Judge Recommends $5.7M Penalty In Corporate Hijacking Suit
"New York (November 25, 2014, 5:33 PM EST) -- A New York federal magistrate judge is recommending new civil penalties of $5.72 million against two men who prosecutors have said helped perpetrate “corporate hijackings” by fabricating business documents used in an international investment fraud and money laundering scheme.
U.S. Magistrate Judge Debra Freeman recommended that U.S. District Judge Denise Cote impose equal punishments of $2.86 million on Irwin Boock and Roger Shoss for their involvement in the “Texas phase” of a scam that allegedly involved selling worthless stock of dormant public companies. The Texas phase was the segment in which fake documents were allegedly created.
“The SEC has now made plain that it is seeking an award of third-tier penalties as against both Shoss and Boock, based on each of the 22 violations at issue in this phase of the case … Given the high level of involvement of Shoss and Boock with respect to all of the Texas-phase hijackings, as described by the SEC in its supplemental proposed findings, I recommend that this request be granted,” Judge Freeman said.
“In sum, I recommend that the court impose civil penalties in the amount of $2,860,000 against Shoss, and in an equal amount, separately, against Boock, in connection with the Texas phase of the case,” the judge said.
Judge Freeman recommended Tier III penalties for Shoss, and Judge Cote had previously recommended Tier III penalties for Boock.
Shoss was sentenced in August 2012 to 18 months in prison after a jury convicted him of wire fraud conspiracy.
The amended civil complaint filed in October 2012 accused the two of running the scheme along with three others. It says Boock recruited Shoss to help handle the paperwork required, including false documents sent to secretaries of state, the Committee on Uniform Securities Identification Procedures service, transfer agents and Nasdaq. Shoss was a middleman for Boock in arranging the sale of “hijacked shell companies” to buyers, the amended complaint says. There were at least 22 such hijackings, it says.
In April, attorney Lawrence S. Hartman was sentenced in Tampa, Fla., to 10 years in federal prison and ordered to pay $42.5 million for his role, the Department of Justice said.
The entirety of the scheme — not all of which is alleged to have involved Boock and Shoss — purportedly involved a plot in which Hartman and others hijacked dormant publicly traded companies in the United States and then sold worthless stock to the victim investors, mostly in the U.K., through the use of high-pressure and misleading sales techniques employed by boiler room telemarketers, who were based mostly in Spain.
Hartman, 48, was the last of the conspiracy's ringleaders to be sentenced, ending a lengthy and far-reaching investigation into the scheme, which saw victim investors wire more than $127 million to bank accounts in Florida for worthless stock, according to the DOJ.
The case is Securities and Exchange Commission v. Irwin Boock et al., case number 1:09-cv-08261, in the U.S. District Court for the Southern District of New York." -quoted.
