.
Billions of dollars change hands in our markets every day. They
change hands on the honor of a broker's word and the trust that
is placed not only in the broker, but also in the integrity of
our market systems. The people who were arrested today have
abused that trust. The consequences for abusing that trust must
be severe."
MARY L. SCHAPIRO said that, "This is an important case, not
only for its magnitude and depth, but because it demonstrates the
effectiveness of complete cooperation between federal agencies
and market regulators working together to help safeguard investor
interests. NASD Regulation plans to work in cooperation with the
FBI, the Commission, and the Department of Justice to ensure that
investigations emanating from the evidence obtained today are
vigorously pursued."
According to the 19 separate criminal complaints unsealed
today, undercover Special Agents of the FBI, operating a small
brokerage firm in Manhattan, posed as unscrupulous brokers who
managed millions of dollars on behalf of supposed "high net worth
individuals," and were willing to accept payoffs to sell over-
the-counter bulletin board and NASDAQ stocks to their customers.
The payments were generally made by and through stock promoters
who, working often with officers of the companies whose stocks
were being touted, paid the brokers as much as 40% of the value
of the stock being sold to the brokers' customers. Included
among those charged today were stock promoters, company
officials, and current or former stock brokers.
The arrests today followed an extensive investigation that
was the product of close coordination between the FBI, the
Commission, NASD Regulation, and the U.S. Attorney's Office for
the Southern District of New York. NASD Regulation offices in
both New York and Washington D.C. were actively involved on a
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daily basis in helping in the undercover operation. Both the
Commission and the NASD were consulted throughout the
investigation and asked to provide industry expertise, and to
minimize the effect of the undercover investigation on the
operation of the securities markets. No public customers were
involved in the transactions effected by the undercover
investigation, and all stock purchased during the course of the
investigation is being held as evidence.
The charges in a criminal complaint are merely accusations,
and the defendant is presumed innocent unless and until proven
guilty.
The following individuals were charged in complaints
unsealed today.
ROLAND ACEVEDO, 48, of New York, New York, is charged with
conspiracy to commit securities fraud. The Commission commenced
administrative proceedings against ACEVEDO.
ALFRED P. AVASSO, 57, of Suffern, New York, is charged with
conspiracy to commit securities fraud. The Commission commenced
administrative proceedings against AVASSO.
GEORGE BADGER, 66, of Salt Lake City, Utah, is charged with
conspiracy to commit securities fraud and criminal contempt.
STEVE BINGAMAN, 40, of New York, New York, is charged with
conspiracy to commit securities fraud. The Commission commenced
administrative proceedings against BINGAMAN.
IRA BLACKEY, 46, of Williamsville, New York, is charged with
conspiracy to commit securities fraud. The Commission commenced
administrative proceedings against BLACKEY.
THOMAS J. BROWNE, 31, of Forest Hills, New York, is charged
with conspiracy to commit securities fraud. NASD-Regulation
initiated disciplinary proceedings against BROWNE.
DARYL BUERGE, age unknown, of Canada, is charged with
conspiracy to commit securities fraud.
RICHARD CEDRONE, 33, of Del Ray Beach, Florida, is charged
with securities fraud. The Commission commenced administrative
proceedings against CEDRONE.
CARY CIMINO, 36, of New York, New York, is charged with
securities fraud. The Commission commenced administrative
proceedings against CIMINO.
DALE EYMAN, 56, of Phoenix, Arizona, is charge with
conspiracy to commit securities fraud.
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JOHN FASANO, 37, of Happauge, New York, is charge with
conspiracy to commit securities fraud.
BARTHOLOMEW HARING, 30, of Brooklyn, New York, is charged
with conspiracy to commit securities fraud. NASD-Regulation
initiated disciplinary proceedings against HARING.
THEODORE HEITZMAN, 49, of Carlsbad, California, is charged
with securities fraud. The Commission commenced administrative
proceedings against HEITZMAN.
GARY HRYCYK, 30, of New York, New York, is charged with
conspiracy to commit securities fraud. NASD-Regulation initiated
disciplinary proceedings against HRYCYK.
RICHARD LANGLEY, JR., 33, of Los Angeles, California, is
charged with conspiracy to commit securities fraud. The
Commission commenced administrative proceedings against LANGLEY.
MICHAEL LAPP, 38, of Coral Springs, Florida, is charged with
conspiracy to commit securities fraud. The Commission commenced
administrative proceedings against LAPP.
GERALD LARDER, 45, of Englewood, Colorado, is charged with
conspiracy to commit securities fraud. The Commission commenced
administrative proceedings against LARDER.
NORMAN LESCHT, 38, of East Brunswick, New Jersey, is charged
with securities fraud. The Commission commenced administrative
proceedings, and NASD-Regulation initiated disciplinary
proceedings, against LESCHT.
MIRON LESHEM, 32, of Boca Raton, Florida, is charged with
[what]. The Commission commenced administrative proceedings
against LESHEM.
WILLIAM LUCAS, 63, of West Hempstead, New York, is charged
with conspiracy to commit securities fraud. The Commission
commenced administrative proceedings against LUCAS.
RICHARD MALLION, 31, of Sunrise, Florida, is charged with
conspiracy to commit securities fraud, securities fraud, and
criminal contempt. The Commission commenced administrative
proceedings against MALLION.
JAMES MANAS, 44, of Belle Harbor, New York, is charged with
conspiracy to commit securities fraud.
GAMAL ASHRAF MARWAN, 29, of Los Angeles, California, is
charged with securities fraud. The Commission commenced
administrative proceedings against MARWAN.
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GERALD CASH MCNEIL, age unknown, of North Bergen, New
Jersey, is charge with conspiracy to commit securities fraud.
NASD-Regulation commenced administrative proceedings against
MCNEIL.
GARY MITCHELL, 28, of Denver, Colorado, is charged with
conspiracy to commit securities fraud. The Commission commenced
administrative proceedings against GARY MITCHELL.
ROBERT MITCHELL, 28, of Denver, Colorado, is charged with
conspiracy to commit securities fraud. The Commission commenced
administrative proceedings against ROBERT MITCHELL.
GREGORY JOHN MOUEN, 37, of New York, New York, is charged
with conspiracy to commit securities fraud. NASD-Regulation
initiated disciplinary proceedings against MOUEN.
TIMOTHY MURRAY, age and address unknown, is charged with
conspiracy to commit securities fraud.
EDWARD PADNOS, 59, of Highland Park, Illinois, is charged
with conspiracy to commit securities fraud. The Commission
commenced administrative proceedings against PADNOS.
GEORGE PANAGIOTOU, 25, of Lodi, New Jersey, is charged with
conspiracy to commit securities fraud. The Commission previously
commenced administrative proceedings against PANAGIOTOU.
JOSEPH PIGNATIELLO, 50, of Coral Springs, Florida, is
charged with conspiracy to commit securities fraud.
JEFF POKROSS, 39, of New Jersey, is charged with conspiracy
to commit securities fraud. The Commission commenced
administrative proceedings against POKROSS.
ALEXANDER RUGE, age unknown, of Canada, is charged with
conspiracy to commit securities fraud. The Commission commenced
administrative proceedings against RUGE.
BLAKE MARSHALL RUSS, age unknown, of Boca Raton, Florida, is
charged with conspiracy to commit securities fraud. NASD-
Regulation initiated disciplinary proceedings against RUSS.
MARK ANTHONY SAVAGE, age unknown, of Brooklyn, New York, is
charged with conspiracy to commit securities fraud. NASD-
Regulation initiated disciplinary proceedings against SAVAGE.
The Commission previously commenced administrative proceedings
against SAVAGE.
ROBERT SCHULMAN, 50, of Armonk, New York, is charged with
conspiracy to commit securities fraud. The Commission commenced
administrative proceedings against SCHULMAN.
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ANDREW SCUDIERO, 35, of New York, New York, is charged with
securities fraud. The Commission commenced administrative
proceedings against SCUDIERO.
SY SIEGEL, 71, of Los Angeles, California, is charged with
securities fraud. The Commission commenced administrative
proceedings against SIEGEL.
BERTRAM SLUTSKY, 56, of Newton, New Jersey, is charged with
conspiracy to commit securities fraud and securities fraud. The
Commission commenced administrative proceedings against SLUTSKY.
JEFFRY SZUR, 30, of Bayhead, New Jersey, is charged with
conspiracy to commit securities fraud and securities fraud. The
Commission commenced administrative proceedings, and NASD-
Regulation initiated disciplinary proceedings against SZUR.
JEFF TRENK, 44, of New Hyde Park, New York, is charged with
securities fraud. The Commission commenced administrative
proceedings against TRENK.
DEAN CHRISTOPHER VERRIGNI, age unknown, of Wappinger Falls,
New York, is charged with conspiracy to commit securities fraud.
NASD-Regulation initiated disciplinary proceedings against
VERRIGNI. The Commission previously instituted administrative
proceedings against VERRIGNI.
TRUNG VUGIA, 29, of Stamford, Connecticut, is charged with
conspiracy to commit securities fraud.
EDWARD WILLIAMSON, 49, of Witchita, Kansas, is charged with
securities fraud. The Commission commenced administrative
proceedings against WILLIAMSON.
ALLEN WOLFSON, 50, Salt Lake City, Utah, is charged with
conspiracy to commit securities fraud. The Commission commenced
administrative proceedings against WOLFSON.
The Commission also brought administrative proceedings
against JOHN CHAPMAN, of Salt Lake City, Utah.
Assistant United States Attorneys Katherine M. Choo (212)
791-1152 and Bruce G. Ohr (212) 791-1045 are in charge of the
prosecution. |
