The FBI raided two offices in the Garment District and other locations, officials said today. Thirteen people were charged in New York and Florida, including reputed Bonanno crime family soldier Anthony Guarino.
Authorities said the brokerage would artificial inflate the value of a stock in a company with misleading sales pitches -- especially to elderly victims.
Steven Kimmel was the President of the so-called "boiler-room" scheme and the offices of his Powercom/Empire firm along West 36th Street were searched by the FBI Wednesday.
According to court papers, Kimmel "was formerly employed by the Securities and Exchange Commission."
Investigators said the suspects solicited through phone calls more than $12 million from unsuspecting investors who thought they were purchasing shares of stock in Realcast and BBC Gaming companies.
But 40 percent of the investors' cash was paid straight to Powercom and was never invested in Realcast or BBC Gaming, officials said.
In addition, mailings stated no commissions were being paid when at least 40 percent of funds were allegedly paid out as commissions.
The suspects were expected to appear in court later Wednesday. Others charged include William Dick, Lance Barbarino, Gabriel Almandi, Ciro Cozzolino, Issac Davis, among others.
In one case, suspect Jamil Fuller is accused of stealing the $50,000 dollars invested by one elderly client. The entire investment is lost, officials said.
In other cases, suspects allegedly claimed the firm was about to merge and their investment would soar in value. Instead, the suspects allegedly looted the cash.
And in another case, court papers state 50 percent of one $700,000 investment was split between some of the suspects.
The defendants face securities fraud, wire fraud and other related charges.