U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 18909 / September 29, 2004
Securities and Exchange Commission v. Robert J. Cassandro, Michael C. Cardascia, and Stephen E. Apolant, Defendants, and Joan Cardascia, Relief Defendant, Civil Case No. CV-04-4199 (Spatt, J.) (E.D.N.Y. filed September 29, 2004)
SEC Sues Attorney and Two Stock Promoters in Anthrax Hoax Case
On September 29, 2004, the Commission filed a civil action against an attorney, Robert J. Cassandro, and two stock promoters, Michael C. Cardascia and Stephen E. Apolant, in a case that arose out of a fraudulent scheme to manipulate the price of Spectrum Brands Corporation's stock by exploiting the fear of bio-terrorism following September 11, 2001. Specifically, the complaint alleges that Spectrum Brands was secretly managed and controlled by a group of stock promoters in Hicksville, New York, some of whom were convicted felons. The complaint further alleges that to conceal its true ownership from the investing public, Spectrum Brands stated in a Form 8-K filed with the Commission on or about October 31, 2001, that a Michael J. Burns was the sole officer and director of the company and that the corporate address was in Hauppauge, New York. In truth, Burns had little or no management responsibility for Spectrum Brands and the Hauppauge address was a mail drop. The complaint alleges that Cassandro participated in drafting the false and misleading statements in the Form 8-K while knowing that the statements were false and misleading. Also, according to the complaint, Michael Cardascia and Apolant helped promote Spectrum Brands stock via internet, radio, bulk e-mail, and fax while knowing that these communications contained false and misleading statements regarding the identity of the persons controlling and managing Spectrum Brands. The complaint also alleges that Michael Cardascia bought Spectrum Brands stock privately at a discount and that his wife Joan Cardascia, who was named as a relief defendant, was unjustly enriched when she sold it at inflated prices.
The Commission charged Cassandro with primary and aiding and abetting violations of Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder. The Commission charged Michael Cardascia and Apolant with aiding and abetting violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The Commission seeks permanent injunctions, an accounting of all gains garnered, disgorgement of such gains, with prejudgment interest, and civil money penalties. The Commission also seeks an order providing that Joan Cardascia disgorge the amount by which she was unjustly enriched, with prejudgment interest. This case is related to Securities and Exchange Commission v. Spectrum Brands Corp., Saverio (Sammy) Galasso III, David Hutter (a/k/a David Green), Charlie Dilluvio and Michael J. Burns, Civil Case No. CV-01-8257 (Spatt, J.)(E.D.N.Y. filed December 11, 2001)[LR - 17265), in which the Commission alleged that, among other things, Spectrum Brands falsely claimed that it had a product that could "wipe out surface germs in less than 5 seconds, including anthrax."
The Commission acknowledges assistance provided by NASD Regulation Inc., the United States Attorney's Office for the Eastern District of New York and the United States Postal Inspection Service in this matter.
For tips on how to avoid Internet "pump-and-dump" stock manipulation schemes, visit http://www.sec.gov/investor/online/pump.htm. For more information about Internet fraud, visit http://www.sec.gov/divisions/enforce/internetenforce.htm. To report suspicious activity involving possible Internet fraud, visit http://www.sec.gov/complaint.shtml.