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U.S. Securities and Exchange Commission


Litigation Rel. No. 17245 / November 21, 2001

SEC Obtains Preliminary Injunction Against Broker in Identity Theft and Penny Stock Manipulation Fraud Case.

SEC v. Robert C. Ingardia (United States District Court for the Southern District of New York, C.A. No. 01-CV-8356 (WHP), filed September 6, 2001)

The Commission announced today that, on November 8, 2001, the Honorable William H. Pauley III, United States District Judge for the Southern District of New York, issued a preliminary injunction and granted other ancillary relief against Robert C. Ingardia, a broker most recently affiliated with the New York City-based brokerage firm of Joseph Stevens & Co. ("Joseph Stevens"), based on the Commission's prima facie showing that Ingardia had engaged in violations of the antifraud provisions of the United States securities laws.

The Commission's Complaint alleges that, from at least June 2001 through the date of the filing of the Complaint, Ingardia and certain unknown individuals engaged in an identity theft and penny stock manipulation fraud. According to the Complaint, in late June 2001, Ingardia, who has been employed since 1996 by at least six broker-dealers besides Joseph Stevens, including the now defunct New York City-based Mason Hill & Co. ("Mason Hill"), began making telephone calls to several other brokerage firms, including Fidelity, Charles Schwab and Brown & Co., in which he assumed the identity of at least eight of his present and former Joseph Stevens and Mason Hill customers. The Complaint further alleged that, after he had successfully assumed the identity of his customers, Ingardia would generally, without authorization, change the address to which all correspondence concerning the account, including trade confirmations, should be sent, and then liquidate the account by placing unauthorized orders to sell all or many of the stock positions it contained. Using the cash proceeds of the liquidation, Ingardia would then place unauthorized orders to buy huge quantities of penny stock in either Converge Global, Inc. ("Converge"), a Utah corporation headquartered in Santa Monica, California or Equity Technologies & Resource, Inc. ("ETCR"), a Delaware corporation headquartered in Lexington, Kentucky.

According to the SEC, in the course of this fraudulent scheme, Ingardia and certain unknown individuals working in concert with him made more than $1.1 million worth of unauthorized trades in the brokerage accounts of unsuspecting investors, including liquidating more than $800,000 worth of stock and purchasing more than $230,000 worth of stock in Converge and ETCR. Transactions effected by Ingardia accounted for a large percentage of all shares traded in Converge and ETCR on those days.

The Commission obtained a preliminary injunction restraining Ingardia from committing violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and an order prohibiting the destruction or alteration of documents. In addition to the preliminary injunction and ancillary relief alreadyobtained, the Commission seeks permanently to enjoin Ingardia from violating the aforementioned provisions. The Commission also seeks disgorgement of ill-gotten gains, prejudgment interest and civil monetary penalties. For further information, see Litigation Release No. 17117 (September 6, 2001).


Modified: 11/23/2001