Robert F. Fox, Karim M. Lamarti, Charles S. Pipia, Charles J. Principato, Jr., James A. Sammartano, Mark Sanfilippo, Angelo M. Scifo, Jr., Shawn J. Smith, J. Vincent Tarantino, Clyde Anthony Williams
SECURITIES EXCHANGE ACT OF 1934
Release No. 48483 / September 11, 2003
ADMINISTRATIVE PROCEEDING
File No. 3-11256
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ORDER INSTITUTING PROCEEDINGS PURSUANT TO SECTION 15(b)(6) OF THE SECURITIES EXCHANGE ACT OF 1934, MAKING FINDINGS AND IMPOSING REMEDIAL SANCTIONS |
I.
The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that a public administrative proceeding be, and hereby is, instituted pursuant to Section 15(b)(6) of the Securities Exchange Act of 1934 ("Exchange Act") against Robert F. Fox ("Fox"), Karim M. Lamarti ("Lamarti"), Charles S. Pipia ("Pipia"), Charles J. Principato, Jr. ("Principato"), James A. Sammartano ("Sammartano"), Mark Sanfilippo ("Sanfilippo"), Angelo M. Scifo, Jr. ("Scifo"), Shawn J. Smith ("Smith"), J. Vincent Tarantino ("Tarantino"), and Clyde Anthony Williams ("Williams") ("collectively Respondents").
II.
Respondents have submitted Offers of Settlement ("Offers") that the Commission has determined to accept. On the basis of the foregoing, Respondents hereby:
A. Admit the jurisdiction of the Commission over them and over the matters set forth in the Order Instituting Proceedings Pursuant to Section 15(b)(6) of the Securities Exchange Act of 1934, Making Findings and Imposing Remedial Sanctions;
B. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission or to which the Commission is a party, and without admitting or denying the Commission's findings contained in the Order, except as to the fact of their criminal convictions set forth in Section III.B. below, which is admitted, consent to the entry of an Order by the Commission containing the following findings and remedial sanctions set forth below:
III.
On the basis of this Order and Respondents' Offers, the Commission finds that:
A. Respondents
1. Fox, age 38, was a registered representative at A.S. Goldmen & Co., Inc. ("Goldmen"), a broker-dealer registered with the Commission, from November 1993 to April 1996. Fox was also a registered representative at the following broker-dealers registered with the Commission: Allegiance Securities, Inc. (December 1988 to August 1989); Davis & Kahn Equities, Inc. (August 1989 to September 1989); Paine Webber Incorporated (November 1989 to March 1990); D.H. Blair & Co., Inc. (April 1990 to August 1991); Hanover Sterling & Company Ltd. (August 1991 to January 1992); GKN Securities Corp. (January 1992 to November 1993); Meyers Pollock Robbins, Inc. (April 1996 to August 1996); Global Equities Group Inc. (August 1995 to January 1997); and Alden Capital Markets, Inc. (March 1997 to August 1997). Fox is a resident of New Jersey.
2. Lamarti, age 33, was a registered representative at Goldmen from March 1996 to October 1998. Lamarti is a resident of New York.
3. Pipia, age 33, was a registered representative at Goldmen from October 1993 to May 1997. From May 1997 to July 1999, Pipia was a registered representative at R.D. White & Co., Inc., a broker-dealer registered with the Commission. Pipia is a resident of New York.
4. Principato, age 41, was a registered representative at Goldmen from July 1990 to April 1996 and was a manager in Goldmen's New York office. Principato was also a registered representative at the following broker-dealers registered with the Commission: Madison, Chapin Associates, Inc. (February 1990 - May 1990); First Fidelity Capital Corp. (May 1990 - June 1990); and R.D. White & Co., Inc. (April 1996 - July 1999).
5. Sammartano, age 31, was a registered representative Goldmen from April 1997 to April 1998. Sammartano has also been a registered representative at the following broker-dealers registered with the Commission: First Hanover Securities, Inc. (November 1995 - April 1997); LCP Capital Corp. (June 1998 - November 1998); Mayer & Schweitzer, Inc. (October 1998 - July 1999); and M.H. Meyerson & Co., Inc. (December 1999 - October 2000). Sammartano is a resident of New York.
6. Sanfilippo, age 33, was an employee of Goldmen from May 1989 to October 1998. Sanfilippo was a registered representative at Goldmen and ultimately become an assistant trader. Sanfilippo is a resident of New York.
7. Scifo, age 31, was a registered representative at Goldmen from July 1995 to September 1998. Scifo has also been a registered representative at the following broker-dealers: R.D. White & Co., Inc. (April 1996 - June 1996); H.J. Meyers & Co., Inc. (September 1998); Lloyd Wade Securities Inc. (September 1998 - November 1998); and Redstone Securities, Inc. (May 1999 - June 2000). Scifo is a resident of the State of New York.
8. Smith, age 29, was a registered representative at Goldmen from July 1995 to May 1997. From May 1997 to December 1997, Smith was a registered representative at R.D. White & Co., Inc., and from December 1997 to July 1999 was a registered representative at Cantone Research Inc. Smith is a resident of New Jersey.
9. Tarantino, age 30, was a registered representative at Goldmen from April 1997 to October 1998. Tarantino is a resident of New York.
10. Williams, age 31, was a registered representative at Goldmen from January 1997 to October 1998. He has also been a registered representative at the following broker-dealers: Americorp Securities, Inc. (August 1995 - January 1996); First Hanover Securities (January 1996 - January 1997); and, Continental Broker-Dealer Corp. (October 1998 - July 1999). Williams is a resident of New Jersey.
B. State Criminal Convictions
1. On June 18, 1999, Fox was criminally convicted of the crime of attempted enterprise corruption by the entry of his plea of guilty by the Supreme Court of the State of New York. Fox was sentenced to probation and to pay forfeiture in the amount of $10,000. According to the plea allocution upon which his conviction was based, Fox had knowledge of the existence of a criminal enterprise and the nature of its activities, and, being employed by and associated with such enterprise, intentionally attempted to conduct and participate in the affairs of an enterprise by participating in a pattern of criminal activity. Specifically, Fox, while acting as a registered representative at Goldmen, and others, engaged in fraud by engaging in conduct constituting at least three of the criminal acts included in the pattern of criminal activity as follows: (1) refusing to execute customer sell orders; (2) executing unauthorized transactions in customer accounts; (3) failing to comply with lawful regulatory requests; (4) misleading regulators conducting investigations; (5) lying under oath and suppressing customer complaints by improper compensation to avoid required regulatory reporting; and (6) falsifying business records to conceal prohibited transactions in brokerage accounts in which he had a beneficial interest.
2. On June 10, 1999, Lamarti was criminally convicted of attempted enterprise corruption upon the entry of his plea of guilty by the Supreme Court of the State of New York. Lamarti was sentenced to probation. According to the plea allocution upon which his conviction was based, Lamarti had knowledge of the existence of a criminal enterprise and the nature of its activities, and, being employed by and associated with such enterprise, intentionally attempted to conduct and participate in the affairs of an enterprise by participating in a pattern of criminal activity. Specifically, Lamarti, while acting as a registered representative at Goldmen, and others, engaged in fraud by engaging in conduct constituting at least three of the criminal acts included in the pattern of criminal activity as follows: (1) making misrepresentations and false statements regarding the nature and value of certain securities that he sold to investors;
(2) making misrepresentations and failing to disclose material facts concerning the business, business plans, profitability, and financial stability of certain securities that he sold to investors;
(3) misrepresenting and failing to disclose material facts concerning the true market, liquidity, safety and suitability of certain securities that he sold to investors; (4) making and causing to be made false entries in the business records of two enterprises with respect to the purported purchases of certain securities in nominee accounts maintained at Goldmen; and (5) refusing to execute customer sell orders.
3. On May 10, 2002, Pipia was criminally convicted of the crime of attempted enterprise corruption upon the entry of his plea of guilty by the Supreme Court of the State of New York. He was sentenced to 5 years probation and to pay forfeiture in the amount of $100,000. According to the plea allocution upon which his conviction was based, Pipia, acting as a registered representative of Goldmen, and others, had knowledge of the existence of a criminal enterprise and the nature of its activities, and being employed by and associated with such enterprise, engaged in a pattern of criminal activity that included: (1) making misrepresentations and false statements regarding the nature and value of certain securities that he sold to investors; (2) failing to disclose the extent to which certain securities distributed in an initial public offering had been placed into nominee and controlled accounts for no or nominal consideration; (3) misrepresenting and failing to disclose the extent to which employees of Goldmen were scheming to control, and were controlling, the market for those securities;
(4) misrepresenting and failing to disclose the extent to which prices of certain securities were dependent on the continued existence of that scheme; and (5) misrepresenting and failing to disclose the extent to which customers had been, were being, and would be discouraged and restrained from selling certain securities. In addition, Respondent made and caused to be made a false entry in certain business records and undertook other unlawful activities including refusals to execute customer sell orders, manipulation of securities prices, and making unauthorized transactions in customer accounts.
4. On December 18, 2000, Principato was criminally convicted of the crimes of enterprise corruption based on conduct arising during Principato's association with Goldmen, and for securities fraud based upon conduct arising during Principato's association with R.D. White & Co., Inc., upon the entry of his plea of guilty by the Supreme Court for the State of New York. Principato was sentenced to a term of imprisonment of 4 to 12 years. According to Part One of the plea allocution upon which his conviction was based, Principato, acting as a registered representative and manager at Goldmen, and others, directly or through accomplices acting at their direction and control, engaged in a pattern of criminal activity that included:
(1) making misrepresentations and false statements regarding the nature and value of certain securities that he sold to investors and failing to disclose the extent to which the securities distributed in an initial public offering had been placed into nominee and controlled accounts;
(2) misrepresenting and failing to disclose the extent to which employees of Goldmen were scheming to control, and were controlling, the market for those securities; misrepresenting and failing to disclose the extent to which the prices of certain securities were dependant on the continuation of that scheme; (3) misrepresenting and failing to disclose the extent to which Goldmen brokers were being compensated for selling those securities; (4) misrepresenting and failing to disclose the extent to which customers had been, were being, and would be discouraged and restrained from selling those securities. According to Part Two of the plea allocution upon which his conviction was based, Principato, acting as a registered representative at R.D. White & Co., engaged in the conduct including the following: (1) making fraudulent misrepresentations of material facts concerning the nature of certain securities that he sold to investors; (2) failing to disclose material facts concerning the nature of certain securities that he sold to investors; (3) making misleading statements to investors including unreasonable price predictions and statements about his expected compensation; (4) imparting or intimating that he possessed material nonpublic information; and (5) otherwise engaging in fraudulent conduct.
5. On September 10, 2001, Sammartano was criminally convicted of the crime of scheme to defraud in connection with the sale of securities upon the entry of his plea of guilty by the Supreme Court for the State New York. Sammartano was sentenced to probation. Based on the plea allocution upon which his conviction was based, Sammartano, while a registered representative of Goldmen, engaged in fraud by: (1) making misrepresentations about the value and certain securities that he sold to investors; (2) providing investors with untrue information about the company's financial prospects; (3) failing to disclose material information to investors about certain securities he was selling to them, or about the unlawfully high sales commissions he was receiving, and that certain stocks sold by Goldmen were essentially controlled and manipulated by Goldmen.
6. On November 20, 2001, Sanfilippo was criminally convicted of the crime of perjury upon the entry of his plea of guilty by the Supreme Court for the State of New York. Sanfilippo was sentenced to probation. Based upon the plea allocution upon which his conviction was based, Sanfilippo provided false testimony to a Grand Jury investigating the business and affairs of Goldmen. Specifically, Sanfilippo testified that he had never heard of instances of false or "nominee" accounts at his employer, Goldmen. In fact, Sanfilippo had specific knowledge of, and participated in discussions regarding, nominee accounts at Goldmen. In addition, Sanfilippo had personally benefited from unlawful securities transactions in nominee accounts at Goldmen, and by so doing made and caused to be made false entries in business records. According to the plea allocution upon which his conviction was based, Sanfilippo, while a registered representative and assistant trader at Goldmen, also engaged in the following: (1) unlawfully controlling securities through nominee and other controlled accounts;
(2) falsifying business records; (3) refusing to comply with customers' orders to sell securities; (4) charging undisclosed and excessive markups and commissions; (5) systematically violating "blue sky" registration laws; (6) unlawfully failing to report certain transactions to NASDAQ; (7) making misleading and false statements to investors; and (8) suppressing regulatory action based on customer complaints by executing transactions through which injured customers received payments via controlled transactions in IPO warrants.
7. On September 10, 2001, Scifo was criminally convicted of the crime of scheme to defraud in connection with the sale of securities upon the entry of his plea of guilty by the Supreme Court for the State of New York. Scifo was sentenced to probation. According to the plea allocution upon which his conviction was based, Scifo, acting as a registered representative of Goldmen, engaged in fraud by: (1) making misrepresentations and false statements regarding the nature and value of certain securities that he sold to investors; (2) misrepresenting and failing to disclose purchases and sales of securities based on material non-public information by employees and associates of Goldmen; (3) misrepresenting and failing to disclose the extent to which Goldmen brokers were compensated for selling securities to investors, and;
(4) misrepresenting and failing to disclose material facts concerning the true nature, safety and suitability of certain securities that he sold to investors.
8. On May 3, 2002, Smith was criminally convicted of the crime of attempted enterprise corruption, and was sentenced to probation and to pay forfeiture of $10,000. According to the plea allocution upon which his conviction was based, Smith, acting as a registered representative of Goldmen, and others, directly or through accomplices acting at their direction and control, engaged in a pattern of criminal activity that included: (1) making misrepresentations and false statements regarding the nature and value of certain securities that he sold to investors and failing to disclose the extent to which the securities distributed in an initial public offering had been placed into nominee and controlled accounts;
(2) misrepresenting and failing to disclose the extent to which employees of Goldmen were scheming to control, and were controlling, the market for those securities; misrepresenting and failing to disclose the extent to which the prices of certain securities were dependant on the continuation of that scheme; (3) misrepresenting and failing to disclose the extent to which Goldmen brokers were being compensated for selling those securities; (4) misrepresenting and failing to disclose the extent to which customers had been, were being, and would be discouraged and restrained from selling those securities.
9. On November 2, 2001, Tarantino was criminally convicted of the crime of scheme to defraud in connection with the sale of securities upon the entry of his plea of guilty by the Supreme Court of the State of New York, and sentenced to probation. Based on the plea allocution upon which his conviction was based, Tarantino, while a registered representative at Goldmen, engaged in fraud by: (1) misrepresenting and failing to disclose material facts concerning the nature and value of certain securities he sold to investors; and (2) misrepresenting and failing to disclose the extent to which Goldmen brokers were being compensated for selling those securities.
10. On October 3, 2001, Williams was criminally convicted of the crime of scheme to defraud and was sentenced to probation. Based on the plea allocution upon which his conviction was based, Williams, while a registered representative at Goldmen, engaged in fraud by: (1) misrepresenting and failing to disclose material facts concerning the nature and value of certain securities he sold to investors; (2) misrepresenting and failing to disclose the extent to which Goldmen and other persons were scheming to control and were controlling, certain securities; (3) misrepresenting and failing to disclose certain purchases and sales of securities by Goldmen associates based on material, non-public information; (4) misrepresenting and failing to disclose that Goldmen was purchasing and exercising certain securities for its own account at prices lower than were being offered to investors; (5) misrepresenting and failing to disclose the extent to which Goldmen brokers were being compensated for selling those securities; and (6) misrepresenting and failing to disclose material facts concerning the true market, liquidity, safety and suitability of certain securities that he sold to investors.
IV.
Based on the foregoing, the Commission deems it appropriate and in the public interest to accept Respondents' Offers and to impose the sanctions that are set forth in the Offers.
ACCORDINGLY, IT IS ORDERED that, pursuant to Section 15(b)(6) of the Exchange Act, Respondents be, and hereby are, barred from association with any broker or dealer.
By the Commission.
Jonathan G. Katz
Secretary