|9 more charged in Staten Island-based securities fraud scheme|
Published: Tuesday, June 22, 2010, 8:07 AM Updated: Tuesday, June 22, 2010, 8:08 AM
STATEN ISLAND, N.Y. -- Nine more people have been charged in connection with a Staten Island-based securities fraud scheme that allegedly bilked unwitting investors of $20 million, federal prosecutors announced yesterday.
In all, 14 defendants are accused, including the scam's alleged mastermind, Prince's Bay resident, Kenneth Marsh, 43, president of Gryphon Holdings Inc. At least five others also are Staten Islanders.
Operating out of a strip mall on Victory Boulevard in Travis, Gryphon presented itself as a high-powered hedge fund run by rock-star executives who brought in more money than Warren Buffett, and had offices on Wall Street, and in Chicago, London and Sydney. The company also did business under the name Gryphon Financial.
Accused ringleader Kenneth Marsh, when his marriage and his alleged scheme were in flower.
The "boiler-room" scheme ran between January 2007 and April 2010 and cheated victims, many of them elderly retirees, of more than $20 million in fees and investment services, said Loretta E. Lynch, United States attorney for the Eastern District of New York. Prosecutors originally had pegged investors' losses at $17.5 million.
Marsh and four others -- Baldwin Anderson, 56; Robert Anthony Budion, 28; Jeanne Lada, 44, and James T. Levier, 35 -- were named in the original indictment filed in April by Brooklyn federal prosecutors. Anderson of Sunnyside and Budion also hail from Staten Island. Ms. Lada lives in Freehold, N.J., and Levier in Beachwood, N.J.
Those five also were charged in a superseding indictment unsealed yesterday along with nine others -- Richard Borrello, 26; John Degliuomini; Christopher Perrotta; Gregory Rossomando; Michael Scarpaci, 34; Robert Seidor; Dominic Spinelli, 31; Paul Stokes, 31, and William Vecchione.
Scarpaci, of Prince's Bay, is an alleged Gambino crime family associate. Two months ago, he was charged, along with 13 other mobsters in an unrelated case in Manhattan federal court with racketeering and other crimes. Scarpaci pleaded not guilty, and that case is pending.
Spinelli and Stokes also are borough residents. Borrello is from Broad Channel, Queens. Addresses and ages for the others were not immediately available.
All the defendants were Gryphon sales representatives and purportedly known by other names. The defendants were each charged with wire fraud and securities fraud conspiracy; securities fraud, and investment adviser fraud conspiracy.
The cadre contacted its victims through unsolicited e-mails and phone numbers, and promoted itself through a series of Web pages and electronic newsletters.
The newsletters, which contained specific trade recommendations, ranged in price from $99 to $1,000, said court papers. Besides the newsletters, the defendants sold stock recommendations at anywhere from $1,000 to $50,000 a pop.
In some instances, Marsh and other defendants directly managed customers' accounts or money.
Yet, Anderson, a Jamaican native, said he had no experience in financial services and began working as a Gryphon salesman in 2007 after answering a newspaper ad, court papers said.
One of Gryphon's Web sites, thewolvesofwallstreet.com, even featured a quote from billionaire investor George Soros, "Alone, the traders of Gryphon Financial are incredible, together the[y] are unstoppable."
Federal authorities say Soros made no such statement.
Gryphon's $1.4 billion hedge fund was a fiction, as was its "ruthless" trading desk, federal authorities allege.
Marsh posed as "Michael Warren" and "Ken Maseka" and boasted degrees from Harvard, Oxford, Columbia and Wharton, and job histories with Goldman Sachs. All were fictitious, federal prosecutors charge.
And the company's claim it operated "in the heart of the financial world at 110 Wall St., 11th Floor," was bogus, too, federal prosecutors charge. The Staten Island office was at 3767 Victory Blvd., between a martial-arts school and a bakery.
Fred A. Schwartz, Marsh's lawyer in the criminal case could not immediately be reached for comment yesterday. When the original charges were filed in April, he said his client, who pleaded not guilty had operated his business in conformity with the advice of a securities attorney.
Spinelli's lawyer, Louis E. Diamond, said the allegations against his client, who also denies them, are weak.
"The basis for the case is 'Poker Chips in the fifth; can do,'" said Diamond, referring to a line in the musical "Guys and Dolls," about a gambling scheme.
Lawyer Mark J. Fonte, who represents Stokes, agreed.
"My client pled not guilty," he said. "He never made a trade, but was merely selling subscriptions to a financial newsletter."
Besides the criminal charges which carry a maximum sentence of up to 20 years' imprisonment, 11 individuals, including Marsh's estranged wife, Nicole Desposito Marsh, 30, of Prince's Bay, face civil repercussions.
The federal Securities and Exchange Commission has filed a civil suit in Brooklyn federal court against Gryphon Holdings Inc. and all the criminal defendants except for Degliuomini, Perrotta, Rossomando, Seidor and Vecchione. Ms. Marsh is also named in that action.