In May 2016 the Department of Justice (DOJ) filed a five-count indictment in New York against nine defendants including Jared Mitchell, the Managing Partner of Mitchell & Sullivan Capital LLC; Richard Brown, a registered broker with Chelsea Financial Services; Christopher Castaldo, the Chief Executive Officer of Stock Traders Press Inc. and the President of Wall Street Buy Sell Hold Inc.; Gerald Cocuzzo, also known as “Gerry,” a registered broker formerly with Newbridge Securities Corporation; Naveed Khan, also known as “Nick,” a registered broker formerly with Meyers Associates, L.P.; Herschel Knippa III, also known as “Tres,” the owner and Head Trader at Kenai Capital Management LLC; Maroof Miyana, a registered broker formerly with Legend Securities; Pranav Patel, a registered broker formerly with Dawson James Securities; and Louis Petrossi, the founder and Chief Executive Officer of the Wealth Research Institute.
The DOJ’s charges involve the unlawful sale and activity related to stock ForceField Energy Inc. (ForceField), a publicly-traded company under the ticker symbol “FNRG.” The charges include securities fraud, conspiracy to commit securities fraud, wire fraud, money laundering and making a false statement to law enforcement officials in connection with the fraudulent market manipulation of the stock.
The DOJ alleged that the defendants employed of scheme together with dishonest registered brokers to perpetrate an elaborate but fraudulent scheme built on lies, kickbacks and manipulated trading activity. The defendants essentially used a company with no business operations and little revenue and deceived the market and their clients into believing it was worth hundreds of millions of dollars through unauthorized trades and deceptive promotions.
The defendants are alleged to have abused their positions as stock promoters, brokers, or investor relations to push up the stock’s price in a fraudulent fashion costing investors approximately $131 million in losses.
The specific allegations concerning the corrupt brokers focuses on that in October 2014, a ForceField executive hired Mitchell to distribute kickbacks to corrupt registered broker dealers, including Brown, Cocuzzo, Khan, Miyana, and Patel, in exchange for their purchasing of ForceField stock in their clients’ brokerage accounts. In order to pay the brokers bribes, ForceField paid Mitchell a ten-percent commission or a kickback for purchases of ForceField stock generated by the corrupt brokers using offshore entities and bank accounts. Mitchell then is alleged to have shared the ten-percent commission with those who had stuffed their clients’ brokerage accounts with ForceField stock. Investors were never disclosed the secret kickbacks that were received for making the ForceField purchases.
According to the DOJ, Between October 2014 and April 2015, Mitchell and the corrupt brokers conned clients into purchasing more than 425,000 shares of ForceField at a cost of more than $3 million.
In addition, ForceField is alleged to have conducted a series of private placements that raised more than $19.7 million from investors through the paying of ten-percent kickbacks to a group of allegedly corrupt stock promoters, including Castaldo, Knippa, and Petrossi, to promote ForceField. The corrupt promoters are alleged to have duped more than 100 investors into purchasing more than $6.2 million in ForceField stock.
The investment fraud attorneys at Gana Weinstein LLP have experience representing investors in market manipulation schemes who have suffered securities losses due to the mishandling of their accounts. The majority of these claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.