A Colorado lawyer pleaded guilty Tuesday to conspiring with a half-dozen others in the $20 million, Connecticut-based stock swindle that sent former Hartford attorney and City Councilor Corey Brinson to prison a year ago.
Diane D. Dalmy, a suburban Denver lawyer who has been in trouble with government securities regulators previously, is the seventh discredited lawyer or broker arrested in a stock manipulation scheme that, by conservative estimate, has ensnared 12,000 victims, many of whom are retirees who lost their savings.
She appeared in U.S. District Court Tuesday and pleaded guilty to a charge of conspiracy to commit fraud.
Dalmy, as with Brinson, was accused of signing phony attorney opinion letters that falsely certified the legitimacy of what are known as pump-and-dump, penny-stock transactions. She previously was barred from securities work by the federal Securities and Exchange Commission for issuing the same sort of letter in an earlier stock offering and profiting from the resulting fraud.
Dalmy, 63, also admitted in court Tuesday that she allowed one of the other conspirators to use their law firm trust account to move money.
In pump-and-dump schemes, conspirators acquire blocks of stock in worthless shell companies and pitch the companies to investors as being on the cusp of a commercial breakthrough, often in fields such as rare earth mining or software development.
The stock manipulators used rigged stock trades, phony announcements about business developments — often delivered to millions of inboxes by unscrupulous Internet spammers — and other fraudulent means to pump up share prices of the stock, much of which they control.
As share values, which trade for pennies, rise rapidly, salesmen pitch the stocks to unsophisticated investors. As values peak, the conspirators dump, or sell, their stock, causing the value to collapse, and leaving unwitting investors with worthless shares.
Dalmy faces up to five years in prison, a $40 million fine and an order to make $10.7 million in restitution. She is scheduled to be sentenced on May 2.
Government records and disclosures in court identify Christian Meissenn, also known as Christian Nigohossian, of Suffield as a leader of the scheme. Meissenn, 44, is associated with a dozen or so businesses and properties across the state. He pleaded guilty to conspiracy and tax evasion charges in 2016 and has been cooperating with federal investigators ever since.
Meissenn and his lawyer have declined to discuss his business ventures.
The Financial Industry Regulatory Authority, a regulatory agency funded by the securities industry, reports that, over the decade before moving to Connecticut, Meissenn worked for a half-dozen New York-area brokerage businesses, four of which were expelled by FINRA for violating industry rules.
Meissenn was barred personally from the industry by FINRA as well as the by state banking department, before the date of many of the offenses with which he is now charged.
Authorities have so far charged people from Florida, New York, Colorado and Connecticut for conspiring in the stock fraud — for setting up fraudulent businesses and trades or selling worthless stock to victims.
Two have been sentenced to prison sor far. Brinson, who said he was tricked by Meissenn into working for the conspiracy, is serving three years. A stock salesman from Florida, who had previously been charged in a different stock swindle, was sentenced to seven years.
The others are awaiting sentencing and the investigation is continuing.
Department of Justice U.S. Attorney’s Office District of Connecticut
FOR IMMEDIATE RELEASE
Tuesday, May 15, 2010
Colorado Attorney Involved in Stock "Pump and Dump" Scheme Sentenced to 3 Years in Federal Prison
John H. Durham, United States Attorney for the District of Connecticut, announced that DIANE DALMY, 63, of Denver, Colorado, was sentenced today by U.S. District Judge Jeffrey A. Meyer in New Haven to 36 months of imprisonment, followed by three years of supervised release, for her role in a securities fraud scheme.
According to court documents and statements made in court, DALMY, an attorney, performed securities-related legal work on behalf of several public companies, including Mammoth Energy Group, Inc., a company that later became known as Strategic Asset Leasing Inc.; and Fox Petroleum, Inc. (the “Subject Companies”). Between approximately January 2009 and July 2016, DALMY conspired with others, including William Lieberman, of Boca Raton, Florida, and Christian Meissenn, of Suffield, Connecticut, to defraud investors through a stock “pump and dump” scheme. During the course of the conspiracy, DALMY acted largely at Lieberman’s direction.
As part of the scheme, Lieberman, Meissenn and others induced investors to purchase securities by making false and misleading representations in calls, emails and press releases concerning the securities and the issuing companies, thereby causing the price of those securities to become falsely inflated. The issuing companies, which were essentially shell companies with virtually no legitimate business activities, were controlled by Lieberman and others. After the hype led to artificially-inflated share prices for the company’s stock, Lieberman, Meissenn and others sold their own large positions in the stock at a profit. They then ended the promotion and allowed the share price to plummet, leaving investors holding worthless and unsalable stock. As a result, victim investors lost millions of dollars.
DALMY participated in the conspiracy by writing, and permitting Lieberman to write in her name, fraudulent opinion letters that were used to unrestrict the co-conspirators’ stock so that the stock could be freely traded on the open market (without having to register the stock with the Securities and Exchange Commission). The opinion letters were materially false in various respects, including as to whether the issuing company was a shell company, whether the shareholder was an affiliate of the issuer, whether the transactions described in the letters actually had occurred, and whether DALMY had performed the due diligence that she described in the letters. DALMY also ghost-wrote similarly fraudulent opinion letters for the Subject Companies in another Colorado attorney’s name and permitted Lieberman to do so. These included “adequacy” letters that were posted on a website maintained by an electronic securities marketplace. In general, an “adequacy” letter, which is intended to be relied upon by investors in making investment decisions, accompanies a public filing by an issuer and states that, after appropriate investigation, it is the authoring attorney’s opinion that adequate current information about the issuer is publicly available for investors to review.
At times, DALMY provided the co-conspirators with capital by advancing money from her Lawyer Trust Account (“IOLTA”). These funds belonged to other clients of DALMY’s law practice who did not know that their funds had been advanced to the co-conspirators by DALMY.
Finally, between February 2015 and July 2016, DALMY laundered a portion of the proceeds of the scheme on behalf of the co-conspirators. DALMY helped Lieberman to incorporate and open bank accounts for a private company, Queen Asia Pacific Ltd. (“Queen Asia”), which was controlled by Lieberman. These bank accounts were used to receive proceeds of the scheme from a brokerage account in Queen Asia’s name. DALMY periodically received money in Queen Asia’s bank accounts, transferred those funds to her IOLTA, and then transferred the funds again to Lieberman, Meissenn, and their network of stock promoters. In total, DALMY laundered approximately $825,000 on behalf of the co-conspirators through Queen Asia’s bank accounts and her IOLTA.
DALMY’s total gain from her participation in this conspiracy, and related legal work for the Subject Companies, was approximately $30,000.
Judge Meyer ordered DALMY to pay $2 million in restitution.
On February 6, 2018, DALMY pleaded guilty to one count of conspiracy.
Lieberman, Meissenn and four other individuals also pleaded guilty to various offenses stemming from this scheme.
On January 20, 2017, Corey Brinson, a Hartford-based attorney, was sentenced to 36 months of imprisonment and, on September 27, 2017, Damian Delgado, also known as “Michael Neumann,” of Orlando, Florida, was sentenced to 84 months of imprisonment. On May 7, 2018, Brian Ferraioli, of Sayville, N.Y., and Thomas Heaphy, Jr., of East Moriches, N.Y., were each sentenced to 72 months of imprisonment for their roles in this scheme and an unrelated investment fraud scheme. Meissenn and Lieberman await sentencing.
DALMY, who is released on a $100,000 bond, was ordered to report to prison on June 14, 2018.
This investigation is being conducted by the Federal Bureau of Investigation and Internal Revenue Service – Criminal Investigation Division, with assistance from the Connecticut Department of Banking and the Hartford and Stamford Police Departments. This case is being prosecuted by Assistant U.S. Attorney Avi M. Perry.
Citizens with information that may be helpful to this ongoing investigation, or who believe they may have been victimized by this scheme, are encouraged to contact the FBI at (203) 777-6311.
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