1. High-Profile Financial Advisors Headed to Jail
Alberto Vilar, a New York philanthropist who once ran Amerindo Investment Advisors, has been sentenced to nine years in prison for bilking his clients – including the mother of actress Phoebe Cates – in a multimillion-dollar securities scam, The Wall Street Journal reported. According to federal prosecutors, the Journal said, Vilar spent almost $22 million worth of investor funds on charitable donations and other personal expenses. He has been ordered to pay twice that amount in restitution and penalties, the Journal said, in addition to serving a long prison term followed by three years of supervised release. Gary Tanaka, Vilar’s partner and a high-profile figure in England, will spend five years in prison for his own role in the investment scam, the newspaper added.
2. Investors Hub Operator Near Plea Deal with Prosecutors
Matthew Brown, operator of the Investors Hub website for penny stocks, looks poised to change his not-guilty plea to felony charges of stock manipulation, StockWatch has reported. Although Brown originally pleaded not guilty to the charges last year, StockWatch said, a U.S. judge recently noted that he has reached a deal with prosecutors and scheduled a new plea hearing for the defendant next week. Together with six co-conspirators, StockWatch noted, Brown has been accused of orchestrating pump-and-dump schemes involving several penny stocks that traded on the lightly regulated Pink Sheets. Currently free on a $50,000 bond, StockWatch added, Brown faces up to 40 years in prison if found guilty of his alleged crimes.
3. Hacker Pleads Guilty in 'Pump-and-Dump' Case
Jaisankar Marimuthu, a computer hacker from India, has pleaded guilty to fraud charges stemming from a pump-and-dump scheme involving “thinly traded securities” here in the U.S. Back in 2006, federal prosecutors claim, Marimuthu participated in a foreign conspiracy designed to artificially drive up stock prices by hacking into private trading accounts and purchasing the stocks on behalf of unsuspecting customers. After the stock prices rose, prosecutors say, Marimuthu and others then dumped their own holdings in those same companies. All told, prosecutors estimate, at least 95 U.S. investors – holding accounts at nine different brokerage firms – fell victim to the investment scam. Marimuthu now faces up to seven years in prison for his crimes. One of his co-conspirators, Thirugnanam Ramanathan, has already served two years in prison for his role in the scheme. Another, Chockalingham Ramanathan, remains at large.
4. Convicted Stock Promoter Banned from B.C. Markets
The British Columbian Securities Commission has permanently banned Philip Wong from the province’s capital markets following his conviction for securities fraud here in the U.S. The Canadian stock promoter was ordered to serve 21 months in prison, followed by two years of supervised release, after pleading guilty in the U.S. to numerous fraud-related charges back in 2008. Canadian regulators have now barred him from engaging in the following activities in British Columbia: trading or purchasing any securities; serving as an officer or director of any publicly traded company; acting as a stock promoter or a fund manager; or participating in any investor relations activities.
5. Two Arrested in Indiana for Alleged Investment Scam
Indiana authorities arrested two men last week for allegedly stealing funds that they pledged to invest in a pair of healthcare companies. According to state officials, Daniel Murry and George Duncan promised to use the money for investments in two companies – Healthcare Information Technology Corporation and HIPPA Resources Management – led by Murry but wound up funneling those funds elsewhere instead. Murry has been charged with eight felonies, while Duncan has been charged with three. They face up to eight years in prison for each felony count if they are found guilty if their alleged crimes.
6. Galleon Informant Escapes Prison after Cooperating
Mark Lenowitz, a key witness in the massive insider trading case against the fallen Galleon Group hedge fund, dodged a prison sentence – receiving three years of probation instead – for trading on inside tips himself in an unrelated case several years ago, The Wall Street Journal has reported. A former stock trader at Chelsey Capital, where one of the Galleon defendants also worked, Lenowitz pleaded guilty to insider trading charges in mid-2007 and has since cooperated with government authorities in the epic Galleon case, the Journal said. Although Lenowitz could have faced up to 57 months in prison, the Journal noted, he escaped a jail term altogether as a reward for his high level of cooperation in the sweeping Galleon probe. He was ordered to pay $337,000 in restitution for his past misconduct, the Journal added, which allowed him to reap illicit profits ahead of UBS analyst reports.
7. SEC Drops Backdating Case against Broadcom Founders
The U.S. Securities and Exchange Commission has abandoned plans to pursue civil fraud charges against Broadcom co-founders Henry Nicholas and Henry Samueli, as well as the company’s former CFO and general counsel, for allegedly violating rules against backdated stock option, The Wall Street Journal reported. Regulators dropped the case this week, the Journal said, after a federal judge tossed criminal charges against the defendants late last year for alleged prosecutorial misconduct. Prosecutors have signaled that they will continue to pursue the former leaders of Broadcom, the Journal added, which suffered a $2.2 billion write-down as a result of the backdated options.
8. State Street Fined Again over Subprime Mortgage Mess
State Street Bank and Trust has agreed to pay another $300 million to investors who lost money on the firm’s dangerous bets on subprime mortgage-backed securities. According to the U.S. Securities and Exchange Commission, State Street concealed the high-risk nature of its holdings from investors who thought they were being placed in much safer vehicles instead. All told, State Street has now agreed to return $663 million to investors who were injured by the firm’s losing gambles in the subprime mortgage space.
9. Another Galleon Defendant Looks Poised to Plead Guilty
Rajiv Goel, the former director of strategic investments at Intel Capital, could soon plead guilty to charges stemming from the giant insider trading case that toppled the Galleon Group hedge fund, the Associated Press has reported. Goel has indicated that he will waive potential indictment, the A.P. said, a move that often precedes a looming guilty plea. If he does plead guilty, the A.P. noted, he will become the ninth defendant to do so since government authorities cracked down on the alleged trading ring last fall. Goel is accused of passing along inside tips to Galleon founder Raj Rajaratnam, the A.P. added, who reportedly scored almost $580,000 in illicit gains as a result.
10. BofA Sued by Prosecutors as It Inks Settlement with SEC
New York Attorney General Andrew Cuomo filed criminal charges against Bank of America and two of its former executives this week, The New York Times reported, even as the U.S. Securities and Exchange Commission agreed to settle its own complaint against the giant bank. In his new lawsuit, the Times said, Cuomo accuses BofA – as well as former CEO Kenneth Lewis and former CFO Joe Price – of misleading both company shareholders and the federal government about its merger with Merrill Lynch. Cuomo claims that BofA failed to disclose massive losses suffered by Merrill Lynch ahead of the deal, the Times stated, and then used those same losses to secure a second bailout from the government. Meanwhile, the Times noted, BofA has agreed to pay $150 million – almost five times more than its previous offer – to settle similar charges filed by the SEC.
Melissa Davis, senior editor of The Street Sweeper, poses with celebrity stock picker Jim Cramer after a recent taping of his “Mad Money” television show. Davis worked as an investigative reporter for TheStreet.com, where Cramer serves as chairman, before assuming her current role at The Street Sweeper.
AENY: Look What's Hiding beneath that Former Shell
by Melissa Davis, 2/4/2010 8:23:01 AM
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Americas Energy Company (AENY.OB) exposed some ugly flaws when it emerged from its corporate shell.
Following its heavily hyped reverse merger, AENY now counts CEO Christopher Headrick – a longtime dealmaker with a history of failure – as its sole officer, director and member of its staff. Although AENY has announced plans to expand its senior management team, the company aims to do so by hiring leaders who have benefited handsomely from a series of generous related-party deals. One of those potential executives, already identified as a company vice president in the past, has agreed to plead guilty to felony tax evasion charges and could face up to five years in prison for his crime. more...
Jayhawk, No Longer a Highflier, Crashes to Earth
by Melissa Davis, 1/26/2010 12:22:26 PM
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Following a swift plunge that cut its stock price by almost half, Jayhawk Energy (JYHW.OB) stepped forward this week to blame the recent volatility on outside promotions followed by aggressive profit-taking – a classic, if softened, description of a “pump-and-dump” scheme – with no connection to the company’s actual operations. JYHW insisted that the company itself played no role in the stock’s short-lived rally, even though its top officer profited from the stock’s big run-up before its subsequent crash. more...
PennyStockChaser Hides Profits, Secrets from Investors
by Melissa Davis, 11/16/2009 1:16:30 PM
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This June, shortly after PennyStockChaser announced that it had become the most popular website for “hot penny stock tips” in the business, the Internet-based tout sheet began dropping a familiar name that once carried considerable weight on Wall Street.
It listed Mike Schonberg – a name formerly attached to such legendary investment firms as Dreyfus and UBS – as its official contact person. Keeping with its secretive nature, however, the website stopped well short of offering any details about Schonberg’s professional background. more...
Convicted Swindler Touts Risky Penny Stocks
by Melissa Davis, 10/12/2009 2:37:08 PM
Rich Roon had already served time in prison for swindling investors when he decided to reenter the securities business as a penny stock promoter.
In 2003, just 16 months after his release from jail, Roon quietly established a consulting business that targets obscure microcap companies desperate for publicity. Roon’s firm, known as Oceanic Consulting, aggressively promotes penny stocks on its OTC Reporter website in exchange for shares of the companies being touted. Over the years, Oceanic Consulting has collected – and promptly sold – billions of free shares of penny stocks that have lost money for average investors. more...
Surgeon Seeks to Cut Influence of Device Industry
by Melissa Davis, 11/23/2009 5:51:37 AM
Charles Rosen is a soft-spoken spine surgeon who has earned the kind of reputation that’s normally assigned to a hard-nosed cop.
He first blew the whistle on a giant healthcare company a decade ago, when a hospital owned by Tenet – the second-largest publicly traded hospital chain in the country – failed to inform him that its operating-room sterilizer had not been working properly for months. As the hospital’s chief of surgery, Rosen was asked to minimize the problem during an upcoming inspection by the Joint Commission on Accreditation of Healthcare Organizations. Instead, Rosen sounded an alarm during JCAHO’s annual visit and promptly resigned in protest when the agency – which counted one of the hospital’s directors among its own board members – ignored his concerns. more...
Former Mafia Prosecutor Focuses on White-Collar Crime
by Melissa Davis, 10/12/2009 4:18:26 PM
Gregory J. O’Connell, a founding partner of New York-based De Feis, O’Connell & Rose, has successfully prosecuted Mafia bosses, represented multimillionaires accused of white-collar crimes and even scored a feature role in the latest book published by Jordan Belfort, the so-called “Wolf of Wall Street.” In short, at this point in his illustrious career, O’Connell needs no introduction. Belfort penned such a colorful one in his new book, however, that it would be a crime to skip past the opportunity to share it here. more...
New Article Alert!
Investors must be properly armed in order to protect themselves against the dangers of Wall Street. To help out, The Street Sweeper has mined the Internet for the most powerful weapons available to investors researching publicly traded companies. In our “Loaded Weapons” section, you’ll find direct links to corporate documents filed with the SEC, conference call transcripts published by Seeking Alpha, insider stock sales tracked by Insider-Monitor.com and popular investment tools offered by Yahoo! Finance. You can also identify the promoters behind current penny stock campaigns – and the compensation they are receiving – by connecting to StockPromoters.com. You can link to other websites that are conducting topnotch stock investigations as well. Click here now.
