The Genuine Article of Material Fact................
(July 15, 2013) -- Wow, A disbarred lawyer and a Florida stock promoter each pled guilty Monday in California federal court to conspiracy to commit securities fraud as part of a scheme that allegedly allowed its participants to reap $18 million as part of a stock price manipulation ring headed by an ex-prosecutor. Joseph R. Scarpello, a disbarred California attorney who is free on bond, and William Mackey, who is currently jailed, entered their pleas in a hearing before U.S. District Judge Stephen V. Wilson.
After admitting to their crimes, Judge Wilson said he found that “the guilty pleas are knowingly and voluntarily made” and scheduled an Oct. 28 sentencing hearing for both men.
An indictment made public by federal prosecutors in February named Scarpello and Mackey, accusing them of being involved in a scheme headed by Regis M. Possino, a disbarred California lawyer who once worked for the Los Angeles County District Attorney's Office. Possino was disbarred in 1984, according to records with the State Bar of California.
The indictment alleged that the conspiracy's members made at least $18 million in illegal proceeds by selling their shares of the companies whose stock price and volume they had manipulated, a February press release from the FBI
In February, law enforcement officials announced the arrest of 14 defendants in two separate indictments alleging stock price manipulation.
Scarpello agreed to assist his co-conspirators to generate illegal profits from fraudulently manipulating the volume and price of two companies, Sport Endurance Inc. and FrogAds Inc., according to his plea agreement.
Scarpello admitted in court papers that he committed numerous acts in furtherance of the conspiracy, which allowed Scarpello and other co-conspirators to conceal the ownership and control over the free trading shares of the companies' stock, fraudulently inflating the stock and volume of the companies and then coordinating the sale of the companies' stock at inflated prices to the investing public.
Scarpello, who received at least $400,000 for his role in the scheme, also used his legal training to help his co-conspirators have the companies' stock registered with the U.S. Securities and Exchange Commission
, his plea agreement stated.
The scheme lasted from 2009 until earlier this year, prosecutors said in Scarpello's plea agreement.
He was disbarred by the State Bar of California in 2004, whose court found Scarpello had committed an act of moral turpitude by misappropriating $300,000 from two people by transferring their money, held in his client trust account, to a company without their knowledge.
Mackey's plea agreement is under seal, but he admitted to the same offense as Scarpello. Federal prosecutors also said the fact pattern in Mackey's agreement is roughly similar to the one for Scarpello.
Both men have agreed to pay restitution to their victims.
Mackey, 62, is currently jailed at the Metropolitan Detention Center in Los Angeles. A resident of Plantation, Fla., Mackey allegedly was free on bond in a federal case in New York City when he committed the crimes alleged in the Los Angeles indictment, the FBI said in its February press release.
Scarpello is represented by Patrick W. McLaughlin. Mackey is represented by Curtis V. Leftwich.
The case is United States of America v. Regis Possino et al., case number 2:13-cr-00048, in the U.S. District Court for the Central District of California.