Department of Justice
Office of Public Affairs
FOR IMMEDIATE RELEASE
Tuesday, May 21, 2013
Attorney Convicted in Multimillion-Dollar Stock Fraud
Attorney Mitchell J. Stein, 53, of Hidden Hills, Calif., was convicted by a jury in the Southern District of Florida for his role in operating a five-year, multimillion-dollar market manipulation and fraud scheme, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division.
Stein was charged in a December 2011 indictment and on May 20, 2013, he was convicted on all counts: conspiracy to commit mail and wire fraud and three counts each of mail fraud and wire fraud, each of which carries a maximum penalty of 20 years in prison; three counts of securities fraud, which each carry a maximum penalty of 25 years; three counts of money laundering, which each carry a maximum penalty of 10 years; and one count of conspiracy to obstruct justice, which carries a maximum penalty of five years in prison. Stein is being detained until sentencing, which is scheduled for Aug. 16, 2013.
According to evidence presented at trial, Stein’s wife held a controlling interest in Signalife Inc., a publicly-traded company currently known as Heart Tronics that purportedly sold electronic heart monitoring devices. Stein engaged in a scheme to artificially inflate the price of Signalife stock by creating the false impression of sales activity for Signalife. Specifically, the evidence at trial showed that Stein and his co-conspirators created fake purchase orders and related documents from fictitious customers, then caused Signalife to issue press releases and file documents with the U.S. Securities and Exchange Commission (SEC) trumpeting these fictitious sales. Evidence at trial also proved that in a further effort to create the false appearance of sales activity, Stein arranged to have Signalife products shipped to and temporarily stored with an individual who had not purchased any products.
Evidence at trial further proved that Stein disguised his selling of stock during the conspiracy by placing shares in purportedly blind trusts, and that he had a co-conspirator sell shares of Signalife stock after Stein caused false information to be disseminated to the public. Stein also caused Signalife to issue shares to third parties so that those third parties could sell the shares and remit the proceeds of those sales to Stein. From one co-conspirator alone, Stein received illicit gains of over $1.8 million.
In addition, evidence at trial proved that Stein conspired to obstruct the SEC’s investigation into Heart Tronics by testifying falsely and arranging for others to testify falsely in an effort to conceal the scheme described above.
This case was investigated by the U.S. Postal Inspection Service and the Office of the Special Inspector General for the Troubled Asset Relief Program.
This matter was referred to the Department by the SEC, which conducted a parallel investigation and in December 2011 announced the filing of a civil enforcement action against Stein and others. The Department thanks the SEC for its substantial assistance in this matter. The Department also acknowledges the substantial assistance of FINRA’s Criminal Prosecution Assistance Group.
This case is being prosecuted by Assistant Chief Albert B. Stieglitz, Jr. and Trial Attorneys Kevin B. Muhlendorf and Andrew H. Warren of the Criminal Division’s Fraud Section.
Stein was charged in a December 2011 indictment and on May 20, 2013, he was convicted on all counts: conspiracy to commit mail and wire fraud and three counts each of mail fraud and wire fraud, each of which carries a maximum penalty of 20 years in prison; three counts of securities fraud, which each carry a maximum penalty of 25 years; three counts of money laundering, which each carry a maximum penalty of 10 years; and one count of conspiracy to obstruct justice, which carries a maximum penalty of five years in prison. Stein is being detained until sentencing, which is scheduled for Aug. 16, 2013.
According to evidence presented at trial, Stein’s wife held a controlling interest in Signalife Inc., a publicly-traded company currently known as Heart Tronics that purportedly sold electronic heart monitoring devices. Stein engaged in a scheme to artificially inflate the price of Signalife stock by creating the false impression of sales activity for Signalife. Specifically, the evidence at trial showed that Stein and his co-conspirators created fake purchase orders and related documents from fictitious customers, then caused Signalife to issue press releases and file documents with the U.S. Securities and Exchange Commission (SEC) trumpeting these fictitious sales. Evidence at trial also proved that in a further effort to create the false appearance of sales activity, Stein arranged to have Signalife products shipped to and temporarily stored with an individual who had not purchased any products.
Evidence at trial further proved that Stein disguised his selling of stock during the conspiracy by placing shares in purportedly blind trusts, and that he had a co-conspirator sell shares of Signalife stock after Stein caused false information to be disseminated to the public. Stein also caused Signalife to issue shares to third parties so that those third parties could sell the shares and remit the proceeds of those sales to Stein. From one co-conspirator alone, Stein received illicit gains of over $1.8 million.
In addition, evidence at trial proved that Stein conspired to obstruct the SEC’s investigation into Heart Tronics by testifying falsely and arranging for others to testify falsely in an effort to conceal the scheme described above.
This case was investigated by the U.S. Postal Inspection Service and the Office of the Special Inspector General for the Troubled Asset Relief Program.
This matter was referred to the Department by the SEC, which conducted a parallel investigation and in December 2011 announced the filing of a civil enforcement action against Stein and others. The Department thanks the SEC for its substantial assistance in this matter. The Department also acknowledges the substantial assistance of FINRA’s Criminal Prosecution Assistance Group.
This case is being prosecuted by Assistant Chief Albert B. Stieglitz, Jr. and Trial Attorneys Kevin B. Muhlendorf and Andrew H. Warren of the Criminal Division’s Fraud Section.
Posts
No comments:
Post a Comment