Former Treasurer and Chairman of Board Sentenced for Kickback Scheme
|U.S. Attorney’s Office March 12, 2014|
BOSTON—The former treasurer and chairman of the board of directors of a Nevada-based publicly traded company was sentenced yesterday for his role in a fraudulent kickback scheme.
U.S. District Court Judge Denise J. Casper sentenced Albert Reda, 67, of Tustin, California, to 26 months in prison, one year of supervised release, a fine, and forfeiture of his illegal earnings. In November 2013, following a six-day trial, a jury convicted Reda of wire fraud and mail fraud.
Reda was involved in a scheme to pay secret kickbacks to an investment fund representative in exchange for having the investment fund buy stock in the Reda’s company, First Global Financial Corporation, which 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 Reda did not know was that the purported investment fund representative was actually an undercover federal agent.
Reda’s conviction and sentence followed a yearlong 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 Securities Exchange Commission.
The Securities and Exchange Commission, which conducted a parallel civil investigation alongside the undercover operation, cooperated with criminal authorities in bringing these charges, as well as charges against other defendants who participated in the kickback scheme. To date, 14 other individuals have been convicted for their participation in the scheme.
United States Attorney Carmen M. Ortiz and Vincent B. Lisi, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement 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.