SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16823 / December 12, 2000
SECURITIES AND EXCHANGE COMMISSION V. MARCO G. FIORE, JR., BENJAMIN V. SALMONESE, JR., THOMAS DeCEGLIE, DAVID C. LAVENDER, AND PETER C. RESTIVO, 00 Civ. 9422 (JGK) (S.D.N.Y.)
The Securities and Exchange Commission announced today that it filed a Complaint in the United States District Court for the Southern District of New York charging five representatives of Nationwide Securities Corporation ("Nationwide") with perpetrating a fraud on their customers. The Complaint alleges that the defendants employed fraudulent sales practices to induce Nationwide customers to invest in the 1996 initial public offering ("IPO") of Thermo-Mizer Environmental Corp. ("Thermo-Mizer"). The Complaint further alleges that the defendants artificially inflated the price of, and demand for, Thermo-Mizer stock and warrants in aftermarket trading so that the defendants could sell their own undisclosed holdings of Thermo-Mizer securities at inflated prices.
Named in the Complaint are:
Marco G. Fiore, Jr. ("Fiore"), a 34 year old resident of Morganville, New Jersey, and a registered representative and control person of Nationwide from at least September 1995 to April 1996.
Benjamin V. Salmonese, Jr. ("Salmonese"), a 32 year old resident of New York, New York, and a registered representative and control person of Nationwide from at least October 1995 through April 1996.
Thomas DeCeglie ("DeCeglie"), a 39 year old resident of Old Bridge, New Jersey, and a registered representative at Nationwide from at least October 1995 through June 1996.
David C. Lavender ("Lavender"), a 31 year old resident of New York, New York, and a registered representative at Nationwide from at least January 1996 through April 1996.
Peter C. Restivo ("Restivo"), a 29 year old resident of Valley Stream, New York, and a registered representative at Nationwide from at least November 1995 through April 1996.
The Complaint alleges that:
Between approximately January 1996 and approximately March 1996, DeCeglie, Lavender, and Restivo, at the direction of Fiore and Salmonese: (i) made baseless and inflated projections about the price that Thermo-Mizer stock would command in the aftermarket; (ii) baselessly promised customers that Nationwide would purchase their Thermo-Mizer shares after the IPO if the price of those shares did not significantly increase; (iii) offered and sold Thermo-Mizer securities to Nationwide customers prior to the effective date of Thermo-Mizer's IPO; (iv) solicited customer purchases of Thermo-Mizer securities in the aftermarket prior to the commencement of Thermo-Mizer's IPO - almost always requiring customers who wanted IPO securities to agree to buy an equal number of aftermarket securities at a higher price; (v) executed unauthorized purchases of Thermo-Mizer securities in customer accounts; (vi) refused or otherwise failed to execute customer orders to sell Thermo-Mizer securities during aftermarket trading; and (vii) executed customer sell orders for Thermo-Mizer securities in the aftermarket only if the sale could be paired with a purchase of Thermo-Mizer securities by another customer.
While engaging in this conduct, Fiore, Salmonese, DeCeglie, Lavender, and Restivo retained undisclosed control over substantial positions in Thermo-Mizer securities by placing those securities in the names of nominees subject to arrangements that gave them control over the sale of the securities and all or a portion of the proceeds. Fiore and Salmonese directed and approved of the scheme, which resulted in substantial inflation in the value of Thermo-Mizer stock and warrants, and which yielded at least $720,000 in aggregate illegal profits for the defendants.
The Commission alleges that: (i) Fiore and Salmonese, both directly and, pursuant to Section 20(a) of the Securities Exchange Act of 1934 ("Exchange Act"), as controlling persons, violated Sections 5 and 17(a) of the Securities Act of 1933 ("Securities Act"), and Section 10(b) of the Exchange Act and Rules 10b-5 and 10b-6 and (ii) DeCeglie, Lavender, and Restivo violated Sections 5 and 17(a) of the Securities Act, and Section 10(b) of the Exchange Act and Rules 10b-5 and 10b-6. The Commission seeks permanent injunctive relief, disgorgement of ill-gotten gains, prejudgment interest, an accounting, and civil penalties against each defendant.
The Commission acknowledges the assistance of the U.S. Attorney's Office for the Southern District of New York and the FBI in this matter. The litigation is pending as to all defendants.