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Dozens Indicted on Fraud Charges

August 15, 2002

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MIAMI (AP) _ At least 52 brokers, stock promoters and corporate officers were indicted on securities fraud, money laundering and other charges, culminating a two-year federal undercover operation, authorities said Thursday.

The investigation exposed fraudulent attempts to sell $200 million in securities from 23 publicly traded U.S. companies to undercover agents, according to the U.S. Attorney’s Office.

No investors lost any money through the scheme, officials said.

Undercover agents posed as mutual-fund traders, pretending to represent investors. The agents told the defendants that they could arrange to buy large blocks of stock at significantly above market prices with millions from their fictitious funds.

According to the indictments, the defendants wanted the fund to buy their securities and agreed to give the agents kickbacks on the stock sales.

The kickbacks generally amounted to several millions and were paid through offshore corporations and bank accounts, officials said.

Some of the defendants, including licensed securities brokers, were also accused of manipulating market prices of the stocks involved in the scheme.

They would specifically agree to arbitrarily increase the market price of a security by recommending and selling shares of the stock to their customers in exchange for a payoff.

Investigators also targeted corporate officers, stock promoters and others, posing as members of a Colombian drug cartel in need of laundering drug money.

Agents reached agreements with some of the defendants to launder nearly $1.4 million in purported drug money in exchange for millions in cash.

The suspects could get five years for each conspiracy charge, 10 years for securities fraud, and 20 years for money laundering.

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