U.S. authorities unveiled criminal charges on Thursday accusing seven people, including a banking executive once married to a star of "The Sopranos," of running a $300 million stock manipulation scheme that cheated elderly and other investors.
Abraxas Discala, the chief executive officer of merchant banking firm OmniView Capital Advisors and former husband of Jamie-Lynn Sigler, who played Meadow Soprano on the hit HBO series, was charged in an indictment unsealed in Brooklyn, New York, with 10 criminal counts including securities fraud, wire fraud and conspiracy.
Discala, who is 43 and known as A.J., and the other defendants were accused of using "pump-and-dump" and other illegal tactics to artificially control prices and trade volumes in four companies from October 2012 to July 2014.
Authorities said they used wiretaps to help uncover the scheme, which involved misleading press releases and regulatory filings, rapid trading, concealing conspirators' ownership stakes, and unauthorized purchases for unwitting investors.
"When the defendants stopped their criminal game of musical shares, it was the unsuspecting investors who were left holding the bag," Brooklyn U.S. Attorney Loretta Lynch told a news conference.
Joseph Tacopina, a lawyer for Discala, said: "Anyone who knows A.J. is shocked by these allegations. And that is exactly what they are, merely allegations."
The four companies are CodeSmart Holdings Inc., Cubed Inc., StarStream Entertainment Inc. and Staffing Group Ltd.
Others indicted were OmniView President Marc Wexler, 52; CodeSmart CEO Ira Shapiro, 53; brokers Matthew Bell, 47, and Craig Josephberg, 41; Kyleen Cane, 59, a Las Vegas lawyer; and Victor Azrak, 32, vice president of Excel Corp.
The U.S. Securities and Exchange Commission brought civil charges against all but Cane and Azrak.
"This was a brazen manipulation scheme calculated to enrich Discala and his accomplices using, in many cases, the retirement savings of innocent and unwitting retail investors," SEC enforcement chief Andrew Ceresney said.
Lynch said the scheme boosted the stocks' market caps to $300 million, causing investor losses of at least $50 million alone on CodeSmart, the first company targeted.
Law enforcement intervened before unsuspecting investors could lose money in the other companies, she said.
Text messages and phone calls were often used to manipulate prices, authorities said.
For example, Discala allegedly messaged Bell on May 13, 2014, about StarStream, whose ticker is SSET and was trading at 35 cents per share: "We got good stuff going. Sset. Should be over a buck today." The stock price tripled that day to $1.05.
CodeSmart in March said former New York Governor David Paterson joined its advisory board. Neither Paterson nor Sigler, who was married to Discala from 2003 to 2006, was accused of wrongdoing.
A woman who answered OmniView's phone said the firm would not comment. Lawyers for other defendants would not comment or could not immediately be located. CodeSmart and Excel did not immediately respond to requests for comment.
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