New York Paralegal Blog

Preet Bharara, the United States Attorney for the Southern District of New York, and Mary Galligan, the Acting Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (FBI), announced today the arrest of Robert Kelly, the chief executive officer of Wwebnet Inc. (Wwebnet), a software development company, on securities and wire fraud charges. Kelly allegedly diverted for his own personal use over $2 million in investor proceeds that was intended for the development of a software program capable of transmitting music, videos, and movies over the Internet. He used the money to trade options, to pay his personal income taxes, and for other purposes unrelated to software development. Kelly was arrested yesterday afternoon in Raleigh, North Carolina, and was presented there in federal court this morning.

Three principals of a company that imported paving stones from Australia were charged with conspiracy, securities fraud, and money laundering in an indictment unsealed today in federal court in Central Islip, New York. The charges against Eric Aronson, Vincent Buonauro, and Fredric Aaron arose from their solicitation of investor money for, and their operation of, Permapave Industries and Permapave USA (“Permapave”). Permapave marketed porous paving stones in the United States that were manufactured in Australia.

Manhattan District Attorney Cyrus R. Vance, Jr., today announced the guilty plea of CHRISTOPHER VULLIEZ, 37, for running a scheme that resulted in thefts totaling in excess of $2 million from approximately a dozen victims. VULLIEZ pleaded guilty to seven counts of Grand Larceny in the Second Degree, six counts of Grand Larceny in the Third Degree, one count of Scheme to Defraud in the First Degree, and ten counts of felony violations of the Martin Act (the New York State securities fraud law). VULLIEZ will also forfeit approximately $2.2 million, which will be distributed to victims.

PREET BHARARA, the United States Attorney for the Southern District of New York, announced that ANTHONY CUTI, the former chief executive officer (“CEO”), chairman of the board, and president of Duane Reade, Inc. (“Duane Reade”) was sentenced today in Manhattan federal court to three years in prison for perpetrating a scheme to falsely inflate the income and reduce the expenses that Duane Reade reported. CUTI was convicted in June 2010 after a two-month jury trial. U.S. District Judge DEBORAH A. BATTS imposed today’s sentence.

Preet Bharara, the United States Attorney for the Southern District of New York, announced that Daniel A. Corbin, a day trader from Miami Beach, Florida, pled guilty today to conspiracy and securities fraud charges arising from a scheme in which he obtained and traded on material, non-public information. CORBIN pled guilty before U.S. Magistrate Judge HENRY B. PITMAN. Manhattan U.S. Attorney Preet Bharara said: “Daniel Corbin thought he had a golden source for inside tips and traded on the information he received with impunity. He played a high risk and high stakes game, and it caught up with him in the end.” According to the information, a superseding indictment, previously filed complaints, and statements made during today’s guilty plea proceeding: From February 2005 through September 2008, CORBIN obtained material, non-public information (“Inside Information”) from JAMIL BOUCHAREB. BOUCHAREB obtained the Inside Information about several mergers and acquisitions of public compa...

Earlier today, in federal court in Brooklyn, George Speranza, the operator of a marketing company that created and published Internet websites, pleaded guilty to a perjury charge and admitted that he gave false testimony before the U.S. Securities and Exchange Commission (SEC) in connection with the SEC’s investigation of Spongetech Delivery Systems, Inc. When sentenced by United States District Judge Dora L. Irizarry, Speranza faces a maximum sentence of five years in prison. The guilty plea was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York. As alleged in a superseding indictment and other court filings by the government, between approximately January 2007 and May 2010, the chief officers of Spongetech, together with others, executed a fraudulent scheme to (a) publicly report false and materially overstated sales figures to create artificial demand for, and increase the share price and trading volume of, Spongetech common stock; (b) iss...

WASHINGTON – Three stock promoters have been indicted for their roles in a stock manipulation scheme that defrauded investors, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Chief Postal Inspector Guy Cottrell of the U.S. Postal Inspection Service (USPIS) and James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office. Timothy Barham Jr., 43, of Henderson, Tenn.; Nathan Montgomery, 30, of Henderson, Nev.; and Ryan Reynolds, 39, of Dallas, were each charged in a superseding indictment filed on April 28, 2011, in U.S. District Court for the Southern District of Florida. On April 29, 2011, Barham was arrested in Henderson, Tenn., and Montgomery was arrested in Las Vegas. Reynolds, who was in custody on previously filed civil charges, made his initial appearance today in U.S. District Court in Dallas. The superseding indictment charges Barham, Montgomery and...

PREET BHARARA, the United States Attorney for the Southern District of New York, announced that DONALD LONGUEUIL pled guilty today to conspiracy and securities fraud charges arising from an insider trading scheme in which he obtained and traded on material, nonpublic information. LONGUEUIL participated in this scheme while working as a research analyst and a portfolio manager at two different hedge funds. During his plea allocution and in his plea agreement, LONGUEUIL admitted that, upon reading of the Government's investigation in the press, he destroyed and disposed of a flash drive and hard drives relevant to his securities fraud conviction. LONGUEUIL pled guilty before U.S. District Judge JED S. RAKOFF. Manhattan U.S. Attorney PREET BHARARA stated: "Less than three months after being arrested on insider trading charges, Donald Longueuil has pled guilty. He is the latest example of a privileged professional who thought he was above the law and found out the hard way he su...

Washington, D.C., April 5, 2011 – The Securities and Exchange Commission today announced that Wells Fargo Securities LLC agreed to settle charges that Wachovia Capital Markets LLC engaged in misconduct in the sale of two collateralized debt obligations (CDOs) tied to the performance of residential mortgage-backed securities as the U.S. housing market was beginning to show signs of distress in late 2006 and early 2007. The SEC’s order found that Wachovia Capital Markets violated the securities laws in two respects. First, Wachovia Capital Markets charged undisclosed excessive markups in the sale of certain preferred shares or equity of a CDO called Grand Avenue II to the Zuni Indian Tribe and an individual investor. As detailed in the order, Wachovia Capital Markets marked down $5.5 million of equity to 52.7 cents on the dollar after the deal closed and it was unable to find a buyer. Months later, the Zuni Indian Tribe and the individual investor paid 90 and 95 cents on the dollar. Un...

Manhattan District Attorney Cyrus R. Vance, Jr., today announced the indictment of CARY BUNIN, 69, for a securities fraud scheme that resulted in the theft of more than $3.5 million from at least 16 victims. BUNIN is the Chief Executive Officer of INTERNATIONAL BARCODE CORPORATION, which also operates under the name of BTI. BUNIN and his corporation are charged in the indictment with Grand Larceny in the Second Degree, Scheme to Defraud in the First Degree, and violations of the Martin Act, New York State's securities fraud statute. BUNIN, along with his wholly-owned financial consulting company, ANDOVER CONSULTING SERVICES, LTD, were also indicted on charges of Offering a False Instrument for Filing in the First Degree and violating the New York State Tax code.[1] “CARY BUNIN and his corporation are charged with stealing millions of dollars from trusting investors, fueling the type of widespread mistrust that adversely affects our financial markets,” said District Attorney Vance...

WASHINGTON—A Food and Drug Administration (FDA) chemist and his son were arrested in Maryland today in connection with an alleged $2.27 million insider trading scheme, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney for the District of Maryland Rod J. Rosenstein; James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office; and Elton Malone, Special Agent in Charge, Department of Health and Human Services, Office of the Inspector General (HHS-OIG), Office of Investigations, Specials Investigations Branch. A criminal complaint unsealed today in the District of Maryland charges Cheng Yi Liang, 57, and his son, Andrew Liang, 25, both residents of Gaithersburg, Md., with conspiracy to commit securities and wire fraud, securities fraud, and wire fraud relating to their trading in the securities of five companies: Clinical Data Inc., Vanda Pharmaceuticals Inc., Progenics Pharmaceuticals Inc., Middlebrook Pharmaceuticals I...

WASHINGTON – Six individuals, including a securities attorney, were charged in an indictment unsealed today with defrauding investors in a stock manipulation scheme from 2003 to 2008, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, Deputy Chief Inspector Daniel S. Cortez for the U.S. Postal Inspection Service (USPIS) and James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office. In a related action, the U.S. Securities and Exchange Commission (SEC) filed a civil complaint in the Southern District of Florida, Miami division. The defendants charged in the indictment returned in the Southern District of Florida are: Jonathan Randall Curshen, 46, of Sarasota, Fla.; Michael Simon Krome, 49, a securities attorney from Long Island, N.Y.; Ronald Salazar Morales, aka “Ronny Salazar,” 39, of Costa Rica; Robert Lloyd Weidenbaum, 44, of Miami; and Eric Ariav Weinbaum, 37, and Izhack Zigdon, 47, of Israel. Curshen was arrested this morning...

PREET BHARARA, the United States Attorney for the Southern District of New York, announced that DANIELLE CHIESI pled guilty today to three counts of conspiracy to commit securities fraud arising from an insider trading scheme. During the course of the conspiracies to which CHIESI pled guilty, the hedge fund where she worked gained profits of at least $1.7 million from trades based on material non-public information that she received from others who misappropriated it. CHIESI pled guilty before U.S. District Judge RICHARD J. HOLWELL. Manhattan U.S. Attorney PREET BHARARA said: "Today, Danielle Chiesi admitted to exploiting her access to valuable, non-public information to reap $1.7 million in illegal gains. By sharing and conspiring to trade on inside information, Chiesi compromised the companies she sold out and distorted the market for their stocks. Today's plea should send yet another strong message that we have zero tolerance for privileged professionals who game the syst...

Schwab Touted Fixed Income Expertise Even Though Brokers Were Not Trained And Did Not Understand Auction Rate Securities NEW YORK, NY (August 17, 2009) - Attorney General Andrew M. Cuomo today filed a lawsuit against Charles Schwab & Co. (“Schwab”) charging the discount brokerage firm for falsely representing auction rate securities as liquid, short-term investments without discussing the risks. These representations gave investors a false sense of security that their investments would always be liquid when auction rate securities, in fact, faced significant, inherent liquidity risks. Auction rate securities are long-term bonds that rely on the successful operation of a periodic auction for short-term liquidity. Schwab brokers repeatedly and persistently misrepresented the liquidity risks in auction rate securities, comparing them to money market funds or certificates of deposit, selling auction rates as suitable for cash management purposes, or otherwise telling customers the...

Attorney General Andrew M. Cuomo today announced a settlement with TD Ameritrade, Inc. (“TD Ameritrade”), under which the company has agreed to return $456 million to investors across New York State and the nation holding illiquid auction-rate securities. Attorney General Cuomo also announced imminent legal action against Charles Schwab & Co. (“Schwab”) for deceptively selling auction-rate securities as safe, liquid, short-term investments that were similar to money market instruments. These are Attorney General Cuomo’s latest steps in his ongoing effort to restore liquidity to investors caught in the collapse of the auction-rate securities market. “I commend TD Ameritrade for working with regulators to restore investor confidence, and for joining what has become the single largest consumer recovery in history,”said Attorney General Cuomo. “But given a record replete with misrepresentations, it is disturbing that Charles Schwab, who had been holding itself out as an industry expert...

NEW YORK, NY (August 15, 2008) - Attorney General Andrew M. Cuomo today announced another agreement to provide liquidity to consumers who purchased auction rate securities. Under the latest agreement, Wachovia Securities, LLC and Wachovia Capital Markets, LLC (collectively, “Wachovia”) will return over $8.5 billion to investors across New York State and the nation. The agreement settles allegations that Wachovia made misrepresentations in its marketing and sales of auction rate securities. Wachovia marketed and sold auction rate securities as safe, cash-equivalent products, when in fact they faced increasing liquidity risk. Within the past eight days, Cuomo has signed agreements restoring nearly $35 billion of liquidity to thousands of investors nationwide. Under Cuomo’s settlement, Wachovia has agreed to buy back, no later than November 28, 2008, all illiquid auction rate securities from all Wachovia retail customers, charities, and small businesses. Wachovia will also pay damages to ...