SECURITIES AND EXCHANGE COMMISSION
Securities Act of 1933
Securities Exchange Act of 1934
Admin. 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
The Securities and Exchange Commission today instituted public administrative proceedings against the following persons:
In the Order instituting proceedings, the Division of Enforcement alleges that, from early 1995 through September, Respondents engaged in the following unlawful conduct:
Piazza, Labate, and other principals of DMN Capital Investments, Inc. (ďDMNĒ) manipulated the public trading markets for 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"). In each scheme, Piazza and Labate acquired control over a substantial amount of free-trading securities issued by the public company and, thereafter, engaged in transactions to manipulate the public market price for those securities, including paying bribes to brokers, both directly and through promoters such as Cimino, in exchange for the brokers causing their retail customers to purchase the securities owned or controlled by DMN, Piazza and Labate.
From approximately September 1995 through September 1996, Piazza, Labate and their business partners secretly directed operations at several branch offices of Monitor Investment Group, Inc. ("Monitor"), a registered broker-dealer. Palla, the disclosed principal of Monitor, and Gennusso, Monitorís compliance officer, were aware of and participated in the manipulation schemes involving Beachport and International Nursing.
In late 1994 or early 1995, DMN acquired control of a large block of free-trading common stock that had been issued by Spaceplex under Rule 504 of Regulation D. In early 1995, Piazza and one of DMNís other principals entered into an agreement with Cimino whereby: (a) Cimino agreed to pay bribes to retail brokers to cause those retail brokers to recommend and sell Spaceplex common stock to their customers; and (b) DMN agreed to pay Cimino an amount equal to 35% of the gross sales proceeds generated by the brokers who received bribes from Cimino (the "35% Kickback"). Later in 1995, DMN began paying bribes directly to brokers that had been introduced by Cimino but still paid Cimino a small ďoverrideĒ on the retail purchases caused by those brokers of Spaceplex and the other stocks discussed below.
During 1995, DMNís principals, including Piazza and Labate, paid bribes, directly and indirectly, to the following brokers in exchange for these persons causing their retail customers to purchase Spaceplex common stock: Nejaime, Radigan, Gallo, Robert Dacunto, Michael Dacunto, Meduri, Vincent Padulo, Vito Padulo, Bruzzese, Ruggiero, 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.
In mid-1995, DMNís principals, including Piazza and Labate, received control of a large block of free-trading stock issued by Reclaim pursuant to Regulation S. Although none of DMNís principals were foreign investors, the foreign nominees of DMNís principals immediately executed stock powers to transfer control of the Regulation S stock to DMNís principals immediately after expiration of a forty day holding period. In addition, Reclaim issued a block of free-trading stock under Regulation S-8 to DMNís principals.
DMN paid bribes to the following brokers in exchange for these persons causing their retail customers to purchase Reclaim common stock: Gallo, Robert Dacunto, Michael Dacunto, Meduri, Vincent Padulo, Vito Padulo, Ruggiero, Nejaime, Radigan, Chicosky, Choiniere, Burke, Bisnoff, Douglas McGuinn, and Danieli. 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.
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, DMNís principals, including Piazza and Labate, had assumed control over at least two branch offices of Monitor.
DMN paid bribes to the following brokers in exchange for these persons causing their retail customers to purchase Beachport common stock: Gallo, Robert Dacunto, Michael Dacunto, Bruzzese, Giglio, Nejaime, Radigan, Weissman, Fuina, Ponce, Stitsky, Paul Burton, Marc Burton, Fuina, Chicosky, Choiniere, Burke, and McGuinn. None of these persons 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 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 3 classes of publicly-traded securities issued by International Nursing: preferred, common, and warrants.
DMN paid bribes to the following brokers in exchange for these persons causing their retail customers to purchase International Nursing common stock: Gallo, Robert Dacunto, Bruzzese, Giglio, Nejaime, Radigan, Weissman, Dinota, Ponce, Caso, Catalano, Bisnoff, Burke. None of these persons disclosed the payments they received from DMN to their retail customers at the time that they caused their customers to purchase International Nursing securities.
Piazza, Labate, and their business partners received at least $5 million in illicit profits from the manipulation schemes described above. Cimino and the other participants in the schemes received at least $3 million in illicit profits.
The Order alleges that Respondents willfully violated Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
A hearing will be held before an Administrative Law Judge to determine whether the allegations against Respondents are true and, if so, what remedial action, if any, is appropriate.