Feds charge 120 people in big securities fraud crackdown

NEW YORK - Charges were brought Wednesday against 120 people in what federal prosecutors said was the largest securities fraud crackdown in U.S. history. Among those charged were members of all five New York City organized crime families.

The far-reaching fraud stretched over five years, and never before have so many people been charged at once in such a case, U.S. Attorney Mary Jo White said.

Barry W. Mawn, FBI assistant director in charge of the New York office, said the investigation had ''uncovered once again La Cosa Nostra's efforts to infiltrate the securities markets.''

''No matter what market the mob tries to infiltrate, from the fish market to the stock market, the methods it uses are always the same: violence and the threat of violence,'' he said.

Richard Walker, director of enforcement of the U.S. Securities and Exchange Commission, called the crimes ''among the most egregious witnessed in recent years.''

As part of the overall scheme, the Internet was sometimes used to promote stocks and companies were falsely touted as Internet or ''dot.com'' companies to induce investors to capitalize on the Internet boom, prosecutors said.

The charges were detailed in 16 indictments and seven criminal complaints unsealed in U.S. District Court in Manhattan. The schemes allegedly resulted in total losses of more than $50 million.

Among those charged in the mammoth scheme were 10 alleged members and associates of organized crime, a former New York police detective, a West Coast investment adviser, stock promoters, brokers, and officers, directors and other insiders of several companies.

Search warrants were executed at four locations in New York, one in Dallas and one in Salt Lake City, Utah.

The participants allegedly engaged in racketeering, using bribery, extortion and even soliciting murder to further frauds that reaped millions of dollars in illegal profits.

As part of the scheme, members and associates of the Bonanno and Colombo organized crime families allegedly forged alliances with members and associates of the remaining three New York organized crime families.

They then sought to control and infiltrate broker dealers to defraud union pension plans, using traditional ''boiler-room'' operations and Internet techniques to carry out their crimes, prosecutors said in a statement.

When those techniques failed, they resorted to threats, extortion, physical intimidation and the solicitation of murder to further their goals, they said.

The criminal enterprise allegedly tried to manipulate eight publicly traded securities and to defraud investors in connection with three private placements of securities, including one by Ranch 1 Inc., a company that operates fast food restaurants in the New York City area and elsewhere.

In recent years, members of organized crime families have surfaced more frequently in securities fraud investigations.

Authorities have said mobsters have tried to infiltrate Wall Street because they have been forced out of many of their more traditional rackets and because dramatic rises in the value of stocks has convinced them there is easy money to be made.


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