Fed uncovers massive securities fraud Aug 16 12:24 AP
At least 52 brokers, stock promoters and corporate officers have been indicted on securities fraud, money laundering and other charges, culminating a two-year federal undercover operation in the United States, authorities said.
The multi-agency undercover operation, dubbed "Bermuda Short", exposed fraudulent attempts to sell $US200 million ($369 million) in securities from 23 publicly traded US companies, the US Attorney's Office in Miami, Florida announced on Friday.
Undercover agents posed as mutual-fund traders, pretending to represent investors. The agents told the defendants that they could arrange to buy, with millions from their fictitious funds, large blocks of stock at prices significantly above the market price.
According to the indictments, the defendants wanted the fund to buy their securities and agreed to give the agents kickbacks on the stock sales.
The kickbacks generally amounted to several millions and were paid through offshore corporations and bank accounts, officials said.
Some of the defendants, including licensed securities brokers, were also accused of manipulating market prices of the stocks involved in the scheme.
They would agree to arbitrarily increase the market price of a security by recommending and selling shares of the stock to their customers in exchange for a payoff.
Investigators also targeted corporate officers, stock promoters and others, posing as members of a Colombian drug cartel in need of laundering drug money.
Agents reached agreements with some of the defendants to launder nearly $US1.4 million in purported drug money in exchange for millions in cash.
A spokeswoman for the US Attorney's office declined to comment when asked if the defendants were targeted on suspicion they were breaking the law.
The suspects could get five years for each conspiracy charge, 10 years for securities fraud, and 20 years for money laundering.
