UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
Release No. 49395 / March 11, 2004
File No. 3-11430
PUBLIC ADMINISTRATIVE PROCEEDINGS INSTITUTED AGAINST JOSEPH F. DESANTO
On March 11, 2004, the Commission entered an Order Instituting Public Administrative Proceedings Pursuant to Section 15(b)(6) of the Securities Exchange Act of 1934 (Order) against Joseph F. DeSanto (DeSanto). In the Order, the Division of Enforcement alleges that on May 21, 2002, DeSanto pled guilty to one count of mail fraud in violation of Title 18 United States Code, Section 1341, before the United States District Court for the Middle District of Florida, in United States v. DeSanto, et. al., Case No. 01-CR-350-ALL, arising out of his association with The Hamilton Shea Group Inc. (Hamilton Shea), a broker-dealer registered with the Commission.
The count of the criminal indictment to which DeSanto pled guilty alleged that from at least January 1993 through December 1998, DeSanto used undisclosed nominee accounts to gain control over the trading in, and to artificially inflate the prices of, the securities of Novatek International, Inc., among other securities. In addition, the indictment alleged that DeSanto directed registered representatives at Hamilton Shea to: (1) make baseless price predictions and other material misrepresentations and omissions concerning these securities; (2) engage in or enforce a "no-net-sales" policy with respect to these securities by refusing to execute customer sell orders unless the registered representative could find another customer at the firm to purchase the stock; and (3) effect unauthorized purchases of securities in the accounts of firm customers.
On December 6, 2002, DeSanto was sentenced to a prison term of five years followed by three years of supervised release and was ordered to pay restitution in the amount of $11,608,758.
A hearing will be scheduled before an administrative law judge to determine whether the allegations contained in the Order are true, to provide DeSanto an opportunity to dispute these allegations, and to determine what remedial sanctions, if any, are appropriate and in the public interest.