Businessman Convicted in Fraud Scheme
|U.S. Attorney’s Office November 04, 2013|
BOSTON—The former treasurer and chairman of the Board of Directors of Nevada-based First Global Financial Corporation was convicted today for his participation in a fraudulent kickback scheme.
Albert Reda, 67, of Tustin, California, was convicted following a six-day jury trial. Reda was convicted of wire fraud and mail fraud. U.S. District Court Judge Denise J. Casper scheduled sentencing for February 11, 2014.
Reda was convicted for his participation in a scheme to pay secret kickbacks to an investment fund representative in exchange for having the investment fund buy stock in the defendant’s company, a publicly traded company that traded on the over-the-counter securities market. The kickbacks were concealed through the use of a sham consulting agreement and other fraudulent documents, such as bogus invoices. What the defendant did not know was that the purported investment fund representative was actually an undercover agent with the Federal Bureau of Investigation.
The conviction followed a year-long investigation focusing on preventing fraud in the microcap stock markets. Microcap companies are small publicly traded companies whose stock often trades at pennies a share. Fraud in the microcap markets is of increasing concern to regulators as such markets have proven to be fertile grounds for fraud and abuse. This is, in part, because accurate information about microcap stocks may be difficult for the average investor to find, since many microcap companies do not file financial reports with the SEC.
To date, 15 individuals have been charged arising from the FBI’s undercover operation, and all 15 have been convicted, either after trial or by way of a guilty plea.
The statutory maximum penalties for mail and wire fraud are 20 years in prison, to be followed by three years of supervised release and a $250,000 fine.
The Securities and Exchange Commission, which conducted a parallel civil investigation alongside the FBI undercover operation, cooperated with criminal authorities in bringing these charges and charges against other defendants who participated in the kickback scheme. The Financial Industry Regulatory Authority (FINRA) provided assistance with the trial.
United States Attorney Carmen M. Ortiz and Vincent B. Lisi, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, announced the conviction today. The case was prosecuted by Assistant U.S. Attorneys Vassili Thomadakis, Eric P. Christofferson and Sarah E. Walters of Ortiz’s Economic Crimes Unit.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch and, with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information about the task force, visit www.stopfraud.gov.