Recent Criminal Securities Fraud Cases: Ex-OmniView Capital Advisers CEO is Convicted in $300M Fraud, Jury Finds Former-Wilmington Trust Executives Guilty, and Jury Finds Two Hedge Fund Professionals and a Health Consultant Guilty in Insider Case

$300M Stock Scam Allegations Lead to Guilty Verdict

A Brooklyn jury has convicted ex-OmniView Capital Advisors LLC CEO Abraxas J. Discala of conspiracy, wire fraud, and securities fraud in a $300M market rigging scam/ pump-and dump fraud.  A second defendant, lawyer Kyleen Cane, was acquitted after initially being charged with conspiracy and securities fraud.

According to prosecutors, the stock fraud occurred from 10/2012 through 7/2014. Trades in four publicly traded companies were reportedly involved.

Meantime, the defendants allegedly enhanced the market valuation of the companies’ stocks to $300M and were responsible for investors losing at least $50M related to the stock of CodeSmart Holdings Inc. alone.

Others implicated in the market rigging fraud include Halcyon Cabot Partners brokers Michael Morris and Craig Josephberg. The latter pleaded guilty to conspiracy, wire fraud, and securities fraud charges earlier this year. At his plea deal hearing, Josephberg admitted to rigging the share price and trading volume of certain companies while registered with broker-dealers Meyers Associates LP and Halcyon Cabot.

Four Ex-Wilmington Trust Executives Are Convicted Over Concealing Troubled Loans 

A federal jury in Delaware has convicted for ex-Wilmington Trust co. executives on all counts, including conspiracy, securities fraud, and issuing false statements to federal regulators. The defendants are ex-Wilmington Trust President Robert Harra, Controller Kevyn Rakowski, CFO David Gibson, and Chief Credit Officer William North. The criminal charges are related to their handling of beleaguered loans on the bank’s books in the wake of the 2008 economic crisis.

Wilmington Trust was issued a $300M federal bailout in 2008 under TARP, which is the Troubled Asset Relief Program. In 2010, the bank raised $273.9M during a sale conducted to pay back the bailout funds. Wilmington Trust told regulators about $10.8M in commercial loans that were 90 days overdue.  Prosecutors, however, contend that instead, $344M in commercial loans and growing losses should have been reported. They accused the defendants of concealing Wilmington Trust’s true financial state.

In November 2010, the losses led to Wilmington Trust’s acquisition by M & T Bank.

Two Deerfield Management Partners Are Among Those Found Guilty in Insider Trading Scheme 

Ted Huber and Rob Olan of Deerfield Management, US Centers for Medicare and Medicaid Services employee Christopher Worrall, and ex-Precipio Health Strategies founder David Blaszczak have been convicted by a federal jury of wire fraud and conversion of government property in an insider trading scheme that prosecutors believe took place from 2009 to 2014. Huber, Olan, and Blaszczak were also convicted of securities fraud. Jury members in a federal court in Manhattan deliberated for four days before rendering their verdict.

According to prosecutors, Worrall told Blaszczak about decisions that were expected at CMS, which is responsible for determining how much healthcare companies will get back from government insurance programs. Blaszczak then shared this information with Olan and Huber. The latter two made money by engaging in trades in companies that would be affected by said information. The companies that they traded in included Varia Medical Systems, Accuray Inc., NxStage Medical Inc., DaVita Healthcare Partners Inc., and Fresenius Medical Care.

In a parallel civil case, the US Securities and Exchange Commission filed charges against  Blaszczak, Worrall, Huber, and analyst Jordan Fogel. The regulator believes over $3.9M in illicit profits was made in the insider trading scam. Fogel already has cooperated with the regulator against the other men and he settled the SEC charges against him.

In August, Deerfield settled related SEC claims and agreed to pay $4.6M. The hedge fund, however, did not deny or admit to wrongdoing when settling.

If you suspect that your investment losses may be due to fraud, contact Shepherd Smith Edwards and Kantas, LTD LLP today and ask to speak with one of our experienced investor lawyers.

Atty Acquitted, CEO Convicted in $300M Stock Fraud Trial, Law360, May 4, 2018

Former Wilmington Trust Officials, Convicted of Fraud, Conspiracy, Time-Standard, May 3, 2018

Four found guilty in insider trading case linked to US Health Agency, Reuters, May 3, 2018

More Blog Posts from SSEK Law Firm:

Goldman Sachs Gives LPL Financial Holdings Clients Access to Securities Lending, Stockbroker Fraud Blog, March 20, 2018

Massachusetts Investigates Wells Fargo Advisers, Stockbroker Fraud Blog, March 16, 2018