Securities and Exchange Commission
Litigation Release No. 17724 / September 12, 2002
Securities and Exchange Commission v. Edward R. Voccola, Civil Action No. 01CV11359-NG (D. MA) United States District Court for the District of Massachusetts (August 6, 2001)
United States v. Edward R. Voccola Criminal No. 02-10257-REK
Former State Street Executive Criminally Indicted for Securities Fraud
The Securities and Exchange Commission ("Commission") announced today that on September 10, 2002, Edward R. Voccola ("Voccola") of Boston was indicted by the U.S. Attorney for the District of Massachusetts on 18 criminal counts, including 11 counts of securities fraud.
The indictment charges that from February, 2000 through August, 2000, Voccola engaged in free-riding, the practice of purchasing securities without intending to pay for them and using the proceeds of the sale of stock to pay for the purchase. Voccola opened accounts at the Boston offices of eleven brokerage firms and bought millions of dollars of stock, which he paid for with worthless checks totaling more than $4.9 million. He then quickly sold the stock, often at a profit, to pay for the original purchases and buy additional stock. However, if the trades lost money, he did not cover the loss. Instead, according to the indictment, he defrauded the brokerage firms by shifting over $190,000 in losses to them. The indictment further alleges that Voccola's free-riding scheme took place when he was under criminal indictment for tax evasion and continued even after a federal court ordered him to restrict his securities trading. Voccola later pleaded guilty to the tax evasion charges and was sentenced to twelve months in prison. If convicted on the current criminal charges, Voccola faces up to five years imprisonment, to be followed by three years of supervised release, and a $250,000 fine on each count.
On August 6, 2001, the Commission filed a civil complaint against Voccola in connection with the scheme described above. The Commission's complaint charges that Voccola's conduct violated the antifraud provisions of the Securities Act of 1933 (Section 17(a)) and the Securities Exchange Act of 1934 (Section 10(b) and Rule 10b-5 thereunder). The Commission's complaint seeks a permanent injunction against violations of the securities laws, disgorgement by Voccola of his illegal profits and the losses he caused the brokerage firms to incur, and civil monetary penalties. See Litigation Release No. 17091 (August 6, 2001). The Commission's motion for summary judgment, filed July 31, 2002, is currently pending.
The criminal case is being prosecuted by Assistant U.S. Attorney Stephen G. Huggard of the U.S. Attorney's Public Corruption & Special Prosecutions Unit and Special Assistant U.S. Attorney Lauren Albrecht on detail from the Commission.