A total of 14 people were charged for their alleged roles in a $147 million stock manipulation scheme involving publicly traded companies on Wednesday.
The following people were arrested:
Jeffrey Chartier, 53, Los Angeles – insider and marketer of five publicly traded companies whose stock was manipulated
Stephanie Lee, 46, St. Petersburg, Florida – insider and marketer of five publicly traded companies whose stock was manipulated
Lawrence Isen, 63, San Diego – insider and marketer of five publicly traded companies whose stock was manipulated
Robert Gleckman, 52, Tarzana, California – insider and marketer of five publicly traded companies whose stock was manipulated
Erik Matz, 44, Mt. Sinai – manager of My Street Research and its predecessors (the “Boiler Room”)
Ronald Hardy, 42, Port Jefferson – manager of My Street Research and its predecessors (the “Boiler Room”)
Brian Heepke, 36, Farmingdale – Boiler Room cold-caller
Dennis Verderosa, 67, Coram – Boiler Room cold-caller
Emin L. Cohen, 33, Coram – Boiler Room cold-caller
Paul Ewer, 35, Massapequa – Boiler Room cold-caller
McArthur Jean, 34, Dix Hills – Boiler Room cold-caller
Sergio Ramirez, 44, East Meadow – Boiler Room cold-caller
Anthony Vassallo, 54, Farmingdale – owner of Elite Stock Research
Robert Gilbert, 51, Cold Spring Harbor – owner of Accredited Investor Preview
The charges include conspiracy to commit securities fraud, conspiracy to commit wire fraud, conspiracy to commit money laundering, and substantive securities fraud, according to the U.S. Attorney.
All 14 were arrested for manipulating the stock of five publicly traded companies – National Waste Management Holdings Inc. (NWMH); CES Synergies Inc., (CESX); Grilled Cheese Truck, (GRLD); Hydrocarb Energy Corporation, (HECC); and Intelligent Content Enterprises Inc., (ICEIF), the U.S. Attorney said.
In addition, the government restrained Matz’s house in Mt. Sinai, Isen’s home in San Diego and a co-conspirator’s home in Hicksville, as well as seized bank accounts containing alleged criminal proceeds and cars purchased with alleged criminal proceeds, authorities said.
Between January 2014 and July 2017 the group, together with others, engaged in a $147 million scheme to defraud investors and potential investors in, among other companies, the publicly traded companies mentioned above by artificially controlling the price and volume of traded shares in the companies, the U.S. attorney said.
In order to execute this scheme, the group hid their control of shares of the manipulated public companies that were held in brokerage accounts in the names of other individuals or entities, the U.S. Attorney said.
In addition, between 2014 and 2017, Chartier, Lee, Isen, Matz and Hardy engaged in a scheme to launder $14,714,493 in proceeds of the foregoing stock manipulation schemes, the U.S. Attorney said.
In order to carry out the “pump and dump scheme,” employees of the Boiler Room in Melville obtained shares from insiders at the manipulated public companies, including Chartier, Lee and Gleckman, at below-market prices through stock purchase and consulting agreements, the U.S. Attorney said.
Once the employees obtained shares in the companies, they engaged in manipulative trading patterns, including wash trades and matched trades to drive up the price of the shares, while aggressively and repeatedly calling and emailing victims — many of whom were senior citizens — to purchase shares in the Manipulated Public Companies, the U.S. Attorney said.
When victims indicated a willingness to purchase a recommended stock, the employees and their co-conspirators at the Boiler Room would pressure the victims to follow through, causing many of the victims to ultimately purchase stock in more than one of the manipulated public companies, the U.S. Attorney said.
In some cases, the Boiler Room also charged the victims for “subscriptions” to receive stock recommendations. However, they would not tell the victims that after giving their recommendation to the victims that the employees and their co-conspirators sold their own shares in the same companies giving the victims the false impression that the stocks of the companies were sound investments, according to the U.S. Attorney.
Matz, Heepke, Cohen and Jean would often provide false names to victims or use different email addresses when communicating with victim investors, the U.S. Attorney said.
In addition, they would direct and control trading in shares of the manipulated public companies in brokerage accounts using names that were not associated with themselves or the Boiler Room, the U.S. Attorney said.
Chartier, Lee, Isen, Matz and Hardy were all also involved in a scheme to launder a total of $14,714,493 in proceeds of the fraudulent schemes to manipulate the share prices of NWMH, CESX, GRLD, HECC and ICEIF between 2014 and 2017, the U.S. Attorney said.
They laundered proceeds of their pump-and-dump schemes by transferring the proceeds from brokerage accounts that they and their co-conspirators controlled through bank accounts in the names of companies controlled by the co-conspirators and other individuals or by generating invoices to lend the appearance of legitimacy to the transactions, the U.S. Attorney said.
“Manipulating stock prices, as alleged in this case, to appear more attractive to investors, is a deliberate attempt at sabotaging fair market trading,” FBI Assistant Director-in-Charge William Sweeney said. “And manipulation, at its core, is a true act of deception, especially when the elderly are targeted.”