- Jared Mitchell, managing partner at Mitchell & Sullivan Capital LLC,
- Richard Brown, a registerd broker,
- Christopher Castaldo, C.E.O. at Stock Traders Press Inc. and President at Wall Street Buy Sell Hold Inc.,
- Gerald Cocuzzo, a registered broker,
- Naveed Khan, a registered broker,
- Herschel Knippa III, owner and head trader at Kenai Capital Management LLC,
- Mayroof Miyana, a registered broker,
- Pranav Patel, a registered broker, and
- Louis Petrossi, founder and C.E.O. at Wealth Research Institute.
What: The defendants are charged by the Eastern District of New York, federal court, for charges including:
- Securities Fraud (carrying a maximum penalty of 20 years in prison and a $5 million fine, or twice the gain or loss from the offense),
- Conspiracy to Commit Securities Fraud (carrying a maximum penalty of 5 years in prison and various large fines),
- Wire Fraud (carrying a maximum penalty of 20 years in prison and various large fines),
- Money Laundering (carrying a maximum penalty of 20 years in prison and various large fines), and
- Making a False Statement to Law Enforcement Officials in connection with the fraudulent market manipulation of ForceField Energy Inc., a publicly traded company.
Where: The defendants were charged in the Eastern District of New York, but the defendants are from New York, Florida, Texas or Nevada.
When: The crimes allegedly occurred between December 2009 and April 2015. The five-count indictment was unsealed on May 3, 2016.
Why: The defendants allegedly deceived the market and their clients that a company with essentially no business operations and little revenue was worth hundreds of millions of dollars with a series of deceptive promotions and unauthorized trades.
Each of the defendants are alleged to have used their positions as stock promoters, brokers, or investor relations to push stock.
ForceField was a purported worldwide distributor and provider of LED lighting products and solutions. The defendants allegedly artificially controlled the price and volume of traded shares of ForceField in order to acquire investor funds.
Investors lost about $131 million.
How: The defendants allegedly artificially controlled the price and volume of traded shares of ForceField, a company with which each defendant was involved with in some way.
The defendants are accused, among other things, of:
- Purchasing and selling ForceField stock through nominees without disclosing that they were doing so to investors.
- Creating the appearance of genuine trading volume and interest in the stock by orchestrating the trading of ForceField stock.
- Concealing payments to people who promoted and sold Forcefield stock from investors while claiming to be independent of the company.
Defendant Mitchell, who was hired by ForceField, distributed commissions to the broker dealer defendants for purchasing ForceField stock in their clients’ brokerage accounts. Mitchell received a ten-percent commission for purchases of ForceField stock generated by these brokers, which was distributed by ForceField using offshore bank accounts. Mitchell then shared his commission with the brokers. All the while, neither these brokers nor Mitchell ever disclosed the fact that these brokers were receiving these commissions to the brokers’ clients.
Mitchell and the broker dealer defendants used prepaid, disposable cellular phones and encrypted messaging applications to communicate with each other to carry out this scheme.
ForceField was also paying ten-percent commissions to the stock promoter defendants, information that was also not disclosed to the investors.
At least one of these stock promoters promoted ForceField by, for example, speaking of ForceField during a T.V. appearance. Defendant Knippa recommended viewers purchase ForceField stock, and, when asked, stated that he owned ForceField stock himself.
Investigations revealed that defendant Knippa did not own ForceField stock during that time, nor did he disclose to viewers that he was being paid to promote ForceField.