85 Indicted in Micro-Cap Stock Scheme

Eighty-five people--some alleged to have mob connections--have been indicted in connection with fraudulent stock schemes that cost thousands of investors $100 million. A three-year investigation found that nine corrupt brokerage firms used high-pressure and misleading sales pitches to pump up the value of “micro-cap” stocks--shares in small companies--so that defendants could dump them at inflated prices, federal prosecutors said. One scheme was allegedly led by Dominick Dionisio and Enrico Locasio, identified as associates of the Colombo organized crime family. They were accused of using registered and unregistered brokers to create artificial demand for worthless stock.

Prosecutors say they placed and supervised crews of brokers and cold-callers at branch offices of four brokerages to carry out the scheme, including Amerivet Dymally Securities of Inglewood. Elton Johnson, Amerivet’s president, said no broker or principal at Amerivet was involved in any stock manipulation involving the companies listed in the indictment. Amerivet had temporarily ceased doing business at the time of the alleged wrongdoing because its clearing firm had collapsed, Johnson said. When it reopened, the firm’s principals terminated all but one of its New York brokers, he said, which “effectively put an end to any attempts by unscrupulous stock promoters to use [Amerivet] as the fall guy for their operations.” The defendants, who were arraigned in federal court in Brooklyn, N.Y., were charged with such offenses as stock fraud and money laundering. Money laundering, the most serious of the offenses, carries a sentence of up to 20 years in prison.