August 1, 2017
The U.S. Attorneys Eastern District of New York recently charged fourteen people with conspiracy to commit securities fraud, conspiracy to commit wire fraud, conspiracy to commit money laundering, and substantive securities fraud in connection with stock manipulation of five publicly traded companies.
The defendants include: insiders of the manipulated public companies, Jeffrey Chartier, Stephanie Lee, Lawrence Isen, and Robert Gleckman; managers of My Street Research and its predecessors (the “Boiler Room”), Erik Matz and Ronald Hardy; Boiler Room cold-callers, Brian Heepke, Dennis Verderosa, Emin L. Cohen, Paul Ewer, McArthur Jean, and Sergio Ramirez; owner of Elite Stock Research (ESR) Anthony Vassallo; and owner of Accredited Investor Preview (AIP), Robert Gilbert. The government seized several of the defendants’ residences and bank accounts containing alleged criminal proceeds and automobiles purchased with alleged criminal proceeds.
According to nine-count indictment announcement on July 12, 2017, employees of the Boiler Room in Melville, New York obtained shares from insiders and marketers at National Waste Management Holdings, Inc., CES Synergies, Inc., Grilled Cheese Truck, Hydrocarb Energy Corporation, and Intelligent Content Enterprises, Inc. (together referred to as the “Manipulated Public Companies” in the announcement) at below-market prices through stock purchase and consulting agreements. Once obtained, the defendants allegedly engaged in manipulative trading patterns including wash and matched trades to drive up the price of shares and aggressively called and emailed victims—many of whom were senior citizens—to invest in the Manipulated Public Companies.
Specifically, between January 2014 and July 2017, the defendants and others allegedly engaged in a $147 million scheme to defraud the Manipulated Public Companies by artificially controlling the price and volume of traded shares through artificially generating price movements and trading volume in the shares and material misrepresentations and omissions in their communications with victim investors about the stock of these companies. According to the announcement, the defendants concealed their control of the shares by using the names of other individuals and entities. Finally, the announcement states that Chartier, Lee, Matz, Isen, and Hardy allegedly engaged in a scheme to launder over $14.7 million in proceeds of the stock manipulation schemes by transferring the proceeds from brokerage accounts that they and their co-conspirators controlled or by generating invoices to lend the appearance of legitimacy to the transactions.