Twelve Indicted in N.Y. for Mob-Connected Stock Fraud Operation By Dan Morrison
New York, Aug. 21 (Bloomberg) -- Twelve people, including alleged organized crime figures, were charged with participating in a ``boiler room'' stock fraud operation that cost investors more than $40 million, according to a federal indictment.
The defendants were charged with using Euro-Atlantic Securities, a now-defunct brokerage based in Boca Raton, Florida, to manipulate the selling price of stock in three companies controlled by Israeli businessman Ilan Arbel, according to the indictment.
Several people held hidden interests in the companies, including William ``Wild Bill'' Cutolo, an alleged captain in New York's Colombo crime family, and alleged Colombo associates Dominick ``Black Dom'' Dionisio and Enrico Locasio, according to the indictment filed in U.S. District Court in Brooklyn.
Between January 1996 and April 1997, Arbel allegedly transferred $500,000 to a Euro-Atlantic office located at 30 Broad Street in lower Manhattan.
In exchange, the indictment said, Euro-Atlantic's principals manipulated the market price of the three securities. Brokers artificially drove up the price of the stocks by making false representations to customers, the indictment said.
In addition, ``Dionisio and Locasio used violence and threats of violence, reinforced by their association with the Colombo Family, as a means of disciplining the stockbrokers and furthering the manipulation of stock prices,'' according to the indictment.
The three companies whose securities allegedly were manipulated were Multimedia Concepts International Inc., which manufactures knit tops for department stores such as K-mart, movie producer Hollywood Productions and U.S. Wireless, which provides wireless information services.
Between January 1996 and May 1997, the price of Multimedia Concepts International reached $9.62 a share before dropping to 37 cents per share, the indictment said.
Shares in Hollywood Productions traded as high as $11.50 during the alleged conspiracy before falling to $2.43, the indictment said. Shares of U.S. Wireless reached $6.75 before falling to $1.50, the indictment said.
Shares in Multimedia closed at 22 cents per share. Hollywood Production, now traded at Shopnet.com Inc., closed at $1 per share. Trading of U.S. Wireless was halted by NASDAQ in May.
The indictment also charged several of the defendants with laundering millions of dollars through U.S. and off-shore bank accounts.
Among those charged in the indictment were David Melillo, who was the sole listed principal in Euro-Atlantic's Manhattan office; Louis Catapano, a manager in that office; Michael Kelly, Euro- Atlantic's head trader in New York; Euro-Atlantic representatives Glen DeLuca, Neil Grippa, Brett Hamburger, George Matarazzo, and Steven O'Donnell; and Enrico Montaperto, Sr., and Steven DiBenedetto, who allegedly assisted in laundering the profits.
Cutolo, a municipal union official, was last seen on May 26, 1999 in the Bay Ridge section of Brooklyn. Law enforcement officials have said he might have been killed by other members of the Colombo family.
Cutolo's son, William Cutolo Jr., became a federal informant to avenge his father's death, leading to the arrest this January of Alphonse ``Allie Boy'' Persico, the alleged acting boss of the Colombo family, the New York Daily News has reported.