Home Philadelphia Press Releases 2010 Former CFO Sentenced to 51 Months for Stock Manipulation Scheme
Info
This is archived material from the Federal Bureau of Investigation (FBI) website. It may contain outdated information and links may no longer function.

Former CFO Sentenced to 51 Months for Stock Manipulation Scheme

U.S. Attorney’s Office September 07, 2010
  • Eastern District of Pennsylvania (215) 861-8200

PHILADELPHIA—Richard Margulies, 59, of Edison, NJ, the former chief financial officer for Advatech, Inc., was sentenced today to 51 months in prison for his attempt to artificially inflate the company’s stock price, announced United States Attorney Zane David Memeger.

Margulies was Advatech’s chief financial officer and a director when, in June 2008, he hired two individuals to make manipulative purchases in the company’s stock in exchange for illegal kickbacks. Margulies provided them with shareholder lists, confidential information about the company, and non-public press releases. As part of the scheme, Margulies coordinated the release of news with the purchases and was captured on tape instructing them that they should “move [the stock] up nice and slow, so it doesn’t look like we’re a bunch of idiots.” The court found that Margulies intended to cause between $2.5 million and $7 million in losses through his illegal scheme.

In addition to the prison term, U.S. District Court Judge Eduardo C. Robreno ordered Margulies to pay a fine in the amount of $12,500 and to serve five years on supervised release, a condition of which is that he not serve as an officer or director of a publicly traded company.

Advatech Corporation (“Advatech”) is a West Palm Beach, Florida, corporation that describes itself as an early stage biotechnology company engaged in the research and development and the commercialization of non-invasive electrical therapies. Advatech stock is publicly traded under the ticker symbol “ADVA” on Pink OTC Markets Inc., an inter-dealer electronic quotation and trading system in the over-the-counter (“OTC”) securities market commonly referred to as the “Pink Sheets.”1

The case was investigated by the United States Securities and Exchange Commission and the Federal Bureau of Investigation. It was prosecuted by Assistant United States Attorneys Derek A. Cohen and Louis D. Lappen.

1The companies traded on the Pink Sheets tend to be closely held, extremely small, and/or thinly traded. Most do not meet the minimum listing requirements for trading on a national securities exchange, such as the New York Stock Exchange or the Nasdaq Stock Market.

This content has been reproduced from its original source.