Nine Brokers Charged in $131M Stock Scam

Nine financial professionals are charged with scamming investors in a $131M financial fraud involving Forcefield Energy Inc. According to authorities, from 12/09 to 4/15 the defendants, which include brokers, stock promoters, and investor relations officials, manipulated the LED lighting provider’s stock by trading it in secret, using undisclosed accounts, hiding kickbacks that were paid to brokers and stock promoters to tout the stock, and inflating the volume of trades to make it seem as if there was a real demand for the stock. Also this week the U.S. Securities and Exchange Commission filed civil fraud charges against the nine defendants and former ForceField executive chairman Richard St. Julien who was arrested last year on charges accusing him of running scams to inflate his company’s stock price.

Speaking about the criminal case, U.S. Attorney Robert Capers said that the defendants took a business that didn’t have much revenue and “essentially no business” and fooled their clients and the market into thinking that it was worth hundreds of millions of dollars. The nine defendant are charged with securities fraud, and conspiracies to commit wire fraud, securities fraud, and money laundering. They are former Stratton Oakmont Inc. broker Christopher Castaldo, unregistered broker Louis F. Petrossi, Mitchell & Sullivan Capital LLC managing partner of investor relations Jared Mitchell, registered representatives Richard L. Brown, Naveed A. Khan, Gerald J. Cocuzzo, Maroof Miyana, and Pranav V. Patel, and Kenai Capital Management LLC head Herschel Knippa III.

Prosecutors say that Knippa secured over $1.9M in private placements from at least 10 investors and promoted ForceField as an investment when appearing as a market commentator on Fox Business Network and Business News Network. Meantime, Castaldo purportedly solicited over $600K in ForceField stock from over 40 investors.

If you think your investment losses are due to broker fraud, contact Shepherd Smith Edwards and Kantas, LTD LLP today.

Read the SEC Complaint (PDF)

Feds nab nine suspected fraudsters in $131 million stock manipulation scheme, including Jordan Belfort underling, NY Daily News, May 3, 2016

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