6 Charged in $140M Securities Case | NBC New York

6 Charged in $140M Securities Case

The defendants are accused of inducing victims to invest by promising false returns

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    Prosecutors accused the men of using two Wall Street securities companies to rip off clients from 1998 through 2006.

    Six men have been charged with conspiracy to commit securities fraud, accused in a $140 million investment fraud and stock manipulation scheme.

    The charges were in an indictment unsealed today in federal court in Manhattan.

    According to the indictment, from 1998 through 2006, the defendants participated in a scheme to defraud investors via two successive securities broker-dealers: The Thornwater Company, L.P. (Thornwater) and Sky Capital LLC.

    The men are accused of making misrepresentations and left out key information. They induced victims to invest in opportunities that supposedly would yield huge returns.

    "Through material misrepresentations and omissions, the defendants induced victims to invest in purported investment opportunities promising large returns, such as private placements, offers to purchase restricted stock and offers to purchase Sky Capital securities," the federal indictment read.

    Investor money was instead used to enrich the defendants, federal officials said.

    The accused are: Adam Harrington, 39, of Miami, Fla.; Arn Wilson, 52, of Concord, N.C.; and Michael Passaro, 46, of Delray Beach, Fla., Stephen Shea, 37, of Brooklyn, N.Y., and Robert Grabowski, 41, of Staten Island, N.Y. and Ross H. Mandell, 52, of Boca Raton, Fla.

    If convicted, Mandell, Shea, Harrington, Wilson, Grabowski and Passaro each face a maximum sentence on the conspiracy count of five years in prison and a maximum fine of $250,000, or twice the gross gain or loss from the offense.