Source: Chris Hamblin – Editor, Compliance Matters
The US Securities and Exchange Commission has pressed fraud charges against ten people involved in scams to trick investors into buying stock in ForceField Energy Inc. The scams allegedly featured bribes in cash and other kickbacks to registered representatives and unregistered brokers.
The SEC alleges that investors were unaware that people promoting the stock to them were being paid by a ringleader – Richard St Julien, who was at the time ForceField’s chairman of the board – to steer them to the investment and that some of the perpetrators tried to evade law enforcement by going so far as to communicate with prepaid disposable “burner” phones and encrypted, content-expiring text messages.
The SEC and other government agencies, however, followed leads, used surveillance IT and tracked down the alleged culprits, filing a complaint against St Julien and nine others in federal court in Brooklyn, including one who referred to himself as St. Julien’s “brown bag man” (because he distributed cash bribes) and another who touted the stock in a newsletter called “Wall Street Buy Sell Hold.”
“We allege that these men sold investors on the merits of buying ForceField Energy stock while leaving out the most important detail of all: they were being bribed with money and other benefits behind the scenes to tell them that,” according to Andrew Calamari of the SEC. The US Attorney’s Office for the Eastern District of New York pressed criminal charges against St Julien last year; in this more recent parallel action, the US Attorney’s Office is pressing criminal charges against the other nine individuals.
According to the SEC’s complaint against St Julien, the nine were purported investor relations professional Jared Mitchell, investment newsletter publisher Christopher Castaldo, registered representatives Richard Brown, Gerald Cocuzzo, Naveed (Nick) Khan, Maroof Miyana and Pranav Patel and unregistered brokers Herschel (Tres) Knippa and Louis Petrossi.
The allegations then stated that St Julien used a company in Belize to pay the kickbacks, wiring money from a company bank account to Mitchell, who called himself the “brown bag man” and withdrew the payments and paid cash bribes in person to Brown, Cocuzzo, Khan, Miyana, and Patel. Castaldo lured his victims to invest in ForceField through a nationwide cold-calling campaign he conducted from his office in Long Island.
The SEC’s complaint charges all defendants with breaking section 17(a) Securities Act of 1933 and section 10(b) Securities Exchange Act 1934, along with Rule 10b-5 and other offences against the federal securities laws. It seeks disgorgement plus prejudgment interest, penalties, and permanent injunctions against all defendants as well as penny stock bars against St Julien, Castaldo and Petrossi and an officer-and-director bar against St Julien.
By Chris Hamblin – Editor Compliance matters