Two registered reps with independent broker-dealers were arrested Thursday along with the ex-husband of a star from the Sopranos and four other individuals on securities fraud charges in connection with market manipulation of penny stocks, according to the U.S. Attorney's office.
One broker, Craig L. Josephberg, 41, is registered with Meyers Associates. The other broker, Matthew A. Bell, 47, is not currently registered with a broker-dealer but most recently was affiliated for two months in 2013 with Securities America Inc. and before that, from 2009 to 2013, with independent broker-dealer WFG Investments Inc.
Also charged was Abraxas “AJ” Discala, the CEO of OmniView Capital Advisors LLC. Mr. Discala was married in 2003 to Sopranos actress Jamie-Lynn Sigler. The couple separated two years later and then divorced. According to its website, OmniView is a merchant bank. It is not a registered investment adviser with the Securities and Exchange Commission or a registered broker-dealer.
Between October 2012 and July 2014, the defendants, along with others, agreed to defraud investors and potential investors in four publicly traded companies: CodeSmart Holdings Inc., Cubed Inc., StarStream Entertainment Inc. and The Staffing Group Ltd., according to the indictment. They used false and misleading press releases and filing with the Securities and Exchange Commission to artificially control the price and volume of shares in those companies, in what is known as a “pump and dump” stock scheme.
The defendants also fraudulently concealed their ownership interest, engineered price movements and trading volume in the stocks and made unauthorized purchases of stock in accounts of unwitting clients.
An attorney for Mr. Discala, Joseph Tacopina, said "anyone who knows A.J. Is shocked by these allegations. And that is exactly what they are, merely allegations. He will vigorously defend these charges."
Bruce Meyers, CEO of Meyers Associates, said he had no comment about Mr. Josephberg.
Securities America spokeswoman Janine Wertheim, said Mr. Bell “was never approved by Securities America. While (the Financial Industry Regulatory Authority Inc.) approved his transfer, we obtained additional information that resulted in his termination. We do not officially make advisers effective until we hear back from Finra and the state. His home state of Texas did not approve him.”
Wilson Williams, CEO of WFG Investments, said that he declined to comment about Mr. Bell.
The defendants “took companies with essentially no assets or activity and deceived the market into believing they were worth hundreds of millions of dollars through a dizzying round of insider and unauthorized trades,” said Loretta E. Lynch, U.S. Attorney for the eastern district of New York, in a statement. “When the defendants stopped their game of musical shares it was the unsuspecting investors who were left holding the bag.”
The four other defendants charged in the scheme were: Marc Wexler, 52, managing director of OmniView; Ira Shapiro, 53, CEO of CodeSmart Holdings Inc., one of the companies with shares manipulated; Kyleen Cane, 59, an attorney; and Victor Azrak, 32, the vice president and director of the publicly traded Excel Corp.
The 10-count indictment includes charges of securities fraud, wire fraud, conspiracy to commit securities fraud, mail fraud and wire fraud in connection with the manipulation of the companies.