SEC, U.S. ATTORNEY, FBI, NY ATTORNEY GENERAL ANNOUNCE CHARGES IN BOILER-ROOM CASE WHICH INCLUDES ALLEGED ASSOCIATES OF ORGANIZED CRIME
summary
Eighteen individuals, including principals of defunct broker-dealer First United Equities and two alleged Gambino crime family associates, were charged with a boiler-room fraud scheme that manipulated microcap stocks NMFS and Ashton through lies, unauthorized trades, and blocked sales, amassing millions in illicit profits and leading to both SEC civil charges and criminal indictments.
paragraph
The SEC, U.S. Attorney, FBI, and New York Attorney General charged 18 individuals with orchestrating a boiler-room fraud from August 1995 to October 1997 through First United Equities Corporation, targeting microcap stocks NMFS and Ashton. Using high-pressure sales, false claims of guaranteed returns and loss reimbursement, and secret control of stock via proprietary and nominee accounts, the defendants prevented investors from selling shares and executed unauthorized trades—even in the account of a deceased customer—generating millions in illicit profits. The SEC alleged violations of Sections 17(a) and 10(b) and Rule 10b-5, while a separate criminal indictment named 20 defendants, including two linked to the Gambino organized crime family.
narrative
From August 1995 through October 1997, 18 individuals associated with the now-defunct broker-dealer First United Equities Corporation orchestrated a massive boiler-room fraud targeting microcap stocks National Medical Financial Services (NMFS) and Ashton Technology Group. Using high-pressure sales tactics, they lied to investors by claiming no customer had ever lost money, that the firm would reimburse losses, and that the stocks were safe investments, while secretly controlling supply through proprietary and nominee accounts to manipulate prices and block sales. The defendants prevented investors from selling their shares through intimidation and by failing to execute sell orders, and in at least one case, executed unauthorized purchases in the account of a deceased customer. The scheme generated millions of dollars in illicit profits, with the SEC charging all 18 with violations of Section 17(a) of the Securities Act and Section 10(b) and Rule 10b-5 of the Securities Exchange Act. In a parallel criminal action, 20 individuals were indicted, including two alleged associates of the Gambino organized crime family, underscoring the organized criminal nature of the operation. The case marked a landmark example of coordinated enforcement by the SEC, U.S. Attorney’s Office, FBI, and New York State Attorney General, demonstrating a unified front against fraud in the microcap market and sending a strong message to organized crime elements involved in securities fraud.
Classified boiler-room(confidence 100%). EDGAR detection: forms Form D· recall 50% / precision 4%. detection rule →
Parties
Securities and Exchange CommissionHunter AdamsJason A. CohenSteven M. CohenDavid HirschJonathan D. WinstonJohn J. Gremmo, IIIJames L. BilaChristian W. BlakeLouis R. Facchini, Jr.Roberto A. MangiaranoJoseph P. ManninoDavid M. MargulesJames J. PellizziDavid M. PessoMichael PuglieseChristopher J. RussoHoward I. WeinsteinRobert J. Winston
Keywords
newagenmfs ashtonrespondentsorganized crimestockashton stockgeneralashtonordergeneral announceannounce boiler-roomboiler-room whichwhich includesincludes associates
Extracted insights
Entities 11
- company charges in boiler-room case with alleged organized crime associates
- person david hirsch
- agency Federal Bureau of Investigation
- company first united equities corporation
- person fraudulent scheme
- person gambino organized crime family
- person hunter adams
- person richard h. walker
- agency sec director of enforcement
- agency Securities and Exchange Commission
- person steven m. cohen
Triples 20
- SEC charged 18 individuals in enforcement action for boiler-room fraud
- SEC announced charges in boiler-room case with alleged organized crime associates
- U.S. Attorney for Eastern District of New York announced indictment of 20 defendants
- FBI announced indictment of 20 defendants in related criminal prosecution
- New York State Attorney General announced indictment of 20 defendants
- First United Equities Corporation conducted fraudulent scheme in microcap securities market
- Respondents reaped millions of dollars in illicit profits
- Two defendants are associates of Gambino organized crime family
- First United fraudulently marketed stock of National Medical Financial Services, Inc. and Ashton Technology Group, Inc.
- Fraudulent scheme operated from August 1995 through at least October 1997
- First United registered representatives used high-pressure sales tactics and misrepresentations
- Respondents falsely told investors that no customer had ever lost money
- Respondents amassed unlawful profits totaling millions of dollars
- Respondents bullied or failed to execute sell orders to prevent investors from selling stock
- Respondents effected unauthorized purchases of NMFS and Ashton stock in customer accounts
- Hunter Adams was former de facto control person of First United
- Jason A. Cohen was formerly Chairman of First United
- Steven M. Cohen was formerly registered principal of First United
- David Hirsch was former de facto control person of First United
- Richard H. Walker is SEC Director of Enforcement
Extracted body text (5,256c)
FOR IMMEDIATE RELEASE 2001-25 SEC, U.S. ATTORNEY, FBI, NY ATTORNEY GENERAL ANNOUNCE CHARGES IN BOILER-ROOM CASE WHICH INCLUDES ALLEGED ASSOCIATES OF ORGANIZED CRIME Washington, DC, March 8, 2001 - The Securities and Exchange Commission today charged 18 individuals in an enforcement action as part of its continuing battle against boiler-room fraud in the market for microcap securities. The Commission's administrative order instituting proceedings (Order) alleges that the respondents conducted a fraudulent scheme while associated with a Long Island broker- dealer, First United Equities Corporation, that is now defunct. The Order alleges that the respondents reaped millions of dollars in illicit profits from the scheme. In a related criminal prosecution, the U.S. Attorney for the Eastern District of New York, the Federal Bureau of Investigation and the New York State Attorney General simultaneously announced the indictment of 20 defendants. The criminal indictments allege that two of the persons charged are associates of the Gambino organized crime family. SEC Director of Enforcement Richard H. Walker said, "Today's charges involve a classic boiler-room operation, carried out by individuals who were willing to tell any lie - no matter how brazen - in order to get their hands on the public's hard-earned money. These cases demonstrate our continuing commitment to rooting out fraud in the microcap market. Finally, for those who would contemplate engaging in this kind of activity, including members of organized crime, the most daunting news about today's action is that it is the result of outstanding coordination among the SEC, the U.S. Attorney for the Eastern District of New York, the FBI and the New York State Attorney General." The Commission's Order alleges as follows: From August 1995 through at least October 1997, operating through First United, the respondents fraudulently marketed the stock of National Medical Financial Services, Inc. ("NMFS") and Ashton Technology Group, Inc. ("Ashton") to unsuspecting investors. After underwriting initial public offerings for both of these companies, First United and its principals maintained control over large blocks of the stock. Thereafter, registered representatives employed by First United used high-pressure sales tactics and a variety of misrepresentations to induce investors to purchase this stock. In addition to misrepresenting the prospects for NMFS and Ashton stock, certain of the respondents falsely told investors that no customer of First United had ever lost money and that the firm would reimburse customers for any losses on NMFS or Ashton. First United filled customers' buy orders with NMFS and Ashton stock that either was held in First United proprietary accounts, or that came from nominee accounts secretly controlled by the principals of First United. The respondents amassed unlawful profits totaling millions of dollars from this activity. Once a customer purchased NMFS or Ashton stock through First United, the respondents employed various illicit methods to prevent that investor from selling the stock. Respondents either bullied investors into abandoning their attempts to sell the stock, or simply failed to execute sell orders. Respondents also effected unauthorized purchases of NMFS and Ashton stock in the accounts of certain First United customers, including on at least one occasion a purchase in the account of a customer who was deceased. The respondents named in the Commission's Order are as follows: Principals at First United Hunter Adams, age 33, of Atlantic Beach, New York, a former de facto control person of First United; Jason A. Cohen, age 48, of Albertson, New York, formerly Chairman of First United; Steven M. Cohen, age 43, of Port Washington, New York, formerly a registered principal of First United; David Hirsch, age 38, of Jericho, New York, a former de facto control person of First United; Jonathan D. Winston, age 35, of Locust Valley, New York, formerly Vice Chairman of First United; First United Trader John J. Gremmo, III, age 44, of West Gilgo Beach, Babylon, New York; First United Registered Representatives James L. Bila, age 30, of Holbrook, New York; Christian W. Blake, age 30, of Brooklyn, New York; Louis R. Facchini, Jr., age 34, of Parkland, Florida; Roberto A. Mangiarano, age 27, of La Jolla, California; Joseph P. Mannino, age 27, of Lindenhurst, New York; David M. Margules, age 44, of Hackensack, New Jersey; James J. Pellizzi, age 33, of Melville, New York; David M. Pesso, age 32, of Bell Harbor, New York; Michael Pugliese, age 30, of New York, New York; Christopher J. Russo, age 34, of Woodmere, New York; Howard I. Weinstein, age 51, Port Washington, New York; and Robert J. Winston, age 33, of New York, New York. The respondents are all charged with violating or causing others to violate Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. The Commission acknowledges the assistance of the U.S. Attorney for the Eastern District of New York, the FBI and the New York State Attorney General in this matter. For further information, contact Wayne M. Carlin at 212- 748-8035 or Robert Knuts at 212-748-8192. # # #OCR text (5,256c · plain-text · 99% conf)
FOR IMMEDIATE RELEASE 2001-25 SEC, U.S. ATTORNEY, FBI, NY ATTORNEY GENERAL ANNOUNCE CHARGES IN BOILER-ROOM CASE WHICH INCLUDES ALLEGED ASSOCIATES OF ORGANIZED CRIME Washington, DC, March 8, 2001 - The Securities and Exchange Commission today charged 18 individuals in an enforcement action as part of its continuing battle against boiler-room fraud in the market for microcap securities. The Commission's administrative order instituting proceedings (Order) alleges that the respondents conducted a fraudulent scheme while associated with a Long Island broker- dealer, First United Equities Corporation, that is now defunct. The Order alleges that the respondents reaped millions of dollars in illicit profits from the scheme. In a related criminal prosecution, the U.S. Attorney for the Eastern District of New York, the Federal Bureau of Investigation and the New York State Attorney General simultaneously announced the indictment of 20 defendants. The criminal indictments allege that two of the persons charged are associates of the Gambino organized crime family. SEC Director of Enforcement Richard H. Walker said, "Today's charges involve a classic boiler-room operation, carried out by individuals who were willing to tell any lie - no matter how brazen - in order to get their hands on the public's hard-earned money. These cases demonstrate our continuing commitment to rooting out fraud in the microcap market. Finally, for those who would contemplate engaging in this kind of activity, including members of organized crime, the most daunting news about today's action is that it is the result of outstanding coordination among the SEC, the U.S. Attorney for the Eastern District of New York, the FBI and the New York State Attorney General." The Commission's Order alleges as follows: From August 1995 through at least October 1997, operating through First United, the respondents fraudulently marketed the stock of National Medical Financial Services, Inc. ("NMFS") and Ashton Technology Group, Inc. ("Ashton") to unsuspecting investors. After underwriting initial public offerings for both of these companies, First United and its principals maintained control over large blocks of the stock. Thereafter, registered representatives employed by First United used high-pressure sales tactics and a variety of misrepresentations to induce investors to purchase this stock. In addition to misrepresenting the prospects for NMFS and Ashton stock, certain of the respondents falsely told investors that no customer of First United had ever lost money and that the firm would reimburse customers for any losses on NMFS or Ashton. First United filled customers' buy orders with NMFS and Ashton stock that either was held in First United proprietary accounts, or that came from nominee accounts secretly controlled by the principals of First United. The respondents amassed unlawful profits totaling millions of dollars from this activity. Once a customer purchased NMFS or Ashton stock through First United, the respondents employed various illicit methods to prevent that investor from selling the stock. Respondents either bullied investors into abandoning their attempts to sell the stock, or simply failed to execute sell orders. Respondents also effected unauthorized purchases of NMFS and Ashton stock in the accounts of certain First United customers, including on at least one occasion a purchase in the account of a customer who was deceased. The respondents named in the Commission's Order are as follows: Principals at First United Hunter Adams, age 33, of Atlantic Beach, New York, a former de facto control person of First United; Jason A. Cohen, age 48, of Albertson, New York, formerly Chairman of First United; Steven M. Cohen, age 43, of Port Washington, New York, formerly a registered principal of First United; David Hirsch, age 38, of Jericho, New York, a former de facto control person of First United; Jonathan D. Winston, age 35, of Locust Valley, New York, formerly Vice Chairman of First United; First United Trader John J. Gremmo, III, age 44, of West Gilgo Beach, Babylon, New York; First United Registered Representatives James L. Bila, age 30, of Holbrook, New York; Christian W. Blake, age 30, of Brooklyn, New York; Louis R. Facchini, Jr., age 34, of Parkland, Florida; Roberto A. Mangiarano, age 27, of La Jolla, California; Joseph P. Mannino, age 27, of Lindenhurst, New York; David M. Margules, age 44, of Hackensack, New Jersey; James J. Pellizzi, age 33, of Melville, New York; David M. Pesso, age 32, of Bell Harbor, New York; Michael Pugliese, age 30, of New York, New York; Christopher J. Russo, age 34, of Woodmere, New York; Howard I. Weinstein, age 51, Port Washington, New York; and Robert J. Winston, age 33, of New York, New York. The respondents are all charged with violating or causing others to violate Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. The Commission acknowledges the assistance of the U.S. Attorney for the Eastern District of New York, the FBI and the New York State Attorney General in this matter. For further information, contact Wayne M. Carlin at 212- 748-8035 or Robert Knuts at 212-748-8192. # # #