UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Litigation Rel. No. 17117 / September 6, 2001
SEC SEEKS EMERGENCY RELIEF AGAINST NEW YORK CITY BROKER ENGAGED IN IDENTITY THEFT AND MARKET MANIPULATION
SEC v. Robert C. Ingardia (United States District Court for the Southern District of New York, C.A. No. 01 CV 8356, filed September 6, 2001)
The Securities and Exchange Commission announced that it filed a complaint today seeking emergency injunctive relief against Robert C. Ingardia, a 25-year old registered representative at the New York City brokerage firm of Joseph Stevens & Co. the complaint alleges that since at least June 2001, Ingardia has engaged in a complex fraud involving identity theft, unauthorized transactions and penny stock manipulation. To effect this fraud, Ingardia and unidentified third parties working in concert with him have impersonated investors at large brokerage firms and made more than $1 million worth of unauthorized trades in these unsuspecting customers' brokerage accounts in an effort to manipulate the market for two thinly-traded penny stock companies, Converge Global, Inc., a Utah corporation headquartered in Santa Monica, California and Equity Technologies & Resource, Inc.
The Complaint alleges that Ingardia obtained confidential identifying information about brokerage customers through accounts that they held with him at his current firm, Joseph Stevens and from brokerage firms with which Ingardia was previously associated. Some of this confidential information included the location of other brokerage accounts that the customers held. In June 2001, Ingardia began placing telephone calls to Fidelity, Charles Schwab and Brown & Co. and other firms in which he falsely claimed to be one of the account holders. He then provided the firms with information such as dates of birth, addresses and social security numbers in order to effectuate trades. Often, as part of the scheme, Ingardia would also request an address change, to prevent the account holders (who lived in various states, including New Jersey, Massachusetts and Rhode Island) from receiving confirmations of the unauthorized trades.
The Commission alleges that through this scheme, Ingardia successfully liquidated more than $800,000 worth of stock from unsuspecting investors' accounts and used the proceeds to purchase or attempt to purchase approximately one million shares of Converge stock and approximately two million shares of Equity Technologies stock. Transactions effected by Ingardia often accounted for a large percentage of all shares traded in Converge and Equity Technologies on those days. In addition, in multiple instances, the large orders Ingardia placed were filled in smaller blocks at successively rising prices. All of these transactions, the Commission alleges, were part of a manipulative scheme to create the artificial appearance of demand for the securities in question, enabling unidentified sellers to profit and inducing others to buy these stocks based on unexplained increases in the volume and price of the shares.
As a result of the conduct described in the complaint, the Commission has charged Ingardia with 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. In addition seeking a temporary restraining order prohibiting such transactions, the Commission seeks to permanently enjoin Ingardia from continuing to violate these laws. The Commission also seeks disgorgement of ill-gotten gains, prejudgment interest and civil monetary penalties.
In addition to the Commission's civil action against Ingardia, he was arrested on charges of securities fraud on Tuesday, September 4, 2001, by the United States Attorney's Office for the Southern District of New York. The Commission would like to acknowledge the assistance of that office in connection with this matter.