180 Defendants Have Been Charged to Date as Part of the Southern District of Florida Securities and Investment Fraud Initiative
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, Jose A. Gonzalez, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), Paula Reid, Special Agent in Charge, U.S. Secret Service (USSS), Miami Field Office, Ronald J. Verrochio, Inspector in Charge, U.S. Postal Inspection Service (USPIS), Eric I. Bustillo, Regional Director, Securities and Exchange Commission (SEC), Fred W. Gibson, Jr., Principal Deputy Inspector General, Federal Deposit Insurance Corporation, Office of Inspector General (FDIC-OIG), David Meister, Director, Division of Enforcement, U.S. Commodity Futures Trading Commission (CFTC), Cindy Liebes, Director, Federal Trade Commission, Southeast Region (FTC), and Drew J. Breakspear, Commissioner, State of Florida’s Office of Financial Regulation, announce the most recent charges filed in connection with the Southern District of Florida Securities and Investment Fraud Initiative (the “Initiative"). The Initiative was first announced in December 2010 and designed to combat securities fraud and protect the interests of the investing public.
The Initiative was established to address an increase in investment and securities fraud schemes in the Southern District of Florida. Participating agencies include the U.S. Attorney’s Office, FBI, IRS-CI, USSS, USPIS, SEC, CFTC, FTC, FDIC-OIG, and the Florida Office of Financial Regulation. These law enforcement and regulatory agencies have shared intelligence and combined their resources to combat securities and investment fraud, including Ponzi schemes, affinity fraud schemes, prime bank/high-yield investment scams, business opportunity fraud, promoter/micro-cap/“pump and dump" schemes, foreign exchange (FOREX) frauds, false bankruptcy petitions, and other schemes to defraud individual investors. Among the goals of the Initiative is to alert the public about the prevalence of these types of schemes, educate the public on how to avoid falling prey to these schemes, and to highlight the law enforcement response to the problem.
Using the strike force model successfully developed in the health care and mortgage fraud areas, the Initiative has yielded similar success. Since its inception in December 2010, the Initiative has resulted in charges against 180 defendants in the Southern District of Florida, resulting in more than $ 1.8 billion in restitution ordered.
Today, we announce charges against six individuals in the following five cases:
1. United States v. Eric Brown, Case No. 14-60107-CR-Cohn
Eric Brown, 50, of Brooklyn, New York, is charged with one count of mail fraud, in violation of Title 18, United States Code, Section 1341. The information alleges that Brown agreed to pay a purported fund manager one share for every four shares of buying that the fund would make in DAM Holdings, Inc. (DAMH). In October 2011, Brown agreed to come to Florida to induce the fund manager to invest in DAMH.
The case is being prosecuted by Assistant U.S. Attorney H. Ron Davidson.
2. United States v. Billy Ray, Jr., Case No. 14-60109-CR-Zloch
Billy Ray, Jr., 56, of Cumming, Georgia, is charged with one count of securities fraud, in violation of Title 18, United States Code, Section 1348. The information alleges that Ray was the CEO and President of the Board of Directors of Urban AG Corporation (AQUM), a Delaware corporation that was publicly traded. Its common stock was traded in the Pink Sheets and registered with the SEC under Section 12 of the Securities Exchange Act of 1934. On approximately May 28, 2013, Ray agreed to pay a kickback to induce a hedge fund manager to invest the fund’s money in AQUM.
The case is being prosecuted by Assistant U.S. Attorney H. Ron Davidson.
3. United States v. Wade Clark, Case No. 14-60108-CR- Dimitrouleas
Wade Clark, 38, of Melissa, Texas, is charged with committing one count of insider trading, in violation of Title 15, United States Code, Sections 78j(b) and 78ff(a), and Title 17, Code of Federal Regulations, Sections 240.10b-5 and 240.10b5-1. The information alleges that on or about July 9, 2013, in a recorded conversation, Clark told an FBI undercover agent who posed as a hedge fund manager about press releases that had not yet been issued. Clark told the purported fund manager “you should probably start buying" stock before a press release was issued.
The case is being prosecuted by Assistant U.S. Attorney H. Ron Davidson.
4. United States v. Kevin McKnight and Stephen Bauer, Case No. 14-80080-CR-Hurley
Kevin McKnight, 41, of Boca Raton, and Stephen Bauer, 63, of Hillsboro Beach, were charged by indictment alleging that they conspired to commit securities fraud, in violation of Title 18, United States Code, Section 1349. According to the indictment, both men were promoters for Environmental Infrastructure Holdings Corp. (EIHC), a publicly traded company whose stock was registered with the SEC. The defendants were charged with engaging in a scheme to manipulate the publicly quoted share price and trading volume of EIHC common stock. The alleged scheme involved, among other things, illegal kickbacks and the “match trading" of stock, which is the unlawful buying and selling of securities in equal quantities by two parties to a transaction, rather than their bidding or offering orders on the open market.
The case is being prosecuted by Assistant U.S. Attorney Roger Cruz.
5. United States v. Jeffrey Berkowitz, Case No. 14-20342-CR-Scola
Jeffrey Berkowitz, 57, of Palm Beach County, a stock promoter, was charged by information with conspiracy to engage in a scheme to manipulate the publicly quoted share price and trading volume of Face Up Entertainment Group (FUEG) stock, in violation of Title 18, United States Code, Section 371. FUEG, a Florida corporation, is purported to be in the business of operating an internet gaming website.
The case is being prosecuted by Assistant U.S. Attorney Michael Sherwin.
Mr. Ferrer commends the investigative efforts of the FBI, IRS-CI, USSS, USPIS, SEC, FDIC-OIG, CFTC, FTC, and the State of Florida’s Office of Financial Regulation.
An indictment or information is merely an accusation and defendants are presumed innocent until proven guilty.
A copy of this press release may be found on the website of the United States Attorney's Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.
Source: U.S. Department of Justice, Office of the United States Attorneys
