The fraud and conspiracy case against recidivist fraudster Regis L. Possino and 10 others charged in connection with a multimillion-dollar “pump-and-dump” scheme appears to be nearing an end — in almost total secrecy.
Most of the documents filed in Possino’s case over the past two years were sealed by the judge, at the request of federal prosecutors or Possino’s attorney. But the docket shows that on Monday, prosecutors filed sentencing exhibits and a proposed restitution order.
That suggests that Possino — featured in several Sharesleuth stories — has agreed to a plea deal or is close to one. Filings in a separate action showed that he already forfeited his house in Pacific Palisades, Calif., which was to be sold for a minimum of $2.5 million.
The U.S. Attorney’s office in Los Angeles alleged in 2013 that Possino and his associates collected at least $18 million through “pump-and-dump” schemes involving three public companies.
The indictment said they manipulated the share prices of the companies, issued false press releases to generate investor interest, then dumped their own stock on an unsuspecting public. The companies used as vehicles were Sports Endurance Inc. (OTC: SENZ), FrogAds Inc. (formerly OTC: FROG), and Empire Post Media Inc. (OTC: EMPM).
A spokesman for the U.S. Attorney’s office in Los Angeles told Sharesleuth last year that he did not expect any of the cases against the defendants to come to trial.
A grand jury originally indicted 15 people, four of whom had appeared in previous Sharesleuth investigations. It alleged that they participated in two overlapping stock-manipulation rings that netted more than $30 million.
The defendants included Possino, who has convictions for drug dealing and fraud; Sherman Mazur, a onetime real estate mogul with a prior fraud conviction; and Edon Moyal, the former chief executive of a publicly traded energy-drink company called Who’s Your Daddy Inc. (formerly OTC:WYDY). While at that company, he was charged with aiding drug traffickers and later was sentenced to 18 months in prison.
The FBI said in its press release about the indictments in the pump-and-dump case that its investigation included a series of wiretaps that resulted in the interception of more than 60,000 phone calls and 24,000 text messages.
However, after questions arose about representations the FBI made to a judge to win approval for the wiretaps, the Justice Department withdrew the wiretaps as evidence and dropped the charges against Possino, Mazur and all other defendants in one of the cases.
That left 11 defendants in the case that survived. It is unclear why so many documents in that case have been sealed, or what information the prosecution and defense and trying to protect.
None of the unindicted co-conspirators mentioned in the original indictments have been charged in the nearly four years since the case was made public, nor has anyone else.
Court documents show that seven defendants besides Possino have agreed to plea deals and been sentenced. Prosecutors dismissed charges against two other defendants, saying the loss of the wiretaps would make it hard to win convictions.
The 11th and final defendant, Ivano Angelastri, remains a fugitive.
Who’s Your Daddy was the subject of a Sharesleuth story in 2009. We reported that entities connected with Possino provided early funding to the company in exchange for notes that could be converted to large amounts of stock.
Who’s Your Daddy later became Fitt Highway Products Inc. (formerly OTC: FHWY) and has since morphed into Global Future City Holding Inc. (OTC:FTCY).
Companies tied to Possino and another of the defendants, Grover Henry Colin Nix, also provided to financing to Pure Play Music Ltd. (formerly Pink Sheets: PPML) and got millions of shares of stock.
Sharesleuth detailed those connections in a pair of stories in 2009.
The indictments in the pump-and-dump cases alleged that Possino, Mazur, Moyal and Nix were part of both networks. Authorities said the schemes defrauded more than 20,000 investors in the United States and other countries.
Court records show Nix pleaded guilty to conspiracy and was sentenced to five years in prison. Moyal also pleaded guilty to conspiracy and was sentenced to 15 months.
The indictments (see details here and here ) identified five public companies whose shares were manipulated. The two companies that figured into the case that was dismissed were GenMed Holding Corp. (formerly OTC: GENM) and BioStem U.S. Corp. (formerly OTC: GENM). The SEC later revoked the registrations of both.
It appeared from certain details in the court documents — such as the reported proceeds from the schemes involving those five stocks and the overall profits of the purported “pump-and-dump’’ network — that even more public companies were involved.
The indictments against Possino, Mazur, Moyal, Nix and the other defendants were secretly issued in 2012, as part of ongoing investigations being conducted by the FBI and the Internal Revenue Service’s criminal division.
The FBI said four of the defendants allegedly participated in the schemes while on pretrial release in other criminal cases.
That group included Moyal, who was convicted of conspiracy to distribute marijuana. The indictments in the pump-and-dump cases alleged that Moyal used another of his companies, 8 Sounds Inc., to pay promoters for touting the stocks used in the manipulation schemes. They say he also received a cut of the proceeds.
Another of the defendants, Tarun Mendiratta, pleaded guilty in 2009 to conspiracy and tax evasion charges in connection with a fraud scheme at a public company called American Fire Retardant Corp. According to the indictment, Mendiratta boasted of grossing more than $75 million from stock-manipulation schemes over the past decade.
Court documents show that Mendiratta pleaded guilty to conspiracy in the pump-and-dump case and was sentenced to five years in prison.
Julian Spitari, who was chief executive of FrogAds, also pleaded guilty to conspiracy and was sentenced to 18 months in prison. So did Joseph Scarpello, a disbarred attorney who headed one of the entities used to hide and trade stock.
Mark Harris, a stock promoter, pleaded guilty to conspiracy charges and was sentenced to five months in prison. He already has served his sentence but remains on probation.
William Mackey, another stock promoter, pleaded guilty to conspiracy and was sentenced to the time he had already served while awaiting trial.
Prosecutors asked the government to dismiss the charges against Peter Dunn, who was chief executive of Empire Post Media, and Joseph Davis, the head of a Los Angeles-area public relations firm.
Angelastri, who operated investment companies in Switzerland and Dubai, remains at large.