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U.S. Securities and Exchange Commission

United States of America
before the
Securities and Exchange Commission

Securities Act Of 1933
Release No. 8289 / September 17, 2003

Securities Exchange Act of 1934
Release No. 48497 / September 17, 2003

Administrative Proceeding
File No. 3-10229


In the Matter of

Salvatore Piazza, James S. Labate, William F. Palla, Emmanuel Gennusso, Cary F. Cimino, Todd M. Nejaime, Kevin P. Radigan, Robert Gallo, Robert J. Dacunto, Michael P. Dacunto, Joseph P. Meduri, Vincent A. Padulo, Jr., Vito G. Padulo, John Bruzzese, Salvatore F. Ruggiero, Patrick Giglio, Irving Stitsky, Paul L. Burton, Marc I. Burton, Kenneth J. Fuina, Marc L. Weissman, Anthony P. Dinota, Jr., Facundo Ponce, Chester L. Chicosky, Lawrence M. Choiniere, William P. Burke, Michael Caso, John Catalano, Jr., George Bisnoff, Damien Douglas, Craig P. Mcguinn, II, and Mark Danieli

Respondents.


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ORDER MAKING FINDINGS AND IMPOSING REMEDIAL SANCTIONS BY DEFAULT

I.

The Securities and Exchange Commission (Commission) initiated this proceeding on June 14, 2000, by an Order Instituting Proceedings (OIP) pursuant to Section 8A of the Securities Act of 1933 (Securities Act) and Sections 15(b)(6) and 21C of the Securities Exhange Act of 1934 (Exchange Act). The OIP alleged that thirty-two Respondents willfully violated Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and Rule 10b-5 thereunder from 1995 through 1996 (the relevant period). On July 5, 2000, Respondent John Bruzzese (Bruzzese) filed an Answer to the OIP.

I stayed this proceeding on July 27, 2000, at the request of the United States Attorney for the Southern District of New York (USAO).1 On November 20, 2002, I lifted the stay as to Respondents Michael Caso, Michael P. Dacunto, Robert J. Dacunto, Anthony P. Dinota, Jr., Robert Gallo, Emmanuel Gennusso, James S. Labate, Craig P. McGuinn, II, and Joseph P. Meduri and ordered them to file Answers by December 11, 2002. See 17 C.F.R. § 201.220(b). Gallo filed an Answer on January 21, 2003. None of the other Respondents addressed in the November 20 Order answered the OIP.

On May 5, 2003, I lifted the stay as to Respondents Salvatore Piazza, Cary F. Cimino, Todd M. Nejaime, Kevin P. Radigan, Vincent A. Padulo, Jr., Vito G. Padulo, Salvatore F. Ruggiero, Patrick Giglio, Irving Stitsky, Paul L. Burton, Marc I. Burton, Kenneth J. Fuina, Marc L. Weissman, Chester L. Chicosky, Lawrence M. Choiniere, William P. Burke, John Catalano, Jr., George Bisnoff, Damien Douglas, Mark Danieli, and Bruzzese, and ordered the Respondents who had not previously filed Answers to file them by June 5, 2003. See 17 C.F.R. § 201.220(b). None of the Respondents addressed in the May 5 Order except Bruzzese, who had previously answered, filed answers.

On August 19, 2003, the Division of Enforcement (Division) filed a motion for disposition of this proceeding, requesting either entry of a default or summary disposition order against each Respondent except William F. Palla. Also, on August 19, 2003, the Division filed with the Commission the Division of Enforcement's Motion to Modify the Order Instituting Proceedings to Withdraw the Disgorgement and Civil Penalties Claims Against All Respondents (Motion to Modify the OIP). On September 11, 2003, the Commission granted the Motion to Modify the OIP.

Pursuant to Rules 155(a) and 220(f) of the Commission's Rules of Practice, 17 C.F.R. §§ 201.155(a), .220(f), the following Respondents are in default because they failed to file Answers to the OIP: Piazza, Labate, Gennusso, Cimino, Nejaime, Radigan, Robert Dacunto, Michael Dacunto, Meduri, Vito Padulo, Vincent Padulo, Ruggiero, Giglio, Stitsky, Paul Burton, Marc Burton, Fuina, Weissman, Dinota, Chicosky, Choiniere, Burke, Caso, Catalano, Bisnoff, Douglas, McGuinn, and Danieli (Respondents in Default).2

II.

As authorized under Rule 155(a) of the Commission's Rules of Practice, 17 C.F.R. § 201.155(a), I find the following allegations in the OIP to be true as to the Respondents in Default:

Background

Piazza and Labate, who were principals of DMN Capital Investments, Inc. (DMN), directed four fraudulent manipulation schemes involving securities issued by Spaceplex Amusement Centers International Ltd., Inc. (Spaceplex), Reclaim, Inc. (Reclaim), Beachport Entertainment Group, Inc. (Beachport), and International Nursing Services, Inc. (International Nursing). The manipulation schemes involved the following common elements: (a) DMN obtained control of a large block of free-trading stock, usually issued pursuant to Rule 504 of Regulation D or pursuant to Regulation S; (b) DMN caused trades to be executed on the public market to give the false appearance that there was genuine demand for the stock of the issuer; (c) DMN paid bribes to brokers, both directly and through various intermediaries, nominees, and promoters (such as Cimino), in exchange for the brokers creating retail demand for the issuer's securities controlled by DMN; and (d) DMN sold the issuer's securities that it controlled into the retail demand created by the bribed brokers.

From approximately September 1995 through September 1996, Piazza, Labate, and their business partners controlled several branch offices of Monitor Investment Group, Inc. (Monitor). During the time period that DMN's principals operated several branch offices of Monitor, Palla was the disclosed owner of Monitor and Gennusso was Monitor's compliance officer. Palla and Gennusso were aware of, and participated in, the manipulations organized and perpetrated by DMN while DMN's principals controlled the various branch offices of Monitor. Palla warned DMN's principals to make sure that Monitor's brokers did not disclose the bribes that they were receiving from DMN's principals to Monitor's retail customers. Gennusso participated in the payments of bribes to Monitor brokers and participated in numerous meetings and discussions that related to the retail sales component of the manipulation schemes.

During the relevant period, the Respondents in Default had the following relationships with broker-dealers:

  1. Piazza, age 48, is a resident of Howard Beach, New York. From June 1995 to June 14, 2000, Piazza acted as a principal of DMN. At all relevant times, Piazza participated in offerings of penny stock. In September 1997, the National Association of Securities Dealers, Inc. (NASD) barred Piazza from associating with any of its member firms.
     
  2. Labate, age 45, is a resident of Staten Island, New York. From June 1995 through June 14, 2000, Labate acted as a principal of DMN. At all relevant times, Labate participated in offerings of penny stock.
     
  3. Gennusso, age 53, is a resident of Brooklyn, New York. From September 1995 though July 1996, Gennusso was the registered compliance officer at Monitor. In December 1999, the NASD barred Gennusso from associating with any of its member firms.
     
  4. Cimino, age 39, is a resident of New York, New York. From June 1995 through June 14, 2000, Cimino operated as an undisclosed promoter of microcap securities. During that time period, Cimino arranged for bribes to be paid to brokers to induce those brokers to sell shares of microcap securities to retail customers without disclosing such bribes to retail customers. At all relevant times, Cimino participated in offerings of penny stock.
     
  5. Nejaime, age 34, is a resident of Plantation, Florida. From June 1995 through January 1996, Nejaime was a registered representative employed by Gilford Securities (Gilford). From January 1996 through July 1996, Nejaime was a registered representative employed by Monitor. From July 1996 through the end of 1996, Nejaime was a registered representative employed at Laidlaw Equities (Laidlaw). On June 14, 2000, Nejaime was a registered representative for Fin-Atlantic Securities, Inc. (Fin-Atlantic Securities).
     
  6. Radigan, age 32, is a resident of New York, New York. From June 1995 through January 1996, Radigan was a registered representative employed by Gilford. From January 1996 through July 1996, Radigan was a registered representative employed by Monitor. From July 1996 through the end of 1996, Radigan was a registered representative employed at Laidlaw. On June 14, 2000, Radigan was a registered representative for Auberback, Pollack & Richardson Inc.
     
  7. Robert Dacunto, age 39, is a resident of Staten Island, New York. From June 1995 through August 1995, Robert Dacunto was a registered representative at Atlantic General. From August 1995 through February 1996, Robert Dacunto was a registered representative at Monitor.
     
  8. Michael Dacunto, age 26, is a resident of Staten Island, New York. From June 1995 through August 1995, Michael Dacunto was a registered representative at Atlantic General. From August 1995 through February 1996, Michael Dacunto was a registered representative at Monitor.
     
  9. Meduri, age 29, is a resident of Boca Raton, Florida. From June 1995 through August 1995, Meduri was a registered representative at Atlantic General. From August 1995 through February 1996, Meduri was a registered representative at Monitor. On June 14, 2000, Meduri was registered as an associated person at On-Site Trading.
     
  10. 1Vincent Padulo, age 34, is a resident of New York, New York. From June 1995 through August 1995, Vincent Padulo was a registered representative at Atlantic General. From August 1995 through February 1996, Vincent Padulo was a registered representative at Monitor.
     
  11. Vito Padulo, age 38, is a resident of Englishtown, New Jersey. From June 1995 through August 1995, Vito Padulo was a registered representative at Atlantic General. From August 1995 through February 1996, Vito Padulo was a registered representative at Monitor. In December 1999, the NASD barred Vito Padulo from associating with any of its member firms.
     
  12. Ruggiero, age 28, is a resident of Brooklyn, New York. From June 1995 through August 1995, Ruggiero was a registered representative at Atlantic General. From August 1995 through July 1996, [Ruggerio]was a registered representative at Monitor.
     
  13. Giglio, age 37, is a resident of Staten Island, New York. From September 1995 through July 1996, Giglio was a registered representative at Monitor. In January 2000, the NASD barred Giglio from associating with any of its member firms.
     
  14. Stitsky, age 45, is a resident of Jericho, New York. From December 1995 through March 1996, Stitsky was an undisclosed registered representative at Monitor.
     
  15. Paul Burton, age 38, is a resident of New York, New York. From December 1995 through March 1996, Paul Burton was an undisclosed registered representative at Monitor. On June 14, 2000, Paul Burton was a registered representative at Fin-Atlantic Securities.
     
  16. Marc Burton, age 40, is a resident of Melville, New York. From January through March 1996, Marc Burton was a registered representative at Monitor.
     
  17. Fuina, age 50, is a resident of White Plains, New York. From December 1995 through March 1996, Fuina was a registered representative at Monitor.
     
  18. Weissman, age 33, is a resident of New York, New York. From February 1996 through July 1996, Weissman was a registered representative at Monitor.
     
  19. Dinota, age 34, is a resident of New Hyde Park, New York. From March 1996 through July 1996, Dinota was a registered representative at Monitor.
     
  20. Chicosky, age 37, is a resident of Fairfield, Connecticut. From June 1995 through March 1996, Chicosky was a registered representative at Gilford. From March 1996 through July 1996, Chicosky was a registered representative at Brookehill Equities (Brookehill).
     
  21. Choiniere, age 51, is a resident of Sea Cliff, New York. From June 1995 through March 1996, Choiniere was a registered representative at Gilford. From March 1996 through July 1996, Choiniere was a registered representative at Brookehill. On June 14, 2000, Choiniere was a registered representative at Schonfeld Securities.
     
  22. Burke, age 47, is a resident of Lattingtown, New York. From June 1995 through December 1995, Burke was a registered representative at Gilford.
     
  23. Caso, age 39, is a resident of Brooklyn, New York. From June 1995 through September 1996, Caso was a registered representative at Meyers Pollack & Robbins, Inc. (MPR).
     
  24. Catalano, age 32, is a resident of Brooklyn, New York. From June 1995 through September 1996, Catalano was a registered representative at MPR.
     
  25. Bisnoff, age 39, is a resident of Roslyn, New York. From June 1995 through September 1995, Bisnoff was a registered representative at Nichols Safina. From September 1995 through September 1996, Bisnoff was a registered representative at Whale Securities. On June 14, 2000, Bisnoff was a registered representative at KSH Investment Group, Inc.
     
  26. Douglas, age 31, is a resident of Queens, New York. From June 1995 through December 1995, Douglas was a registered representative at Nichols Safina. On June 14, 2000, Douglas was a registered representative at First Republic Group, LLC.
     
  27. McGuinn, age 33, is a resident of Brooklyn, New York. From June 1995 through September 1995, McGuinn was a registered representative at Barrington Capital Advisers Inc. From March 1996 through July 1996, McGuinn was a registered representative at Monitor. On June 14, 2000, McGuinn was a registered representative at Sandgrain Securities, Inc.
     
  28. Danieli, age 39, is a resident of New York, New York. From June 1995 through September 1996, Danieli was a registered representative at Commonwealth Associates. On June 14, 2000, Danieli was a registered representative at First Level Capital, Inc.

Manipulation Schemes

Spaceplex

In late 1994 or early 1995, DMN acquired a large block of free-trading common stock issued by Spaceplex under Rule 504 of Regulation D. In early 1995, Piazza and an unnamed DMN principal entered into an agreement with Cimino, a promoter. Cimino agreed to pay bribes to retail brokers to cause the retail brokers to recommend and sell Spaceplex common stock to their customers. DMN agreed to pay Cimino 35% of the gross sales proceeds generated by the brokers who received these bribes (the 35% Kickback).

During 1995, DMN paid Cimino the 35% Kickback for retail purchases of Spaceplex common stock caused by numerous brokers, including Nejaime and Radigan. Cimino bribed Nejaime and Radigan to cause them to recommend and sell Spaceplex common stock to their retail customers. Nejaime and Radigan failed to disclose the payments to their retail customers who purchased Spaceplex common stock.

In mid-1995, Piazza and an unnamed DMN principal began paying bribes to brokers directly rather than pay the 35% Kickback to Cimino. Instead, DMN began paying Cimino a 5-10% override on sales generated by the brokers introduced to DMN by Cimino.

During 1995, DMN paid bribes to Gallo and to the following group of brokers who were employed at Atlantic General and supervised by Gallo: Robert Dacunto, Michael Dacunto, Meduri, Vincent Padulo, Vito Padulo, Bruzzese, and Ruggiero (the PMD Crew). The PMD Crew received bribes in exchange for recommending and selling Spaceplex common stock to their retail customers. Gallo negotiated the amount of the bribe payments with DMN's principals, often received the gross bribes for the entire PMD Crew, and was responsible for distributing the bribes to the PMD Crew. None of the brokers in the PMD Crew disclosed the payments they received from DMN (through Gallo and directly) to their retail customers at the time that they recommended or sold Spaceplex common stock to those customers.

DMN also paid bribes to the following brokers at Gilford in exchange for retail purchases of Spaceplex stock: Nejaime, Radigan, Chicosky, Choiniere, and Burke. None of these brokers disclosed the payments they received from DMN to their retail customers at the time that they recommended or sold Spaceplex common stock to those customers. Labate also participated in the Spaceplex manipulation scheme.

During 1995, DMN sold approximately 1 million shares of Spaceplex stock for approximately $2.5 million in proceeds. Approximately $1 million of those proceeds were paid to brokers and promoters.

Reclaim

In mid-1995, DMN's principals, including Piazza and Labate, received control of a large block of free-trading stock issued by Reclaim pursuant to Regulation S. After the expiration of the forty-day holding period, the foreign nominees of DMN's principals immediately executed stock powers to transfer control of the Regulation S stock to DMN's principals. However, none of DMN's principals were foreign investors. Reclaim also issued a block of free-trading stock under Regulation S-8 to DMN's principals.

DMN paid bribes to Gallo and the following members of the PMD Crew in exchange for those brokers causing their customers to purchase Reclaim common stock: Robert Dacunto, Michael Dacunto, Meduri, Vincent Padulo, Vito Padulo, and Ruggiero. None of the brokers disclosed the payments they received from DMN to their retail customers at the time that they caused their customers to purchase Reclaim common stock.

Additionally, DMN paid bribes to the following brokers at Gilford: Nejaime, Radigan, Chicosky, Choiniere, and Burke. DMN also paid bribes to the following brokers: Bisnoff, Douglas, McGuinn, and Danieli. The brokers received the bribes in exchange for retail purchases of Reclaim common stock. None of these brokers disclosed the payments they received from DMN to their retail customers at the time that they recommended or sold Reclaim common stock to those customers. Cimino also participated in the Reclaim manipulation scheme.

During the period from May 1995 through August 1995, the price of Reclaim common stock rose from approximately $1.00 per share to $5.00 per share as a result of the manipulation scheme organized by DMN.

Beachport

In the fall of 1995, DMN received a large block of Rule 504 stock and a smaller block of S-8 stock from Beachport. The S-8 stock was issued to DMN pursuant to a sham consulting agreement. At that time, DMN's principals, including Piazza and Labate, had assumed control over at least two branch offices of Monitor. Piazza, Labate, Gennusso, Cimino, Palla, and Dinota also participated in the Beachport manipulation scheme.

DMN paid bribes to Gallo and the following members of the PMD Crew (then employed at Monitor): Robert Dacunto, Michael Dacunto, Bruzzese, and Giglio. DMN also paid bribes to the following other brokers at Monitor: Nejaime, Radigan, Weissman, Fuina, and Ponce. During late 1995, DMN hired Stitsky and several associates to work at one of Monitor's branch offices (the Stitsky Crew). DMN paid bribes to Stitsky and the following members of the Stitsky Crew: Paul Burton, Marc Burton, and Fuina. Additionally, DMN paid bribes to the following brokers at other firms: Chicosky, Choiniere, Burke, and McGuinn. DMN paid the bribes to each of these brokers in exchange for those brokers causing their customers to purchase Beachport common stock. None of the brokers disclosed the payments they received from DMN to their retail customers at the time that they caused their customers to purchase Beachport common stock.

During the course of the Beachport manipulation, DMN received approximately 1 million shares of Beachport common stock, which were sold for an approximate average price of $3 per share.

International Nursing3

During the summer of 1995, DMN received control of a large block of Regulation S common stock and a smaller block of S-8 stock. Immediately thereafter, Monitor made markets in and manipulated all three classes of publicly-traded securities issued by International Nursing: preferred, common, and warrants. As in the case of Beachport, Palla and Gennusso were aware of and participated in the International Nursing manipulation scheme while serving as a principal and compliance officer at Monitor. Piazza, Labate, Cimino, and McGuinn also participated in the International Nursing manipulation scheme.

DMN paid bribes to Gallo and the following members of the PMD Crew (then employed at Monitor): Robert Dacunto, Bruzzese, and Giglio. DMN also paid bribes to the following other Monitor brokers: Nejaime, Radigan, Weissman, Dinota, and Ponce. Additionally, DMN paid bribes to the following brokers at other firms: Caso, Catalano, Bisnoff, and Burke. All of these brokers received the bribes from DMN in exchange for causing customers to purchase International Nursing securities. None of these individuals disclosed the payments they received from DMN to their retail customers at the time that they caused their customers to purchase International Nursing securities.

Illicit Profits

During 1995 and 1996, DMN's principals, including Piazza and Labate, received at least $5 million in proceeds from the manipulation schemes. Additionally, the Cimino and the other participants in the schemes received at least $3 million in illicit profits. The following defaulting Respondents received payments from DMN, all of which represent illicit profits arising from market manipulation schemes organized and perpetrated by DMN: Gennusso, $28,000; Cimino, $916,000; Nejaime, $299,000; Radigan, $129,000, Gallo, $642,000;4 Robert Dacunto, $112,000; Ruggiero, $32,000; Giglio, $6,000; Stitsky, $72,000; Paul Burton, $27,000; Marc Burton, $106,000; Fuina, $86,000; Weissman, $130,000; Dinota, $70,000; Ponce, $59,000; Chicosky, $100,000; Choiniere, $122,000; Burke, $165,000; Caso, $165,000;5 Bisnoff, $113,000, Douglas, $41,000, McGuinn, $34,000; and Danieli, $34,000.

Conclusion

As a result of the foregoing participation in manipulation schemes, the Respondents in Default willfully and knowingly violated Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. Pursuant to Section 8A of the Securities Act and Section 21C of the Exchange Act, the Respondents in Default will be ordered to cease and desist from committing or causing any violation or any future violation of Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and Rule 10b-5 thereunder. I further find that it is in the public interest, pursuant to Section 15(b)(6) of the Exchange Act, that the Respondents in Default be barred from participating in any penny stock offering and be barred from associating with any broker or dealer.

III.

IT IS ORDERED that, pursuant to Section 8A of the Securities Act of 1933 and Section 21C of the Securities Exchange Act of 1934, Respondents Salvatore Piazza, James S. Labate, Emmanuel Gennusso, Cary F. Cimino, Todd M. Nejaime, Kevin P. Radigan, Robert J. Dacunto, Michael P. Dacunto, Joseph P. Meduri, Vincent A. Padulo, Jr., Vito G. Padulo, Salvatore F. Ruggiero, Patrick Giglio, Irving Stitsky, Paul L. Burton, Marc I. Burton, Kenneth J. Fuina, Marc L. Weissman, Anthony P. Dinota, Jr., Chester L. Chicosky, Lawrence M. Choiniere, William P. Burke, Michael Caso, John Catalano, Jr., George Bisnoff, Damien Douglas, Craig P. McGuinn, II, and Mark Danieli CEASE AND DESIST from committing or causing any violation or any future violation of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder; and

IT IS FURTHER ORDERED that, pursuant to Section 15(b)(6) of the Securities Exchange Act of 1934 Respondents Salvatore Piazza, James S. Labate, Emmanuel Gennusso, Cary F. Cimino, Todd M. Nejaime, Kevin P. Radigan, Robert J. Dacunto, Michael P. Dacunto, Joseph P. Meduri, Vincent A. Padulo, Jr., Vito G. Padulo, Salvatore F. Ruggiero, Patrick Giglio, Irving Stitsky, Paul L. Burton, Marc I. Burton, Kenneth J. Fuina, Marc L. Weissman, Anthony P. Dinota, Jr., Chester L. Chicosky, Lawrence M. Choiniere, William P. Burke, Michael Caso, John Catalano, Jr., George Bisnoff, Damien Douglas, Craig P. McGuinn, II, and Mark Danieli are hereby BARRED from participating in any offering of penny stock; and

IT IS FURTHER ORDERED that, pursuant to Section 15(b)(6) of the Securities Exchange Act of 1934, Respondents Salvatore Piazza, James S. Labate, Emmanuel Gennusso, Cary F. Cimino, Todd M. Nejaime, Kevin P. Radigan, Robert J. Dacunto, Michael P. Dacunto, Joseph P. Meduri, Vincent A. Padulo, Jr., Vito G. Padulo, Salvatore F. Ruggiero, Patrick Giglio, Irving Stitsky, Paul L. Burton, Marc I. Burton, Kenneth J. Fuina, Marc L. Weissman, Anthony P. Dinota, Jr., Chester L. Chicosky, Lawrence M. Choiniere, William P. Burke, Michael Caso, John Catalano, Jr., George Bisnoff, Damien Douglas, Craig P. McGuinn, II, and Mark Danieli are hereby BARRED from association with any broker or dealer.

_____________________
Robert G. Mahony
Administrative Law Judge

Endnotes

1 The USAO brought criminal charges against the thirty-two Respondents. At the request of the USAO, I stayed the proceeding. On March 7, 2002, the Commission entered into a settlement agreement with Respondent Facundo Ponce. The stay has been lifted as to all Respondents except Respondent Palla, whose criminal proceeding has not yet been resolved.

2 The charges as to Respondents Gallo and Bruzzese, who have filed answers, will be resolved in a subsequent summary disposition order.

3 The price of International Nursing was $0.8125 on December 12, 1996. (Declaration of Daphna Abrams in Support of the Division of Enforcement's Motion for Disposition of this Proceeding ¶ 7)

4 The monies paid to Gallo included the bribes to be paid to individual members of the PMD Crew.

5 The monies paid to Caso included the bribes to be paid to his partner, Catalano.

 

http://www.sec.gov/litigation/admin/33-8289.htm


Modified: 09/17/2003