20 Arrested in Stock Fraud Scheme
Two alleged associates of the Gambino crime family were among 20 people indicted by a federal grand jury on charges of running a massive pump-and-dump stock scheme through crooked brokerages that cost investors more than $50 million.
FBI agents fanned out in four states to arrest former managers and brokers for First United Equities Corp., Lexington Capital Corp., and AGS Financial Group. All three firms are defunct.
Between 1994 and 1998, the brokerages employed the classic scheme of buying large blocks of micro-cap stock at low prices, inflating the price with misrepresentations, then selling out to investors at higher prices, authorities said.
The Securities and Exchange Commission also filed civil charges against 18 of those arrested.
Five of those arrested now work for New York securities firm Preston Langley Asset Management Inc., formerly known as Lexington Capital Corp., according to National Assn. of Securities Dealers records.
Start your day right
Sign up for Essential California for news, features and recommendations from the L.A. Times and beyond in your inbox six days a week.
You may occasionally receive promotional content from the Los Angeles Times.
