US investigators uncovered a sweeping stock fraud scheme in Brooklyn yesterday involving 18 individuals, including two with alleged ties to organised crime. The case involved a classic "boiler-room" operation that focused on manipulating the value of two stocks in the lightly regulated US over-the-counter, or penny, stock market.
The accused reaped $50 million (€53.83 million) in profits, according to officials. Two of the individuals facing criminal charges are said to be associates of the Gambino organised crime family.
The scheme dated from 1995 to 1997, and involved a now defunct Long Island broker, First United Equities. Individuals inside the company were charged with using high pressure sales tactics and a range of strategies to induce investors to buy two stocks that First United underwrote during their initial public offerings.
Officials at the Securities and Exchange Commission, the FBI and the US Attorney were involved in the investigation, which covered New York, California and Florida.
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