NEW YORK (AFX) - Eight stockbrokers were indicted Wednesday on charges they used fraudulent sales tactics to swindle customers into purchasing shares of a small New Jersey company at an artificially high price.
The brokers and four companies they worked with are charged with defrauding customers of at least $13 million over five years.
People who bought the stock, only to see its value plummet, included a real estate agent who lost more than $500,000 from his retirement fund, said Manhattan District Attorney Robert Morgenthau.
Meanwhile, the brokers picked up cash bonuses for their success in selling the stock, the indictment said. Payments sometimes exceeded $10,000 a month, prosecutors said.
The defendants also took in nearly $30 million by selling shares of the company, Stratus Services Group Inc., which they had previously purchased at low prices, Morgenthau said.
The indictment identified the leader of the brokerage operation as Christopher Janish, 35, of Parsippany, N.J. Prosecutors said Janish is the nephew of Stratus Services Group's chief executive.
Janish and nine other defendants, including four corporations that worked with the brokers, face a list of racketeering charges, including enterprise corruption, grand larceny, perjury and fraud.
The indictment charged Joseph Barile, 36, of Long Branch, N.J., Arthur Caruso, 33, of Secaucus, N.J., Marat Beksultanov, 22, of Brooklyn, and four other unnamed individuals with being members of Janish's sales force.
Christopher Brennan, an attorney who represents Caruso and Beksultanov, said they were innocent of any wrongdoing.
Janish's attorney did not immediately return a phone message.
A phone message left at a Stratus office Wednesday was not immediately returned. A second phone number listed on the company's Web site was disconnected.
Neither Stratus nor its executives have been charged, Morgenthau said.
The corporations charged in the case included an entity prosecutors said was created to funnel the bonuses to the brokers and an investment fund run by Janish called Pinnacle Investment Partners. Also charged was the brokerage firm Essex & York Inc., which prosecutors said was run by Janish and Barile.
A man who answered the phone at Essex & York's offices in Manhattan on Wednesday said no one was available to comment on the indictment.
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